SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Bell Sports Corp.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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previously. Identify the previous filing by registration statement number,
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<PAGE>
[BELL SPORTS LOGO]
BELL SPORTS CORP.
15170 N. HAYDEN RD., SUITE 1
SCOTTSDALE, ARIZONA 85260
(602) 951-0033
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of Bell Sports Corp. to be held at 10:00 a.m. local time on Thursday, November
21, 1996, at the Marriott Mountain Shadows Resort, 5641 E. Lincoln Drive,
Scottsdale, Arizona 85253. Directions to the Marriott Mountain Shadows Resort
are included at the back of the accompanying Proxy Statement.
The matters to be considered at the meeting are described in the Proxy
Statement. Regardless of your plans for attending in person, it is important
that your shares be represented at the meeting. Therefore, please mark, date and
sign the enclosed proxy card and return it in the enclosed, business reply
envelope. This will enable you to vote on the business to be transacted whether
or not you attend the meeting.
We hope that you can attend the 1996 Annual Meeting.
Sincerely,
/s/ TERRY G. LEE
TERRY G. LEE
Chairman and
Chief Executive Officer
October 10, 1996
<PAGE>
BELL SPORTS CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 21, 1996
TO OUR STOCKHOLDERS
The Annual Meeting of Stockholders (the "Annual Meeting") of Bell Sports
Corp., a Delaware corporation (the "Company"), will be held at 10:00 a.m. local
time on Thursday, November 21, 1996, at the Marriott Mountain Shadows Resort,
5641 E. Lincoln Drive, Scottsdale, Arizona 85253 for the following purposes:
1. To elect three (3) members of the Board of Directors of the Company to
serve three years;
2. To elect one (1) member of the Board of Directors of the Company to
serve one year;
3. To approve an amendment to the Restated and Amended Bell Sports Corp.
1993 Outside Directors Stock Option Plan providing for the payment of Board
member retainer fees in stock options in lieu of cash and to increase the
number of shares issuable thereunder;
4. To ratify the appointment of Price Waterhouse LLP as independent public
accountants for the Company for its fiscal year ending June 28, 1997; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on September 27, 1996
are entitled to receive notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof. Your attention is directed to the
accompanying proxy card, Proxy Statement and 1996 Annual Report to Stockholders.
Whether or not you plan to attend the Annual Meeting in person, you are urged to
specify your voting preferences by marking, dating and signing the enclosed
proxy card and returning it in the enclosed business reply envelope. If you wish
to vote in accordance with the Directors' recommendations, all you need to do is
date and sign the proxy card and return it in such envelope. If you attend the
Annual Meeting and wish to vote in person, you may withdraw your proxy and vote
your shares personally.
A complete list of the holders of record of the Company's Common Stock
entitled to vote at the Annual Meeting will be open to examination during
ordinary business hours at the Company's headquarters located at 15170 N. Hayden
Rd., Suite 1, Scottsdale, Arizona 85260 for 10 days preceding the Annual
Meeting, by any stockholder of the Company for any purpose germane to the Annual
Meeting.
By Order of the Board of Directors
/s/ HOWARD A. KOSICK
HOWARD A. KOSICK
Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
Scottsdale, Arizona
October 10, 1996
<PAGE>
BELL SPORTS CORP.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 21, 1996
GENERAL INFORMATION
This Proxy Statement (the "Proxy Statement") is being furnished to the
holders of Common Stock, $.01 par value ("Common Stock"), of Bell Sports Corp.,
a Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors (the "Board of Directors" or the "Board") of
the Company for use at the 1996 Annual Meeting of Stockholders of the Company to
be held at 10:00 a.m. local time on Thursday, November 21, 1996, at the Marriott
Mountain Shadows Resort, 5641 E. Lincoln Drive, Scottsdale, Arizona 85253 and at
any and all adjournments or postponements thereof (the "Annual Meeting"). The
Company's principal executive offices are located at 15170 N. Hayden Rd., Suite
1, Scottsdale, Arizona 85260.
Each holder of Common Stock at the close of business on September 27, 1996
(the "Record Date") is entitled to receive notice of and to vote at the Annual
Meeting. At the close of business on the Record Date, there were 13,700,960
shares of Common Stock outstanding, each of which entitles the registered holder
thereof to one vote.
If you are unable to attend the Annual Meeting, you may vote by proxy. The
proxies will vote your shares according to your instructions. If you return a
properly signed and dated proxy card but do not mark a choice on one or more
items, your shares will be voted in accordance with the recommendations of the
Board of Directors as set forth in this Proxy Statement. The proxy card gives
authority to the proxies to vote your shares in their discretion on any other
matter presented at the Annual Meeting.
You may revoke your proxy at any time prior to voting at the Annual Meeting
by delivering written notice to the Secretary of the Company, by submitting a
subsequently dated proxy card or by attending and voting in person at the Annual
Meeting.
The Company will bear the cost of preparing, handling, printing and mailing
this Proxy Statement, the accompanying proxy card and any additional material
which may be furnished to holders of Common Stock, and the actual expense
incurred by brokerage houses, fiduciaries and custodians in forwarding such
materials to beneficial owners of Common Stock held in their names. The
solicitation of proxies will be made by the use of the mails and through direct
communication with certain holders of Common Stock or their representatives by
officers, directors or employees of the Company who will receive no additional
compensation for such solicitation. This Proxy Statement was first sent or given
to holders of Common Stock on or about October 10, 1996.
VOTING INFORMATION
The holders of a majority of the shares of Common Stock outstanding and
entitled to vote must be present in person or represented by proxy at the Annual
Meeting in order for a quorum to be present.
A holder of Common Stock may, with respect to the election of directors (i)
vote for the election of all named director nominees, (ii) withhold authority to
vote for all named director nominees or (iii) vote for the election of all named
director nominees other than any nominee with respect to whom the holder of
Common Stock withholds authority to vote by so indicating in the appropriate
space on the proxy card. A holder of Common Stock may, with respect to the
proposal to amend the Bell Sports Corp. Restated and Amended 1993 Outside
Directors Stock Option Plan (the "1993 Plan") and the proposal to ratify the
appointment of Price Waterhouse LLP, vote "FOR" such proposal, (2) vote
"AGAINST" such proposal or (3) "ABSTAIN" from voting on such proposal.
Properly executed proxy cards that are received by the Company prior to the
Annual Meeting and not revoked, will be voted as directed therein on all matters
presented at the Annual Meeting. In the
1
<PAGE>
absence of specific direction from a holder of Common Stock, proxies will be
voted for the election of all named director nominees, for approval of the
proposed amendment to the 1993 Plan and for approval of the ratification of the
appointment of Price Waterhouse LLP as the Company's independent public
accountants. If a proxy card indicates that all or a portion of the shares of
Common Stock represented by such proxy card are not being voted with respect to
a particular proposal, such non-voted shares will not be considered present and
entitled to vote on such proposal, although such shares of Common Stock may be
considered present and entitled to vote on other proposals, and will count for
the purpose of determining the presence of a quorum at the Annual Meeting.
ELECTION OF DIRECTORS (PROPOSALS 1 AND 2)
The Board of Directors currently consists of nine persons and is divided into
three classes. The terms of the Class II Directors expire with the Annual
Meeting. Each of the nominees for Class II Director, if elected, will serve
three years until the 1999 Annual Meeting of Stockholders and until a successor
has been elected and qualified. The nominee for Class III Director, if elected,
will serve one year until the 1997 Annual Meeting of Stockholders and until a
successor has been elected and qualified. The current Class III and Class I
Directors will continue in office until the 1997 and 1998 Annual Meetings,
respectively.
Unless otherwise instructed, the proxy holders will vote the proxies received
by them FOR the three Class II nominees of the Board of Directors named below
and FOR the one Class III nominee of the Board of Directors named below. Holders
of Common Stock do not have the right to cumulate votes in the election of
directors. Directors are elected by a plurality of the votes cast. Thus,
assuming a quorum is present, with respect to Proposal 1, the three persons
receiving the greatest number of votes will be elected to serve as members of
Class II of the Board of Directors and, with respect to Proposal 2, the person
receiving the greatest number of votes will be elected to serve as a member of
Class III of the Board of Directors. Accordingly, non-votes with respect to the
election of directors will not affect the outcome of the election of directors.
In the event that any nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the Board of Directors to fill the vacancy.
It is not expected that any nominee will be unable or will decline to serve as a
director. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them FOR the
nominees recommended by the Board of Directors.
CB Capital Investors, Inc., a Delaware corporation ("CBCI"), Harry H. Manko,
Stephen A. Silverstein and the Company are parties to a Post-Merger Stockholders
Agreement (the "Post-Merger Stockholders Agreement") pursuant to which CBCI and
Messrs. Manko and Silverstein have agreed, among other things, to vote their
shares of Common Stock in favor of the election of each of the nominees
proposed, recommended or otherwise supported by the Board of Directors, subject
to such stockholders' right to withhold such vote with respect to not more than
one such nominee, in the aggregate, in their sole discretion. The Post-Merger
Stockholders Agreement also contains certain limitations on the acquisition and
disposition of shares of Common Stock by CBCI and Messrs. Manko and Silverstein.
The Post- Merger Stockholders Agreement was entered into in connection with the
merger (the "AMRE Merger") of a subsidiary of the Company and American
Recreation Company Holdings, Inc. ("AMRE"), pursuant to which AMRE became a
wholly-owned subsidiary of the Company. The AMRE Merger was completed on July 3,
1995. Mr. Manko is a Director and Vice Chairman of the Company. Arnold L.
Chavkin, a Director of the Company, is a General Partner of Chase Capital
Partners ("CCP"), an affiliate of CBCI. Michael R. Hannon, a Director of the
Company, is a Principal of CCP. As of September 27, 1996, CBCI owned 2,283,414
shares of Common Stock, representing 16.7% of the shares of Common Stock then
outstanding. As of that same date, Mr. Manko and Mr. Silverstein owned
beneficially 360,306 and 150,000 shares of Common Stock, respectively,
representing 2.6% and 1.1%, respectively, of the shares of Common Stock then
outstanding. It is expected that all shares of Common Stock owned by CBCI and
Messrs. Manko and Silverstein will be voted FOR the election of the nominees of
the Board of Directors named below. The obligation of CBCI and Messrs. Manko and
Silverstein under the Post-Merger Stockholders Agreement to vote their shares as
described above applies with respect to each election of directors of the
Company conducted prior to January 3, 1998.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE NAMED NOMINEES
AS DIRECTORS OF THE COMPANY (PROPOSALS 1 AND 2).
NOMINEES FOR DIRECTORS
CLASS II -- NOMINEES TO SERVE THREE YEARS:
Frederick W. Winter, Director, age 51. Mr. Winter has been a Director of the
Company since October 1991. Mr. Winter has been the Dean of the School of
Management at the State University of New York at Buffalo since May 1994. He
previously was the Head of the Department of Business Administration at the
University of Illinois from 1986 to 1993. Mr. Winter is also a Director of Alkon
Corporation and Rand Capital Corp.
Kenneth K. Harkness, Director, age 62. Mr. Harkness has been a Director of
the Company since February 1992. Mr. Harkness is part owner and Chief Executive
Officer of Ceratech Holdings (a giftware holding company). From February 1996 to
July 1996, Mr. Harkness was an independent management consultant. From December
1994 until January 1996, he was President of Cirgon Technologies. Mr. Harkness
was the Chief Executive Officer of Ramco Industries, Inc. from December 1993
until August 1994, an independent management consultant during 1993, and the
Chief Executive Officer and a Director of Guidance Technologies, Inc. from 1989
through 1992.
Harry H. Manko, Director and Vice Chairman, age 69. Mr. Manko has been a
Director of the Company and the Vice Chairman of the Company since July 1995.
Mr. Manko headed AMRE and its predecessors for 41 years. Mr. Manko became
Chairman of the Board and a Director of AMRE in April 1993. From 1984 to 1993,
Mr. Manko was President and Chief Executive Officer of American Recreation
Group, L.P. ("ARG"), a predecessor of AMRE. Mr. Manko currently serves as the
President and Treasurer of the Bicycle Wholesale Distributor Association. He
formerly served as the President of the Bicycle Institute of America.
Class III -- Nominee to Serve One Year
Arnold L. Chavkin, Director, age 45. Mr. Chavkin has been a Director of the
Company since July 1995. Mr. Chavkin served as a Director of AMRE since April
1993. Mr. Chavkin is a General Partner of CCP and the President of Chemical
Investments, Inc. ("CII"), an affiliate of CCP. Mr. Chavkin has been a General
Partner of CCP since January 1992 and has served as the President of CII since
March 1991. CII is an affiliate of The Chase Manhattan Corporation. Mr. Chavkin
is also a Director of Reading & Bates Corporation, American Radio Systems, Inc.,
Wireless One, Inc. and Forcenergy Gas Exploration, Inc. Prior to joining CII,
Mr. Chavkin was a specialist in investment and merchant banking at Chemical Bank
for six years.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Class III -- Serving Until 1997 Annual Meeting:
Phillip D. Matthews, Director, age 58. Mr. Matthews has been a Director of
the Company since November 1989. Mr. Matthews is a business consultant to the
Company and other companies and is Chairman of the Executive Committee of the
Board of Wolverine World Wide, Inc. (a footwear manufacturer and retailer) and
Chairman of the Reliable Company (a laundry equipment service provider). Mr.
Matthews is also a Director of H.F. Ahmanson & Company and several
privately-held companies.
Christopher Wright, Director, age 39. Mr. Wright has been a Director of the
Company since November 1989. Mr. Wright is an Executive Director of Klienwort
Benson Limited., an English merchant bank with which he has been employed since
1978 and an Executive Vice President of Dresdner Kleinwort Benson North America.
He is General Manager of Kleinwort Benson (USA) Inc., the investment advisor to
The KB Mezzanine Fund, L.P., which is a stockholder of the Company. Mr. Wright
is also a Director of Roper Industries, Inc. (a fluid handling and controls
company).
Class I -- Serving Until 1998 Annual Meeting:
Terry G. Lee, Director, Chairman and Chief Executive Officer, age 47. Mr. Lee
also served as President of the Company until the completion of the AMRE Merger.
He joined Bell Helmets, Inc. (a predecessor of the Company) as President and
Chief Operating Officer and a Director in 1984, and became Chief Executive
Officer in 1986. He was also a stockholder of and consultant to Echelon Sports
3
<PAGE>
Corporation (a predecessor of the Company) prior to its acquisition by the
Company in 1989. Mr. Lee became Chief Executive Officer, President and Chairman
of the Company in November 1989.
W. Leo Kiely III, Director, age 49. Mr. Kiely has been a Director of the
Company since January 1995. Mr. Kiely has been the President and Chief Operating
Officer of Coors Brewing Company since March 1993. From 1982 until he joined
Coors, Mr. Kiely oversaw various operations at Frito-Lay Inc., a subsidiary of
PepsiCo, Inc. Mr. Kiely serves on the Wharton Marketing Advisory Board and the
Wharton Graduate Executive Board.
Michael R. Hannon, Director, age 36. Mr. Hannon has been a Director of the
Company since July 1995. Mr. Hannon served as a Director of AMRE since April
1993 and has been a Principal of CVP, an affiliate of CBCI, since January 1992.
From January 1988 to January 1992, Mr. Hannon was an officer of CBC Capital
Partners, Inc., an affiliate of CCP. CCP and CBC Capital Partners, Inc. are
affiliates of The Chase Manhattan Corporation. Mr. Hannon is also a director of
several privately-held companies.
DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held 5 meetings during the Company's fiscal year ended
June 29, 1996 ("Fiscal 1996"), including 4 regular meetings and 1 special
meeting. No Director attended fewer than 75% of the meetings of the Board or
committees thereof on which he served except for Mr. Chavkin.
The Board of Directors has an Audit Committee comprised of Messrs. Winter,
Wright and Hannon. The Audit Committee reviews the results and scope of the
audit and other services provided by the Company's independent public
accountants and recommends the appointment of independent public accountants to
the Board of Directors. See "Ratification of Appointment of Independent Public
Accountants". The Audit Committee met 2 times during Fiscal 1996.
The Board of Directors has a Compensation Committee comprised of Messrs.
Matthews, Chavkin, Harkness, and Kiely. The Compensation Committee approves all
executive compensation other than certain matters relating to stock options. The
Compensation Committee met six times during Fiscal 1996.
The Board of Directors has a Management Stock Incentive Committee comprised
of Messrs. Matthews, Chavkin, Kiely and Harkness. The Management Stock Incentive
Committee has responsibility for granting stock options to eligible members of
management under, and otherwise administers, the Company's Restated and Amended
1991 Management Stock Incentive Plan (the "1991 Plan"), its Restated and Amended
1992 Management Stock Incentive Plan (the "1992 Plan"), and its 1996 Stock
Option Plan (the "1996 Plan"). The Management Stock Incentive Committee met five
times during Fiscal 1996.
The Board of Directors has an Outside Directors Stock Option Committee with
Mr. Lee as its sole member. The Outside Directors Stock Option Committee
administers the 1993 Plan. If the proposal to amend the 1993 Plan presented
herein is approved, the 1993 Plan will be administered by the Board of Directors
instead of the Outside Directors Stock Option Committee. Recipients of stock
options under the 1993 Plan and the timing and terms of all grants made
thereunder are determined in the manner set forth in the 1993 Plan and not in
the discretion of the administrators of the 1993 Plan. See "Approval of
Amendment to the 1993 Outside Directors Stock Option Plan."
The Board has no nominating committee. Selection of nominees for the Board is
made by the entire Board of Directors. The names of potential nominees for the
Company's Board should be directed to the Company's Secretary, Howard A. Kosick,
at Bell Sports Corp., 15170 N. Hayden Rd., Suite 1, Scottsdale, Arizona 85260.
Members of the Board of Directors who are employees or consultants to the
Company did not receive compensation for services on the Board or any committees
thereof during Fiscal 1996. Other non-employee directors received a quarterly
retainer of $1,500 plus $1,000 for each Board meeting they attended. In Fiscal
1996, Mr Matthews received aggregate compensation of $60,000 for consulting
services provided to the Company.
If the proposal to amend the 1993 Plan presented herein is approved, the
quarterly retainer fee will no longer be paid in cash and each non-employee
director (including any who serve as consultants to the Company) will receive
annually in lieu thereof an immediately exercisable option to purchase Common
4
<PAGE>
Stock granted under the 1993 Plan, with an exercise price per share equal to 50%
of the fair market value of a share of Common Stock on the date of grant. The
number of shares of Common Stock subject to each such option will be determined
by dividing $10,000 by 50% of the fair market value of a share of Common Stock
on the date of grant. For purposes of the 1993 Plan, the fair market value of a
share of Common Stock on a given day is deemed to be the average of the high and
low sales prices of a share of Common Stock as reported by The Nasdaq Stock
Market for that day. See "Approval of Amendment to the 1993 Outside Directors
Stock Option Plan." The $1,000 meeting fee will continue to be paid in cash,
regardless of whether the proposed 1993 Plan amendment is approved by
stockholders. All directors are reimbursed for expenses incurred in connection
with their services as directors of the Company.
In addition, pursuant to the terms of the 1993 Plan previously approved by
stockholders, and without regard to whether the proposed 1993 Plan amendment is
approved by stockholders, each non-employee director of the Company (including
any who serve as consultants to the Company) receives an option to purchase
2,000 shares of Common Stock on the date of each annual meeting of stockholders,
assuming the continued service of such person as a non-employee director
immediately following such meeting. Any person commencing service as a
non-employee director will also receive, upon commencement of such service, an
option to purchase 5,000 shares of Common Stock. Each stock option granted
pursuant to the terms of the 1993 Plan described in this paragraph has (or will
have) an exercise price per share equal to the fair market value of a share of
Common Stock on the date of grant, becomes (or will become) exercisable
incrementally in equal amounts on the first three anniversaries of its date of
grant, and in the event of (i) the dissolution or liquidation of the Company or
(ii) under certain circumstances, the reorganization, merger or consolidation of
the Company, will become exercisable in full.
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<PAGE>
EXECUTIVE OFFICER COMPENSATION
GENERAL
This section of the Proxy Statement sets forth certain information pertaining
to compensation of the Chief Executive Officer of the Company and the five other
most highly compensated executive officers of the Company during Fiscal 1996
(collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
The table below summarizes the annual and long-term compensation paid to each
of the Named Executive Officers for all services rendered to the Company during
the last three fiscal years, in accordance with Securities and Exchange
Commission ("SEC") rules relating to disclosure of executive compensation.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------ --------------
SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS (#)(2) COMPENSATION(3)
------------------ ---- ------ ----- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Terry G. Lee ................ 1996 $ 375,027 -- -- 100,000 $ 2,124
Chairman and Chief 1995 365,385 -- $ 46,669 248,938 4,030
Executive Officer 1994 324,257 $193,000 104,134 21,000 4,287
Harry H. Manko .............. 1996 $ 352,296 -- $ 684,200(4) 35,000 $ 3,644
Vice Chairman
Mary J. George .............. 1996 $ 207,069 -- $ 167,726 125,000 $ 1,626
President -- North America. 1995 101,269 -- 1,000 25,000 1,200
Robert Alan McCaughen........ 1996 $ 260,524(5) -- 10,000 --
President -- Canada
Howard A. Kosick ............ 1996 $ 165,016 -- -- 50,000 $ 4,181
Executive Vice-President, 1995 170,959 $ 50,000 $ 49,813 136,425 4,243
Chief Financial Officer, 1994 140,962 73,125 -- 20,000 3,648
Secretary and Treasurer
Stephen A. Silverstein....... 1996 $ 337,541 -- $1,101,864(4) 45,000 $866,626
President and Chief
Operating Officer(6)
</TABLE>
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(1) The Fiscal 1996 amounts include, in part, relocation reimbursements paid by
the Company to Ms. George of $163,326, which includes a non-taxable amount
of $5,846. Mr. Lee's Fiscal 1995 amount includes, in part, payment of auto
expenses totaling $26,776 and club dues of $18,392. The Fiscal 1995 amount
includes relocation reimbursements paid by the Company to Mr. Kosick of
$49,813. The Fiscal 1994 amounts includes relocation reimbursements paid by
the Company to Mr. Lee of $82,798.
(2) Certain Fiscal 1996 and Fiscal 1995 amounts include the grant of replacement
stock options. See "Ten-Year Option Repricing."
(3) The Fiscal 1996 amounts include the following annual Company contributions
to the Bell Sports Corp. Employees' Retirement and 401(k) Plan: Mr. Lee
$1,803, Mr. Manko $3,644, Ms. George $1,298, Mr. Kosick $3,993, and Mr.
Silverstein $3,626. The Fiscal 1996 amounts also include the following life
insurance premiums paid by the Company: Mr. Lee $321, Ms. George $328, and
Mr. Kosick $188. The Fiscal 1996 amount for Mr. Silverstein also includes
$863,000 paid by the Company under a severance agreement. See "Certain
Relationships and Related Transactions".
(4) Pursuant to prior employment agreement with AMRE, the Company paid Mr. Manko
$684,200 and Mr. Silverstein $1,019,800 in lieu of annual bonuses through
June 30, 1996 and all future installments of the signing bonus. In addition,
Mr. Silverstein's amount includes $53,190 of relocation reimbursements and
$29,338 of additional medical payments.
(5) Mr. McCaughen's Fiscal 1996 salary includes $90,585 of sales commissions
relating to a pre-existing agreement in connection with the acquisition of
Denrich Sporting Goods by AMRE in 1991.
(6) Effective June 15, 1996, Mr. Silverstein ceased to be employed by the
Company.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The table below provides information relating to grants of stock options by
the Company during Fiscal 1996 to each of the Named Executive Officers. The
Company has never granted any stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES STOCK OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO TEN-YEAR OPTION TERM(2)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ----------------------------
NAME GRANTED(#)(1) IN FISCAL YEAR PRICE DATE 5% 10%
- ---- ------------- -------------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Terry G. Lee ............ 100,000 11% $ 12.94 07/3/05 $ 813,790 $ 2,062,303
Harry Manko ............. 35,000 4% $ 12.94 07/3/05 284,826 721,806
Mary George ............. 50,000 6% $ 12.94(3) 07/3/05 406,895 1,031,151
Mary George ............. 75,000 8% $ 8.69(4) 01/15/06 409,882 1,038,722
Robert Alan McCaughen.... 10,000 1% $ 9.13 11/15/05 57,418 145,509
Howard A. Kosick ........ 50,000 6% $ 12.94 07/3/05 406,895 1,031,151
Stephen A. Silverstein... 45,000 5% $ 12.94 07/3/05 366,205 928,036
</TABLE>
<TABLE>
<S> <C> <C>
Increase in market value of Common Stock for all stockholders at assumed annual
rates of stock price appreciation over 10-year period above.(5) $62,500,000 $158,300,000
</TABLE>
- -----------------
(1) These awards were made pursuant to the 1991 Plan and 1992 Plan. Under these
plans, the exercise price per share must not be less than 100% of the fair
market value of one share of Common Stock on the date of grant of the
option. The options vest ratably over a three-year period and may not be
exercised ten years after the date of grant. In the event of a change in
control, the Board of Directors may accelerate the vesting of these options.
(2) The gains shown in these columns result from calculations assuming, pursuant
to SEC rules, 5% and 10% growth rates and are not intended to forecast
future stock price performance.
(3) This stock option was replaced. See "Ten-Year Option Repricing."
(4) This award was granted in exchange for previously granted stock options. See
"Ten-Year Option Repricing".
(5) These amounts represent the increase in the market value of outstanding
shares of Common Stock (approximately 13.7 million) as of June 29, 1996 that
would result from the same stock price assumptions used to show the
Potential Realizable Values for the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The table below provides certain information relating to the exercise of
stock options during Fiscal 1996 by each of the Named Executive Officers and the
stock options held by each of the Named Executive Officers at the end of Fiscal
1996.
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
ACQUIRED UNDERLYING UNEXERCISED MONEY OPTIONS AT FY-END
ON VALUE OPTIONS AT FY-END EXERCISABLE/UNEXERCISABLE
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE (BASED UPON $7.25 PER SHARE)
- ---- -------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Terry G. Lee ............... -- -- 98,598/265,960 0/0
Harry Manko ................ -- -- 40,410/35,000 $223,766/0
Mary George ................ -- -- 0/75,000 0/0
Robert Alan McCaughen....... 8,200 $ 70,094 0/10,000 0/0
Howard A. Kosick............ -- -- 57,195/140,950 0/0
Stephen A. Silverstein...... 40,410 $233,869 0/45,000 0/0
</TABLE>
7
<PAGE>
TEN-YEAR OPTION REPRICING
The table below provides certain information relating to certain grants of
stock options made by the Company in exchange for previously granted options. No
such replacement grants were made by the Company before March 31, 1995.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET ORIGINAL OPTION
SECURITIES PRICE OF EXERCISE TERM
UNDERLYING STOCK AT PRICE AT NEW REMAINING AT
OPTIONS TIME OF TIME OF EXERCISE DATE OF
NAME DATE REPRICED REPRICING REPRICING PRICE REPRICING
- ---- ---- -------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
1996:
Mary J. George .............. 01/15/96 25,000 $ 8.69 15.12 $ 8.69 8 years
President, North America 01/15/96 50,000 $ 8.69 12.94 $ 8.69 9 years
1995:
Terry G. Lee ................ 03/31/95 200,000 $13.87 $24.87 $13.87 6 years
Chairman and Chief 03/31/95 21,000 $13.87 $35.50 $13.87 7 years
Executive Officer
Howard A. Kosick ............ 03/31/95 100,000 $13.87 $24.87 $13.87 6 years
Executive Vice President, 03/31/95 20,000 $13.87 $35.50 $13.87 7 years
Chief Financial Officer,
Secretary and Treasurer
</TABLE>
REPORT OF MANAGEMENT STOCK INCENTIVE COMMITTEE REGARDING THE GRANT OF
REPLACEMENT OPTIONS DURING FISCAL 1996
In July 1995, after the Company completed the merger of a subsidiary of the
Company with American Recreation Company Holdings, Inc. ("AMRE"), pursuant to
which AMRE became a wholly-owned subsidiary of the Company, it became apparent
to the Management Stock Incentive Committee that the Company's existing stock
option program was in need of certain restructuring. There were few stock
options remaining available to grant, yet many new executives in either new or
broader positions that might effectively be motivated by stock incentives. In
addition, the Management Stock Incentive Committee wanted to broaden the overall
participation in the stock option program. Rather than merely expand the number
of options available for grant and increase the grants to employees, the
Management Stock Incentive Committee determined to focus on the stock option
program and the Company's bonus program as a part of an integrated incentive
program. As a result of this focus, on August 27, 1996, the Management Stock
Incentive Committee adopted a program permitting employees eligible to
participate in the Company's bonus program to elect to forego their Fiscal 1997
operating bonus and return all outstanding stock options granted after April
1992 in exchange for replacement stock options. In general, employees eligible
to participate in the Company's bonus program were eligible for bonuses between
10%-to-75% of their annual base salary if the Company met or exceeded certain
Board approved net operating income goals.
Senior management with long tenure, including Messrs. Lee and Kosick, were
asked to cancel 40% of their existing stock options, excluding stock options
granted prior to April 1992, to increase the number of stock options available
for grant, thereby facilitating the broadening of participation in the stock
option program and enabling the Company to create a voluntary program by which
other employees participating in the Company's bonus program would be able to
replace existing stock options in exchange for foregoing their Fiscal 1997
operating bonus.
Under the replacement program, the number of shares of Common Stock subject
to a replacement option to be granted to an eligible employee will be determined
by dividing 80% of such employee's estimated Fiscal 1997 bonus by the fair
market value of a share of Common Stock on the date of grant of such option.
Each replacement option will have an exercise price per share equal to the fair
market value of a share of Common Stock on the date of grant of such option and
will become exercisable incrementally in equal amounts on the first three
anniversaries of such date. For these purposes, the fair
8
<PAGE>
market value of a share of Common Stock on a date is deemed to be the average of
the high and low transaction prices of a share of Common Stock as reported by
The Nasdaq Stock Market on such date.
The Management Stock Incentive Committee believes the replacement program is
in the best interests of the Company because it requires employees to invest in
the Company by trading their potential cash bonus and any outstanding stock
options granted after April 1992 for replacement options and significantly
broadens employee participation in the Company's stock option program from 72
participants to 217 participants.
On January 15, 1996, for incentive purposes and in recognition of Ms.
George's promotion to President -- North America and the higher level of
management responsibility associated with such position, the Management Stock
Incentive Committee concluded that it was appropriate to exchange options to
purchase 75,000 shares of Common Stock held by Ms. George, with exercise prices
ranging from $12.94 to $15.12, for options to purchase 75,000 shares of Common
Stock with an exercise price equal to the fair market value of a share of Common
Stock on January 15, 1996, which was $8.69.
THE MANAGEMENT STOCK INCENTIVE
COMMITTEE OF THE BOARD OF DIRECTORS
Phillip D. Matthews (Chairman)
Arnold L. Chavkin
Kenneth K. Harkness W.
Leo Kiely III
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Lee which provides that he
will serve as Chairman of the Board and Chief Executive Officer of the Company
and an employment agreement with Mr. Kosick which provides that he will serve as
the Executive Vice President, Chief Financial Officer, Secretary and Treasurer
of the Company. The employment agreements with Messrs. Lee and Kosick are each
for a term expiring on June 30, 1999 unless terminated earlier in the event of
the employee's death, disability, termination by the Company with or without
cause (as defined in the agreement) or termination by the employee with or
without good reason (as defined in the agreement), with automatic renewals for
successive one-year periods after the initial term thereof unless either the
Company or the employee terminates such renewal provision at least one year
prior to any such renewal. Each agreement provides for an initial annual base
salary, which in the case of Mr. Lee is $375,000 and in the case of Mr. Kosick
is $165,000 annual salary increases and annual cash bonuses based on actual
operating income as compared to projected operating income targets approved by
the Board of Directors, up to a maximum annual bonus of 125% of the then
existing base salary for each of Mr. Lee and Mr. Kosick. The current base salary
for Mr. Lee remains unchanged at $375,000 and Mr. Kosick's current base salary
is $200,000. Under the employment agreements, Messrs. Lee and Kosick are
entitled to participate in the Company's benefit plans and programs, and Mr. Lee
also is entitled to reimbursement for any deductibles and co-payments related to
medical expenses. In the event of change in control of the Company during the
two year period ending June 30, 1999, the terms of each employment agreement
will automatically be extended for a two-year period following such change in
control. Under each employment agreement, in the event of early termination of
employment by the Company without cause or by the employee for good reason, the
Company will continue to pay the employee his base salary, bonus and all other
benefits payable for two years or until the end of the term of the employment
agreement, whichever is longer. In the event of early termination of employment
due to the disability of the employee, the Company will continue to pay the
employee his base salary until the end of the term of the agreement, less all
payments under any disability plan covering the employee. In the event of early
termination of employment due to the death of the employee, the Company will pay
the employee's executor or administrator four months of base salary and bonus.
In the event that the Company terminates the automatic renewal provision, the
Company will continue to pay the employee his base salary, bonus and all other
benefits otherwise payable for six months following the expiration of the term
of the employment agreement. Each agreement provides for
9
<PAGE>
an employee noncompetition period following termination of employment prior to a
change in control of the Company which will extend for two years or the period
of salary continuation payments, whichever is longer.
The Company has an employment agreement with Mr. Manko, which provides that
Mr. Manko will serve as Vice Chairman of the Board of Directors of the Company
and as Chairman of AMRE and of the specialty retail division of the Company. The
employment agreement is for a term ending on December 31, 1998, unless
terminated earlier for any reason which is the same as those provided in the
employment agreements with Messrs. Lee and Kosick. The employment agreement
provides for an annual base salary of $352,296 through June 30, 1996 and
$250,000 thereafter. Under the employment agreement, Mr. Manko is entitled to
participate in the Company's benefit plans and programs. The employment
agreement provides that in the event of early termination of employment by the
Company without cause (as defined in the agreement) or by Mr. Manko for good
reason (as defined in the agreement), the Company will continue to pay Mr. Manko
his base salary and all other benefits otherwise payable until the end of the
term of the employment agreement, and if such termination occurs following a
change in control of the Company, Mr. Manko will be entitled to receive a lump
sum amount equal to the present value of such payments. In the event of early
termination of employment due to the disability or death of Mr. Manko, the
Company will continue to pay Mr. Manko, or his executor or administrator in the
event of his death, his base salary, bonus and all other benefits otherwise
payable for a period of four months following such termination of employment.
Mr. Manko's employment agreement also provides for a noncompetition period
following termination of employment which would extend for two years or the
period of salary continuation payments, whichever is longer.
The Company has an employment agreement with Ms. George, which expires on
June 30, 1998, unless terminated earlier in the event of her death, incapacity
or termination for cause. The agreement provides for an initial base salary of
$175,000 and annual cash bonuses pursuant to the Company's cash bonus plan for
salaried employees, if certain Board approved objective operating income targets
are met. Ms. George's current base salary is $225,000. Annual salary increases
are at the sole discretion of the Company. Under the employment agreement, in
the event of early termination of employment by the Company without cause or by
the employee for good reason, the Company will continue to pay Ms. George her
base salary, bonus and all other benefits payable for 18 months, or until the
end of the term of employment agreement, whichever is longer.
The Company has entered into a severance agreement with Mr. Lee which
provides that if Mr. Lee's employment with the Company is terminated upon
certain circumstances (a "Qualifying Termination") during the two-year period
after a change in control (as defined in the agreement), Mr. Lee will receive a
severance payment and certain insurance benefits. A Qualifying Termination
includes a termination of employment with the Company, except for cause, death
or disability, or by Mr. Lee during such two-year period for good reason (as
defined in the agreement) or for any reason during the 30-day period commencing
six months after the change in control. The severance payments and other
benefits to be provided to Mr. Lee upon a Qualifying Termination would be
determined in accordance with his severance agreement and not his employment
agreement.
Upon a Qualifying Termination, in addition to the payment of any earned
unpaid base salary, deferred compensation and accrued vacation pay, Mr. Lee will
be entitled to receive a pro-rated bonus plus an amount equal to three times his
annual base salary (at the highest rate paid to him during the prior twelve
months) plus three times the average bonus paid to him over the prior five
fiscal years. Mr. Lee will also be entitled to receive the value of any unvested
employer contributions for his benefit under the Company's 401(k) Plan. For the
one-year period commencing with the Qualifying Termination, Mr. Lee will be
entitled to cause the Company to repurchase certain shares of Common Stock owned
by him in the same manner as provided in his employment agreement. Mr. Lee will
also be entitled to receive certain insurance benefits for the three-year period
commencing with the date of the termination.
If it is determined that payments made to Mr. Lee under his severance
agreement or otherwise would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") and it is
determined that the payments made to Mr. Lee after imposition of such excise tax
10
<PAGE>
would be less than the amount he would receive if he received the maximum amount
that could be paid to him without the imposition of such excise tax, then the
amount paid under his severance agreement will be reduced so that the payments
made to him will be one dollar less than the amount that would require payment
of such excise tax.
The Company has also entered into a severance agreement with Mr. Kosick, the
terms of which, including the amounts to be paid thereunder, are the same as Mr.
Lee's, except that (i) upon a Qualifying Termination, Mr. Kosick's severance
payment would include an amount equal to two times his annual base salary plus
two times the average bonus paid to him over the prior five fiscal years, (ii)
Mr. Kosick would be entitled to receive insurance benefits for two years
commencing with the date of termination and (iii) Mr. Kosick would be entitled
to receive reimbursement for certain outplacement expenses.
In the case of a merger, consolidation, dissolution or liquidation of the
Company, or in any other case in which the Management Stock Incentive Committee
determines that it is in the Company's best interest, the Management Stock
Incentive Committee may accelerate the exercisability of any outstanding stock
options issued under the 1991 Plan or the 1992 Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Lee and Mr. Matthews are the general partners of Hayden Leasing ("Hayden
Leasing"). The Company leases automobiles for three of its employees from Hayden
Leasing. On November 1, 1995, the Company entered into a lease agreement with
Hayden Leasing pursuant to which the Company leased an airplane for a monthly
fee of $3,000 during Fiscal 1996. This lease agreement terminates on June 30,
1999. Payments under such automobile and airplane leases and certain related
expenses approximated $73,500 during Fiscal 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The Compensation Committee of the Board of Directors has oversight
responsibility for the Company's executive compensation programs. More
specifically, the Compensation Committee approves all executive employment
contracts, salary increases and other changes affecting executive compensation.
It also approves performance targets for incentive awards and actual cash
payments under incentive programs.
The Company's compensation policies are designed to link executive officer
compensation to the performance of the Company and to provide
industry-competitive compensation for such officers. The compensation mix
reflects a balance of annual base salary payments, annual incentive bonus
payments, long-term stock based incentives in the form of stock options and
other competitive executive benefits. Significant emphasis is placed on
long-term stock based plans, which more closely align the interests of the
executive officers with those of the stockholders of the Company. These stock
based plans also provide incentives to motivate and retain talented executive
officers over the long term.
Base Salary. Executive base salaries are determined by maintaining a
competitive position with similar size growth companies. An individual
executive's responsibilities, time in the job and other factors are also
evaluated in setting base salaries. In the case of Mr. Lee, his employment
contract also provides for an annual base salary increase at least equal to the
annual increase in the Consumer Price Index as published by the Bureau of Labor.
Mr. Lee's base salary was $375,000 per year at the end of Fiscal 1996.
Annual Incentive Bonus. Annual incentive bonuses are primarily based upon the
achievement of measurable net operating income performance goals established at
the beginning of the fiscal year. For Mr. Lee and other executives, 100% of the
bonus opportunity is based on the Board approved net operating income goal.
In addition to the executive officers, some level of annual incentive bonus
may currently be earned by about 126 salaried employees.
11
<PAGE>
Long-Term Stock Option Incentives. Stock options provide executives with the
opportunity to buy an equity interest in the Company and to share in the
appreciation of the value of the Company's Common Stock. Stock options are
granted at the fair market value price of the Common Stock on the date of grant,
and are subject to vesting over time and only have future value for the
executives if the stock price appreciates from the date of grant. Factors
influencing stock option grants to executive officers include performance of the
Company, relative levels of responsibility, contributions to the business of the
Company and competitiveness with other growth oriented companies. Stock options
granted to executive officers and other management employees are approved by the
Company's Management Stock Incentive Committee.
As of September 27, 1996, approximately 95 management employees have been
granted stock options.
In Fiscal 1996, Mr. Lee was granted options to buy 100,000 shares of Common
Stock at an exercise price of $12.94 per share.
Benefits. Benefits offered to key executives are largely those that are
offered to the general employee population, such as group health and life
insurance coverage and participation in the Bell Sports Corp. Employees'
Retirement and 401(k) Plan. In addition, certain executives are provided a
Company automobile, use of a club membership or reimbursement of any deductibles
and co-payments related to health expenses. Benefits are not tied directly to
corporate performance.
The Compensation Committee believes that the Company's executive compensation
policies and programs serve the interests of the Company and its stockholders.
Total compensation to the executives is linked to Company performance. The
Compensation Committee believes the performance of the Company in recent years
validates this compensation philosophy.
THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
Phillip D. Matthews (Chairman)
Arnold L. Chavkin
Kenneth K. Harkness
W. Leo Kiely III
12
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the cumulative return on the Common
Stock since the initial public offering of the Common Stock on April 9, 1992
with The Nasdaq Market Index and the Media General Financial Services Sporting
Goods Index (which includes the Company).
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
- --------------------------------FISCAL YEAR ENDING------------------------------
COMPANY 1992 1992 1993 1994 1995 1996
BELL SPORTS CORP 100 115.49 159.15 130.28 64.79 40.85
INDUSTRY INDEX 100 92.01 107.73 154.78 136.65 166.88
BROAD MARKET 100 97.00 119.07 130.57 153.13 192.76
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective June 15, 1996, the Company entered into a severance agreement with
Mr. Silverstein, pursuant to which Mr. Silverstein received a lump sum cash
amount of $863,000 which represents the negotiated amount relating to salary,
bonuses, long-term incentive awards, severance payments and other benefits due
Mr. Silverstein under an Employment Agreement dated July 3, 1995.
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND PRINCIPAL STOCKHOLDERS
The following table sets forth information as of September 27, 1996
concerning beneficial ownership of Common Stock by each person known by the
Company to own beneficially more than five percent of the outstanding shares of
Common Stock, each director, each director nominee, each Named Executive Officer
and all directors and executive officers of the Company as a group. Unless
otherwise noted, the listed persons have sole voting and dispositive power with
respect to the shares of Common Stock held in their names, subject to community
property laws if applicable.
NUMBER OF
SHARES OF PERCENT OF TOTAL
COMMON STOCK OUTSTANDING
NAME OF BENEFICIAL HOLDER BENEFICIALLY OWNED SHARES
------------------------- ------------------ ------
Mary J. George ................................ -- *
Robert Alan McCaughen(1) ...................... 17,975 *
Howard A. Kosick(2) ........................... 82,267 *
Stephen A. Silverstein(3) ..................... 196,000 1.4%
Terry G. Lee(4) ............................... 297,766 2.2%
Harry H. Manko(5) ............................. 412,383 3.0%
W. Leo Kiely III(6) ........................... 3,134 *
Frederick D. Winter(7) ........................ 9,500 *
Kenneth K. Harkness(7) ........................ 9,500 *
Phillip D. Matthews(8) ........................ 21,314 *
Christopher Wright(9) ......................... 248,936 1.8%
Arnold L. Chavkin(10) ......................... 2,283,414 16.7%
Michael R. Hannon(10) ......................... 2,283,414 16.7%
CB Capital Investors, Inc.(11) ................ 2,281,080 16.6%
CG Acquisition Group(12) ...................... 772,500 5.6%
All directors and executive officers as a group 3,619,292 26.4%
(17 persons)(13) .............................
- ------------------
* Less than one percent.
(1) The shares of Common Stock beneficially owned by Mr. McCaughen include 3,334
shares issuable upon the exercise of options which will be exercisable
within 60 days following the date of this Proxy Statement.
(2) The shares of Common Stock beneficially owned by Mr. Kosick include 73,862
shares issuable upon the exercise of options which will be exercisable
within 60 days following the date of this Proxy Statement.
(3) The shares of Common Stock beneficially owned by Mr. Silverstein include
145,000 shares issuable upon the exercise of options which will be
exercisable within 60 days following the date of this Proxy Statement. Such
options will terminate on October 15, 1996. Shares of Common Stock
beneficially owned by Mr. Silverstein are subject to the Post-Merger
Stockholders Agreement. See "Election of Directors".
(4) The shares of Common Stock beneficially owned by Mr. Lee include 131,931
shares issuable upon the exercise of options which will be exercisable
within 60 days following the date of this Proxy Statement.
14
<PAGE>
(5) The shares of Common Stock beneficially owned by Mr. Manko include 52,077
shares issuable upon the exercise of options which will be exercisable
within 60 days following the date of this Proxy Statement. Shares of Common
Stock beneficially owned by Mr. Manko are subject to the Post- Merger
Stockholders Agreement. See "Election of Directors".
(6) The shares of Common Stock beneficially owned by Mr. Kiely include 2,334
shares issuable upon the exercise of options which will be exercisable
within 60 days following the date of this Proxy Statement.
(7) The shares of Common Stock beneficially owned are shares issuable upon the
exercise of options which will be exercisable within 60 days following the
date of this Proxy Statement.
(8) The shares of Common Stock beneficially owned by Mr. Matthews include 7,000
shares issuable upon the exercise of options which will be exercisable
within 60 days following the date of this Proxy Statement.
(9) Christopher Wright is the general manager of the investment advisor to The
KB Mezzanine Fund, L.P. Mr. Wright beneficially owns 7,000 shares issuable
upon the exercise of options which will be exercisable within 60 days
following the date of this Proxy Statement. The remaining 241,936 shares of
Common Stock shown above are owned by the KB Mezzanine Fund, L.P.; however,
by reason of his position with respect to the investment advisor to The KB
Mezzanine Fund, L.P., he may be deemed to beneficially own all of the shares
owned by The KB Mezzanine Fund, L.P., with shared voting and investment
power over the shares. Mr. Wright disclaims beneficial ownership of shares
owned by The KB Mezzanine Fund L.P.
(10)The shares of Common Stock beneficially owned by Messrs. Chavkin and Hannon
include 2,334 shares issuable upon the exercise of options which will be
exercisable within 60 days following the date of this Proxy Statement. Mr.
Chavkin is a General Partner of, and Mr. Hannon is a Principal of, CCP, an
affiliate of CBCI. Accordingly, Messrs. Chavkin and Hannon may be deemed to
be the beneficial owners of the 2,283,414 shares of Common Stock held by
CBCI. Each of Messrs. Chavkin and Hannon disclaims beneficial ownership of
shares owned by CBCI.
(11)Shares of Common Stock beneficially owned by CBCI are subject to the
Post-Merger Stockholders Agreement. See "Election of Directors". CBCI's
address is 380 Madison Avenue, 12th Floor, New York, New York 10017. CBCI is
a wholly-owned subsidiary of The Chase Manhattan Corporation.
(12)Based on the most recent report on Schedule 13G filed with the SEC. The
address of this stockholder is Two North Riverside Plaza, Chicago, Illinois
60606.
(13)All directors and executive officers as a group is calculated to include
all shares owned by The KB Mezzanine Fund L.P. and CBCI.
APPROVAL OF AMENDMENT TO THE 1993 OUTSIDE DIRECTORS STOCK OPTION PLAN
(PROPOSAL 3)
BACKGROUND
The Board of Directors is proposing for stockholder approval at the Annual
Meeting amendments to the 1993 Plan which would provide (i) for the grant of
options to purchase Common Stock to non- employee directors of the Company
("Outside Directors") in lieu of cash retainer fees and, (ii) vest
administration of the 1993 Plan in the Board of Directors rather than a
committee thereof. and (iii) increase the number of shares of Common Stock
issuable thereunder from 130,000 to 200,000.
The 1993 Plan was originally approved by stockholders at the Company's 1993
Annual Meeting. Stockholders approved an amendment to the 1993 Plan at the 1995
Annual Meeting which increased the number of shares of Common Stock issuable
thereunder. The proposed amendments would not increase the total number of
shares of Common Stock issuable under the 1993 Plan.
The purpose of the 1993 Plan is to encourage stock ownership by each Outside
Director, so that each such Outside Director may acquire a proprietary interest
in the success of the Company, and is intended to provide an incentive for
maximum effort in the successful operation of the Company, to attract Outside
15
<PAGE>
Directors to the Company and to encourage Outside Directors to remain directors
of the Company. The Board of Directors determined that the proposed amendments
are consistent with and will serve to further those goals.
Grants of stock options under the 1993 Plan have been, and will continue to
be, automatic and not subject to the discretion of the Board or any committee.
Under the 1993 Plan, as proposed to be amended, in addition to the automatic
grant of stock options currently made thereunder (the terms of which are fixed
entirely by the 1993 Plan), each Outside Director eligible to receive retainer
fees in accordance with such criteria as may be established from time to time by
the Board, would receive options to purchase Common Stock, the terms of which
would be based, in part, on retainer fee amounts, which are subject to change by
the Board. As of the date hereof, a total of 73,000 shares of Common Stock
remain available for the grant of stock options under the 1993 Plan, the
proposed amendment would increase this amount by 70,000 shares.
Reference is made to Exhibit A to this Proxy Statement for the complete text
of the 1993 Plan, as proposed to be amended. A summary description of the 1993
Plan, as proposed to be amended, follows.
If a quorum is present, in order to approve the proposal to amend the 1993
Plan, a majority of the shares present in person or by proxy at the Annual
Meeting and entitled to vote on such matter must vote in favor of approval.
Accordingly, abstentions will have the same effect as votes against and
non-votes will reduce the number of shares considered present and entitled to
vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL TO
AMEND THE 1993 PLAN (PROPOSAL 3).
DESCRIPTION OF THE 1993 PLAN
Administration. The 1993 Plan, as it is proposed to be amended, will be
administered by the Board of Directors. As described below, the 1993 Plan sets
forth the amount and price of shares of Common Stock subject to stock options
issued thereunder, as well as the timing of grants, periods of exercisability
and termination provisions. Subject to the terms of the 1993 Plan, the Board
will have authority to prescribe rules and regulations for administering the
1993 Plan and to decide questions of interpretation or application of any
provision of the 1993 Plan.
Available Shares. Under the 1993 Plan, as it is proposed to be amended, up to
200,000 shares of Common Stock may be issued upon the exercise of options
granted thereunder, subject to adjustment to reflect any stock dividend,
recapitalization or other similar change in capitalization. If an option expires
or is terminated, the shares of Common Stock allocable to the unexercised
portion of such option will again be available for issuance under the 1993 Plan.
As of the date hereof, options covering a total of 57,000 shares of Common Stock
have been granted under the 1993 Plan.
Grant and Exercise of Options. The 1993 Plan provides that each Outside
Director will receive an option to purchase 2,000 shares of Common Stock on the
date of each annual meeting of stockholders, assuming the continued service of
such person as an Outside Director at that time. Each additional Outside
Director, if any, will receive an option to purchase 5,000 shares of Common
Stock on the date at which such person first begins to serve as such and will
thereafter receive additional options as described above. Each option granted
under the 1993 Plan and described in this paragraph will expire on the tenth
anniversary of its date of grant, have a per share exercise price equal to the
fair market value of a share of Common Stock on the date of grant, become
exercisable in equal amounts on the first three anniversaries of the date of
grant and in the event of (i) the dissolution or liquidation of the Company or
(ii) under certain circumstances, the reorganization, merger or consolidation of
the Company, will become exercisable in full. This acceleration provision could
increase the cost to a potential acquiror of the Company and, therefore, could
affect the willingness of an acquiror to propose such a transaction with the
Company.
The 1993 Plan, as it is proposed to be amended, will provide that each
Outside Director (including any who serve as consultants to the Company), in
addition to the stock options described in the preceding paragraph, will receive
an option to purchase that number of shares of Common Stock determined by
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<PAGE>
dividing the amount of the retainer fee for Outside Directors (as set from time
to time by the Board) by one-half of the fair market value of a share of Common
Stock on the date of grant, be exercisable in full on and after such date and
expire on the tenth anniversary thereof. The stock options described in this
paragraph will be paid in lieu of cash retainer fees.
For purposes of the 1993 Plan, the fair market value of a share of Common
Stock on a given day is deemed to be the average of the high and low transaction
prices of a share of Common Stock as reported by The Nasdaq Stock Market for
that day. The option price per share and number of shares subject to outstanding
options as well as the number of shares subject to the 1993 Plan are subject to
adjustment for certain changes in capitalization of the Company. Payment of the
purchase price may be made in cash or by delivery of previously owned shares of
Common Stock. No option may be granted under the 1993 Plan after the tenth
anniversary of stockholder approval of the 1993 Plan.
Termination of Directorship. If an Outside Director's status as a director
terminates by reason of retirement after the completion of three years of
service as a director and the attainment of age 65, disability or involuntary
termination of directorship, an option held by such Outside Director will become
fully exercisable and may thereafter be exercised for a period of three months
after the date of such termination, but in no event after the expiration of such
option. If an Outside Director's status as such terminates by reason of death,
an option held by such Outside Director will become fully exercisable and may
thereafter be exercised for a period of one year after the Outside Director's
death, but in no event after the expiration of such option. If an Outside
Director's status as a director terminates by reason of voluntary termination of
directorship, an option held by such Outside Director will be exercisable only
to the extent that such option was exercisable on the date of such termination
of directorship and may thereafter be exercised for a period of three months
after such date, but in no event after the expiration of such option. If an
Outside Director's status as a director is terminated for cause, an option held
by such director, to the extent not yet effectively exercised, will terminate
automatically. If an Outside Director dies during one of the above-mentioned
three-month periods, an option held by such Outside Director will be exercisable
only to the extent that such option was exercisable on the date of death, but in
no event after the expiration of such option.
Amendment and Termination. The 1993 Plan may be amended or terminated by the
Board in any respect, at any time, subject to any required stockholder approval,
provided that (i) the 1993 Plan may not be amended more than once every six
months, other than to comport with changes in the Code, the Employee Retirement
Income Security Act, or the rules thereunder, and (ii) the 1993 Plan may not be
amended in a manner which would result in the 1993 Plan failing to comply with
Rule 16b-3 under the Exchange Act. No amendment may impair the rights of a
holder of an outstanding 1993 Plan option without the consent of such holder.
Federal Income Tax Consequences. The following is a brief overview of the
United States federal income tax consequences of participation in the 1993 Plan.
(a) An Outside Director who is granted options under the 1993 Plan (a "1993
Plan Participant") will not be deemed to have received any taxable income at the
time the options are granted and the Company will not be allowed a tax deduction
at that time.
(b) A 1993 Plan Participant who exercises an option will, unless he or she
elects otherwise, recognize taxable compensation at the later of (i) the date
which is six months after the option was granted (or, if earlier, the date that
the restrictions imposed by Section 16(b) of the Exchange Act with respect to
the option lapse), and (ii) the date of exercise, in an amount equal to the
excess, if any, of the fair market value of a share at such date over the option
price, multiplied by the number of shares as to which the option is exercised. A
1993 Plan Participant who exercises an option within six months of the date of
grant (or before the time the restrictions imposed by Section 16(b) of the
Exchange Act with respect to the option lapse), may elect, by filing such
election with the Internal Revenue Service within 30 days after the date of
exercise of such option, to recognize income at the time of exercise (rather
than the time the restriction imposed by Section 16(b) of the Exchange Act with
respect to the option lapse).
(c) The Company will be entitled to a tax deduction in an amount equal to the
taxable compensation recognized by a 1993 Plan Participant.
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The foregoing is only a summary of the applicable federal income tax laws and
should not be relied upon as being a complete statement. Further, the income tax
laws may change after the date of this Proxy Statement.
NEW PLAN BENEFITS
There were seven Outside Directors during Fiscal 1996. Of such seven Outside
Directors, all but Mr. Matthews, who is paid consulting fees by the Company,
received retainer fees. During Fiscal 1996 each Outside Director, including Mr.
Matthews, received an option pursuant to the 1993 Plan with respect to 2,000
shares of Common Stock at an exercise price of $9.13 per share. If the proposed
amendments to the 1993 Plan had been in effect during Fiscal 1996, each Outside
Director, including Mr. Matthews, would have also received an option with
respect to 2,193 shares of Common Stock with an exercise price of $4.56 per
share and no Outside Director would have received cash retainer fees.
Assuming that the nominees named in Proposals 1 and 2 are elected at the
Annual Meeting, there will be seven Outside Directors following the Annual
Meeting, each of whom will be entitled to receive an option pursuant to the 1993
Plan with respect to 2,000 shares of Common Stock and an exercise price per
share equal to the then current fair market value of a share of Common Stock.
The Board has determined that if the amendments to the 1993 Plan are approved by
stockholders, the annual retainer fee will be raised to $10,000. Assuming that
the fair market value of a share of Common Stock is $7.00, each Outside
Director, including Mr. Matthews, will receive an option with respect to 2,857
shares of Common Stock and an exercise price of $3.50 per share and no Outside
Director will receive cash retainer fees during the current fiscal year. On
September 27, 1996, the closing price per share of Common Stock as reported by
The Nasdaq Stock Market was $7.00.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 4)
The Board of Directors has appointed Price Waterhouse LLP as independent
public accountants of the Company for the fiscal year ending June 28, 1997.
Price Waterhouse LLP has audited the Company's financial statements beginning
with the Company's 1991 fiscal year. A representative of Price Waterhouse LLP is
expected to be at the Annual Meeting and will be available to respond to
appropriate questions. Price Waterhouse LLP will also have the opportunity to
make a statement at the meeting if they desire to do so.
If a quorum is present, in order to approve the proposal to ratify the
appointment of Price Waterhouse LLP as the Company's independent public
accountants, a majority of the shares present in person or by proxy at the
Annual Meeting and entitled to vote on such proposal must vote in favor of it.
Accordingly, abstentions will have the same effect as votes against and
non-votes will reduce the number of shares considered present and entitled to
vote on the proposal. If the proposal to ratify the appointment of Price
Waterhouse LLP as the Company's independent public accountants is not approved,
the Board will reconsider whether to retain such firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS (PROPOSAL
4).
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
1997 Annual Meeting of Stockholders must be received by the Company no later
than June 12, 1997. Such proposals may be included in next year's Proxy
Statement if they comply with certain rules and regulations promulgated by the
SEC. The Company's By-laws set forth additional requirements and procedures
regarding the submission by stockholders of matters for consideration at an
annual meeting of stockholders.
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SECTION 16 BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than ten percent of a registered class of the
Company's equity securities ("Reporting Persons") to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Reporting
Persons are required by Securities and Exchange Commission regulation to furnish
the Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such forms received by it and
written representations from certain Reporting Persons, the Company believes
that during Fiscal 1996 its Reporting Persons complied with all filing
requirements applicable to them.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders for the fiscal year ended June
29, 1996 accompanies this Proxy Statement.
A COPY, WITHOUT EXHIBITS, OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
FISCAL 1996 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE PROVIDED
WITHOUT CHARGE TO ANY STOCKHOLDER SUBMITTING A WRITTEN REQUEST FOR SUCH REPORT
TO THE COMPANY'S SECRETARY, HOWARD A. KOSICK, AT BELL SPORTS CORP., 15170 N.
HAYDEN RD., SUITE 1, SCOTTSDALE, ARIZONA 85260.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
Annual Meeting, but if any other matters should properly come before the
meeting, it is intended that the persons named in the accompanying proxy card
will vote on such matters in accordance with their best judgment.
October 10, 1996
By Order of the Board of Directors
HOWARD A. KOSICK
Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
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<PAGE>
EXHIBIT A
RESTATED AND AMENDED
BELL SPORTS CORP.
1993 OUTSIDE DIRECTORS STOCK OPTION PLAN
ARTICLE I. Purpose
The purpose of this 1993 Outside Directors Stock Option Plan (the "Plan") is
to encourage stock ownership by each Outside Director (as defined herein) of
Bell Sports Corp., a Delaware corporation (the "Corporation"), so that such
Outside Director may acquire a proprietary interest in the success of the
Corporation. The Plan is intended to provide an incentive for maximum effort in
the successful operation of the Corporation, to attract Outside Directors to the
Corporation and to encourage Outside Directors to remain directors of the
Corporation. The term Outside Director refers to each member of the
Corporation's Board of Directors (the "Board") who is not an employee of the
Corporation or any of its subsidiaries.
ARTICLE II. Eligibility
Each Outside Director shall be granted options ("Plan Options") to purchase
shares of the Corporation's Common Stock, par value $.01 ("Common Stock"), in
accordance with the terms hereof. Plan Options are not intended to constitute
"Incentive Stock Options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor provision.
ARTICLE III. Common Stock To Be Issued Under The Plan
Subject to adjustment as provided herein, the aggregate number of shares of
Common Stock that may be issued upon the exercise of Plan Options shall not
exceed 200,000. Shares of Common Stock to be delivered under the Plan shall be
authorized and unissued shares of Common Stock, or authorized and issued shares
of Common Stock reacquired and held as treasury shares or otherwise, or a
combination thereof. In the event that any outstanding Plan Option expires or is
terminated, the shares of Common Stock allocable to the unexercised portion of
such Plan Option may again be covered by an option granted under the Plan.
ARTICLE IV. Administration
The Plan shall be administered by the Board. Subject to the terms of the
Plan, the Board may establish rules and regulations for the administration of
the Plan and interpret the Plan, including any Plan Options. All such rules,
regulations and interpretations relating to the Plan adopted by the Board shall
be conclusive and binding on all parties.
ARTICLE V. Grants of Plan Options
On November 17, 1993, each person serving as an Outside Director immediately
after the adjournment of the Corporation's 1993 Annual Meeting of Stockholders
(or, if later, on the date on which a person is first elected or begins to serve
as an Outside Director), shall be granted a Plan Option (an "Initial Option") to
purchase 5,000 shares of Common Stock.
On the date of the Corporation's annual meeting of stockholders next
succeeding the date on which an Outside Director receives an Initial Option and,
thereafter, on the date of each succeeding annual meeting of stockholders of the
Corporation, such Outside Director, if re-elected to the Board as an Outside
Director at such meeting or if continuing in office as an Outside Director after
such meeting, shall be granted a Plan Option (a "Subsequent Option") to purchase
2,000 shares of Common Stock.
Each Outside Director eligible to receive a retainer fee (the "Retainer Fee")
in accordance with such criteria as may be established from time to time by the
Board, or a duly authorized committee of the Board, on the date the Retainer Fee
is to be paid, shall be granted a Plan Option (a "Retainer Fee Option") to
purchase that number of whole shares of Common Stock determined by rounding up
to the
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nearest whole number, that number determined by dividing the amount of the
Retainer Fee payable to such Outside Director on such date by one-half of the
Fair Market Value (as defined in Article VII) of a share of Common Stock on such
date. Retainer Fee Options shall be in lieu of the payment of cash retainer
fees.
Each Plan Option shall be evidenced by a written agreement (an "Agreement")
between the Corporation and the optionee and, upon execution by the Corporation
and the optionee and delivery of the Agreement to the Corporation, such Plan
Option shall be effective as of its date of grant.
ARTICLE VI. Period of Exercisability
No Plan Option shall be exercisable after the expiration of ten years from
its date of grant. Except as otherwise provided herein, no Initial Option or
Subsequent Option shall be exercisable during the first year following its date
of grant. Thereafter, such Initial Option or Subsequent Option may be exercised:
(i) on or after the first anniversary of the date of grant, for up to one-third
of the total shares of Common Stock covered thereby, (ii) on or after the second
anniversary of the date of grant, for up to an additional one-third (two-thirds
on a cumulative basis) of the total shares of Common Stock covered thereby or
(iii) on or after the third anniversary of the date of grant, for all of the
shares of Common Stock covered thereby. Each Retainer Fee Option shall be
exercisable in full on and after its date of grant. An exercisable Plan Option,
or a portion thereof, may be exercised only with respect to whole shares of
Common Stock.
ARTICLE VII. Purchase Price
The per share purchase price (the "Purchase Price") of shares of Common Stock
covered by an Initial Option or a Subsequent Option shall be equal to the Fair
Market Value of a share of Common Stock on the date of grant of such option. The
purchase price per share of Common Stock covered by a Retainer Fee Option shall
be equal to one-half of the Fair Market Value of a share of Common Stock on the
date of grant of such option. The Fair Market Value of a share of Common Stock
on a date shall mean the average of the high and low transaction prices of a
share of Common Stock as reported by The Nasdaq Stock Market on such date or, if
the Common Stock does not trade on The Nasdaq Stock Market, the average of the
high and low transaction prices of a share of Common Stock on the principal
national stock exchange on which the Common Stock is traded on the date as of
which such value is being determined, or, if there shall be no reported
transactions for such date, on the next preceding date for which transactions
were reported; provided, however, that if Fair Market Value for any date cannot
be so determined, Fair Market Value shall be determined by the Board by whatever
means or method as the Board, in the good faith exercise of its discretion,
shall at such time deem appropriate.
ARTICLE VIII. Exercise of Plan Options
A Plan Option may be exercised (i) by giving written notice to the Secretary
of the Corporation specifying the number of whole shares of Common Stock to be
purchased and accompanied by payment of the Purchase Price therefor in full (or
arrangement made for such payment to the satisfaction of the Corporation) either
(A) in cash, (B) in previously owned whole shares of Common Stock (for which the
optionee has good title free and clear of all liens and encumbrances) having a
Fair Market Value determined as of the date of exercise, (C) a combination of
(A) and (B), or (D) in cash by a broker-dealer to whom the optionee has
submitted an irrevocable notice of exercise and (ii) by executing such documents
as the Corporation may reasonably request. No shares of Common Stock shall be
issued until the full Purchase Price therefor has been paid.
The Corporation shall not be required to issue or deliver any certificate for
shares of Common Stock purchased upon the exercise of all or any part of a Plan
Option before (i) such shares are approved for inclusion on The Nasdaq Stock
Market or, if applicable, such shares are admitted for listing on any stock
exchange on which the Common Stock may then be listed, and (ii) completion of
any registration or other qualification of such shares under any state or
federal law, or ruling or regulation of any governmental regulatory body that
the Board shall, in its sole discretion, determine is necessary or advisable.
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An optionee shall have no rights as a stockholder with respect to any shares
of Common Stock covered by a Plan Option until such optionee becomes a holder of
record with respect to such shares of Common Stock and no adjustment shall be
made for dividends or distributions or other rights prior thereto, except as
provided in Article XI hereof.
ARTICLE IX. Termination of Directorship
No Plan Option may be exercised after the termination of the optionee as a
director of the Corporation (a "Termination"), except as hereinafter provided:
(a) Retirement. Each Plan Option may be exercised within three (3) months
after the Retirement (as defined herein) of the optionee, but in no event
after the expiration of such Plan Option, and such Plan Option shall be
exercisable for all of the shares of Common Stock covered thereby. For the
purposes of the Plan, the term "Retirement" shall mean the retirement of the
optionee as a director of the Corporation after such optionee shall have
attained the age of sixty-five (65) and completed three (3) years of service
as a director of the Corporation.
(b) Disability. Each Plan Option may be exercised within three (3) months
after the Termination of the optionee by reason of the Disability (as defined
herein) of the optionee, but in no event after the expiration of such Plan
Option, and such Plan Option shall be exercisable for all of the shares of
Common Stock covered thereby. For the purposes of the Plan, an optionee shall
be deemed to have incurred a "Disability" if the Corporation determines that
the optionee is totally and permanently prevented, as a result of physical or
mental infirmity, injury or disease, either occupational or nonoccupational
in cause, from continuing as a director of the Corporation (provided,
however, that disability here under shall not include any disability incurred
or resulting from the optionee's having engaged in a criminal act or
enterprise, or any disability consisting of or resulting from the optionee's
chronic alcoholism, addiction to narcotics or an intentionally self-inflicted
injury).
(c) Death.
(1) If an optionee shall die while a director of the Corporation, each
Plan Option granted to such deceased optionee shall be exercisable within
one (1) year after the date of the optionee's death, but in no event after
the expiration of such Plan Option, and such Plan Option shall be
exercisable for all of the shares of Common Stock covered thereby.
(2) If an optionee shall die within three (3) months after Termination,
each Plan Option granted to such deceased optionee shall be exercisable
within one (1) year after the date of the optionee's death, but in no
event after the expiration of such Plan Option, and each Plan Option shall
be exercisable for such number of shares of Common Stock, if any, as are
purchasable immediately prior to the optionee's death.
(3) The legal representative, if any, of such deceased optionee's
estate, otherwise the appropriate legatees or distributees of such
deceased optionee's estate, may exercise the Plan Options granted to such
deceased optionee.
(d) Involuntary Termination. Each Plan Option may be exercised within
three (3) months after the Involuntary Termination (as hereinafter defined)
of the optionee, but in no event after the expiration of such Plan Option,
and such Plan Option shall be exercisable for all of the shares of Common
Stock covered thereby. For purposes of the Plan, the term "Involuntary
Termination" shall mean any Termination by reason of resignation after
request by the Corporation or other involuntary termination of the optionee's
directorship by action of the Corporation other than a Termination
constituting a Termination for Cause under subparagraph (f) of this Article
IX.
(e) Voluntary Termination. Each Plan Option may be exercised within three
(3) months after a Voluntary Termination (as hereinafter defined) of the
optionee, but in no event after the expiration of such Plan Option, and such
Plan Option may not be exercised for more than the number of shares of Common
Stock covered thereby, if any, as to which such Plan Option was exercisable
by the optionee immediately prior to such Termination. For the purposes of
the Plan, "Voluntary Termination" shall mean any Termination by reason of the
optionee's resignation or other voluntarily
A-3
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departure from the Board other than (i) an Involuntary Termination, (ii)
Retirement, (iii) termination by reason of Disability, or (iv) a Termination
constituting a Termination for Cause under subparagraph (f) of this Article
IX.
(f) Termination for Cause. Anything contained herein to the contrary
notwithstanding, if Termination is a result of or caused by (i) the
optionee's fraud or intentional misrepresentation, (ii) embezzlement,
misappropriation or conversion of assets or opportunities of the Corporation
or a subsidiary of the Corporation, or (iii) disclosure by the optionee of
confidential information of the Corporation or a subsidiary, then each Plan
Option and any and all rights granted to such optionee thereunder, to the
extent not yet effectively exercised, shall become null and void effective as
of the date of the occurrence of the event which results in the optionee's
Termination and any purported exercise of such Plan Option by or on behalf of
said optionee on or following such date shall be of no effect.
ARTICLE X. Transfer of Plan Options
No Plan Option shall be transferable other than by will or the laws of
descent and distribution and shall be exercisable during the optionee's lifetime
only by the optionee or the optionee's guardian, legal representative or similar
person. Except as permitted by the preceding sentence, no Plan Option shall be
sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise
disposed of (whether by operation of law or otherwise) or be subject to
execution, attachment or similar process. Upon any attempt to so sell, transfer,
assign, pledge, hypothecate, encumber or otherwise dispose of any Plan Option,
such Plan Option and all rights thereunder shall immediately become null and
void.
ARTICLE XI. Adjustments for Changes in Capitalization
In the event of any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares,
liquidation, spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Stock other than a cash dividend, (i) the
number and class of securities available under the Plan, (ii) the number,
Purchase Price and class of securities subject to each outstanding Plan Option,
and (iii) the number and kind of securities subject to each Plan Option to be
granted to Outside Directors pursuant to Article V hereof shall be appropriately
adjusted by the Board, such adjustments to be made in the case of outstanding
Plan Options without a change in the aggregate Purchase Price for the securities
covered thereby.
The grant of a Plan Option shall not affect in any way the right or power of
the Corporation to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
ARTICLE XII. Acceleration of Exercisability
Upon the approval by the stockholders of the Corporation of a reorganization,
merger, consolidation, dissolution or liquidation of the Corporation, each
outstanding Plan Option, other than a Plan Option with a period of
exercisability modified pursuant to subparagraphs (e) or (f) of Article IX
hereof, shall immediately become exercisable for all of the shares of Common
Stock covered thereby. The foregoing sentence shall not apply to any
reorganization, merger or consolidation of the Corporation where immediately
after such reorganization, merger or consolidation at least 66 2/3 % of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Board at the time of
the execution of the initial agreement or action of the Board providing for such
reorganization, merger or consolidation.
ARTICLE XIII. Plan Amendments
The Plan may be amended or terminated by the Board in any respect, at any
time, subject to any required stockholder approval, provided that (i) the Plan
may not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the rules
thereunder, and (ii) the Plan shall not be amended in a manner which would
result in the Plan failing to comply with Rule 16b-3 under the Exchange Act. No
amendment may impair the rights of a holder of an outstanding Plan Option
without the consent of such holder.
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ARTICLE XIV. Effective Date and Term of Plan
The Plan shall be submitted to the stockholders of the Corporation for
approval and, if approved, shall become effective as of the date of such
approval. The Plan shall terminate ten years after its effective date unless
terminated prior thereto by action of the Board. No Plan Option shall be granted
after termination of the Plan, but termination of the Plan shall not affect the
rights of any optionee under any Plan Option granted prior to such termination.
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BELL SPORTS CORP.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 21, 1996
THE MARRIOTT MOUNTAIN SHADOWS RESORT
5641 E. LINCOLN DRIVE
SCOTTSDALE, ARIZONA
(602) 948-7111
SKY HARBOR INTERNATIONAL AIRPORT TO THE
MARRIOTT MOUNTAIN SHADOWS RESORT:
(APPROXIMATELY 30 MINUTES)
Exit Airport using the 44th Street North Exit and proceed North for
approximately eight miles. 44th Street North will curve East and turn into
McDonald Drive. Continue East on McDonald Drive for approximately one mile and
turn North (left) onto 56th Street. Continue on 56th Street for approximately
1/2 mile and turn East (right) onto Lincoln Drive. The entrance to the Marriott
Mountain Shadows Resort will be on the immediate south (right) side of the road.
[MAP OF AREA]
<PAGE>
PROXY PROXY
BELL SPORTS CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 21, 1996
The undersigned stockholder of Bell Sports Corp. (the "Company") does
hereby acknowledge receipt of Notice of said Annual Meeting and the accompanying
Proxy Statement and does hereby constitute and appoint Terry G. Lee and Howard
A. Kosick, or either of them, with full power of substitution, to vote all
shares of the Company that the undersigned is entitled to vote, as fully as the
undersigned could do if personally present, at the Annual Meeting of
Stockholders of the Company to be held on Thursday, November 21, 1996 at 10:00
a.m., local time at the Marriott Mountain Shadows Resort, 5641 E. Lincoln Drive,
Scottsdale, Arizona 85253, and at any adjournment thereof.
This Proxy when properly executed will be voted in the manner directed
by the undersigned stockholder. If no direction is made, this Proxy will be
voted for the three nominees listed in Proposal 1 and the one nominee listed in
Proposal 2 and for each of Proposals 3 and 4. If other business is presented at
said Annual Meeting, this Proxy will be voted on those matters, in accordance
with the best judgment of the named proxies.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
BELL SPORTS CORP.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
The Board of Directors recommends a vote "FOR" each of the nominees listed in
Proposal 1 and 2 and "FOR" each of Proposals 3 and 4.
Election of Directors-
1. Nominees: Frederick W. Winter, Kenneth K. Harkness and Harry H. Manko
FOR ALL(Except
Nominee(s)
FOR WITHHOLD written below
/ / / / / /
_______________________________________________________________________
2. Nominee: Arnold L. Charkin
FOR ALL(Except
Nominee(s)
FOR WITHHOLD written below
/ / / / / /
_______________________________________________________________________
3. To approve an amendment to the Restated and Amended Bell Sports Corp.
1993 Outside Directors Stock Option Plan providing for the payment of
retainer fees in stock options in lieu of cash and to increase the
number of shares issuable thereunder.
FOR AGAINST ABSTAIN
/ / / / / /
4. To ratify the appointment of Price Waterhouse as independent public
accountants for the Company for its fiscal year ending June 29, 1997.
FOR AGAINST ABSTAIN
/ / / / / /
This proxy shall be voted in accordance with the instructions given and, in the
absence of such instructions, shall be voted for the nominees listed and in
favor of proposals 2, 3, and 4. If other business if presented at said Annual
Meeting, this proxy shall be voted on those matters in accordance with the best
judgment of the named proxies.
Dated:_____________________________, 1996
Signatures(s)___________________________________________________________________
________________________________________________________________________________
When signing the proxy, please take care to have the signature conform to the
stockholder's name as it appears on this side of the proxy. If shares are
registered in the names of two or more persons, each person should sign.
Executors, administrators, trustees and guardians should so indicate when
signing. Corporations and partnerships should sign in their full corporate or
partnership names by a duly authorized person.
