EXECUTION COPY

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                    -----------------------------------------


         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of February 17,
1998 and  effective  as of and  simultaneous  with the  Merger  (the  "Effective
Date"), is among Terry G. Lee (the  "Executive"),  Bell Sports Corp., a Delaware
corporation  (the  "Holding  Company"),  and Bell  Sports,  Inc.,  a  California
corporation  (the  "Operating  Company").  The Holding Company and the Operating
Company are collectively referred to herein as the "Company".

         WHEREAS, the Company is engaged primarily in the business of designing,
manufacturing,  producing, distributing, marketing, advertising and selling auto
racing helmets, bicycle helmets, bicycle accessories and related products;

         WHEREAS, pursuant to an Agreement and Plan of Merger dated February 17,
1998 (the  "Recapitalization  Agreement") between the Company and HB Acquisition
Corporation,  a Delaware corporation  ("Newco"),  Newco will merge with and into
(the  "Merger")  the  Company  and the Company  will  continue as the  surviving
corporation;

         WHEREAS,  the Executive  currently serves as the Chairman of the Board,
President and Chief  Executive  Officer of the Holding Company and the Operating
Company,  pursuant to the terms of an Employment  Agreement dated as of June 13,
1995 (the "Prior Employment Agreement");

         WHEREAS,  the  Executive  and the  Company  are  parties to a Severance
Agreement  dated January 5, 1995, as amended on December 8, 1997 (the "Severance
Agreement")  and  a  Noncompetition   Agreement  dated  December  8,  1997  (the
"Noncompetition Agreement" and together with the Severance Agreement, the "Prior
Agreements");

         WHEREAS,  the  Executive's   abilities  and  services  are  unique  and
essential to the prospects of the Company; and

         WHEREAS,  the Company and the Executive desire to amend and restate the
Prior  Employment  Agreement  in its  entirety in the form of this  Agreement to
provide for the  continued  employment  of the Executive by the Company upon the
terms and subject to the conditions set forth herein.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements contained herein, the parties hereby agree as follows:
<PAGE>
Section 1.        Employment; Term; Extensions.

         1.1.  Employment.  The Company  hereby  employs the  Executive  and the
Executive hereby agrees to be employed by the Company upon the terms and subject
to the conditions contained in this Agreement.

         1.2. Term.  The term of this Agreement  shall commence on the Effective
Date and shall continue until the second  anniversary of the Effective Date (the
"Term") unless earlier terminated  pursuant to Section 4 hereof. For purposes of
this  Agreement,  the term  "Employment  Period"  shall mean the period from the
Effective  Date until the earlier to occur of (i) the  expiration of the Term or
(ii) the termination of employment pursuant to Section 4 hereof.

Section 2.        Position; Duties; Responsibilities.

         2.1.  Position and Duties.  During the Employment  Period,  the Company
shall employ the  Executive as the Chairman of the Board of the Holding  Company
and the Operating  Company.  For the period commencing on the Effective Date and
continuing  until six months  thereafter (the "Initial  Period"),  the Executive
shall be employed by the Company on a  full-time  basis and shall  perform  such
duties and  responsibilities,  commensurate  with the Executive's  position,  on
behalf of the Company and its  affiliates  as shall be  designated  from time to
time by the Board or the Chief Executive Officer.  From and after the end of the
Initial Period and  continuing  through the end of the  Employment  Period,  the
Executive  shall be  employed  by the  Company  on a  part-time  basis and shall
perform  such duties and  responsibilities,  commensurate  with the  Executive's
position,  on behalf of the Company and its  affiliates  as shall be  designated
from time to time by the Board or the Chief  Executive  Officer.  The  Executive
shall faithfully and loyally perform to the best of his abilities all the duties
reasonably  assigned to him  hereunder,  shall devote such of his business time,
attention  and effort to the affairs of the Company as is  reasonably  necessary
for the proper  performance  of such  duties and shall use his  reasonable  best
efforts to promote the interests of the Company.  Notwithstanding the foregoing,
during the Employment Period, the Executive may serve as a director,  officer or
paid  consultant  of  business  corporations  other than the Company or civic or
community  organizations  or  entities,  provided  that such  activities  do not
violate  the  terms of any of the  covenants  set  forth in  Section  7  hereof;
provided,  however,  that during the  Initial  Period  such  activities  must be
approved  prior to the  commencement  thereof by any two members of the Board of
Directors of the Holding  Company (the "Board") who are not full-time  employees
of  the  Holding  Company  or the  Operating  Company  or any of its  controlled
affiliates.  The  Executive's  ownership  interest in and  participation  in the
operation  and  management  of  Mission  Leasing,  Hayden  Leasing,  Lee  Family
Enterprises,  and affiliates thereof,  and the Executive's service as a director
of Reliable Holding Corp., are hereby approved pursuant to this Section 2.1.

         2.2.  Directorship.  The  Company  shall  take all  actions  reasonably
necessary  to elect the  Executive  to the  Board of  Directors  of the  Holding
Company and the Operating Company and to maintain the Executive's  position as a
director during the Employment Period.
                                       -2-
<PAGE>
Section 3.        Compensation.

         3.1.  Base  Salary.  During  the  Initial  Period,  the  Company  shall
compensate the Executive at a base salary of $415,000 per annum. From the end of
the Initial Period and continuing  through the end of the Employment Period, the
Company shall  compensate the Executive at an annual base salary of $207,500 per
annum.  All  compensation  paid to the Executive  shall be payable in accordance
with the Company's  executive payroll policy. The Executive's base salary, as in
effect at any particular time, is referred to herein as the "Base Salary."

         3.2.  Execution Bonus. On the Effective Date, as an incentive to induce
the Executive to enter into this Agreement,  the Company shall pay the Executive
a lump sum cash bonus equal to $860,800.

         3.3. Annual Performance Bonus.

                  (a) The  Executive  shall be  entitled  to  receive  an annual
                  performance bonus payable in cash for each of the fiscal years
                  ended June 30, 1998 (the "1998 Fiscal Year") and June 30, 1999
                  (the "1999 Fiscal Year"),  in accordance  with the formula set
                  forth in this  Section 3.3.  The annual  performance  bonus to
                  which the  Executive is entitled  pursuant to this Section 3.3
                  is referred to herein as the "Bonus."

                  (b) The  amount of the Bonus to which the  Executive  shall be
                  entitled  for the 1998  Fiscal  Year  shall be  determined  in
                  accordance with the following formula:

<TABLE>
<CAPTION>
Amount of Net Operating Income                    Amount of Bonus
------------------------------                    ---------------
<S>                                               <C>                                   
Equal to or greater than 80% but less than        25% of Base Salary in that fiscal year
90%, of Plan Net Operating Income                 

Equal to or greater than 90% but less than        50% of Base Salary in that fiscal year
100%, of Plan Net Operating  Income               

Equal to or greater than 100%, but less than      75% of Base Salary in that fiscal year
110%, of Plan Net Operating Income                

Equal to or greater than 110%, but less than      85% of Base Salary in that fiscal year
125%, of Plan Net Operating Income                

Equal to or greater than 125% of Plan Net         125% of Base Salary in that fiscal year
Operating Income                                  
</TABLE>
                                       -3-
<PAGE>
                  (c) The  amount of the Bonus to which the  Executive  shall be
                  entitled  for the 1999  Fiscal  Year  shall be  determined  in
                  accordance with the following formula; provided, however, that
                  if the  Company's  return on assets does not equal or exceed a
                  target to be determined  and defined by the Board of Directors
                  for the 1999 Fiscal Year, the Executive  shall not be entitled
                  to a Bonus:

<TABLE>
<CAPTION>
         Net Operating Income                                 Amount of Bonus
         --------------------                                 ---------------

<S>                                               <C>                                     
Equal to or greater than 80% but less than        12.5% of Base Salary in that fiscal year
90%, of Plan Net Operating Income                 

Equal to or greater than 90% but less than        25% of Base Salary in that fiscal year
100%, of Plan Net Operating  Income               

Equal to or greater than 100%, but less than      37.5% of Base Salary in that fiscal year
110%, of Plan Net Operating Income                

Equal to or greater than 110%, but less than      42.5% of Base Salary in that fiscal year
125%, of Plan Net Operating Income                

Equal to or greater than 125% of Plan Net         62.5% of Base Salary in that fiscal year
Operating Income                                  
</TABLE>

                  (d) As used in this Section 3.3, the following  terms have the
                  meanings set forth below:

         "Net  Operating  Income"  means,  for any period,  gross  profit  minus
selling,   general   and   administrative   expenses.   "Selling,   general  and
administrative expenses" means the sum of (i) sales and marketing expenses, (ii)
general and administrative  expenses,  (iii) corporate affairs expenses and (iv)
research and  development  expenses.  In determining  Net Operating  Income,  no
amounts  other  than  selling,  general  and  administrative  expenses  shall be
deducted  from  gross  profit.  In  particular,  amortization  of  goodwill  and
intangible  assets,   consolidation   costs  (including  (x)  one-time  expenses
attributable  to  the  merger  of a  subsidiary  of  the  Company  and  American
Recreation  Company  Holdings,   Inc.,  a  Delaware  corporation,   and  related
transactions  contemplated by the merger agreement  relating thereto and (y) any
expenses  attributable  to any new  basis  of  accounting  resulting  from  such
merger),  net  investment  income,  interest  expense,  income taxes  (including
federal,  state,  local and foreign  income  taxes,  whether paid or  deferred),
extraordinary  items and cumulative effect of changes in accounting  principles,
shall not be deducted from gross profit in determining Net Operating Income. All
such  amounts  shall  be  determined  in  accordance  with  generally   accepted
accounting principles consistently applied by the Company.
                                       -4-
<PAGE>
         "Plan Net Operating Income" means, for any period, the amount specified
as Net  Operating  Income  contained  in the  Company's  business  plan for such
period, as approved by the Board.

         The terms  "Net  Operating  Income"  and  "Operating  Income"  are used
interchangeably  by the  Company;  and when used by the Company  with respect to
this  Agreement,  the  term  "Operating  Income"  has the same  meaning  as "Net
Operating Income" set forth in this Section 3.3(d).

                  (e) The  payment  of each Bonus  shall be made  within 30 days
                  after  the  Company's   independent   accountants  shall  have
                  certified the Company's  consolidated financial statements for
                  the fiscal year to which such Bonus relates.

                  (f) If the Company's  fiscal year changes,  the  provisions of
                  this  Section 3.3 shall be changed in an  equitable  manner to
                  ensure that the  Executive's  opportunity to earn the Bonis is
                  not materially and adversely affected.

         3.4. Stock Options. In the discretion of the Company's Management Stock
Incentive  Committee,  the  Executive  shall be eligible  to receive  options to
purchase  shares  of  equity of the  Company  pursuant  to the terms of the Bell
Sports Management Stock Incentive Plans or any successor plans thereto.

         3.5. Perquisites.  During the Employment Period, the Executive shall be
entitled to (i) the use of an automobile  and  reimbursement  by the Company for
all expenses  relating to the operation  thereof,  (ii) the use of the Company's
office facilities located in Scottsdale,  Arizona and (iii) reimbursement of the
capital  assessments  of the country club of which the  Executive is currently a
member.

         3.6.  Reimbursement  of  Expenses.  The  Company  shall  reimburse  the
Executive  for  all  expenses  necessarily  and  reasonably  incurred  by him in
connection  with the  business  of the  Company,  upon  presentation  of  proper
receipts or other proof of expenditure and subject to such reasonable guidelines
or  limitations  provided  to  the  Executive  and  applied  prospectively,   as
established by the Company;  provided that after the end of the Initial  Period,
the Company may, at its option, either offset any amounts owed by the Company to
the  Executive by an amount equal to 50% of the expenses  incurred in connection
with the Executive's  employment of a secretary,  or receive  reimbursement from
the Executive for 50% of such expenses.

         3.7.  Vacation.  During the Employment  Period,  the Executive shall be
entitled each calendar year to no fewer than six weeks of paid vacation and sick
leave combined.

         3.8. Aircraft Lease. The Company will take all commercially  reasonable
action necessary to keep in effect throughout the Employment Period the Lease of
Aircraft dated April
                                       -5-
<PAGE>
10, 1997 between Hayden Leasing, L.C. and BSI and shall make the aircraft leased
thereunder  available for the  Executive's  reasonable  use until the end of the
Employment Period.

         3.9.  Participation in Benefit Plans. During the Employment Period, the
Executive  shall  be  entitled  to  participate  in  any  profit  sharing  plan,
retirement  plan,  group life insurance plan or other  insurance plan or medical
expense  plan  maintained  by the Company for its senior  executives  generally,
which  plans shall not differ in value in any manner  materially  adverse to the
Executive  from  those in which the  Executive  currently  participates.  Family
coverage under the Company's medical and dental plans shall be made available to
the  Executive  at a  nominal  charge.  In  addition,  the  Executive  shall  be
reimbursed  for all medical and dental  expenses  that are not covered under the
medical and dental plans otherwise covering the Executive.

Section 4.        Termination.

         4.1.  Death.  Upon the death of the Executive,  the  Employment  Period
shall  automatically  terminate  and all rights of the  Executive and his heirs,
executors and  administrators to compensation and other benefits hereunder shall
cease,  except for (i)  compensation  which  shall  have  accrued to the date of
death,  including accrued Base Salary,  prorated Bonus, plus four months of Base
Salary and Bonus and (ii) the rights to indemnification under Section 5 hereof.

         4.2.  Disability.  The Company may terminate the Employment Period upon
written notice to the Executive if the Executive,  because of physical or mental
incapacity or disability,  fails in any material respect to perform the services
required of him hereunder for a continuous period of 90 days or any 180 days out
of any 12-month period.  Upon such  termination,  all obligations of the Company
hereunder shall cease,  except for (i) compensation  which shall have accrued to
the date of termination,  including accrued Base Salary and prorated Bonus, (ii)
Base  Salary  which  shall  be  paid by the  Company  for  the  duration  of the
Employment  Period,  minus any amounts payable to, or received by, the Executive
pursuant to the terms of any disability plan covering the Executive  (whether or
not  such  plan  is  sponsored  by  the  Company),   and  (iii)  the  rights  to
indemnification  under Section 5 hereof.  In the event of any dispute  regarding
the  existence  of the  Executive's  incapacity  hereunder,  the matter shall be
resolved by the  determination  of a majority of three  physicians  qualified to
practice medicine in the state of the Executive's residence,  one to be selected
by each of the  Executive and the Board and the third to be selected by such two
designated  physicians.   For  this  purpose,  the  Executive  shall  submit  to
appropriate medical examinations.

         4.3.     Cause.

                  (a) The Company may, at its option,  terminate the Executive's
                  employment  under this  Agreement for "Cause" (as  hereinafter
                  defined).  A termination for Cause shall not take effect until
                  and unless the Company  complies  with this  Section  4.3. The
                  Executive  shall be given  written  notice by the Board of the
                  intention to terminate his employment hereunder for Cause (the
                  "Cause Notice").
                                       -6-
<PAGE>
                  The Cause  Notice  shall  state the  particular  action(s)  or
                  inaction(s)   giving  rise  to  termination  for  Cause.   The
                  Executive  shall have 10 days after the Cause  Notice is given
                  to cure the particular action(s) or inaction(s), to the extent
                  a cure is possible.  If the  Executive so effects a cure,  the
                  Cause  Notice  shall be  deemed  rescinded  and of no force or
                  effect. As used in this Agreement, the term "Cause" shall mean
                  any one or more of the following:

                           (1)      the Executive's  refusal to perform specific
                                    directives of the Board which are consistent
                                    with the scope and nature of the Executive's
                                    duties  and  responsibilities  as set  forth
                                    herein;

                           (2)      the Executive's admission or conviction of a
                                    felony  or  of  any  crime  involving  moral
                                    turpitude,  fraud,  embezzlement,  theft  or
                                    misrepresentation;

                           (3)      any  gross  or  willful  misconduct  of  the
                                    Executive  resulting in substantial  loss to
                                    the  Company  or  substantial  damage to the
                                    Company's reputation;

                           (4)      any  breach by the  Executive  of any one or
                                    more of the covenants contained in Section 6
                                    or 7 hereof,  other than an inadvertent  and
                                    unintentional breach of a covenant contained
                                    in  Section  6  having  an   inconsequential
                                    effect on the Company any of its  controlled
                                    affiliates.

                  (b) The exercise of the right of the Company to terminate this
                  Agreement  pursuant to this Section 4.3 shall not abrogate the
                  rights or  remedies  of the  Company  in respect of the breach
                  giving rise to such termination.

                  (c) If the Company  terminates the Executive's  employment for
                  Cause, the Executive shall be entitled to:

                           (1)      accrued Base Salary  through the date of the
                                    termination of his employment;

                           (2)      any  Bonus  owing  but not yet  paid for any
                                    fiscal   year   ended  on  or   before   the
                                    Executive's  termination  of employment  for
                                    Cause;

                           (3)      any amounts  owing but not yet paid pursuant
                                    to Section 3.7; and

                           (4)      other or  additional  benefits in accordance
                                    with  applicable  plans and  programs of the
                                    Company  and his  rights to  indemnification
                                    under Section 5.
                                       -7-
<PAGE>
                  (d) Notwithstanding anything to the contrary contained in this
                  Agreement,  if,  following a  termination  of the  Executive's
                  employment for Cause, a court of competent jurisdiction,  in a
                  final  determination,  determines  that the  Executive was not
                  guilty  of  the   conduct   that  formed  the  basis  for  the
                  termination,  the Executive  shall be entitled to the payments
                  and the  economic  equivalent  of the  benefits  he would have
                  received had his  employment  been  terminated  by the Company
                  without Cause.

         4.4.  Termination Without Cause. If the Board terminates the Employment
Period for any reason other than a reason set forth in Section 4.1, 4.2 or 4.3:

                  (a) concurrent with such termination, the Company shall pay to
                  the  Executive an amount equal to his Base Salary and prorated
                  Bonus, in each case accrued through the date of termination;

                  (b) the Company  shall  continue to pay the Executive his Base
                  Salary,  Bonus and all other benefits which would otherwise be
                  payable hereunder for the remainder of the Term;

                  (c) all of the  Executive's  options to purchase equity of the
                  Company  whether  or  not  vested  shall  become   immediately
                  exercisable in full;

                  (d) the  Executive  shall be entitled to any amounts owing but
                  not yet paid pursuant to Section 3.7; and

                  (e)  the  Executive   shall  be  entitled  to  his  rights  to
                  indemnification under Section 5 hereof.

         The Company will use its  reasonable  efforts to structure the payments
and benefits  specified by Sections  4.4(a)  through 4.4(e) in a manner which is
tax-efficient for the Executive.

         4.5.  Termination  for Good Reason.  The  Executive  may  terminate his
employment under this Agreement for Good Reason (as hereinafter  defined),  upon
notice to the Company setting forth in reasonable detail the nature of such Good
Reason.  In the event the Executive  terminates  this Agreement for Good Reason,
the  Executive  shall be entitled to the  payments  and  benefits  specified  by
Sections  4.4(a) through 4.4(e).  For purposes of this Agreement,  "Good Reason"
shall mean, without the Executive's  express written consent,  the occurrence of
any one or more of the following events:

                  (a) the a material breach of this Agreement by the Company;
                                       -8-
<PAGE>
                  (b) the failure to elect or re-elect  the  Executive to any of
                  the positions described in Section 2.1 hereof,  removal of the
                  Executive  from  any  such  position  or  any  change  in  the
                  Executive's  responsibilities  described in Section 2.1 in any
                  respect which is materially adverse to the Executive;

                  (c) other  than as  contemplated  by  Section  2.1  hereof,  a
                  diminution of any of the Executive's significant duties or the
                  assignment  to the Executive of any duties  inconsistent  with
                  his  duties  or the  material  impairment  of the  Executive's
                  ability to function in the positions  described in Section 2.1
                  hereof,  in each case only after the Company shall have had an
                  opportunity  to cure (any cure to be  effected  within 30 days
                  after appropriate  written notice of the basis for Good Reason
                  is given to the Company by the Executive);

                  (d) a material  reduction of any benefit or perquisite enjoyed
                  by the  Executive or the failure to continue  the  Executive's
                  participation  in any incentive  compensation  plan,  unless a
                  plan providing a substantially similar economic opportunity is
                  substituted or all senior  executives  suffer a  substantially
                  similar reduction or failure;

                  (e) the  relocation  of the  Executive's  office to a location
                  more than 50 miles from Scottsdale, Arizona.

         4.6.  Voluntary  Termination.  If, during the  Employment  Period,  the
Executive  voluntarily  terminates his employment hereunder for any reason other
than Good  Reason,  he shall be entitled to the  payments  specified by Sections
4.3(c)(l) through 4.3(c)(4) hereof, inclusive.

Section 5. Indemnification. To the fullest extent permitted by law, the Restated
Certificate  of  Incorporation  of the  Holding  Company  and  the  Articles  of
Incorporation of the Operating Company, the Executive (and his heirs,  executors
and  administrators)  shall be indemnified by the Company and its successors and
assigns. The obligations of the Company pursuant to this Section 5 shall survive
the termination of the Employment Period.

Section  6.  Confidentiality.  The  Executive  shall  at all  times  during  the
Employment  Period and thereafter  hold in confidence  any and all  Confidential
Information  (as  hereinafter  defined)  that may have come or may come into his
possession or within his knowledge concerning the products, services, processes,
businesses,  suppliers,  customers and clients of the Company or its  controlled
affiliates.  The  Executive  agrees that neither he nor any person or enterprise
controlled by him will for any reason directly or indirectly, for himself or any
other person,  use or disclose any  Confidential  Information  provided that the
Executive  may  disclose  Confidential  Information  which has become  generally
available to the public other than as a result of a breach of this  Agreement by
the Executive or pursuant to an order of a court of competent jurisdiction or of
a  governmental  agency,  department  or  commission.  Upon  termination  of his
employment under
                                       -9-
<PAGE>
this  Agreement,  the  Executive  shall  promptly  surrender  to the Company all
documents he believes contain  Confidential  Information and that are within his
possession or control,  other than  documents to which the Executive is or was a
party or that relate to the Executive or the basis, or purported basis, on which
his  employment  was  terminated.  For  purposes  of this  Agreement,  the  term
"Confidential  Information"  shall  mean  any  trade  secrets,   proprietary  or
confidential information,  inventions,  manufacturing or industrial processes or
procedures,  patents,  trademarks,  trade names,  customer lists, service marks,
service names, copyrights, applications for any of the foregoing, or licenses of
other rights in respect  thereof,  owned or used by, or licensed to, the Company
or any of its controlled affiliates.

Section 7.        Restricted Activities.

         7.1. Noncompetition. The Executive agrees that for five years following
the  Effective  Date  (the  "Noncompete  Period"),  he shall  not,  directly  or
indirectly,  engage in any manner in any activity that is directly or indirectly
competitive or potentially competitive with the Company or any of its affiliates
as  conducted  or  planned  to be  conducted  during  the Term and  neither  the
Executive  nor  any  person  or  enterprise  controlled  by him  will  become  a
stockholder,  co-venturer,  lender,  director,  officer,  agent or employee of a
corporation or member of or lender to a partnership, engage as a sole proprietor
in any business, act as a consultant to any of the foregoing or otherwise engage
directly or indirectly in any business, that is in competition with the business
then conducted by the Company or any of its  controlled  affiliates in any state
in the United  States or any other  country  in which the  Company or any of its
controlled  affiliates  has  engaged  in such  business  during  the term of the
Executive's  employment  under  this  Agreement;  provided,  however,  that  the
foregoing  shall not prohibit the Executive from owning less than two percent of
the  outstanding  securities of any class of capital stock of a corporation  the
securities  of which are  regularly  traded or quoted on a  national  securities
exchange  or on an  inter-dealer  quotation  system.  In  consideration  of  the
agreements and covenants  contained in this Section 7, the Company shall pay the
Executive  $1,500,000,  in equal installments of $500,000 payable on each of the
Effective  Date,  the first  anniversary  of the  Effective  Date and the second
anniversary of the Effective Date.

         7.2.  Non-solicitation.  The Executive agrees that while he is employed
by the Company and during the  Noncompete  Period,  neither he nor any person or
enterprise  controlled  by him will (i)  solicit  for  employment  or employ any
employee of the Company or any of its  affiliates or any person who was employed
by the Company or any of its affiliates at any time within one year prior to the
time of the act of  solicitation,  (ii) in any  way  cause,  influence,  induce,
encourage  or attempt to  persuade  any  employee  of the  Company or any of its
affiliates  or  any  person  who  was  employed  by  the  Company  or any of its
affiliates  at any  time  within  one  year  prior  to the  time of such  act to
terminate his employment  relationship with the Company or any of its affiliates
or (iii) in any way, cause, influence,  induce, encourage or attempt to persuade
any customer or vendor of the Company or any of its  affiliates  to terminate or
diminish its relationship or violate any agreement with any of them.
                                      -10-
<PAGE>
         7.3. Relief, Reformation; Severability. The Executive acknowledges that
he has carefully read and considered all terms and conditions of this Agreement,
including the restraints imposed by Section 7 hereof. The Executive acknowledges
that there is no adequate remedy at law for a breach of this Section 7 and that,
in the event of such a breach or attempted breach, the Company shall be entitled
to injunctive or other  equitable  relief to prevent any such breach,  attempted
breach or continuing breach, without prejudice to any other remedies for damages
or  otherwise.  The  Executive  agrees  that  the  covenants  contained  in this
Agreement  are separate and are  reasonable  in their  nature,  subject  matter,
geographic limitation, scope and duration and that the Executive shall not raise
any issue of  reasonableness  as a defense in any  proceeding  to enforce any of
such  covenants.  Notwithstanding  the  foregoing,  in the event that a covenant
contained  in this  Agreement  shall be deemed  by any court to be  unreasonably
broad in any respect,  the parties agree that the court may modify such covenant
for the purpose of making such covenant  reasonable  in scope and duration.  The
validity,  legality  or  enforceability  of the  remaining  provisions  of  this
Agreement shall not be affected by any such modification.

Section 8.  Inventions.  The Executive  hereby assigns to the Company his entire
right, title and interest in and to all discoveries and improvements, patentable
or otherwise,  trade  secrets and ideas,  writings and  copyrightable  material,
which may be conceived  by the  Executive or developed or acquired by him during
the term of his  employment  by the  Company,  which  may  pertain  directly  or
indirectly to the Company's business. The Executive agrees to disclose fully all
such  developments to the Company upon its request,  which  disclosure  shall be
made in writing promptly  following any such request.  The Executive shall, upon
the  Company's  request,  execute,  acknowledge  and  deliver to the Company all
instruments and do all other acts which are necessary or desirable to enable the
Company to file and  prosecute  applications  for, and to acquire,  maintain and
enforce, all patents, trademarks and copyrights in all countries.

Section 9. Remedies. The Executive acknowledges that any material breach of this
Agreement  will cause  irreparable  harm to the Company,  that such harm will be
difficult if not impossible to ascertain, and that the Company shall be entitled
to equitable  relief,  including  injunction,  against any actual or  threatened
breach hereof,  without bond and without liability should such relief be denied,
modified or vacated.  Neither the right to obtain such relief nor the  obtaining
of any such relief  shall be exclusive of or preclude the Company from any other
remedy.

Section 10.  Insurance.  The Company  may, at its  election and for its benefit,
ensure  the  Executive  against  disability,  accidental  loss or death  and the
Executive shall submit to such physical examinations and supply such information
as may be required in connection therewith.

Section  11.  Expenses.  The  Company  will  reimburse  the  Executive  for  his
reasonable  out of pocket  costs and  expenses of  obtaining  independent  legal
advice relating to the negotiation of this Agreement and the Executive's  equity
participation in Newco and the Surviving Corporation;  provided that the maximum
payment under this Section 12 shall not exceed $10,000.
                                      -11-
<PAGE>
Section 12. Assignment. The rights and benefits of the Executive hereunder shall
not be assignable,  whether by voluntary or involuntary  assignment or transfer.
This  Agreement  shall be  binding  upon,  and  inure  to the  benefit  of,  the
successors   and  assigns  of  the  Company,   and  the  heirs,   executors  and
administrators  of the Executive,  and shall be assignable by the Company to any
entity  acquiring  substantially  all of the assets of the  Company,  whether by
merger, consolidation, sale of assets or similar transactions.

Section 13.  Notices.  Any notice  required or  permitted to be given under this
Agreement  shall be sufficient if in writing and personally  delivered,  sent by
certified or registered mail or sent by overnight courier service as follows: if
to the  Executive,  to his address as set forth in the  records of the  Company,
with a copy to Robert F. Wall,  Esq.,  Winston & Strawn,  35 West Wacker  Drive,
Suite 4700,  Chicago,  Illinois 60601, and if to the Company,  to the address of
its principal executive offices,  attention:  Chief Financial Officer, or to any
other address designated by any party hereto by notice similarly given.

Section 14.  Waiver of Breach.  A waiver by the Company or the  Executive of any
breach of any  provision of this  Agreement by the other party shall not operate
or be  construed  as a waiver  of any  other or  subsequent  breach by the other
party.

Section 15. Entire  Agreement.  This Agreement  contains the entire agreement of
the parties with respect to the subject  matter  hereof.  This  Agreement may be
modified only by an agreement in writing signed by the parties hereto.

Section 16. Applicable Law. The terms of this Agreement shall be governed by and
construed in  accordance  with the internal  laws (as opposed to the conflict of
laws provisions) of the State of Arizona.

Section 17.  Termination of Prior  Agreements.  The Prior  Agreements are hereby
terminated. This Agreement supersedes all prior agreements between the Executive
and the Company concerning the Executive's employment with the Company, and none
of such agreements shall


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                                      -12-
<PAGE>
be of any force or effect  whatsoever  and neither the Company nor the Executive
shall have any rights or obligations under the Prior Agreements.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.

                                              BELL SPORTS CORP.



                                              By 
                                                 -------------------------------



                                              BELL SPORTS, INC.



                                              By 
                                                 -------------------------------



                                              EXECUTIVE:



                                              /s/ Terry G. Lee
                                              ----------------------------------
                                              Terry G. Lee