<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
BELL SPORTS CORP.
(NAME OF THE ISSUER)
4 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
(TITLE OF CLASS OF SECURITIES)
077903AA0
(CUSIP NUMBER OF CLASS OF SECURITIES)
LINDA K. BOUNDS
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER
BELL SPORTS CORP.
6350 SAN IGNACIO AVENUE
SAN JOSE, CALIFORNIA 95119
(408) 574-3400
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications
on Behalf of Person Filing Statement)
-----------------------------
June 30, 1998
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
Transaction Valuation* Amount of Filing Fee
--------------------- ---------------------
==============================================================================================================
<S> <C>
$55,625,000 $11,125.00
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* For purposes of calculating the filing fee pursuant to Rule 0-11 of the
Securities Exchange Act of 1934, as amended, the market value of the 4 1/4%
Convertible Subordinated Debentures due 2000 proposed to be acquired was
determined by the amount of cash to be paid for such debentures.
[_] Check box if any part of the fee is offset as provided in Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration number, or the Form or Schedule and
the date of its filing.
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
Page 1 of 10 pages
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This Issuer Tender Offer Statement (the "Statement") is being filed with
the Securities and Exchange Commission by Bell Sports Corp., a Delaware
corporation (the "Company"), in connection with a tender offer (the "Tender
Offer") by the Company for up to $62.5 million aggregate principal amount of its
4 1/4% Convertible Subordinated Debentures due 2000 (the "Debentures"). A copy
of the Offer to Purchase dated June 30, 1998 is attached hereto as Exhibit 1
(the "Offer to Purchase"). Pursuant to General Instruction B to Schedule 13E-4,
certain information contained in the Offer to Purchase is hereby incorporated by
reference in answer to items of this Statement.
ITEM 1. SECURITY AND ISSUER
(a) The Company is the issuer of the Debentures subject to the Tender
Offer. The Company's principal executive offices are located at 6350
San Ignacio Avenue, San Jose, California 95119. Reference is made to
the information set forth in the Offer to Purchase under the caption
"The Company," which information is incorporated herein by reference.
(b) The Company is offering to purchase up to $62.5 million of the $86.25
million aggregate principal amount of Debentures currently outstanding
for a cash purchase price of $890 per $1,000 principal amount, plus
accrued and unpaid interest from May 15, 1998 up to, but not
including, the date of payment. Reference is made to the information
set forth on the cover page of the Offer to Purchase and in the Offer
to Purchase under the captions "The Debentures" and "The Tender
Offer," which information is incorporated herein by reference. Certain
affiliates of the Company may own Debentures that may be acquired in
the Tender Offer.
(c) The Debentures are currently listed for quotation on the Nasdaq Small
Cap Market under the symbol "BSPT." Reference is made to the
information set forth in the Offer to Purchase under the caption
"Market and Trading Information," which information is incorporated
herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The Company expects, although it has not made definitive plans or
arrangements, that there will be a private placement of notes (the
"Notes") of the Company and Bell Sports, Inc., its wholly owned
subsidiary, concurrently with the consummation of the merger of HB
Acquisition Corporation ("HB Acquisition") with and into the Company
(the "Merger") with the Company continuing as the surviving
corporation (the "Surviving Corporation"). Reference is made to the
information set forth in the Offer to Purchase under the captions
"Background and Purpose of
Page 2 of 10 pages
<PAGE>
The Tender Offer--Background" and "The Tender Offer," which
information is incorporated herein by reference.
(b) The Company expects, although it has not made definitive plans or
arrangements, that there will be a private placement of the Notes
concurrently with the consummation of the Merger. Reference is made
to the information set forth in the Offer to Purchase under the
caption "Background and Purpose of The Tender Offer--Background" and
"The Tender Offer," which information is incorporated herein by
reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a) The purpose of the Tender Offer is to enable the Company to reduce the
amount of debt that becomes due on November 15, 2000 from $86,250,000
to $23,750,000 and to provide greater flexibility in managing its
operations and financing its business after the recapitalization of
the Company in connection with the Merger. The shareholders of HB
Acquisition will acquire common and preferred equity of the Company
pursuant to the Agreement and Plan of Recapitalization and Merger,
dated as of February 17, 1998 and amended as of April 8, 1998 (the
"Merger Agreement"). In addition, in connection with the Merger,
certain members of the Company's existing management team have entered
into agreement relating to their equity holdings in the Company. In
connection with the Merger, certain members of the Company's existing
management team may be provided with an opportunity to invest in
equity of the Company. Pursuant to a letter agreement dated as of
February 17, 1998, as amended on April 8, 1998 (the "Equity Letter"),
between Mary J. George and HB Acquisition, Ms. George has agreed to
exchange a portion of her options to purchase common stock of the
Company for options to purchase Capital Stock of the Surviving
Corporation following the Merger. Reference is made to the information
set forth in the Offer to Purchase under the captions "Background and
Purpose of the Tender Offer--Background" and "The Tender Offer," which
information is incorporated herein by reference.
(b) Pursuant to the terms of the Merger Agreement, HB Acquisition will
merge with and into the Company. Reference is made to the information
set forth in the Offer to Purchase under the captions "Background and
Purpose of the Tender Offer--Background" and "The Tender Offer--
Conditions of the Tender Offer," and the information relating to the
Merger and the Merger Agreement included in the Company's Current
Reports on Form 8-K enumerated under the caption "Incorporation of
Certain Information By Reference," which information is incorporated
herein by reference.
(c) Not applicable.
Page 3 of 10 pages
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(d) Pursuant to the terms of the Merger Agreement, the directors of HB
Acquisition will become the directors of the Company. In addition, in
connection with the Merger, certain members of the Company's existing
management team have entered into agreements relating to their
employment with the Company after the Merger. Reference is made to
the copies of: (i) that certain Amended and Restated Employment
Agreement, dated as of February 17, 1998 and effective as of and
simultaneous with the Merger, among Terry G. Lee, the Company and Bell
Sports, Inc.; (ii) that certain Amended and Restated Employment
Agreement, dated as of February 17, 1998 and effective as of and
simultaneous with the Merger, among Mary J. George, the Company and
Bell Sports, Inc.; (iii) that certain Memorandum of Understanding
between the Company and Linda K. Bounds, dated January 28, 1998;
and (iv) that certain Equity Letter, each of which is attached as an
exhibit to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 28, 1998 described under the caption "Incorporation of
Certain Information By Reference," which information is incorporated
herein by reference. Reference is made to the information set forth in
the Offer to Purchase under the caption "Background and Purpose of the
Tender Offer--Background" and the information relating to the Merger
included in the Company's Current Reports on Form 8-K enumerated under
the caption "Incorporation of Certain Information By Reference," which
information is incorporated herein by reference.
(e) In connection with the Merger, the Tender Offer and related
transactions, the Company will be recapitalized and its indebtedness
will be increased. Reference is made to the information set forth in
the Offer to Purchase under the captions "Certain Considerations--
Substantial Leverage" and "Background and Purpose of the Tender Offer-
-Background," which information is incorporated herein by reference.
(f) Not applicable.
(g) Pursuant to the terms of the Merger Agreement, the bylaws of HB
Acquisition will become the bylaws of the Company. Reference is made
to the information relating to the Merger included in the Company's
Current Reports on Form 8-K enumerated under the caption
"Incorporation of Certain Information By Reference," which information
is incorporated herein by reference.
(h) As a result of the Merger, the Company's common stock, par value $.01
per share, will no longer be listed for quotation on The Nasdaq
National Market. Reference is made to the information set forth in the
Offer to Purchase under the caption "Background and Purpose of the
Tender Offer--Background," which information is incorporated herein by
reference.
Page 4 of 10 pages
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(i) As a result of the Merger, the Company's common stock, par value $.01
per share, will be eligible for termination of registration and will
be terminated pursuant to Section 12(g)(4) of the Securities Exchange
Act of 1934, as amended. Reference is made to the information set
forth in the Offer to Purchase under the caption "Background and
Purpose of the Tender Offer--Background," which information is
incorporated herein by reference.
(j) Not applicable.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Not applicable.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The Company has entered into several agreements relating to its
securities including, the Merger Agreement, an agreement with the
rights agent amending the Company's rights plan to permit the Merger
and the Equity Letter, pursuant to which Ms. George has agreed to
exchange a portion of her options to purchase common stock of the
Company for options to purchase capital stock of the Surviving
Corporation following the Merger. Reference is made to the information
set forth in the Offer to Purchase under the caption "Background and
Purpose of the Merger--Background" and the information relating to the
Merger included in the Company's Current Reports on Form 8-K
enumerated in the Offer to Purchase under the caption "Incorporation
of Certain Information By Reference," which information is
incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is made to the information set forth in the Offer to
Purchase under the caption "Fees and Expenses," which information is
incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) Reference is made to the information set forth in the Offer to
Purchase under the captions "Summary Historical and Pro Forma
Consolidated Statement of Operations and Balance Sheet Information"
and the financial statements included in "Item 8. Consolidated
Financial Statements and Supplementary Data" in the Company's Annual
Report on Form 10-K for the year ended June 28, 1997 and "Item 1 in
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 28, 1998, which documents are enumerated under the caption
Page 5 of 10 pages
<PAGE>
"Incorporation of Certain Information by Reference," which information
is incorporated herein by reference.
(b) Reference is made to the information set forth in the Offer to
Purchase under the caption "Summary Historical and Pro Forma
Consolidated Statement of Operations and Balance Sheet Information,"
which information is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Reference is made to the copies of: (i) that certain Amended and
Restated Employment Agreement, dated as of February 17, 1998 and
effective as of and simultaneous with the Merger, among Terry G. Lee,
the Company and Bell Sports, Inc.; (ii) that certain Amended and
Restated Employment Agreement, dated as of February 17, 1998 and
effective as of and simultaneous with the Merger, among Mary J.
George, the Company and Bell Sports, Inc.; and (iii) that certain
Memorandum of Understanding between the Company and Linda K. Bounds,
dated January 28, 1998; and (iv) that certain Equity Letter, each of
which is attached as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 28, 1998 described under the
caption "Incorporation of Certain Information By Reference," which
information is incorporated herein by reference.
(b) There are no applicable regulatory requirements which must be complied
with or approvals which must be obtained in connection with the Tender
Offer other than compliance with the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder including, without limitation, Rule
13e-4 promulgated thereunder, the Trust Indenture Act of 1939, as
amended, and the requirements of state securities or "blue sky" laws.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
99.1. Offer to Purchase dated June 30, 1998.
99.2. Form of Letter of Transmittal.
Page 6 of 10 pages
<PAGE>
99.3. Notice of Guaranteed Delivery.
99.4. Form of Letter to Holders of 4 1/4% Convertible Subordinated
Debentures due 2000.
99.5. Form of Letter to Broker, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
99.6. Form of Letter to Clients.
99.7. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.8. Agreement and Plan of Recapitalization and Merger, dated as of
February 17, 1998, between HB Acquisition Corporation and the Company
(Incorporated by reference to the Company's Current Report on Form 8-K
dated February 17, 1998).
99.9. First Amendment to Agreement and Plan of Recapitalization and Merger,
dated as of April 8, 1998, between HB Acquisition Corporation and the
Company (Incorporated by reference to the Company's Current Report on
Form 8-K dated April 8, 1998).
99.10. Amended and Restated Employment Agreement, dated as of February 17,
1998 and effective as of and simultaneous with the Merger, among Terry
G. Lee, the Company and Bell Sports, Inc. (Incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended
March 28, 1998).
99.11. Amended and Restated Employment Agreement, dated as of February 17,
1998 and effective as of and simultaneous with the Merger, among Mary
J. George, the Company and Bell Sports, Inc. (Incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 28, 1998).
99.12. Memorandum of Understanding between the Company and Linda K. Bounds,
dated January 28, 1998. (Incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 28, 1998).
99.13. Letter Agreement dated as of February 17, 1998, as amended on April 8,
1998, between Mary J. George and HB Acquisition.
Page 7 of 10 pages
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: June 30, 1998 BELL SPORTS CORP.
By /s/ Linda K. Bounds
---------------------------------
Name: Linda K. Bounds
Title: Senior Vice President and
Chief Financial Officer
Page 8 of 10 pages
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
99.1. Offer to Purchase dated June 30, 1998.
99.2. Form of Letter of Transmittal.
99.3. Notice of Guaranteed Delivery.
99.4. Form of Letter to Holders of 4 1/4% Convertible Subordinated
Debentures due 2000.
99.5. Form of Letter to Broker, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99.6. Form of Letter to Clients.
99.7. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.8. Agreement and Plan of Recapitalization and Merger, dated as of
February 17, 1998, between HB Acquisition Corporation and the
Company (Incorporated by reference to the Company's Current Report
on Form 8-K dated February 17, 1998).
99.9. First Amendment to Agreement and Plan of Recapitalization and
Merger, dated as of April 8, 1998, between HB Acquisition
Corporation and the Company (Incorporated by reference to the
Company's Current Report on Form 8-K dated April 8, 1998).
99.10. Amended and Restated Employment Agreement, dated as of February 17,
1998 and effective as of and simultaneous with the Merger, among
Terry G. Lee, the Company and Bell Sports, Inc. (Incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 28, 1998).
99.11. Amended and Restated Employment Agreement, dated as of February 17,
1998 and effective as of and simultaneous with the Merger, among
Mary J. George, the Company and Bell Sports, Inc. (Incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 28, 1998).
Page 9 of 10 pages
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99.12. Memorandum of Understanding between the Company and Linda K. Bounds,
dated January 28, 1998. (Incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 28, 1998).
99.13. Letter Agreement dated as of February 17, 1998, as amended on April 8,
1998, between Mary J. George and HB Acquisition.
Page 10 of 10 pages
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EXHIBIT 99.1
OFFER TO PURCHASE
BELL SPORTS CORP.
OFFER TO PURCHASE FOR CASH UP TO $62.5 MILLION AGGREGATE PRINCIPAL AMOUNT OF
ITS 4 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
THE TENDER OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY 29,
1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). HOLDERS OF DEBENTURES MUST
TENDER THEIR DEBENTURES ON OR PRIOR TO THE EXPIRATION DATE IN ORDER TO
RECEIVE THE TENDER OFFER CONSIDERATION (AS DEFINED). TENDERED DEBENTURES MAY
BE WITHDRAWN AT ANY TIME ON OR PRIOR TO THE EXPIRATION DATE.
Bell Sports Corp., a Delaware corporation (the "Company" or "Bell Sports"),
upon the terms and subject to the conditions set forth in this Offer to
Purchase (the "Offer to Purchase") and in the accompanying Letter of
Transmittal (the "Letter of Transmittal") hereby offers to purchase (the
"Tender Offer") up to $62.5 million aggregate principal amount of its 4 1/4%
Convertible Subordinated Debentures due 2000 (each, a "Debenture" and
collectively, the "Debentures") for a cash purchase price of $890 per $1,000
principal amount of Debentures, plus accrued and unpaid interest from May 15,
1998 up to, but not including, the date of payment (the "Tender Offer
Consideration"). The last reported sale price of the Debentures on the Nasdaq
Small Cap Market ("NASDAQ") on June 29, 1998 was $855 per $1,000 principal
amount.
----------------
SEE "CERTAIN CONSIDERATIONS" AND "CERTAIN FEDERAL INCOME TAX CONSEQUENCES"
FOR DISCUSSIONS OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS IN
EVALUATING THE TENDER OFFER.
----------------
The Tender Offer is being made in connection with, and the Company's
obligation to accept for purchase and to pay for Debentures validly tendered
pursuant to the Tender Offer is conditioned upon, (i) consummation of the
merger of HB Acquisition (as defined) with and into the Company, with the
Company continuing as the surviving corporation, (ii) completion of a note
offering by Bell Sports, Inc., a wholly-owned subsidiary of the Company (the
"Subsidiary"), (iii) entry into a new senior credit facility by the Subsidiary
(the "New Credit Facility") in an amount, together with other funds available
to the Company, sufficient to fund amounts payable in connection with the
Merger (as defined), (iv) Debentures in an amount not less than $35.0 million
aggregate principal amount being tendered in the Tender Offer (the "Minimum
Tender Amount"), and (v) satisfaction of the General Conditions (as defined).
If the conditions of the Tender Offer are satisfied, holders of Debentures who
validly tender their Debentures prior to 5:00 P.M., New York City time, on
July 29, 1998, unless extended, will receive the Tender Offer Consideration.
The Company will accept for purchase up to $62.5 million aggregate principal
amount of the Debentures; if Debentures having an aggregate principal amount
in excess of $62.5 million are tendered, the Company will purchase $62.5
million aggregate principal amount, pro rata in an amount per Holder (as
defined) equal to (i) a fraction the numerator of which is such Holder's total
principal amount of Debentures tendered and the denominator of which is the
total principal amount of Debentures tendered, multiplied by (ii)
$62.5 million ("Pro Rata Acceptance").
----------------
Any questions or requests for assistance may be directed to Donaldson,
Lufkin & Jenrette Securities Corporation, which is acting as dealer manager
for the Tender Offer (the "Dealer Manager") at the address and telephone
number set forth on the back cover of this Offer to Purchase. Requests for
copies of the Tender Offer materials should be directed to Georgeson &
Company, Inc., which is acting as information agent for the Tender Offer (the
"Information Agent"), at the address and telephone number set forth on the
back cover of this Offer to Purchase or to a Holder's broker, dealer,
commercial bank or trust company. None of the Company, the Dealer Manager, the
Information Agent, the Trustee (as defined) or the Depositary (as defined)
makes any recommendation as to whether or not Holders should tender any or all
of their Debentures. Holders must make their own decision as to whether to
tender Debentures pursuant to the Tender Offer and, if so, the principal
amount of Debentures to tender.
The Dealer Manager for the Tender Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
JUNE 30, 1998
<PAGE>
Subject to applicable securities laws and the terms set forth in the Offer
to Purchase, the Company reserves the right (i) to terminate the Tender Offer,
(ii) to waive any and all unsatisfied conditions to the Tender Offer, (iii) to
extend the expiration date of the Tender Offer, or (iv) to otherwise amend the
Tender Offer in any respect. Any such waiver, extension or amendment may be
made by press release or such other means of announcement as the Company deems
appropriate subject to compliance with applicable laws.
IMPORTANT INFORMATION
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE TENDER OFFER.
In order to validly tender Debentures in the Tender Offer, a holder of
Debentures (each, a "Holder" and collectively, the "Holders") should, on or
prior to the Expiration Date, deliver to Harris Trust and Savings Bank (the
"Depositary") at the address set forth on the back cover of this Offer to
Purchase a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) or an Agent's Message (as defined), and any
other documents required by the instructions to such Letter of Transmittal,
together with the Debentures (or such Debentures must be transferred pursuant
to the procedures for book-entry transfer described therein and a confirmation
of such book-entry transfer, including an Agent's Message, must be received by
the Depositary, in either case prior to the Expiration Date). IF A HOLDER DOES
NOT DELIVER SUCH DOCUMENTS ON OR PRIOR TO THE EXPIRATION DATE, THE HOLDER WILL
NOT BE ELIGIBLE TO RECEIVE THE TENDER OFFER CONSIDERATION.
Any beneficial owner whose Debentures are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Debentures should contact promptly such registered Holder. See "The
Tender Offer--Procedures for Tendering Debentures--Proper Tender of
Debentures" and the Letter of Transmittal.
The Depositary and the Depository Trust Company ("DTC") have confirmed that
the Tender Offer is eligible for the DTC Automated Tender Offer Program
("ATOP"). Accordingly, DTC participants may electronically transmit their
acceptance of the Tender Offer by causing DTC to transfer Debentures to the
Depositary in accordance with DTC's ATOP procedures for transfer. DTC will
then send an Agent's Message to the Depositary for its acceptance. The
Depositary will establish an account with respect to the Debentures at DTC for
purposes of the Tender Offer, and any financial institution that is a
participant in DTC's system may make book-entry delivery of the Debentures by
causing DTC to transfer such Debentures into the Depositary's account at DTC
in accordance with DTC's procedure for such transfer. Although tenders of
Debentures may be effected through book-entry transfer at DTC, a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantees or an Agent's
Message in connection with a book-entry transfer, must, in any case, be
transmitted to and received by the Depositary at the address set forth on the
back cover of this Offer to Purchase on or prior to the Expiration Date or the
Holder must comply with the guaranteed delivery procedures described herein.
See "The Tender Offer--Procedures for Tendering Debentures."
THE METHOD OF DELIVERY OF DEBENTURES AND LETTERS OF TRANSMITTAL, ANY
REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE TRANSMITTED
THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE PERSON TENDERING DEBENTURES
AND DELIVERING THE LETTER OF TRANSMITTAL AND, EXCEPT AS OTHERWISE PROVIDED IN
THE LETTER OF TRANSMITTAL, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE
HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO
PERMIT DELIVERY TO THE DEPOSITARY ON OR PRIOR TO SUCH DATE.
Tendering Holders will not be obligated to pay any fees to the Dealer
Manager, the Information Agent or the Depositary.
i
<PAGE>
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE AN OFFER TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER WOULD BE UNLAWFUL, AND THE TENDER OFFER IS
NOT MADE TO, AND TENDERS WILL NOT BE ACCEPTED FROM, HOLDERS OF DEBENTURES IN
STATES IN WHICH THE TENDER OFFER OR ACCEPTANCE THEREOF WOULD CONSTITUTE A
VIOLATION OF THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. IN
ACCORDANCE WITH VARIOUS STATE SECURITIES LAWS APPLICABLE TO THE TENDER OFFER
WHICH REQUIRE THE TENDER OFFER TO BE MADE TO THE PUBLIC BY A LICENSED BROKER
OR DEALER, THE TENDER OFFER IS HEREBY MADE TO THE HOLDERS OF DEBENTURES
RESIDING IN EACH SUCH STATE BY THE DEALER MANAGER ON BEHALF OF THE COMPANY.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER THE HOLDER SHOULD TENDER DEBENTURES PURSUANT TO THE
TENDER OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION IN CONNECTION THEREWITH, OTHER THAN THOSE CONTAINED HEREIN
OR IN THE ACCOMPANYING LETTER OF TRANSMITTAL. IF MADE OR GIVEN, SUCH
RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other documents and information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other documents and information may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 7 World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates and from the Commission's Web Site located at http://www.sec.gov. The
Debentures are listed on NASDAQ. Such reports, proxy statements and other
documents and information concerning the Company are also available for
inspection at the offices of the Nasdaq Stock Market Report Section at 1735 K
Street, N.W., Washington, D.C. 20006. Copies of the Indenture (as defined)
pursuant to which the Debentures were issued are also available from the
Company upon request. Requests for such copies should be directed to the
Company, 6350 San Ignacio Avenue, San Jose, California 95119, attention:
Ms. Sondra L. Lehman, Assistant Secretary, telephone number (888) 534-9500.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents of the Company have been filed with the Commission
and are incorporated herein by reference: (i) the Company's Annual Report on
Form 10-K for the year ended June 28, 1997; (ii) the Company's Quarterly
Reports on Form 10-Q for the quarters ended September 27, 1997, December 27,
1997 and March 28, 1998; and (iii) the Company's Current Reports on Form 8-K
filed with the Commission on February 23, 1998 and April 9, 1998. All
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date hereof and prior to the Expiration Date
shall be deemed to be incorporated by reference into this Offer to Purchase
and to be a part hereof from the date of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Offer to Purchase to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Offer to
Purchase.
The Company will provide without charge to each person, including any
beneficial owner to whom this Offer to Purchase has been delivered, upon
written or oral request of such person, a copy of any and all of the documents
referred to above that have been or may be incorporated by reference herein
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference herein). Requests for such copies should be directed
to the Company, 6350 San Ignacio Avenue, San Jose, California 95119,
attention: Ms. Sondra L. Lehman, Assistant Secretary, telephone number (888)
534-9500.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
IMPORTANT INFORMATION..................................................... i
AVAILABLE INFORMATION..................................................... ii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... ii
FORWARD-LOOKING STATEMENTS................................................ iii
SUMMARY................................................................... 1
CERTAIN CONSIDERATIONS.................................................... 6
THE COMPANY............................................................... 8
THE DEBENTURES............................................................ 8
MARKET AND TRADING INFORMATION............................................ 9
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS AND
BALANCE SHEET INFORMATION................................................ 10
BACKGROUND AND PURPOSE OF THE TENDER OFFER................................ 13
Background.............................................................. 13
Purpose................................................................. 13
THE TENDER OFFER.......................................................... 13
Principal Terms of the Tender Offer..................................... 13
Conditions of the Tender Offer.......................................... 14
Expiration Date; Extension; Termination; Amendments..................... 15
Acceptance of Debentures for Purchase; Payment for Debentures; Maximum
Tender Amount and Pro Rata Acceptance.................................. 16
Procedures for Tendering Debentures..................................... 17
Backup Federal Income Tax Withholding................................... 20
Withdrawal of Tenders; Absence of Appraisal Rights...................... 20
Dealer Manager.......................................................... 20
Depositary.............................................................. 21
Information Agent....................................................... 21
Miscellaneous........................................................... 21
FEES AND EXPENSES......................................................... 21
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................... 22
Sales of Debentures Pursuant to the Tender Offer........................ 22
Backup Withholding...................................................... 23
Information Reporting................................................... 23
</TABLE>
FORWARD-LOOKING STATEMENTS
The Company cautions readers that, in addition to the historical information
included or incorporated herein by reference, this Offer to Purchase includes
certain "forward-looking statements" that are based on management's beliefs as
well as on assumptions made by and information currently available to
management. When used herein, the words "expect," "anticipate," "intend,"
"plan," "believe," "seek," "estimate," and similar expressions are intended to
identify such forward-looking statements. However, this Offer to Purchase also
contains or incorporates herein by reference other forward-looking statements.
Such forward-looking statements involve known and unknown risks, including,
but not limited to, economic and market conditions, competitive activities or
other business conditions, dependence on key customers, fluctuations in sales
or working capital, weather conditions, consumer spending levels and results
of pending litigation, including product liability claims. Although the
Company believes that its expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, there can be no assurance that
actual results, performance or achievements of the Company will not differ
materially from any future results, performance or achievements expressed or
implied from such forward-looking statements. Readers are cautioned not to put
undue reliance on forward-looking statements.
iii
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Offer to
Purchase. Many of the statements in this Offer to Purchase are forward-looking
in nature and, accordingly, whether they prove to be accurate is subject to
many risks and uncertainties. See "Certain Considerations" and "Forward-Looking
Statements." References to the Company's "fiscal year" are to the 52-week or
53-week period ending on the Saturday closest to the last day of June. All
brand names referred to in this Offer to Purchase are registered trademarks of
Bell Sports or its subsidiaries.
THE COMPANY
DESCRIPTION Bell Sports is the leading manufacturer and
marketer of bicycle helmets worldwide and a
leading supplier of a broad line of bicycle
accessories in North America. The Company is also
a leading supplier of auto racing helmets and a
supplier of bicycle accessories worldwide.
Recently, the Company began marketing in-line
skating, snowboard, snow skiing and water sport
helmets. The Company markets its helmets under
the widely recognized BELL and GIRO brand names,
and its accessories under such leading brands as
BELL, BLACKBURN, RHODE GEAR, VISTALITE, COPPER
CANYON CYCLING and SPOKE-HEDZ. Bell Sports is a
leading supplier of bicycle helmets and
accessories to mass merchants, independent
bicycle dealers, sporting goods retailers and
mail order catalog businesses, and markets
products across all price points.
BACKGROUND AND PURPOSE OF THE TENDER OFFER
BACKGROUND In February 1998, HB Acquisition Corporation, a
Delaware corporation ("HB Acquisition"), an
affiliate of Harvard Private Capital Holdings,
Inc. ("Harvard Private Capital") and Brentwood
Associates Buyout Fund II, L.P. ("Brentwood" and
together with Harvard Private Capital, the
"Investors"), and the Company entered into a
merger agreement (as amended in April 1998, the
"Merger Agreement"), which provides for the
merger of HB Acquisition with and into the
Company, with the Company continuing as the
surviving corporation (the "Merger" and together
with the Tender Offer and the related financings,
the "Transactions"). Consummation of the Merger
is subject to obtaining the requisite vote of the
Company's stockholders and satisfaction of the
conditions set forth in the Merger Agreement. The
stockholders meeting at which the vote on the
Merger will be held is scheduled for August 11,
1998. Pursuant to the terms of the Merger
Agreement, as of the effective time of the Merger
(the "Effective Time"), each share of common
stock, $.01 par value, of the Company (the
"Common Stock") (other than (i) shares of Common
Stock held by HB Acquisition or shares of Common
Stock held directly or indirectly by the Company,
which shares will be canceled and (ii) shares of
Common Stock held by persons perfecting appraisal
1
<PAGE>
rights) will be converted into the right to
receive $10.25 in cash. In addition, in
connection with the Merger, it is anticipated
that immediately prior to the Effective Time, CB
Capital Investors, L.P. will exchange shares of
Common Stock worth approximately $5.0 million
(valued at the $10.25 per share merger
consideration) with HB Acquisition, and receive,
in consideration thereof, equity of HB
Acquisition.
In connection with the Merger and prior to the
Effective Time, it is anticipated that Harvard
Private Capital and Brentwood will invest an
aggregate of up to $65.0 million in common and
preferred equity in the Company, and thereby will
collectively own a majority of the voting equity
of the Company and have the ability to elect a
majority of the directors and exert significant
influence on the Company.
Concurrently with the consummation of the Merger,
the Company expects that there will be private
placements, which will not be registered under
the Securities Act of 1933, as amended (the
"Securities Act"), of notes of the Company (the
"Company Notes") and the Subsidiary (the
"Subsidiary Notes" and together with the Company
Notes, the "Notes"). The Notes may not be offered
or sold in the United States absent registration
or an applicable exemption from registration
requirements. All proceeds from the offering of
the Notes and borrowings under the New Credit
Facility will rank senior or effectively be
senior in right of payment to the Debentures. The
Company is not seeking the tender of all
outstanding Debentures to avoid the Debentures
being delisted from NASDAQ.
In connection with the Merger, the Company is not
obligated to tender for or otherwise repurchase
the Debentures, and consummation of the Tender
Offer is not a condition of the Merger. After
consummation of the Merger, the Debentures (i)
will no longer be convertible into shares of
Common Stock and (ii) if converted, would entitle
the Holder to receive cash in an amount equal to
$189.60 per $1,000 principal amount of
Debentures.
PURPOSE The purpose of the Tender Offer is to enable the
Company to reduce the amount of debt that becomes
due on November 15, 2000 from approximately $86.3
million to approximately $23.8 million and to
provide greater flexibility in managing its
operations and financing its business after the
recapitalization of the Company in connection
with the Merger.
2
<PAGE>
THE TENDER OFFER
SECURITIES TENDERED 4 1/4% Convertible Subordinated Debentures due
2000
CUSIP NO. 077903AA0
AGGREGATE PRINCIPAL AMOUNT $86,250,000
OUTSTANDING
EXPIRATION DATE The Tender Offer will expire at 5:00 p.m., New
York City time, on July 29, 1998 (unless extended
by the Company in its sole discretion or earlier
terminated).
TENDER OFFER CONSIDERATION The Company is offering, upon the terms and
subject to the conditions set forth in this Offer
to Purchase and the accompanying Letter of
Transmittal, to purchase up to $62.5 million
aggregate principal amount of outstanding
Debentures (the "Maximum Tender Amount") for a
cash purchase price of $890 per $1,000 principal
amount, plus accrued and unpaid interest from May
15, 1998 up to, but not including, the date of
payment. The Debentures were issued pursuant to
the terms of an indenture dated November 15,
1993, between Harris Trust Savings Bank, as
trustee (the "Trustee"), and the Company (the
"Indenture") in an aggregate principal amount of
approximately $86.3 million, of which the full
amount is outstanding as of the date hereof.
ACCEPTANCE OF DEBENTURES Promptly after the Expiration Date, the Company
FOR PURCHASE; PAYMENT FOR will, subject to the satisfaction or waiver of
DEBENTURES; PRO RATA all relevant conditions, accept for purchase, and
ACCEPTANCE pay for, Debentures validly tendered and not
withdrawn under the Tender Offer on or prior to
the Expiration Date; provided, however, that if
more than the Maximum Tender Amount of Debentures
has been tendered, the Company will purchase the
Maximum Tender Amount on a Pro Rata Acceptance
basis.
WITHDRAWAL OF TENDERS; Tenders of Debentures may be withdrawn on or
ABSENCE OF APPRAISAL prior to the Expiration Date. In order to be
RIGHTS effective, withdrawals of Debentures must comply
with the respective procedures therefore
described under "The Tender Offer--Withdrawal of
Tenders; Absence of Appraisal Rights." Tenders of
any Debentures may also be withdrawn if the
Tender Offer is terminated without any such
Debentures being purchased thereunder or as
otherwise provided herein. In the event of any
termination of the Tender Offer, the Debentures
tendered pursuant to the Tender Offer will be
returned promptly to the tendering Holder. There
are no appraisal or other similar statutory
rights available to Holders in connection with
the Tender Offer.
CONDITIONS The Tender Offer is being made in connection
with, and the Company's obligation to accept for
purchase, and to pay for, Debentures validly
tendered pursuant to the Tender Offer is
conditioned upon, (i) consummation of the Merger,
(ii) completion of an offering of the Subsidiary
Notes, (iii) entry into the New Credit
3
<PAGE>
Facility by the Subsidiary in an amount, together
with other funds available to the Company,
sufficient to fund amounts payable in connection
with the Merger, (iv) Debentures in an amount not
less than the Minimum Tender Amount being
tendered in the Tender Offer, and
(v) satisfaction of the General Conditions.
AMENDMENT; WAIVER If the Company makes a material change in the
terms of the Tender Offer or in the information
concerning the Tender Offer or if the Company
waives a material condition of the Tender Offer,
the Company will disseminate additional Tender
Offer materials and will extend the applicable
Tender Offer, in each case to the extent required
by law. Any amendment applicable to the Tender
Offer will apply to all Debentures tendered
pursuant to the Tender Offer.
HOW TO TENDER In order to validly tender Debentures in the
Tender Offer, a Holder should, on or prior to the
Expiration Date, deliver to the Depositary at the
address set forth on the back cover of this Offer
to Purchase a properly completed and duly
executed Letter of Transmittal (or manually
signed facsimile thereof) or an Agent's Message,
and any other documents required by the
instructions in the Letter of Transmittal,
together with such Debentures or such Debentures
must be transferred pursuant to the procedures
for book-entry transfer described therein and a
confirmation of such book-entry transfer,
including an Agent's Message, must be received by
the Depositary, in either case on or prior to the
Expiration Date.
GUARANTEED DELIVERY A Holder who desires to tender Debentures and who
cannot comply with the procedures set forth
herein on a timely basis or whose Debentures are
not immediately available may tender such
Debentures by following the procedures for
guaranteed delivery set forth herein. See "The
Tender Offer--Procedures for Tendering
Debentures--Guaranteed Delivery" and the Letter
of Transmittal.
SPECIAL PROCEDURES FOR Any beneficial owner whose Debentures are
BENEFICIAL OWNERS registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender Debentures should
contact promptly such registered Holder. See "The
Tender Offer--Procedures for Tendering
Debentures--Proper Tender of Debentures" and the
Letter of Transmittal.
CERTAIN CONSEQUENCES OF NOT . Market and Trading Information. The trading
TENDERING market for Debentures not tendered in response to
the Tender Offer is likely to be significantly
more limited, due to the significant reduction in
the amount of Debentures outstanding. The last
reported sale price of the Debentures on NASDAQ
on June 29, 1998 was $855 per $1,000 principal
amount. See "Certain Considerations--Market and
Trading Information" and "The Debentures--Trading
in the Debentures."
. Subordination. All of the Notes and borrowings
under the New Credit Facility will rank senior or
effectively be senior in right of payment to the
Debentures. The Debentures will be, or will be
4
<PAGE>
structurally, junior to all creditors of the
Company's direct and indirect subsidiaries,
including the holders of the Notes and the
lenders under the New Credit Facility. As of
March 28, 1998, the Company had approximately
$3.2 million of indebtedness ranking structurally
senior to the Debentures. On a pro forma basis,
after giving effect to the Transactions, assuming
the Maximum Tender Amount is purchased, as of
March 28, 1998, the Debentures not purchased in
the Tender Offer would be junior, or structurally
junior, to approximately $154.6 million of
indebtedness. See "Certain Considerations--
Subordination."
. Substantial Leverage. The Company and the
Subsidiary will incur substantial indebtedness in
connection with the Merger. If unable to make
scheduled payments, the Company and the
Subsidiary may be required to refinance all or a
portion of their indebtedness, including the
Debentures, to sell assets or to obtain
additional financing. There can be no assurance
that any such refinancing would be possible or
that any such sales of assets or additional
financing could be achieved. As of March 28,
1998, the Company had approximately $89.5 million
of indebtedness outstanding and $123.6 million of
stockholders' equity. As of March 28, 1998, on a
pro forma basis, after giving effect to the
Transactions, assuming the Maximum Tender Amount
is purchased, the Company would have had $178.4
million of indebtedness and $18.4 million of
stockholders' equity. See "Certain
Considerations--Substantial Leverage."
. Loss of Conversion and Anti-Dilution
Rights. The Debentures are currently convertible
into shares of Common Stock. The conversion
feature is protected by certain anti-dilution
provisions. After consummation of the Merger, the
Debentures will no longer be convertible into
shares of Common Stock, but will be convertible
into cash in an amount equal to $189.60 per
$1,000 principal amount of Debentures. See
"Certain Considerations--Loss of Conversion and
Anti-Dilution Rights."
BROKERAGE COMMISSION No brokerage commissions are payable by Holders
to the Dealer Manager, the Trustee, the
Information Agent, the Company or the Depositary.
DEALER MANAGER The Company has retained DLJ to act as the dealer
manager in connection with the Tender Offer. In
its capacity as the dealer manager, DLJ may
contact Holders regarding the Tender Offer and
may request brokers, dealers and other nominees
to forward this Offer to Purchase and related
materials to beneficial owners of Debentures.
DEPOSITARY The Depositary for the Tender Offer is Harris
Trust and Savings Bank.
INFORMATION AGENT The Information Agent for the Tender Offer is
Georgeson & Company, Inc.
5
<PAGE>
CERTAIN CONSIDERATIONS
In deciding whether to participate in the Tender Offer, each Holder should
consider carefully, in addition to the other information contained or
incorporated by reference herein, the following:
MARKET AND TRADING INFORMATION
The Debentures are currently listed for quotation on NASDAQ. Although the
Company expects the Debentures to continue to be listed for quotation on
NASDAQ, to the extent that Debentures are tendered and accepted for payment in
the Tender Offer, the trading market for Debentures that remain outstanding
will be significantly more limited, which is likely to adversely affect the
liquidity of the Debentures. If Debentures in an aggregate principal amount
equal to the Maximum Tender Amount are purchased in the Tender Offer, only
$23.8 million aggregate principal amount of Debentures will remain
outstanding. If Debentures in an aggregate principal amount equal to the
Minimum Tender Amount are purchased in the Tender Offer, only $51.3 million
aggregate principal amount of Debentures will remain outstanding. An issue of
securities with a smaller float may command a lower price than would a
comparable issue of securities with a greater float. Therefore, the market
price for Debentures that are not tendered or not purchased in the Tender
Offer may be adversely affected to the extent that the amount of the
Debentures purchased pursuant to the Tender Offer reduces the float. The
reduced float also will tend to make the trading prices of the Debentures that
are not tendered or purchased more volatile. As a result, there can be no
assurance that there will be any active trading market for the Debentures
after consummation of the Tender Offer.
SUBORDINATION
In connection with the Merger, it is expected that the Subsidiary will enter
into the New Credit Facility and the Company and the Subsidiary will issue
notes, each of which will constitute significant additional indebtedness. All
proceeds from the Notes and borrowings under the New Credit Facility will rank
senior or effectively be senior in right of payment to the Debentures. The
Debentures will be, or will be structurally, junior to all creditors of the
Company's direct and indirect subsidiaries, including the holders of the Notes
and the lenders under the New Credit Facility. As of March 28, 1998, the
Company had approximately $3.2 million of indebtedness ranking structurally
senior to the Debentures. On a pro forma basis, after giving effect to the
transactions as of March 28, 1998, assuming the Minimum Tender Amount and the
Maximum Tender Amount, respectively, the Debentures not purchased in the
Tender Offer would have been junior, or structurally junior, to approximately
$129.7 and $154.6 million of indebtedness.
The ability of the Company and the Subsidiary to comply with the conditions
in the Indenture, the Notes indentures and the New Credit Facility may be
affected by events that are beyond their control. The breach of any such
conditions could result in a default under the Indenture, the Notes indentures
or the New Credit Facility, and in the event of any such default, could result
in acceleration of the debt outstanding thereunder. All such outstanding debt
would be required to be repaid in full before any payments could be made on
the Debentures. There can be no assurance that the assets of the Subsidiary
and the other subsidiaries of the Company would be sufficient to repay all
such outstanding debt and repay the Debentures.
The Company does not have, and may not in the future have, any assets other
than the stock of its subsidiaries. Because the Company is a holding company,
the holders of the Debentures are structurally junior to all creditors of the
Company's subsidiaries.
SUBSTANTIAL LEVERAGE
The Company expects to incur substantial indebtedness in connection with the
Merger. As of March 28, 1998, the Company had $89.5 million of indebtedness
outstanding and $123.6 million of stockholders' equity. As of March 28, 1998,
on a pro forma basis, after giving effect to the Transactions, assuming the
Minimum Tender Amount and the Maximum Tender Amount, respectively, the Company
would have had $181.0 and
6
<PAGE>
$178.4 million of indebtedness and $16.8 and $18.4 million of stockholders'
equity. The Company's debt service obligations could have important
consequences to the Holders, including the following: (i) a substantial
portion of the Company's cash flow available from operations after satisfying
certain liabilities arising in the ordinary course of business will be
dedicated to the payment of principal and interest on its indebtedness,
thereby reducing the funds that would otherwise be available to the Company,
including for acquisitions and future business opportunities; (ii) the
Company's ability to obtain additional financing in the future may be limited;
(iii) certain of the Company's borrowings (including, but not limited to, the
amounts borrowed under the New Credit Facility) may be at variable rates of
interest, which could cause the Company to be vulnerable to increases in
interest rates; (iv) the Company's flexibility in planning for, or reacting
to, changes in its business and the industry may be limited; (v) the Company's
higher degree of leverage may make it vulnerable to economic downturns and
competitive pressures; and (vi) a substantial decrease in net operating cash
flows or an increase in expenses of the Company could make it difficult for
the Company to meet its debt service requirements or force it to modify its
operations.
The ability of the Company and the Subsidiary to make scheduled payments of
the principal of, or to pay interest on, or to refinance its indebtedness
(including the Debentures) depends on its future performance, which is subject
to economic, financial, competitive and other factors beyond its control. If
unable to make scheduled payments, the Company and the Subsidiary may be
required to refinance all or a portion of their indebtedness, including the
Debentures, to sell assets or to obtain additional financing. There can be no
assurance that any such refinancing would be possible or that any such sales
of assets or additional financing could be achieved.
LOSS OF CONVERSION AND ANTI-DILUTION RIGHTS
Each Debenture is currently convertible into shares of Common Stock. The
conversion feature is protected by certain anti-dilution provisions. After
consummation of the Merger, the Debentures (i) will no longer be convertible
into shares of Common Stock and the anti-dilution provisions will no longer
apply and (ii) if converted, would entitle the Holder to receive cash in an
amount equal to $189.60 per $1,000 principal amount of Debentures.
PRO RATA ACCEPTANCE
The Company will purchase Debentures in the Tender Offer up to an aggregate
principal amount equal to the Maximum Tender Amount. To the extent that the
aggregate principal amount of the Debentures tendered exceeds the Maximum
Tender Amount, the Company will purchase the tendered Debentures on a Pro Rata
Acceptance basis. There can be no assurance, therefore, that all of a
tendering Holder's tendered Debentures will be purchased by the Company
pursuant to the Tender Offer.
CERTAIN BANKRUPTCY CONSIDERATIONS
Any payments made to Holders in consideration for their Debentures may also
be subject to challenge as a preference if such payments: (a) are made within
90 days of a bankruptcy filing by the Company (or within one year in the case
of Holders who are determined to be insiders of the Company); (b) are made
when the Company is insolvent; and (c) permit the Holders to receive more than
they otherwise might receive in a liquidation under applicable bankruptcy
laws. If such payments were deemed to be a preference, the full amount of such
payments could be recovered by the Company as a debtor in possession or by the
Company's trustee in bankruptcy, and the Holder would be entitled to assert
claims in respect of the Debentures against the Company in its reorganization
or bankruptcy case. The Company does not believe that it is currently
insolvent, will be insolvent after giving effect to the Transactions or will
be insolvent within one year, although for purposes of the preference laws
described above, the Company would be presumed insolvent for the 90 days
preceding a bankruptcy or reorganization case.
7
<PAGE>
THE COMPANY
Bell Sports is the leading manufacturer and marketer of bicycle helmets
worldwide and a leading supplier of a broad line of bicycle accessories in
North America. The Company is also a leading supplier of auto racing helmets
and a supplier of bicycle accessories worldwide. Recently, the Company began
marketing in-line skating, snowboard, snow skiing and water sport helmets. The
Company markets its helmets under the widely recognized BELL and GIRO brand
names, and its accessories under such leading brands as BELL, BLACKBURN, RHODE
GEAR, VISTALITE, COPPER CANYON CYCLING and SPOKE-HEDZ. Bell Sports is a
leading supplier of bicycle helmets and accessories to mass merchants,
independent bicycle dealers, sporting goods retailers and mail order catalog
businesses and markets products across all price points. The principal
executive offices of the Company are located at 6350 San Ignacio Avenue, San
Jose, California 95119.
THE DEBENTURES
The following summary of the Debentures does not purport to be complete and
is qualified in its entirety by reference to the Indenture. The Company issued
$86,250,000 aggregate principal amount of Debentures in November 1993, all of
which is currently outstanding. In connection with the Merger, the Company is
not obligated to tender for or otherwise repurchase the Debentures. The
Debentures or portions thereof are convertible at the option of the Holder at
any time on or prior to the close of business on the maturity date into fully
paid, non-assessable shares of Common Stock, at a conversion price per share
of Common Stock of $54.06 (subject to adjustment). After consummation of the
Merger, the Debentures (i) will no longer be convertible into shares of Common
Stock and the anti-dilution provisions will no longer apply and (ii) if
converted, would entitle the Holder to receive cash in an amount equal to
$189.60 per $1,000 principal amount of Debentures.
Although the Company does not presently intend to redeem the Debentures, the
Debentures are redeemable at the option of the Company, in whole or in part,
at any time after November 15, 1996, and prior to maturity, in accordance with
the terms of the Debentures and the Indenture. If the Company were to redeem
the Debentures in the twelve-month period commencing November 15, 1997, the
redemption price to be paid would be 101.82% of the principal amount thereof,
declining to 101.21% of the principal amount thereof for the twelve-month
period commencing November 15, 1998, declining to 100.61% of the principal
amount thereof for the twelve-month period commencing November 15, 1999 (in
each case, together with accrued and unpaid interest to the redemption date).
In addition, from time to time after the Merger, the Company may repurchase
additional Debentures in open market transactions or otherwise.
8
<PAGE>
MARKET AND TRADING INFORMATION
The Debentures are currently listed on NASDAQ. The following table sets
forth, for the fiscal quarters indicated, the low and high closing prices for
the Debentures. Although the Company expects the Debentures to continue to be
listed for quotation on NASDAQ, to the extent that the Debentures are traded,
prices of such Debentures may fluctuate greatly depending on the trading
volume and the balance between buy and sell orders. In addition, quotations
for securities that are not widely traded, such as the Debentures, may differ
from actual trading prices and should be viewed as approximations. The Company
believes that the trading market for the Debentures that remain outstanding
after the Tender Offer will be more limited. The last reported sale price of
the Debentures on NASDAQ on June 29, 1998 was $855 per $1,000 principal
amount. See "Certain Considerations--Market and Trading Information."
<TABLE>
<CAPTION>
PRICE
-----------------------
LOW HIGH
---------- -----------
(AS A % OF PRINCIPAL)
<S> <C> <C>
FISCAL 1997:
First Quarter (ending September 28)................ 71.50% 75.88%
Second Quarter (ending December 28)................ 75.63% 78.50%
Third Quarter (ending March 29).................... 76.88% 77.50%
Fourth Quarter (ending June 28).................... 75.88% 84.38%
FISCAL 1998:
First Quarter (ending September 27)................ 84.13% 88.13%
Second Quarter (ending December 27)................ 86.38% 88.13%
Third Quarter (ending March 28).................... 84.25% 88.50%
Fourth Quarter (ending June 27).................... 84.00% 85.75%
FISCAL 1999:
First Quarter (through June 29).................... 84.00% 85.50%
</TABLE>
9
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS AND
BALANCE SHEET INFORMATION
The consolidated historical statement of operations and balance sheet
information for the fiscal years ended June 29, 1996 and June 28, 1997 is
derived from the audited consolidated financial statements of the Company for
such periods or at such dates. Such data at or for the nine months ended March
29, 1997 and March 28, 1998 is derived from unaudited consolidated financial
statements. In management's opinion, the Company's unaudited consolidated
financial statements at or for the nine months ended March 29, 1997 and March
28, 1998 include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results of operations
and financial position for the respective periods. The results of operations
for the nine months ended March 29, 1997 and March 28, 1998 are not
necessarily indicative of the results that may be expected for the entire year
or any other interim period.
The unaudited pro forma consolidated balance sheet information at June 28,
1997 and March 28, 1998 is presented on (i) an actual basis, (ii) as if the
Company had completed the Merger, (iii) as if the Company had completed the
Transactions in which the Minimum Tender Amount of Debentures were
repurchased, and (iv) as if the Company had completed the Transactions in
which the Maximum Tender Amount of Debentures were repurchased, as if such
transactions had occurred on June 28, 1997 and March 28, 1998, respectively.
The unaudited pro forma consolidated statement of operations information for
the fiscal year ended June 28, 1997 and nine months ended March 28, 1998 are
presented (i) on an actual basis, (ii) as if the Company had completed the
Merger, (iii) as if the Company had completed the Transactions in which the
Minimum Tender Amount of Debentures were repurchased, and (iv) as if the
Company had completed the Transactions in which the Maximum Tender Amount of
Debentures were repurchased, as if such transactions had occurred, in each
case, on June 30, 1996.
It is expected that the Merger and the transactions contemplated by the
Merger Agreement will be accounted for as a recapitalization under generally
accepted accounting principles for financial reporting purposes. Under
recapitalization accounting, the historical values of assets and liabilities
continue to be reported by the Company and stockholders' equity is reduced by
the amount of the merger consideration paid to the stockholders of the
Company. New equity and debt issued by the Company are recorded based on the
respective proceeds to the Company, net of issuance costs.
The pro forma adjustments are based upon available information and upon
certain assumptions that the Company believes are reasonable. In the opinion
of management, all adjustments necessary to fairly present the pro forma
information have been made. The unaudited pro forma consolidated financial
statement information is provided for informational purposes only and does not
purport to be indicative of the results that would have been reported had such
events actually occurred on the dates specified, nor is it indicative of the
Company's future results if the aforementioned transactions are completed. The
Company cannot predict whether the consummation of the Merger or the Tender
Offer will conform to the assumptions used in preparation of the unaudited pro
forma consolidated statement of operations and balance sheet information.
10
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS AND
BALANCE SHEET INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<TABLE>
<CAPTION>
JUNE 28, 1997
--------------------------------------
PRO FORMA
----------------------------
MINIMUM MAXIMUM
JUNE 29, THE TENDER TENDER
1996 ACTUAL MERGER AMOUNT AMOUNT
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS (FOR
THE YEAR ENDED):
Net sales.................... $262,340 $259,534 $259,534 $259,534 $259,534
Net loss(A).................. (12,375) (18,188) (21,499) (25,678) (26,065)
BALANCE SHEET:
Working capital(B)........... $149,474 $130,677 $105,974 $104,832 $103,935
Total assets(B).............. 298,635 268,754 243,549 248,454 248,037
Total assets less
goodwill(B)................. 227,390 212,283 187,078 191,983 191,566
Total indebtedness(C)........ 125,571 109,022 173,495 195,266 192,387
Stockholders' equity(D)...... 136,041 118,965 30,592 12,583 14,148
PER SHARE (FOR THE YEAR
ENDED):(E)
Net loss per share--basic.... $ (0.90) $ (1.33) $ (21.29) $ (25.42) $ (25.81)
Net loss per share--diluted.. (0.90) (1.33) (21.29) (25.42) (25.81)
OTHER FINANCIAL DATA:
Ratio of earnings to fixed
charges(F).................. -- -- -- -- --
Fixed charges in excess of
earnings before fixed
charges..................... $ 20,625 $ 21,151 $ 26,669 $ 33,634 $ 34,280
Book value per common share.. $ 9.93 $ 8.65 $ 30.29 $ 12.46 $ 14.01
<CAPTION>
MARCH 28, 1998
--------------------------------------
PRO FORMA
----------------------------
MINIMUM MAXIMUM
MARCH THE TENDER TENDER
27, 1997 ACTUAL MERGER AMOUNT AMOUNT
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS (FOR
THE NINE MONTHS ENDED):
Net sales.................... $189,267 $138,554 $138,554 $138,554 $138,554
Net income (loss)(A)......... (22,414) 4,119 1,095 (2,040) (2,330)
BALANCE SHEET:
Working capital(B)........... $170,311 $122,528 $102,168 $101,350 $100,708
Total assets(B).............. 309,776 247,330 225,947 230,970 230,646
Total assets less
goodwill(B)................. 252,814 192,570 171,187 176,210 175,886
Total indebtedness(C)........ 153,189 89,481 158,842 180,985 178,398
Stockholders' equity(D)...... 114,264 123,593 34,753 16,816 18,436
PER SHARE (FOR THE NINE
MONTHS ENDED):(E)
Net income (loss) per share--
basic....................... $ (1.63) $ 0.30 $ 1.08 $ (2.02) $ (2.31)
Net income (loss) per share--
diluted..................... (1.63) 0.29 1.08 (2.02) (2.31)
OTHER FINANCIAL DATA:
Ratio of earnings to fixed
charges(F).................. -- 2.45x 1.18x -- --
Fixed charges in excess of
earnings before fixed
charges..................... $ 26,063 -- -- $ 3,621 $ 4,105
Book value per share......... $ 8.31 $ 8.90 $ 34.41 $ 16.65 $ 18.25
</TABLE>
11
<PAGE>
NOTES TO SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS AND BALANCE SHEET INFORMATION
(A) Pro forma net income (loss) for the three alternatives presented reflect
adjustments primarily resulting from additional interest expense incurred
on incremental debt financing that the Company expects to incur in the
Transactions.
(B) Pro forma working capital, total assets and total assets less goodwill for
the three alternatives presented primarily reflect adjustments resulting
from the use of available cash in the Transactions.
(C) Pro forma total indebtedness reflects adjustments to record incremental
debt financing expected to be incurred in the offering of the Notes,
including amounts expected to be paid in the Tender Offer under the Pro
Forma Minimum Tender Amount and Pro Forma Maximum Tender Amount
alternatives.
(D) Pro forma stockholders' equity for the three alternatives presented
reflects the repurchase of Common Stock, stock options and other stock-
based incentive compensation pursuant to the Merger Agreement, an equity
contribution by the Investors and tax-effected one-time costs and
benefits, including transaction costs, the gain on the repurchased
Debentures under the Tender Offer and the write-off of debt issue costs on
the Company's existing indebtedness. The equity contribution by the
Investors under the Pro Forma Merger, Pro Forma Minimum Tender Amount and
Pro Forma Maximum Tender Amount alternatives was $65.0 million, $45.0
million and $45.0 million, respectively.
(E) Basic earnings per share excludes dilution and is computed by dividing
income available to common stockholders by the weighted-average common
shares outstanding for the period. Diluted earnings per share reflects the
weighted-average common shares outstanding plus the potential effect of
securities or contracts which are convertible to common shares such as
options, warrants, and convertible debt and preferred stock. After the
Merger, the Company does not expect to have any dilutive instruments
outstanding.
(F) The ratio of earnings to fixed charges is computed by dividing pre-tax net
income (loss after adding back fixed charges (interest expense and
facility charges), by fixed charges. The Company was unable to fully cover
the indicated fixed charges by earnings for certain periods presented and
instead has disclosed the amount by which fixed charges exceed earnings
before fixed charges where applicable.
12
<PAGE>
BACKGROUND AND PURPOSE OF THE TENDER OFFER
BACKGROUND
In February 1998, HB Acquisition and the Company entered into the Merger
Agreement, which provides for the Merger. Consummation of the Merger is
subject to obtaining the requisite vote of the Company's stockholders and
satisfaction of the conditions set forth in the Merger Agreement. The
stockholders meeting at which the vote on the Merger will be held is scheduled
for August 11, 1998. Pursuant to the terms of the Merger Agreement, as of the
Effective Time, each share of Common Stock (other than (i) shares of Common
Stock held by HB Acquisition or shares of Common Stock held directly or
indirectly by the Company, which shares will be canceled and (ii) shares of
Common Stock held by persons perfecting appraisal rights) will be converted
into the right to receive $10.25 in cash. After the Merger, the Common Stock
will no longer be listed on the NASDAQ and will be deregistered under the
Exchange Act. In addition, in connection with the Merger, it is anticipated
that immediately prior to the Effective Time, CB Capital Investors, L.P. will
exchange shares of Common Stock worth approximately $5.0 million (valued at
the $10.25 per share merger consideration) with HB Acquisition, and receive,
in consideration thereof, equity of HB Acquisition. In connection with the
Merger and prior to the Effective Time, it is anticipated that Harvard Private
Capital and Brentwood will invest an aggregate of up to $65.0 million in
common and preferred equity of the Company, and thereby collectively will own
a majority of the voting equity of the Company and have the ability to elect a
majority of the directors and exert significant influence on the Company. In
addition, in connection with the Merger, certain members of the Company's
existing management team have entered into agreements relating to their
employment with the Company after the Merger and certain of those members of
management have entered into agreements relating to their equity holdings in
the Company. In connection with the Merger, certain members of the Company's
existing management team may be provided with an opportunity to invest in
equity of the Company. Pursuant to the Merger Agreement, the directors of HB
Acquisition will become directors of the Company and the bylaws of HB
Acquisition will become the bylaws of the Company.
The Company expects, although it has not made definitive plans or
arrangements, that there will be private placements of the Notes by the
Company and the Subsidiary concurrently with the consummation of the Merger.
The Company intends to use a portion of the proceeds from the offering of the
Notes to purchase Debentures tendered pursuant to the Tender Offer. The Notes
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. All of the Notes and
borrowings under the New Credit Facility will rank senior or effectively be
senior in right of payment to the Debentures. The Company is not seeking the
tender of all outstanding Debentures to avoid the Debentures being delisted
from NASDAQ.
The Company is neither obligated to tender for or otherwise repurchase the
Debentures pursuant to the terms of the Indenture. After consummation of the
Merger, the Debentures will no longer be convertible into shares of Common
Stock, but will be convertible into cash in an amount equal to $189.60 per
$1,000 principal amount of Debentures.
PURPOSE
The purpose of the Tender Offer is to enable the Company to reduce the
amount of debt that becomes due on November 15, 2000 from approximately $86.3
million to approximately $23.8 million and to provide greater flexibility in
managing its operations and financing its business after the recapitalization
of the Company in connection with the Merger. The Company intends to retire
any and all Debentures purchased pursuant to the Tender Offer.
THE TENDER OFFER
PRINCIPAL TERMS OF THE TENDER OFFER
Upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the accompanying Letter of Transmittal, the Company is
offering to purchase up to $62.5 million aggregate principal amount of the
Debentures for a cash purchase price of $890 per $1,000 principal amount plus
accrued and unpaid interest from May 15, 1998 up to, but not including, the
date of payment.
13
<PAGE>
CONDITIONS OF THE TENDER OFFER
Notwithstanding any other provision of the Tender Offer, the Company shall
not be required to accept for purchase, or to pay for, the Debentures tendered
pursuant to the Tender Offer, and may terminate, extend or amend the Tender
Offer or delay or refrain (subject to Rule 14e-1(c) under the Exchange Act)
acceptance for purchase or payment of Debentures so tendered, if, as of the
Expiration Date, (i) the Merger has not been consummated, (ii) the note
offering by the Subsidiary has not been completed, (iii) the Subsidiary has
not entered into the New Credit Facility or the amount of the New Credit
Facility, together with other funds available to the Company, are insufficient
to fund amounts payable in connection with the Merger, (iv) Debentures in an
amount less than the Minimum Tender Amount have been tendered or (v) any of
the General Conditions have not been satisfied. Consummation of the Merger is
conditioned upon: (i) obtaining requisite shareholder approval from the
Company's shareholders, (ii) inclusion in the proxy statement relating to the
Merger of a statement to the effect that it is expected that the Merger and
the related transactions will be treated as a recapitalization for accounting
purposes, (iii) receipt of sufficient funds to enable HB Acquisition to
consummate the Merger and the related transactions and to meet the working
capital requirements of the Company, (iv) the absence of any occurrence or
event (whether existing or threatened) that, individually or in the aggregate
with other such occurrences or events, could reasonably be expected to become
or result in a Material Adverse Effect (as defined in the Merger Agreement) on
the Company and its subsidiaries, and (v) certain other conditions set forth
in the Merger Agreement. The sale of the Notes is expected to be conditioned
upon: (i) the internal reorganization of certain wholly-owned subsidiaries of
the Company, (ii) consummation of the Merger, and (iii) other customary
conditions.
The General Conditions shall be deemed to have been satisfied unless any of
the following conditions shall occur on or prior to the acceptance for payment
of the Debentures tendered pursuant to the Tender Offer (each of (1) through
(7), a "General Condition" and collectively, the "General Conditions"):
(1) there shall have been threatened, instituted or pending any action or
proceeding by or before any court or governmental regulatory or
administrative authority or tribunal, domestic or foreign, which challenges
the making of the Tender Offer, the acquisition of Debentures pursuant to
the Tender Offer or otherwise relates in any manner to the Tender Offer;
(2) a statute, rule, regulation, judgment, order, stay, decree or
injunction shall have been threatened, proposed, sought, promulgated,
enacted, entered, enforced or deemed to be applicable by any court or
governmental regulatory or administrative agency, authority or tribunal,
domestic or foreign, which, in the sole judgment of the Company, would or
might directly or indirectly prohibit, prevent, restrict or delay
consummation of the Tender Offer;
(3) there shall have occurred or be likely to occur any event affecting
the business or financial affairs of the Company that would or might
prohibit, prevent, restrict or delay consummation of the Tender Offer or
that will, or is reasonably likely to, materially impair the contemplated
benefits of the Tender Offer, to the Company or otherwise results in the
Tender Offer not being or reasonably likely not being in the best interests
of the Company;
(4) (i) any general suspension or limitation of trading in, or limitation
on prices for, securities in the financial markets of the United States;
(ii) any suspension of trading of any securities of the Company on any
United States securities exchange or interdealer quotation system; (iii)
the declaration of a banking moratorium, or any suspension of payments in
respect of banks, by Federal, California or New York authorities; or
(iv) any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by the United States or any
other substantial state, national, or international calamity or emergency
if the effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable in the Company's view for the
Company to proceed with the Tender Offer;
(5) any change in the general political, market, economic or financial
conditions in the United States or abroad that in the Company's opinion has
or may have a material adverse effect with respect to the Company's
business, operations or prospects or the trading in the securities of the
Company, or any decline
14
<PAGE>
in either the Dow Jones Industrial Average or the Standard and Poor's Index
of 500 Industrial companies by an amount in excess of 10%, as measured from
the close of business on June 29, 1998;
(6) the Company shall not have obtained all consents, approvals, waivers
or amendments from third parties necessary to permit the consummation of
the Tender Offer; or
(7) any change shall have occurred (or any development shall have
occurred involving any prospective change) in the business, assets,
liabilities, condition (financial or otherwise), operations, results of
operations, or prospects of the Company that, in the sole judgment of the
Company, has or may have a material adverse effect on the Company or that
would or might prohibit, prevent, restrict or delay consummation of the
Tender Offer or the Subsidiary's ability to sell the Subsidiary Notes and
enter into the New Credit Facility.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company, in its sole discretion, regardless of the
circumstances giving rise to any such condition or may be waived by the
Company in whole or in part at any time and from time to time in the Company's
sole discretion. The failure by the Company at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time.
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENTS
The Tender Offer will expire on the Expiration Date. The Company expressly
reserves the right to extend the Tender Offer on a daily basis or for such
period or periods as it may determine in its sole discretion from time to time
by giving written or oral notice to the Depositary and by making a public
disclosure prior to 9:00 a.m., New York City time, on the next business day
following the previously scheduled Expiration Date. During any extension of
the Tender Offer, all Debentures previously tendered and not accepted for
purchase will remain subject to the Tender Offer and may, subject to the terms
and conditions of the Tender Offer, be accepted for purchase by the Company.
The Company expressly reserves the absolute right, in its sole discretion,
to (i) waive any condition to the Tender Offer, (ii) amend any terms of the
Tender Offer and (iii) modify the Tender Offer. Any waiver or amendment
applicable to the Tender Offer will apply to all Debentures tendered
regardless of when or in what order such Debentures were tendered. If the
Company makes a material change in the terms of the Tender Offer or in the
information concerning the Tender Offer or if it waives a material condition
of the Tender Offer, the Company will disseminate additional Tender Offer
materials and will extend the Tender Offer, in each case, to the extent
required by law. See "--Withdrawal of Tenders; Absence of Appraisal Rights."
If the Company amends the terms of the Tender Offer, such amendment will apply
to all Debentures tendered pursuant thereto regardless of when or in what
order such Debentures were tendered.
The Company expressly reserves the right, in its sole discretion, to
terminate the Tender Offer if any of the conditions applicable thereto set
forth under "--Conditions to the Tender Offer" shall exist and shall not have
been waived by the Company. Any such termination will be followed promptly by
public announcement thereof. In the event the Company shall terminate the
Tender Offer, it shall give immediate notice thereof to the Depositary, and
all Debentures theretofore tendered pursuant to the Tender Offer shall be
returned promptly to the tendering Holders thereof. See "--Withdrawal of
Tenders; Absence of Appraisal Rights" and "--Conditions of the Tender Offer."
Any extension, waiver of a condition, delay, termination or amendment of the
Tender Offer will be followed as promptly as practicable by a press release or
other public announcement thereof, such announcement in the case of an
extension to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner by which the Company may choose to make such announcement,
the Company will not, unless otherwise required by law, have any obligation to
publish, advertise or otherwise communicate any such announcement.
15
<PAGE>
ACCEPTANCE OF DEBENTURES FOR PURCHASE; PAYMENT FOR DEBENTURES; MAXIMUM TENDER
AMOUNT AND PRO RATA ACCEPTANCE
Upon the terms and subject to the conditions of the Tender Offer, promptly
after the Expiration Date, the Company will, subject to the satisfaction or
waiver of all relevant conditions, accept for purchase, and pay for,
Debentures validly tendered and not withdrawn under the Tender Offer on or
prior to the Expiration Date; provided, however, that if more than the Maximum
Tender Amount of Debentures has been tendered, the Company will purchase the
Maximum Tender Amount on a Pro Rata Acceptance basis.
The Company expressly reserves the right, in its sole discretion, to delay
acceptance for purchase of Debentures tendered under the Tender Offer or the
payment for Debentures accepted for purchase (subject to Rule 14e-1(c) under
the Exchange Act, which requires that the Company pay the consideration
offered or return the Debentures deposited by or on behalf of the Holders
promptly after the termination or withdrawal of the Tender Offer), or to
terminate the Tender Offer and not accept for purchase any Debentures not
theretofore accepted for purchase, if any of the conditions set forth under
"--Conditions of the Tender Offer" shall not have been satisfied or waived by
the Company or in order to comply in whole or in part with any applicable law.
In all cases, payment for Debentures purchased pursuant to the Tender Offer
will be made only after timely receipt by the Depositary of (i) such
Debentures, or timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Debentures into the Depositary's account at DTC
pursuant to the procedures set forth below in "Procedures for Tendering
Debentures," (ii) a properly completed and duly executed Letter of Transmittal
(or an Agent's Message in lieu thereof) and (iii) all necessary signature
guarantees and any other documents required by the Letter of Transmittal. See
"--Procedures for Tendering Debentures" for a description of the procedures
for tendering Debentures pursuant to the Tender Offer.
For purposes of the Tender Offer, the Company will be deemed to have
accepted for payment (and therefore purchased) Debentures when and if it gives
oral, to be followed by written, notice to the Depositary of its acceptance of
such Debentures for payment pursuant to the Tender Offer. Payment for
Debentures purchased pursuant to the Tender Offer will be made by the Company
on the Payment Date by depositing the Tender Offer Consideration therefor with
the Depositary, which will act as agent for tendering Holders for the purpose
of receiving Tender Offer Consideration from the Company and transmitting
Tender Offer Consideration to the tendering Holders.
Tenders with respect to the Debentures pursuant to the Tender Offer will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof.
If, for any reason whatsoever, acceptance for purchase of or payment for
validly tendered Debentures pursuant to the Tender Offer is delayed or the
Company is unable to accept for purchase or to pay for validly tendered
Debentures pursuant to the Tender Offer, then the Depositary may,
nevertheless, on behalf of the Company, retain tendered Debentures, without
prejudice to the rights of the Company described under "--Expiration Date;
Extension; Termination; Amendments," "--Conditions of the Tender Offer" and
"--Withdrawal of Tenders; Absence of Appraisal Rights," but subject further to
Rule 14e-1(c) under the Exchange Act, which requires that the Company pay the
consideration offered or return the Debentures deposited by or on behalf of
the Holders promptly after the termination or withdrawal of the Tender Offer.
The Company does not expect to increase the consideration offered in the
Tender Offer, but if the consideration offered in the Tender Offer is
increased, all tendering Holders whose Debentures are accepted for payment
pursuant to the Tender Offer will be given the increased consideration
regardless of when or in what order such Debentures were tendered.
Under no circumstances will any interest be payable because of any delay in
the transmission of funds to the Holders of purchased Debentures. If any
tendered Debentures are not accepted for payment for any reason pursuant to
the terms and conditions of the Tender Offer or if certificates are submitted
evidencing more Debentures than are tendered, certificates evidencing
unpurchased Debentures will be returned, without expense, to the tendering
Holder (or, in the case of Debentures tendered by book-entry transfer into the
Depositary's
16
<PAGE>
account at DTC, the account maintained at DTC designated by the participant
therein who so delivered such Debentures), unless otherwise requested by such
Holder under "Special Delivery Instructions" in the Letter of Transmittal,
promptly following the Expiration Date or the termination of the Tender Offer.
Tendering Holders whose Debentures are purchased in the Tender Offer will
not be obligated to pay brokerage commissions or fees or to pay transfer taxes
with respect to the purchase of their Debentures unless the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" in the respective Letter of Transmittal has been completed, as
described in the instructions thereto. The Company will pay all other charges
and expenses in connection with the Tender Offer. See "--Depositary" and "--
Miscellaneous."
PROCEDURES FOR TENDERING DEBENTURES
Proper Tender of Debentures. For Debentures to be properly tendered pursuant
to the Tender Offer, (i) such Debentures, together with a properly completed
and duly executed Letter of Transmittal (or manually signed facsimile
thereof), and any other documents required by the Letter of Transmittal, must
be received on or prior to the Expiration Date by the Depositary at one of the
addresses set forth on the back cover of this Offer to Purchase, or (ii) such
Debentures must be tendered pursuant to the procedure for book-entry transfer
described below under the caption "Book-Entry Delivery" and a Book-Entry
Confirmation, including an Agent's Message, must be received by the
Depositary, in each case on or prior to the Expiration Date, or (iii) the
tendering Holder must comply with the guaranteed delivery procedures described
below under the caption "Guaranteed Delivery." Holders whose Debentures are
registered in the name of a nominee are urged to contact such nominee promptly
if they wish to accept the Tender Offer. LETTERS OF TRANSMITTAL SHOULD BE SENT
ONLY TO THE DEPOSITARY, NOT THE COMPANY, THE TRUSTEE, THE INFORMATION AGENT OR
THE DEALER MANAGER.
Except as provided below under the captions "Book-Entry Delivery" and
"Guaranteed Delivery," unless the Debentures being tendered are deposited with
the Depositary on or prior to the Expiration Date (accompanied by a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal), the Company may, at its option, reject
such tender. If less than the entire principal amount of any Debentures
evidenced by a submitted certificate(s) is to be tendered, the tendering
Holder should fill in the principal amount tendered in the appropriate box on
the Letter of Transmittal. The entire principal amount represented by all
Debentures deposited with the Depositary will be deemed to have been tendered
unless otherwise indicated.
In all cases, notwithstanding any provision hereof, the payment for
Debentures tendered and accepted for payment pursuant to the Tender Offer will
be made only after the timely receipt by the Depositary of (i) certificates
for such Debentures or a timely Book-Entry Confirmation, (ii) the Letter of
Transmittal (or a manually signed facsimile thereof) properly completed and
duly executed, or an Agent's Message, and (iii) any required signature
guarantees or other documents required by such Letter of Transmittal.
Method of Delivery. ALL LETTERS OF TRANSMITTAL, NOTICES OF GUARANTEED
DELIVERY AND DEBENTURES SHOULD BE DELIVERED ONLY BY COURIER, HAND DELIVERY OR
TRANSMITTED BY MAIL. DELIVERIES SHOULD BE MADE ONLY TO THE DEPOSITARY, NOT TO
THE COMPANY, THE TRUSTEE, THE INFORMATION AGENT OR THE DEALER MANAGER. THE
METHOD OF DELIVERY OF CERTIFICATES FOR DEBENTURES AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING HOLDER, AND DELIVERY WILL
BE DEEMED TO BE MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
CERTIFICATES OF DEBENTURES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Signature Guarantees. No signature guarantees are required on the Letter of
Transmittal if the Letter of Transmittal is signed by the registered holder of
the Debentures tendered herewith and payment is to be made directly to such
registered holder, or if Debentures are tendered for the account of an
institution that is a member of a Signature Guarantee Program recognized by
the Depositary (i.e, the Securities Transfer Agent Medallion Program (STAMP),
the Stock Exchanges Medallion Program (SEMP) and the New York Stock Exchange
17
<PAGE>
Medallion Program (MSP)) (each such entity being hereinafter referred to an as
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. (See Instruction 3
of the Letter of Transmittal). If a Debenture is registered in the name of a
person other than the person signing a Letter of Transmittal, or if payment is
to be made or Debentures not purchased or tendered are to be issued, to a
person other than the registered holder, then such Debentures must be endorsed
or accompanied by a written instrument or instruments of transfer in a form
satisfactory to the Company, in either case, executed by the registered holder
with the signature guarantees by an Eligible Institution.
Book-Entry Delivery. The Depositary will establish an account or accounts
with respect to the Debentures at DTC for purposes of the Tender Offer within
two business days after the date of the commencement of the Tender Offer, and
any financial institution that is a participant in DTC's system may make book-
entry delivery of the Debentures by causing DTC to transfer such Debentures
into the Depositary's account at DTC in accordance with DTC's procedure for
such transfer. Although delivery of Debentures may be effected through book-
entry transfer at DTC, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees or an Agent's Message, a confirmation of such tender and
any other documents required by the Letter of Transmittal must, in any case,
be transmitted to and received by the Depositary at one of the addresses set
forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date, or the Holder must comply with the guaranteed delivery
procedures described below.
The term "Agent's Message" means a message transmitted by DTC and received
by the Depositary and forming a part of a Book-Entry Confirmation, which
states that DTC has received an express acknowledgment from a participant in
DTC tendering the Debentures, that such participant has received the Letter of
Transmittal and agrees to be bound by the terms of the Letter of Transmittal
(or, in the case of an Agent's Message relating to a guaranteed delivery, that
such participant has received and agrees to be bound by the Applicable Notice
of Guaranteed Delivery) and the Company may enforce such agreement against
such participant.
Guaranteed Delivery. If a Holder desires to tender Debentures pursuant to
the Tender Offer and such Holder's certificates are not immediately available
or time will not permit all required documents to reach the Depositary on or
prior to the Expiration Date, or such Holder cannot complete the procedures
for book-entry transfer on a timely basis, such Debentures may nevertheless be
tendered provided that all of the following conditions are satisfied:
(a) The tender is made by or through an Eligible Institution;
(b) On or prior to the Expiration Date, the Depositary receives from such
Eligible Institution at one of the addresses for the Depositary set forth
on the back cover of this Offer to Purchase, a properly completed and duly
executed Notice of Guaranteed Delivery (by mail, hand delivery or
facsimile). Such Notice of Guaranteed Delivery shall (i) be substantially
in the form made available by the Company, (ii) set forth the name and
address of the Holder, (iii) describe the Debentures and the principal
amount of the Debentures tendered, (iv) state that the tender is being made
thereby and (v) guarantee that, within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery, a duly executed Letter of Transmittal (or a manually signed
facsimile thereof) or an Agent's Message together with the certificates
representing such Debentures (or appropriate Book-Entry Confirmation) and
any other documents required by the Letter of Transmittal and the
instructions thereto will be deposited by the Eligible Institution with the
Depositary; and
(c) The certificates for the tendered Debentures in proper form for
transfer (or confirmation of book-entry transfer into the Depositary's
account at DTC), together with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), or
confirmation of a book-entry transfer of such Debentures into the
Depositary's account with DTC as described above, including an Agent's
Message in connection therewith, and all other documents required by the
Letter of Transmittal and the instructions thereto, are received by the
Depositary within three New York Stock Exchange trading days after the
execution of such Notice of Guaranteed Delivery.
18
<PAGE>
In all cases, payment for Debentures tendered and accepted for payment
pursuant to the Tender Offer will be made only after timely receipt by the
Depositary of certificates for such Debentures or confirmation of book-entry
transfer into the Depositary's account at DTC a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof) or
Agent's Message and any other documents required by the Letter of Transmittal.
Tender Constitutes an Agreement. The proper tender of Debentures pursuant to
any of the procedures described above will constitute a binding agreement
between the tendering Holders and the Company upon the terms and subject to
the conditions of the Tender Offer, and a representation that (i) such Holder
owns the Debentures being tendered and is entitled to tender such Debentures
as contemplated by the Tender Offer, all within the meaning of Rule 14e-1
under the Exchange Act and (ii) the tender of such Debentures complies with
Rule 14e-4 under the Exchange Act.
Further, by executing a Letter of Transmittal as set forth above or
permitting an Agent's Message to be delivered, and subject to and effective
upon acceptance for payment of and payment for the Debentures tendered
therewith, a tendering Holder irrevocably sells, assigns and transfers to, or
upon the order of, the Company all right, title and interest in and to all the
Debentures tendered thereby, waives any and all other rights with respect to
the Debentures (including without limitation any existing or past defaults and
their consequences in respect of the Debentures and the Indenture under which
the Debentures were issued) and releases and discharges the Company from any
and all claims such Holder may have now, or may have in the future, arising
out of, or related to, the Debentures, including without limitation any claims
that such Holder is entitled to receive additional principal or interest
payments with respect to the Debentures or to participate in any redemption or
defeasance of the Debentures. Each such Holder also appoints the Depositary
the true and lawful agent and attorney-in-fact of such Holder with respect to
such Debentures, with full power of substitution and resubstitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest) to (i) deliver such Debentures or transfer ownership of such
Debentures on the account books maintained by DTC, together, in each case,
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Company, (ii) present such Debentures for transfer on the books
of the Company, and (iii) receive all benefits or otherwise exercise all
rights of beneficial ownership of such Debentures (except that the Depositary
will have no rights to or control over funds from the Company, except as agent
for the Company, for the purchase price of any Debentures tendered pursuant to
the Tender Offer that are purchased by the Company), all in accordance with
the terms of the Tender Offer.
Determination of Validity; Rejection of Debentures; No Obligation to Give
Notice of Defects. All questions as to the principal amount of Debentures to
be accepted, the validity, form, eligibility (including the time of receipt)
and acceptance for payment of any tender of Debentures pursuant to the
procedures described herein and the form and validity (including time of
receipt of notices of withdrawal) of all documents will be determined by the
Company in its sole discretion, which determination shall be final and binding
on all parties. The Company reserves the absolute right to reject any or all
tendered Debentures determined by it not to be in proper form or the
acceptance of or payment for which may be unlawful. The Company also reserves
the absolute right to waive any of the conditions of the Tender Offer and any
defect or irregularity in the tender of any particular Debentures. The
Company's interpretation of the terms and conditions of the Tender Offer
(including without limitation the instructions in the Letter of Transmittal)
shall be final and binding. No alternative, conditional or contingent tenders
or deliveries will be accepted. Unless waived, any irregularities in
connection with tenders of Debentures must be cured within such time as the
Company shall determine. None of the Company, the Trustee, the Depositary, the
Dealer Manager, the Information Agent or any other person will be under any
duty to give notification of any defects or irregularities in such tenders of
Debentures or will incur any liabilities for failure to give such
notification. Tenders of Debentures will not be deemed to have been made until
such irregularities have been cured or waived. Any Debentures received by the
Depositary that are not properly tendered and as to which the irregularities
have not been cured or waived will be returned by the Depositary to the
tendering Holders (in the case of Debentures tendered by book-entry transfer
into the Depositary's account at DTC, by crediting the account maintained at
DTC from which such Debentures were delivered), unless such Holders have
otherwise provided in the Letter of Transmittal, as promptly as practicable
following the Expiration Date.
19
<PAGE>
Lost or Missing Certificates. If a Holder desires to tender a Debenture
pursuant to the Tender Offer, but the Debenture has been mutilated, lost,
stolen or destroyed, such Holder should write to or telephone the Trustee at
the address listed below, about procedures for obtaining replacement
certificates for such Debentures, arranging for indemnification or any other
matter that requires handling by such Trustee:
Harris Trust and Savings Bank
311 W. Monroe Street
Chicago, Illinois 60606
(312) 461-2575
BACKUP FEDERAL INCOME TAX WITHHOLDING
For a discussion of federal income tax consequences relating to backup
withholding, see "Certain Federal Income Tax Consequences--Backup
Withholding."
WITHDRAWAL OF TENDERS; ABSENCE OF APPRAISAL RIGHTS
Tenders of Debentures may be withdrawn at any time on or prior to the
Expiration Date by delivery of written notice or revocation in accordance with
the following procedures. Holders who wish to exercise their right of
withdrawal with respect to the Tender Offer must give written notice of
withdrawal delivered by mail or hand delivery which notice must be received by
the Depositary at one of the addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date. In order to be
effective, a notice of withdrawal must specify the name of the person who
deposited the Debentures to be withdrawn (the "Depositor"), the name in which
the Debentures are registered if different from that of the Depositor, and the
principal amount of the Debentures to be withdrawn. If certificates have been
delivered or otherwise identified (through confirmation of book-entry transfer
of such Debentures) to the Depositary, the name of the registered holder and
the certificate number or numbers relating to such Debentures withdrawn must
also be furnished to the Depositary as aforesaid prior to the physical release
of certificates for the withdrawn Debentures (or, in the case of Debentures
transferred by book-entry transfer, the name and number of the account at DTC
to be credited with withdrawn Debentures). The notice of withdrawal must be
signed by the Holder or accompanied by an Agent's Message in the same manner
as the Letter of Transmittal (including, in any case, any required signature
guarantee) or an Agent's Message, or be accompanied by documents of transfer
satisfactory to the Company and the Trustee to register the transfer of such
Debentures into the name of the Holder withdrawing the tender.
Withdrawals of tenders of Debentures may not be rescinded, and any
Debentures withdrawn will thereafter be deemed not validly tendered for
purposes of the Tender Offer. However, properly withdrawn Debentures may be
retendered by following one of the procedures described in "--Procedures for
Tendering Debentures" at any time on or prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding. None of the
Company, the Depositary, the Dealer Manager, the Information Agent, the
Trustee or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liabilities
for failure to give any such notification. There are no appraisal or similar
statutory rights available to the Holders in connection with the Tender Offer.
DEALER MANAGER
DLJ is acting as the Dealer Manager for the Company in connection with the
Tender Offer. Any questions or requests for assistance may be directed to the
Dealer Manager at the address or telephone number set forth on the back cover
of this Offer to Purchase.
20
<PAGE>
DEPOSITARY
The Depositary for the Tender Offer is Harris Trust and Savings Bank. All
deliveries, correspondence and questions sent or presented to the Depositary
relating to the Tender Offer should be directed to one of the addresses or
telephone numbers set forth on the back cover of this Offer to Purchase.
INFORMATION AGENT
Georgeson & Company, Inc. is acting as the Information Agent for the Company
in connection with the Tender Offer. Requests for copies of the Tender Offer
materials should be directed to the Information Agent at the address or
telephone number set forth on the back cover of this Offer to Purchase.
MISCELLANEOUS
Directors, officers and regular employees of the Company (who will not be
specifically compensated for such services), and the Dealer Manager may
contact Holders by mail, telephone, telex, telegram messages, mailgram
messages, datagram messages and personal interviews regarding the Tender Offer
and may request brokers, dealers and other nominees to forward this Offer to
Purchase and related materials to beneficial owners of Debentures.
The Company is not aware of any jurisdiction where the making of the Tender
Offer is not in compliance with the laws of such jurisdiction. If the Company
becomes aware of any jurisdiction where the making of the Tender Offer would
not be in compliance with such laws, the Company will make a good faith effort
to comply with any such laws or seek to have such laws declared inapplicable
to the Tender Offer. If, after such good faith effort, the Company cannot
comply with any such applicable laws, the Tender Offer will not be made to
(nor will tenders be accepted from or on behalf of) the Holders residing in
such jurisdiction.
FEES AND EXPENSES
The Company will pay DLJ reasonable and customary compensation for its
services as the Dealer Manager, plus reimbursement for out-of-pocket expenses.
The Company has agreed to indemnify DLJ against certain liabilities in
connection with its services as the Dealer Manager, including liabilities
under the federal securities laws. DLJ has provided investment banking
services to the Company and expects to provide investment banking services to
the Company in the future. DLJ has been and expects to be paid usual and
customary fees for such services.
The Company will pay the Depositary and the Information Agent reasonable and
customary compensation for their services in connection with the Tender Offer,
plus reimbursement for out-of-pocket expenses. The Company has agreed to
indemnify the Depositary and the Information Agent against certain liabilities
in connection with their services, including liabilities under the federal
securities laws.
Brokers, dealers (including the Dealer Manager), commercial banks and trust
companies will be reimbursed by the Company for customary mailing and handling
expenses incurred by them in forwarding material to their customers. The
Company will not pay any fees or commissions to any broker, dealer or other
person (other than the Dealer Manager, the Depositary and the Information
Agent) in connection with the solicitation of tenders of Debentures pursuant
to the Tender Offer.
21
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary is a general description of certain United States
federal income tax consequences applicable under current law to the sale of
Debentures pursuant to this Offer to Purchase. This summary describes the tax
consequences to a Holder of Debentures that is a "U.S. Holder" (which, for the
purpose of this discussion, means a beneficial owner ("Owner") of a Debenture
that is for United States federal income tax purposes (a) a citizen or
resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof or (c) an estate or trust described in Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended (the "Code")).
This discussion does not deal with special classes of Owners, such as dealers
in securities or currencies, banks, financial institutions, insurance
companies, tax-exempt organizations, persons subject to the alternative
minimum tax, Owners that are not U.S. Holders, Owners holding Debentures as
part of a hedge, straddle or in connection with a synthetic security
transaction. In addition, this discussion does not describe any tax
consequences arising out of the laws of any state, local or foreign
jurisdiction. This discussion assumes that the Debentures are held as "capital
assets" within the meaning of Code Section 1221. ALL HOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF
TENDERING THE DEBENTURES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE,
LOCAL OR FOREIGN TAX LAWS.
SALES OF DEBENTURES PURSUANT TO THE TENDER OFFER
Subject to the market discount and bond premium rules discussed below, a
Holder who receives cash for Debentures pursuant to the Tender Offer will
recognize capital gain or loss equal to the difference between the amount of
cash received (excluding any amount attributable to accrued interest) and the
Holder's adjusted tax basis in the Debentures sold. Generally, a Holder's
adjusted tax basis in a Debenture will be the cost of the Debenture to such
Holder. If applicable, a Holder's adjusted tax basis in a Debenture will be
increased by any market discount previously included in income by such Holder
pursuant to an election to include market discount in gross income as it
accrues, and generally will be reduced by the accrual of amortizable bond
premium which the Holder has previously elected to offset against interest
payments on the Debenture. The excess of net long-term capital gains over net
short-term capital losses is taxed at a lower rate than ordinary income for
certain noncorporate taxpayers. Noncorporate taxpayers are generally subject
to a maximum rate of 28% on capital gain realized on the disposition of an
asset held for more than one year but not more than 18 months and a maximum
rate of 20% on capital gain realized on the disposition of an asset held for
more than 18 months. If the Internal Revenue Service Restructuring and Reform
Act of 1998 which is currently pending before the United States Congress is
enacted, the minimum holding period to qualify for the 20% rate on net capital
gains would be reduced from 18 months to 12 months. The distinction between
capital gain or loss and ordinary income or loss is also relevant for purposes
of, among other things, limitations on the deductibility of capital losses. To
the extent that the amount paid for the Debentures represents accrued
interest, it will constitute ordinary income to the Holder unless previously
included in income.
A Holder who acquired a Debenture after its original issuance at a market
discount (subject to a statutorily-defined de minimis exception) will
generally be required to treat any gain on a sale thereof pursuant to the
Tender Offer as ordinary income rather than capital gain to the extent of
accrued market discount, unless an election was made to include market
discount in income as it accrued. Market discount generally equals the excess
of the stated redemption price at maturity of a debt instrument over a
holder's initial tax basis in the debt instrument.
If a Debenture purchased at a premium after the Debenture's original
issuance is sold pursuant to the Tender Offer, a Holder who has elected to
deduct bond premium may be able to claim as an ordinary deduction in the
taxable year of disposition an amount equal to any remaining unamortized bond
premium.
22
<PAGE>
BACKUP WITHHOLDING
A Holder whose Debentures are tendered and accepted for payment may be
subject to backup withholding at the rate of 31% with respect to the gross
proceeds from the sale of such Debentures unless such Holder (i) is a
corporation or other exempt recipient and, when required, establishes this
exemption or (ii) accurately completes the Substitute Form W-9 included in the
Letter of Transmittal. Holders that do not provide their correct taxpayer
identification number may be subject to penalties imposed by the Internal
Revenue Service (the "IRS"). Any amount withheld under these rules will be
creditable against the Holder's federal income tax liability and any excess or
overpayment of federal income taxes pursuant to the imposition of backup
withholding should be returned to the affected Holder, provided certain
required information is reported to the IRS. See "Important Tax Information"
in the Letter of Transmittal.
INFORMATION REPORTING
The Company will provide information statements to tendering Holders and to
the IRS reporting the cash payments, as required by law.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES DOES NOT
CONSIDER THE PARTICULAR FACTS AND CIRCUMSTANCES OF ANY HOLDER'S SITUATION OR
STATUS. THIS SUMMARY IS BASED ON THE PROVISIONS OF THE CODE, REGULATIONS,
PROPOSED REGULATIONS, RULINGS AND JUDICIAL DECISIONS NOW IN EFFECT, ALL OF
WHICH ARE SUBJECT TO CHANGE, POSSIBLY ON A RETROACTIVE BASIS.
23
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal, certificates for Debentures and any other
required documents should be sent by each Holder or such Holder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of the addresses set forth below:
The Depositary:
Harris Trust and Savings Bank
Mail Delivery To:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand Delivery:
c/o Harris Trust Company of New York c/o Harris Trust Company of New York
Wall Street Station 88 Pine Street, 19th Floor
Post Office Box 1023 New York, New York 10005
New York, New York 10268-1023 Att'n: Reorganization Department
</TABLE>
<TABLE>
<S> <C>
By Overnight Delivery: By Facsimile:
c/o Harris Trust Company of New York (For Eligible Institutions Only)
88 Pine Street, 19th Floor (212) 701-7636
New York, New York 10005 Confirm by Telephone:
Att'n: Reorganization Department (212) 701-7624
</TABLE>
Any requests for additional copies of this Offer to Purchase, the Letter of
Transmittal and Notice of Guaranteed Delivery should be directed to the
Information Agent at the address and telephone number set forth below.
The Information Agent:
[LOGO OF GEORGESON & COMPANY INC.]
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
Any questions or requests for assistance may be directed to the Dealer
Manager at the address and telephone number set forth below. You may also
contact your broker dealer, commercial bank or trust company or any other
nominee for assistance concerning the Tender Offer.
The Dealer Manager:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
2121 Avenue of the Stars
Suite 3000
Los Angeles, California 90067
(310) 282-6158 (call collect)
(310) 282-5516 (call collect)
<PAGE>
EXHIBIT 99.2
LETTER OF TRANSMITTAL
TO TENDER UP TO $62.5 MILLION AGGREGATE PRINCIPAL AMOUNT OF 4 1/4% CONVERTIBLE
SUBORDINATED DEBENTURES DUE 2000
OF
BELL SPORTS CORP.
PURSUANT TO THE OFFER TO PURCHASE
DATED: JUNE 30, 1998
THE TENDER OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY 29,
1998 UNLESS EXTENDED (THE "EXPIRATION DATE"). HOLDERS OF DEBENTURES MUST
TENDER THEIR DEBENTURES ON OR PRIOR TO THE EXPIRATION DATE IN ORDER TO
RECEIVE THE TENDER OFFER CONSIDERATION. TENDERED DEBENTURES MAY BE WITHDRAWN
AT ANY TIME ON OR PRIOR TO THE EXPIRATION DATE.
The Depositary for the Tender Offer is:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Overnight Courier or by Hand:
-------- ----------------------- --------------------------------
c/o Harris Trust Company of New York
(For Eligible Institutions Only) c/o Harris Trust Company of New York
Wall Street Station (212) 701-7636 88 Pine Street, 19th Floor
Post Office Box 1023 Confirm by Telephone: New York, New York 10005
---------------------
New York, New York 10268-1023 (212) 701-7624 Att'n: Reorganization Department
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL (THE "LETTER OF TRANSMITTAL") TO AN
ADDRESS, OR TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
All capitalized terms used herein and not defined shall have the meaning
ascribed to them in the Offer to Purchase.
DESCRIPTION OF DEBENTURES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES)
OF
HOLDER(S) AGGREGATE
(PLEASE PRINCIPAL AMOUNT
FILL IN, IF CERTIFICATE REPRESENTED PRINCIPAL AMOUNT
BLANK) NUMBERS* BY CERTIFICATE(S) TENDERED**
- -----------------------------------------------------------------
--------------------------
--------------------------
--------------------------
--------------------------
--------------------------
<S> <C> <C> <C>
TOTAL PRINCIPAL
AMOUNT
OF DEBENTURES
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by Holders (as defined) tendering by book-entry
transfer or in accordance with DTC's ATOP procedure for transfer.
** Unless otherwise indicated in the column labeled "Principal Amount
Tendered" and upon the terms and subject to the conditions of the Offer
to Purchase, a Holder will be deemed to have tendered with respect to
the entire aggregate principal amount represented by the Debentures
indicated in the column labeled "Aggregate Principal Amount Represented
by Certificate(s)." See Instruction 2 below.
List above the Debentures to which this Letter of Transmittal relates. If the
space provided above is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this
Letter of Transmittal. Tenders of Debentures will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof.
<PAGE>
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO DONALDSON,
LUFKIN & JENRETTE SECURITIES CORPORATION (THE "DEALER MANAGER"), WHOSE ADDRESS
AND TELEPHONE NUMBER APPEAR ON THE BACK COVER OF THIS LETTER OF TRANSMITTAL.
REQUESTS FOR ADDITIONAL COPIES OF THE OFFER TO PURCHASE AND THIS LETTER OF
TRANSMITTAL SHOULD BE DIRECTED TO GEORGESON & COMPANY, INC., WHICH IS ACTING
AS INFORMATION AGENT FOR THE TENDER OFFER, WHOSE ADDRESS AND TELEPHONE NUMBER
APPEAR ON THE BACK COVER OF THIS LETTER OF TRANSMITTAL.
The instructions contained herein should be read carefully before this
Letter of Transmittal is completed.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE THE TENDER OFFER CONSIDERATION
PURSUANT TO THE TENDER OFFER MUST VALIDLY TENDER (OR RETENDER IF SUCH HOLDERS
HAVE PREVIOUSLY WITHDRAWN) THEIR DEBENTURES TO THE DEPOSITARY ON OR PRIOR TO
THE EXPIRATION DATE.
This Letter of Transmittal is to be used by Holders of Debentures issued
under the Indenture, dated as of November 15, 1993 (CUSIP No. 077903AA0), of
Bell Sports Corp., a Delaware corporation. This Letter of Transmittal is to be
used by such Holders if: (i) certificates representing Debentures are to be
physically delivered to the Depositary herewith by such Holders, (ii) tender
of Debentures is to be made by book-entry transfer to the Depositary's account
at DTC, pursuant to the procedures set forth in the Offer to Purchase under
the caption "The Tender Offer-Procedures for Tendering Debentures-Book-Entry
Delivery," or (iii) tender of Debentures is to be made according to the
guaranteed delivery procedures set forth under the caption "The Tender Offer-
Procedures for Tendering Debentures-Guaranteed Delivery" in the Offer to
Purchase.
A DTC participant tendering through ATOP, in order to make a valid tender,
must also properly complete and duly execute this Letter of Transmittal (or
Agent's Message in lieu thereof) and deliver it to the Depositary. Delivery of
documents to DTC does not constitute delivery to the Depositary.
IN THE EVENT THAT THE TENDER OFFER IS WITHDRAWN OR OTHERWISE NOT COMPLETED,
THE TENDER OFFER CONSIDERATION WILL NOT BE PAID OR BECOME PAYABLE TO HOLDERS
OF THE DEBENTURES WHO HAVE VALIDLY TENDERED THEIR DEBENTURES IN CONNECTION
WITH THE TENDER OFFER, AND ANY TENDERED DEBENTURES WILL BE RETURNED.
THE TENDER OFFER IS MADE UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET
FORTH IN THE OFFER TO PURCHASE AND HEREIN. HOLDERS SHOULD CAREFULLY REVIEW THE
INFORMATION SET FORTH THEREIN AND HEREIN.
The undersigned should complete, execute and deliver this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Tender Offer.
Your bank or broker can assist you in completing this form. The instructions
included with this Letter of Transmittal must be followed. Questions and
requests for assistance may be directed to the Dealer Manager, whose address
and telephone number appear on the back cover of this Letter of Transmittal.
Requests for additional copies of the Offer to Purchase and this Letter of
Transmittal should be directed to Georgeson & Company, Inc., which is acting
as information agent for the Tender Offer, whose address and telephone number
appear on the back cover of this Letter of Transmittal. See Instruction 10
below.
2
<PAGE>
[_]CHECK HERE IF CERTIFICATES REPRESENTING TENDERED DEBENTURES ARE ENCLOSED
HEREWITH.
[_]CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND
COMPLETE THE FOLLOWING:
Name of tendering institution ______________________________________________
[_] DTC Account No. _____________________________________________________
[_] DTC Transaction Code No. ____________________________________________
[_]CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name of Holder(s): _________________________________________________________
Window Ticket No. (if any) _________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Eligible Institution that Guaranteed Delivery: _____________________
[_] DTC Account No. _____________________________________________________
[_] DTC Transaction Code No. ____________________________________________
If Holders desire to tender Debentures pursuant to the Tender Offer and
(i) certificates representing such Debentures are not lost but are not
immediately available, (ii) time will not permit this Letter of
Transmittal, certificates representing such Debentures and all other
required documents to reach the Depositary prior to the Expiration Date, or
(iii) the procedures for book-entry transfer cannot be completed prior to
the Expiration Date, such Holders may effect a tender of such Debentures in
accordance with the guaranteed delivery procedures set forth in the Offer
to Purchase under the caption "The Tender Offer-Procedures for Tendering
Debentures-Guaranteed Delivery." See Instruction 1 below.
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase dated June 30, 1998 (the "Offer to Purchase") of Bell Sports Corp., a
Delaware corporation ("Bell Sports"), relating to Bell Sports' 4 1/4%
Convertible Subordinated Debentures due 2000 (the "Debentures") and this
Letter of Transmittal (the "Letter of Transmittal" and, together with the
Offer to Purchase, the "Offer Documents"), which together constitute Bell
Sports' offer (the "Tender Offer") to purchase for cash up to $62.5 million
aggregate principal amount of the Debentures, upon the terms and subject to
the conditions set forth in the Offer Documents. The Debentures were issued in
November 1993 in an aggregate principal amount of $86,250,000, all of which
was outstanding as of June 30, 1998.
Upon the terms and subject to the conditions of the Tender Offer, the
undersigned hereby tenders to Bell Sports the principal amount of Debentures
indicated above.
Subject to, and effective upon, the acceptance for purchase of, and payment
for, the principal amount of Debentures tendered with this Letter of
Transmittal, the undersigned hereby sells, assigns and transfers to, or upon
the order of, Bell Sports all right, title and interest in and to the
Debentures that are being tendered hereby. The undersigned hereby irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that the Depositary
also acts as the agent of Bell Sports) with respect to such Debentures, with
full power of substitution (such power-of-attorney being deemed to be an
irrevocable power coupled with an interest) to (i) present such Debentures and
all evidences of transfer and authenticity to, or transfer ownership of, such
Debentures on the account books maintained by DTC to, or upon the order of,
Bell Sports, (ii) present such Debentures for transfer of ownership on the
books of the relevant security registrar, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Debentures, all
in accordance with the terms of and conditions to the Tender Offer as
described in the Offer to Purchase.
The undersigned understands that tenders of Debentures may be withdrawn by
written notice of withdrawal received by the Depositary at any time prior to
the Expiration Date, and, thereafter, if the Tender Offer is terminated
without any Debentures being purchased thereunder and as set forth below. In
the event of a termination of the Tender Offer, certificates representing
Debentures tendered pursuant to the Tender Offer will be returned to the
tendering Holder promptly (or in the case of Debentures tendered by book-entry
transfer, such Debentures will be credited to the account maintained at DTC
from which such Debentures were delivered). If, prior to the Expiration Date,
Bell Sports increases the percentage of Debentures being sought, or increases
or decreases the Tender Offer Consideration, any such changes in such
percentage or consideration would be applicable to all Holders whose
Debentures are accepted for payment pursuant to the Tender Offer. In addition,
in any of the foregoing events, if at the time notice of any such change is
first published, sent or given to Holders, the Tender Offer is scheduled to
expire at any time prior to the tenth business day from and including the date
that such notice is first published, sent or given, the Tender Offer would be
extended at least until the expiration of such ten business day period.
The undersigned understands that valid tenders of Debentures pursuant to any
of the procedures described in the Offer to Purchase and in the instructions
hereto will constitute a binding agreement between the undersigned and Bell
Sports upon the terms and subject to the conditions of the Tender Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Debentures
tendered hereby, and that when such Debentures are accepted for purchase and
payment by Bell Sports, Bell Sports will acquire good title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim or right. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Depositary or by Bell Sports to
be necessary or desirable to complete the sale, assignment and transfer of the
Debentures tendered hereby.
For purposes of the Tender Offer, the undersigned understands that Bell
Sports will be deemed to have accepted for purchase validly tendered
Debentures (or defectively tendered Debentures with respect to which Bell
Sports has waived such defect), if, as and when Bell Sports gives oral
(confirmed in writing) or written notice thereof to the Depositary.
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<PAGE>
The undersigned understands that, under certain circumstances and subject to
certain conditions of the Tender Offer (each of which Bell Sports may waive)
set forth in the Offer to Purchase, Bell Sports would not be required to
accept for purchase any of the Debentures tendered and may accept for purchase
tendered Debentures on a Pro Rata Acceptance (as defined in the Offer to
Purchase) basis. Any Debentures not accepted for purchase will be returned
promptly to the undersigned at the address set forth above (or in the case of
Debentures tendered by book-entry transfer, such Debentures will be credited
to the account maintained at DTC from which such Debentures were delivered),
unless otherwise indicated herein under "Special Delivery Instructions" below.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives.
The undersigned understands that the delivery and surrender of the
Debentures is not effective, and the risk of loss of the Debentures does not
pass to the Depositary, until receipt by the Depositary (whether through DTC's
ATOP procedures for transfer or otherwise) of this Letter of Transmittal, or a
manually signed facsimile hereof, properly completed and duly executed,
together with all accompanying evidences of authority and any other required
documents in form satisfactory to Bell Sports. All questions as to the form of
all documents and the validity (including time of receipt) and acceptance of
tenders and withdrawals of Debentures will be determined by Bell Sports, in
its sole discretion, which determination shall be final and binding.
Unless otherwise indicated herein under "Special Payment Instructions," the
undersigned hereby requests that any Debentures representing principal amounts
not tendered or not accepted for purchase be issued in the name(s) of the
undersigned (and in the case of Debentures tendered by book-entry transfer, by
credit to the account at DTC), and checks for payments of the Tender Offer
Consideration, as the case may be, to be made in connection with the Tender
Offer be issued to the order of the undersigned. Similarly, unless otherwise
indicated herein under "Special Delivery Instructions," the undersigned hereby
requests that any Debentures representing principal amounts not tendered or
not accepted for purchase and checks for payments of the Tender Offer
Consideration to be made in connection with the Tender Offer be delivered to
the undersigned at the address(es) shown above. In the event that the "Special
Payment Instructions" box or the "Special Delivery Instructions" box is, or
both are, completed, the undersigned hereby requests that any Debentures
representing principal amounts not tendered or not accepted for purchase be
issued in the name(s) of, certificates for such Debentures be delivered to,
and checks for payments of the Tender Offer Consideration to be made in
connection with the Tender Offer be issued in the name(s) of, and be delivered
to, the person(s) at the addresses so indicated. The undersigned recognizes
that Bell Sports has no obligation pursuant to the "Special Payment
Instructions" box or "Special Delivery Instructions" box to transfer any
Debentures from the name of the registered Holder(s) thereof if Bell Sports
does not accept for purchase any of the principal amount of such Debentures so
tendered.
5
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF DEBENTURES
REGARDLESS OF WHETHER DEBENTURES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the registered Holder(s) of
Debentures exactly as their name(s) appear(s) on certificate(s) for
Debentures or, if tendered by a participant in DTC, exactly as such
participant's name appears on a security position listing as the owner of
Debentures, or by person(s) authorized to become registered Holder(s) by
endorsements on certificates for Debentures or by bond powers transmitted
with this Letter of Transmittal. Endorsements on Debentures and signatures on
bond powers by Holders not executing this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 3 below. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact, officer
or other person acting in a fiduciary or representative capacity, such person
must set forth his or her full title below under "Capacity" and submit
evidence satisfactory to Bell Sports of such person's authority to so act.
See Instruction 3 below.
X
----------------------------------------------------------------------------
X
----------------------------------------------------------------------------
Signature(s) of Registered Holder(s) or Authorized Signatory
Dated: , 1998
Name(s):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(Please Print)
Capacity:
-----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone No.:
---------------------------------------------------------
Tax Identification or Social Security No.:
--------------------------------------------------
(PLEASE COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 HEREIN)
MEDALLION SIGNATURE GUARANTEES, IF REQUIRED
(SEE INSTRUCTION 3 BELOW)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signatures)
------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number (including area code) of
Eligible Institution)
------------------------------------------------------------------------------
(Authorized Signature)
------------------------------------------------------------------------------
(Printed Name)
[affix Medallion
Guarantee Stamp
here]
Dated: , 1998
6
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 3, 4 AND 6) (SEE INSTRUCTIONS 2, 3, 4 AND 6)
To be completed ONLY if To be completed ONLY if
certificates for Debentures in a certificates for Debentures in a
principal amount not tendered or principal amount not tendered or
not accepted for purchase are to not accepted for purchase or
be issued in the name of, or checks for the Tender Offer
checks for the Tender Offer Consideration are to be sent to
Consideration are to be issued to someone other than the person or
the order of, someone other than persons whose signature(s)
the person or persons whose appear(s) within this Letter of
signature(s) appears within this Transmittal (a "Recipient") or to
Letter of Transmittal (the an address different from that
"Beneficiary") or if Debentures shown in the box entitled
tendered by book-entry transfer "Description of Debentures"
that are not accepted for within this Letter of
purchase are to be credited to an Transmittal.
account maintained at DTC other
than the one designated above
(the "Account Party"). Any such
Beneficiary or Account Party must
complete a Substitute Form W-9.
Mail:[_] Debentures
[_] Checks
(CHECK AS APPLICABLE)
Name _____________________________
Issue:[_] Debentures (PLEASE PRINT)
[_] Checks Address __________________________
__________________________________
(CHECK AS APPLICABLE) (ZIP CODE)
Name _____________________________
(PLEASE PRINT)
Address __________________________
__________________________________
(ZIP CODE)
__________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 HEREIN)
Credit unpurchased Debentures
by book-entry to the DTC account
set forth below:
__________________________________
(DTC ACCOUNT NUMBER)
DTC Account Name:
__________________________________
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<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE TENDER OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR DEBENTURES OR
BOOK-ENTRY CONFIRMATIONS; GUARANTEED DELIVERY PROCEDURES; WITHDRAWAL OF
TENDERS. To tender Debentures in the Tender Offer, physical delivery of
certificates for Debentures or a confirmation of any book-entry transfer into
the Depositary's account with DTC of Debentures tendered electronically, as
well as a properly completed and duly executed copy or manually signed
facsimile of this Letter of Transmittal, and any other documents required by
this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein on or prior to the Expiration Date. The Depositary
and DTC have confirmed that the Tender Offer is eligible for ATOP.
Accordingly, DTC participants may electronically transmit their acceptance of
the Tender Offer by causing DTC to transfer Debentures to the Depositary in
accordance with DTC's ATOP procedures for transfer. DTC will then send an
Agent's Message (as defined in the Offer to Purchase) to the Depositary. The
method of delivery of this Letter of Transmittal, Debentures and all other
required documents to the Depositary is at the election and risk of Holders.
If such delivery is by mail, it is suggested that Holders use properly insured
registered mail with return receipt requested, and that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Depositary prior to such date. No alternative, conditional or contingent
tenders of Debentures will be accepted. HOLDERS DESIRING TO TENDER DEBENTURES
ON THE EXPIRATION DATE SHOULD NOTE THAT SUCH HOLDERS MUST ALLOW SUFFICIENT
TIME FOR COMPLETION OF THE ATOP PROCEDURES DURING THE NORMAL BUSINESS HOURS OF
DTC ON THAT DATE. Except as otherwise provided below, the delivery will be
deemed made when actually received or confirmed by the Depositary. THIS LETTER
OF TRANSMITTAL AND THE DEBENTURES SHOULD BE SENT ONLY TO THE DEPOSITARY, NOT
TO BELL SPORTS, THE TRUSTEE, THE INFORMATION AGENT OR THE DEALER MANAGER.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
If a Holder desires to tender Debentures pursuant to the Tender Offer and
(a) certificates representing such Debentures are not lost but are not
immediately available, (b) time will not permit this Letter of Transmittal,
certificates representing such Debentures and all other required documents to
reach the Depositary on or prior to the Expiration Date, or (c) the procedures
for book-entry transfer cannot be completed on or prior to the Expiration
Date, a tender may be effected if all the following are complied with:
(a) such tender is made by or through an Eligible Institution;
(b) on or prior to the Expiration Date, the Depositary has received from
such Eligible Institution at one of the addresses of the Depositary set
forth on the first page of this Letter of Transmittal, a properly completed
and validly executed Notice of Guaranteed Delivery (by manually signed
facsimile transmission, mail or hand delivery) in substantially the form
provided with the Offer to Purchase, setting forth the name(s) and
addressees of the registered Holder(s) and the principal amount of
Debentures being tendered and stating that the tender is being made thereby
and guaranteeing that, within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed
Delivery, the applicable Letter of Transmittal properly completed and
validly executed (or a manually signed facsimile thereof or Agent's Message
in lieu thereof), together with certificates representing the Debentures
(or confirmation of book-entry transfer of such Debentures into the
Depositary's account with DTC) and any other documents required by the
Letter of Transmittal and the instructions thereto, will be deposited by
such Eligible Institution with the Depositary; and
(c) this Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and validly executed with any required signature
guarantees or Agent's Message in lieu thereof, together with certificates
for all Debentures in proper form for transfer (or confirmation of book-
entry transfer of such Debentures into the Depositary's account with DTC),
and any other required documents are received by the Depositary within
three NYSE trading days after the date of execution of such Notice of
Guaranteed Delivery.
Tenders of Debentures may be validly withdrawn at any time on or prior to
the Expiration Date. Holders who wish to exercise their right of withdrawal
with respect to the Tender Offer must give written notice of withdrawal
delivered by mail, hand delivery or manually signed facsimile transmission,
which notice must be received by the Depositary at one of its addresses set
forth on the first page of this Letter of Transmittal on or prior to the
Expiration Date. In order to be valid, a notice of withdrawal must specify the
name of the person who deposited the Debentures to be withdrawn (the
"Depositor"),
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<PAGE>
the name in which the Debentures are registered (or, if tendered by book-entry
transfer, the name of the DTC participant whose name appears on the security
position listing as the owner of such Debentures), if different from that of
the Depositor, and the principal amount of Debentures to be withdrawn. If
certificates have been delivered or otherwise identified (through confirmation
of book-entry transfer of such Debentures) to the Depositary, the name of the
Holder and the certificate number or numbers relating to such Debentures
withdrawn must also be furnished to the Depositary as aforesaid prior to the
physical release of the certificates for the withdrawn Debentures (or, in the
case of Debentures transferred by book-entry transfer, the name and number of
the account at DTC to be credited with withdrawn Debentures). The notice of
withdrawal must be signed by the Holder in the same manner as this Letter of
Transmittal (including, in any case, any required signature guarantees), or be
accompanied by evidence satisfactory to Bell Sports that the person
withdrawing the tender has succeeded to be the beneficial owner of such
Debentures. Withdrawals of tendered Debentures may not be rescinded and any
Debentures withdrawn will thereafter be deemed not validly tendered for
purposes of the Tender Offer. However, validly withdrawn Debentures may be
retendered by following the procedures therefor described in the Offer to
Purchase at any time on or prior to the Expiration Date.
2. PARTIAL TENDERS. Tenders of Debentures pursuant to the Tender Offer will
be accepted only in respect of principal amounts equal to $1,000 or integral
multiples thereof. If less than the entire principal amount of any Debentures
evidenced by a submitted certificate is tendered, the tendering Holder must
fill in the principal amount tendered in the last column of the box entitled
"Description of Debentures" herein. The entire principal amount represented by
the certificates for all Debentures delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated. If the entire principal
amount of all Debentures is not tendered or not accepted for purchase,
Debentures representing such untendered or unaccepted amount will be sent (or
if tendered by book-entry transfer, returned by credit to the account at DTC
designated herein) to the Holder unless otherwise provided in the appropriate
box on this Letter of Transmittal (see Instruction 4), promptly after the
Debentures are accepted for purchase.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENT;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered Holder(s) of the Debentures tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificate(s)
without alteration, enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a DTC participant whose name is shown as the owner of
the Debentures tendered hereby, the signature must correspond with the name
shown on the security position listing, as the owner of the Debentures.
If any of the Debentures tendered hereby are registered in the name of two
or more Holders, all such Holders must sign this Letter of Transmittal. If any
tendered Debentures are registered in different names on several certificates,
it will be necessary to complete, sign and submit as many separate copies of
this Letter of Transmittal and any necessary accompanying documents as there
are different names in which certificates are held.
If this Letter of Transmittal is signed by the Holder, and the certificates
for any principal amount of Debentures not tendered or not accepted for
purchase are to be issued (or if any principal amount of Debentures that is
not tendered or not accepted for purchase is to be reissued or returned) to
or, if tendered by book-entry transfer, credited to the account at DTC of the
Holder, and checks for payments of the Tender Offer Consideration to be made
in connection with the Tender Offer are to be issued to the order of the
Holder, then the Holder need not endorse any certificates for tendered
Debentures, nor provide a separate bond power. In any other case (including if
this Letter of Transmittal is not signed by the Holder), the Holder either
must properly endorse the certificates for Debentures tendered or transmit a
separate properly completed bond power with this Letter of Transmittal (in
either case, executed exactly as the name(s) of the registered Holder(s)
appear(s) on such Debentures, and, with respect to a DTC participant whose
name appears on a security position listing as the owner of Debentures,
exactly as the name(s) of the participants appear(s) on such security position
listing), with the signature on the endorsement or bond power guaranteed by an
Eligible Institution, unless such certificates or bond powers are executed by
an Eligible Institution.
If this Letter of Transmittal or any certificates for Debentures or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting, in a fiduciary,
or representative capacity, such persons should so indicate when signing and
proper evidence satisfactory to Bell Sports of their authority so to act must
be submitted with this Letter of Transmittal.
9
<PAGE>
Endorsements on certificates for Debentures and signatures on bond powers
provided in accordance with this Instruction 3 by registered Holders not
executing this Letter of Transmittal must be guaranteed by an Eligible
Institution, unless the signature is that of an Eligible Institution.
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered Holder(s) of the Debentures tendered herewith (or by
a DTC participant whose name appears on a security position listing as the
owner of Debentures) and the payment of the Tender Offer Consideration is to
be made, or if any Debentures for principal amounts not tendered or not
accepted for purchase are to be issued, directly to such Holder(s) (or, if
tendered by a DTC participant, any Debentures for principal amounts not
tendered or not accepted for purchase are to be credited to such participant's
account at DTC) and neither the "Special Payment Instructions" box nor the
"Special Delivery Instructions" box of this Letter of Transmittal has been
completed or (ii) such Debentures are tendered for the account of an Eligible
Institution. In all other cases, all signatures on Letters of Transmittal and
endorsements on certificates, signatures on bond powers accompanying
Debentures must be guaranteed by an Eligible Institution, unless the signature
is that of an Eligible Institution.
4. SPECIAL PAYMENT AND SPECIAL DELIVERY INSTRUCTIONS. Tendering Holders
should indicate in the applicable box or boxes the name and address to which
Debentures for principal amounts not tendered or not accepted for purchase or
checks for payment of the Tender Offer Consideration to be made in connection
with the Tender Offer are to be issued or sent, if different from the name and
address of the registered or acting Holder signing this Letter of Transmittal.
In the case of issuance in a different name, the taxpayer identification or
social security number of the person named must also be indicated. If no
instructions are given, Debentures not tendered or not accepted for purchase
will be returned to the registered or acting Holder of the Debentures
tendered. Any Holder tendering by book-entry transfer may request that
Debentures not tendered or not accepted for purchase be credited to such
account at DTC as such Holder may designate under the caption "Special Payment
Instructions." If no such instructions are given, any such Debentures not
tendered or not accepted for purchase will be returned by crediting the DTC
account designated above.
5. SUBSTITUTE FORM W-9. Each tendering Holder is required to provide the
Depositary with the Holder's correct taxpayer identification number ("TIN")
and federal employer identification number, on Substitute Form W-9, which is
provided under "Important Tax Information" below, or, alternatively, to
establish another basis for exemption from backup withholding. A Holder must
cross out item (2) in the Certification box on Substitute Form W-9 if such
Holder is subject to backup withholding. Failure to provide the information on
the form may subject the tendering Holder to 31% federal income tax backup
withholding on the payments made to the Holder or other payee with respect to
Debentures purchased pursuant to the Tender Offer. The box in Part 3 of the
form should be checked if the tendering Holder has not been issued a TIN and
has applied for a TIN or intends to apply for a TIN in the near future. If the
box in Part 3 is checked and the Depositary is not provided with a TIN,
thereafter the Depositary will withhold 31% on all such payments of the Tender
Offer Consideration until a TIN is provided to the Depositary.
6. TRANSFER TAXES. Bell Sports will pay all transfer taxes applicable to the
purchase and transfer of Debentures pursuant to the Tender Offer, except in
the case of deliveries of certificates for Debentures for principal amounts
not tendered or not met that are registered or issued in the name of any
person other than the registered or acting Holder of Debentures tendered
thereby.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. IRREGULARITIES. All questions as to the form of all documents and the
validity (including time of receipt) and acceptance of tenders and withdrawals
of Debentures will be determined by Bell Sports, in its sole discretion, which
determination shall be final and binding. ALTERNATIVE, CONDITIONAL OR
CONTINGENT TENDERS WILL NOT BE CONSIDERED VALID. Bell Sports reserves the
absolute right to reject any or all tenders of Debentures that are not in
proper form or the acceptance of which would, in Bell Sports' opinion, be
unlawful. Bell Sports also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Debentures. Bell
Sports' interpretations of the terms and conditions of the Tender Offer
(including the instructions in this Letter of Transmittal) will be final and
binding. Any defect or irregularity in connection with tenders of Debentures
must be cured within such time as Bell Sports determines, unless waived by
Bell Sports. Tenders of Debentures shall not be deemed to have been made until
all defects or irregularities have been waived by Bell Sports or cured. All
tendering Holders, by execution of this Letter of Transmittal or a manually
signed facsimile hereof, waive any
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<PAGE>
right to receive notice of the acceptance of their Debentures for purchase.
None of Bell Sports, the Depositary, the Dealer Manager, the Information
Agent, the Trustee or any other person will be under any duty to give notice
of any defects or irregularities in tenders of Debentures, or will incur any
liability to Holders for failure to give any such notice.
8. WAIVER OF CONDITIONS. Bell Sports expressly reserves the absolute right,
in its sole and absolute discretion, to amend or waive any of the conditions
to the Tender Offer in the case of any Debentures tendered, in whole or in
part, at any time and from time to time.
9. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES FOR DEBENTURES. Any
Holder whose certificates for Debentures have been mutilated, lost, stolen or
destroyed should write to or telephone the Trustee at the address or telephone
number set forth in the Offer to Purchase.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering Debentures and requests for assistance or additional
copies of the Offer to Purchase and this Letter of Transmittal may be directed
to the Dealer Manager whose address and telephone number appear below. A
Holder may also contact such Holder's broker, dealer, commercial bank, trust
company or nominee for assistance concerning the Tender Offer.
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Debentures are
accepted for payment is required to provide the Depositary (as payer) with
such Holder's correct TIN on Substitute Form W-9 below or otherwise establish
a basis for exemption from backup withholding. If such Holder is an
individual, the TIN is his or her social security number. If the Depositary is
not provided with the correct TIN, a $50 penalty may be imposed by the
Internal Revenue Service, and payments made to such Holder with respect to
Debentures purchased pursuant to the Tender Offer may be subject to backup
withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Substitute
Form W-9. A Substitute Form W-9 can be obtained from the Depositary. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional instructions. A foreign person may qualify
as an exempt recipient by submitting to the Depositary, in lieu of a
substitute Form W-9, a properly completed Internal Revenue Service Form W-8
signed under penalties of perjury, attesting to that Holder's exempt status.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments with respect to Debentures
purchased pursuant to the Tender Offer, the Holder is required to provide the
Depositary with either (i) the Holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (A) such Holder is exempt from
backup withholding, (B) the Holder has not been notified by the Internal
Revenue Service that the Holder is subject to backup withholding as a result
of failure to report all interest or dividends, or (C) the Internal Revenue
Service has notified the Holder that the Holder is no longer subject to backup
withholding or (ii) otherwise establish an adequate basis for exemption from
backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Holder is required to give the Depositary its TIN (e.g., social security
number or employer identification number). If the Debentures are held in more
than one name or are held not in the name of the actual owner, consult the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which number to report.
11
<PAGE>
PAYER'S NAME: HARRIS TRUST AND SAVINGS BANK
PART 1--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND ----------------------
CERTIFY BY SIGNING AND Social Security Number
DATING BELOW. OR
SUBSTITUTE
FORM W-9
----------------------
PAYER'S REQUEST Employer Identification
FOR TAXPAYER Number
IDENTIFICATION --------------------------------------------------------
NUMBER ("TIN") PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY, I
CERTIFY THAT:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting a
number to be issued to me) and
--------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must
cross out item (2) in Part 2 above if you
have been notified by the IRS that you
were subject to backup withholding. If
you received another notification from
the IRS stating that you are no longer
subject to backup withholding, do not
cross out such item (2).
(2) I am not subject to backup withholding because
(i) I am exempt from backup withholding,
PART 3--
(ii) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup
withholding as result of a failure to report all
interests or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup
withholding.
Awaiting
TIN [_]
SIGNATURE DATE , 1998
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE TENDER
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in
the near future. I understand that, if I do not provide a taxpayer
identification number to the Depositary, 31% of all reportable payments
made to me will be withheld, but will be refunded if I provide a certified
taxpayer identification number within 60 days.
SIGNATURE ____________________________________________ DATE: , 1998
Name (Please Print) ______________________________
12
<PAGE>
Any requests for additional copies of this Letter of Transmittal or the
Notice of Guaranteed Delivery should be directed to the Information Agent at
the address and telephone number set forth below.
The Information Agent for the Tender Offer is:
[LOGO OF GEORGESON & COMPANY INC.]
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
Any questions or requests for assistance may be directed to the Dealer
Manager at the address and telephone number set forth below or at such
Holder's broker, dealer, commercial bank or trust company or nominee for
assistance concerning the Tender Offer.
The Dealer Manager for the Tender Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
2121 Avenue of the Stars
Suite 3000
Los Angeles, California 90067
(310) 282-6158 (call collect)
(310) 282-5516 (call collect)
<PAGE>
EXHIBIT 99.3
CUSIP 077903AA0
NOTICE OF GUARANTEED DELIVERY
TO TENDER IN RESPECT OF
UP TO $62.5 MILLION AGGREGATE PRINCIPAL AMOUNT OF THE
4 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
OF
BELL SPORTS CORP.
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 30, 1998
As set forth under the caption "Procedures for Tendering Debentures-
Guaranteed Delivery" in the Offer to Purchase dated June 30, 1998 of Bell Sports
Corp., a Delaware corporation (the "Company") and in Instruction 1 of the
related Letter of Transmittal (the "Letter of Transmittal and, together with the
Offer to Purchase, the "Offer Documents"), this Notice of Guaranteed Delivery,
or one substantially in the form hereof, must be used to accept the Company's
offer to purchase for cash up to $62.5 million of its 4 1/4% Convertible
Subordinated Debentures due 2000 (the "Debentures") subject to the terms and
conditions set forth in the Offer Documents if time will not permit the Letter
of Transmittal, certificates representing Debentures and all other required
documents to reach the Depositary on or prior to the Expiration Date, or the
procedures for book-entry transfer cannot be completed on or prior to the
Expiration Date. This form must be delivered by an Eligible Institution by
registered or certified mail or hand delivery, or transmitted by facsimile
transmission to the Depositary as set forth above. All capitalized terms used
herein and not defined herein shall have the meanings set forth in the Offer to
Purchase.
The Depositary for the Tender Offer is:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Overnight Courier or By Hand:
c/o Harris Trust Company of (212) 701-7636 c/o Harris Trust Company of
New York (For Eligible Institutions Only) New York
Wall Street Station Confirm by Telephone: 88 Pine Street, 19th Floor
Post Office Box 1023 (212) 701-7624 New York, New York 10005
New York, New York 10268-1023 Att'n: Reorganization Department
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Offer to Purchase and Letter of Transmittal
(receipt of which is hereby acknowledged), the principal amount of Debentures
specified below pursuant to the guaranteed delivery procedures set forth in the
Offer to Purchase under the caption "Procedures for Tendering Debentures-
Guaranteed Delivery."
The undersigned understand(s) that tenders of Debentures may be withdrawn
by written notice of withdrawal received by the Depositary at any time on or
prior to 5:00 p.m., New York City time, on the Expiration Date. In the event of
a termination of the Tender Offer, the Debentures tendered pursuant to the
Tender Offer will be returned to the tendering Holders promptly (or, in the case
of Debentures tendered by book-entry transfer, such Debentures will be credited
to the account maintained at DTC from which such Debentures were delivered).
Tendered Debentures cannot be withdrawn subsequent to the Expiration Date unless
the Company decreases either (i) the Tender Consideration for such Debentures or
(ii) the principal amount of such Debentures subject to the Tender Offer, in
which event Debentures previously tendered may be validly withdrawn until the
expiration of ten business days after the date that notice of such reduction is
first published, given or sent to Holders of such Debentures by the Company.
The undersigned understand(s) that payment by the Depositary for Debentures
tendered and accepted for payment pursuant to the Tender Offer will be made only
after timely receipt by the Depositary of such Debentures (or Book-Entry
confirmation of the transfer of such Debentures into the Depositary's account at
DTC) and Letter of Transmittal (or a manually signed facsimile copy thereof)
with respect to such Debentures properly completed and duly executed with any
required signature guarantees and any other documents required by the Letter of
Transmittal or a properly transmitted Agent's Message.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under the Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives.
PLEASE SIGN AND COMPLETE
This Notice of Guaranteed Delivery must be signed by the Holder(s) of Debentures
exactly as their name(s) appear(s) on certificate(s) for Debentures or, if
tendered by a participant in DTC, exactly as such participant's name appears on
a security position listing as the owner of Debentures, or by person(s)
authorized to become Holder(s) by endorsements and documents transmitted with
this Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person acting in a
fiduciary or representative capacity, such person must set forth his or her
name, address and full title as indicated below.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Aggregate Principal Amount of Debentures Name(s) of Holder(s): _
Tendered: _______________________________________________ _____________________________________________________________________
Certificate No(s). (if available): ______________________ _____________________________________________________________________
Window Ticket No. (if any): _____________________________ Address(s) of Holder(s):
[_] Check here if Debentures will be tendered by book- _____________________________________________________________________
entry transfer: _________________________________________
The Depository Trust Company Account (Zip Code)
Number: _________________________________________________ Area Code and Tel. No.: ____________________________________________
Transaction Code Number: ________________________________ Name(s) of Authorized Signatory: ____________________________________
Dated: _______________________, 1998 Full Title: _________________________________________________________
Address(es) of Authorized Signatory:
_____________________________________________________________________
Area Code and Tel. No.: _____________________________________________
Signature(s) of Registered Holder
or Authorized Signatory:
_____________________________________________________________________
______________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association or
other entity that hereby (i) represents that the above-named persons are deemed
to own the Debentures tendered hereby within the meaning of Rule 14e-4
promulgated under the Exchange Act, as amended ("Rule 14e-4"), (ii) represents
that such tender of Debentures complies with Rule 14e-4 and (iii) is a
recognized Eligible Institution. The undersigned hereby guarantees to deliver
the Debentures, in proper form for transfer, or confirmation of book-entry
transfer pursuant to the procedures set forth in the Offer to Purchase under the
caption "Procedures for Tendering Debentures-Guaranteed Delivery," together with
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof or Agent's Message in lieu thereof) with any required
signature guarantees, and any other documents required by the Letter of
Transmittal will be received by the Depositary at one of its addresses set forth
above within three New York Stock Exchange trading days after the date hereof.
The Eligible Institution that completes this form must communicate the guarantee
to the Depositary and must deliver the Letter of Transmittal and certificates
for the Debentures to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Name of Firm: _______________________________________ ___________________________________________________________________
Address: ____________________________________________ (Authorized Signatory)
_____________________________________________________
(Zip Code) Title: _____________________________________________________________
Area Code and Tel. No.: ____________________________ Date: ___________________________________________, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: DO NOT SEND DEBENTURES WITH THIS NOTICE. DEBENTURES SHOULD BE SENT TO THE
DEPOSITARY TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
3
<PAGE>
EXHIBIT 99.4
BELL SPORTS CORP.
6350 SAN IGNACIO AVENUE
SAN JOSE, CALIFORNIA 95119
June 30, 1998
To the Holders of
4 1/4% Convertible Subordinated Debentures due 2000
of Bell Sports Corp.:
Bell Sports Corp., a Delaware corporation ("Bell Sports"), is offering to
purchase for cash (the "Tender Offer") up to $62.5 million aggregate principal
amount of its 4 1/4% Convertible Subordinated Notes due 2000 (the "Debentures"),
upon the terms and subject to the conditions set forth in the enclosed Offer to
Purchase dated June 30, 1998 (the "Offer to Purchase") and the related Letter of
Transmittal (the "Letter of Transmittal"). The Debentures were issued under an
indenture dated as of November 15, 1993.
The consideration for each $1,000 principal amount of Debentures tendered
pursuant to the Tender Offer shall be $890, plus accrued and unpaid interest
from May 15, 1998 up to, but not including, the date of payment.
The Tender Offer is being made in connection with, and Bell Sports'
obligation to accept for purchase and to pay for Debentures validly tendered
pursuant to the Tender Offer is conditioned upon, (i) consummation of the merger
of HB Acquisition Corporation with and into Bell Sports (the "Merger"), (ii)
completion of a note offering by Bell Sports, Inc., a wholly-owned subsidiary of
Bell Sports (the "Subsidiary"), (iii) entry into a new senior credit facility by
the Subsidiary in an amount, together with other funds available to the Bell
Sports, sufficient to fund amounts payable in connection with the Merger, (iv)
Debentures in an amount not less than $35.0 million aggregate principal amount
being tendered in the Tender Offer, and (v) the satisfaction of the General
Conditions (as defined in the Offer to Purchase).
Please read carefully the Offer to Purchase and the other enclosed
materials relating to the Tender Offer. If you require assistance, you should
consult your financial, tax or other professional advisors. Holders who wish to
participate in the Tender Offer are asked to respond promptly by completing and
returning the Letter of Transmittal (enclosed), and all other required
documentation, to Harris Trust and Savings Bank, the Depositary for the Tender
Offer, or to electronically transmit their acceptance of the Tender Offer by
causing The Depository Trust Company ("DTC") to transfer Debentures to the
Depositary in accordance with DTC's Automated Tender Offer Procedures for
transfer.
If you have questions regarding the terms of the Tender Offer, please
direct your questions to Donaldson, Lufkin & Jenrette Securities Corporation at
2121 Avenue of the Stars, Fox Plaza, Los Angeles, California 90067. In
addition, Georgeson & Company, Inc. is acting as our Information Agent for the
Tender Offer and can be reached at Wall Street Plaza, New York, New York 10005
or at 1-800-223-2064.
Thank you for your time and effort in reviewing this request.
Very truly yours,
BELL SPORTS CORP.
<PAGE>
EXHIBIT 99.5
CUSIP 077903AA0
OFFER TO PURCHASE FOR CASH
UP TO $62.5 MILLION AGGREGATE PRINCIPAL AMOUNT OF
4 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
OF
BELL SPORTS CORP.
- --------------------------------------------------------------------------------
THE TENDER OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY 29, 1998,
UNLESS EXTENDED (THE "EXPIRATION DATE"). HOLDERS OF DEBENTURES MUST TENDER THEIR
DEBENTURES ON OR PRIOR TO THE EXPIRATION DATE IN ORDER TO RECEIVE THE TENDER
OFFER CONSIDERATION. TENDERED DEBENTURES MAY BE WITHDRAWN AT ANY TIME ON OR
PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
June 30, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is an Offer to Purchase (the "Offer to
Purchase") and a Letter of Transmittal (the "Letter of Transmittal" and,
together with the Offer to Purchase, the "Offer Documents"), relating to the
offer (the "Tender Offer") by Bell Sports Corp., a Delaware corporation ("Bell
Sports"), to purchase for cash up to $62.5 million aggregate principal amount of
its 4 1/4% Convertible Subordinated Debentures due 2000. The Debentures were
issued under an indenture dated as of November 15, 1993.
The consideration for each $1,000 principal amount of Debentures tendered
pursuant to the Tender Offer shall be $890, plus accrued and unpaid interest
from May 15, 1998 up to, but not including, the date of payment.
THE TENDER OFFER IS BEING MADE IN CONNECTION WITH, AND BELL SPORTS'
OBLIGATION TO ACCEPT FOR PURCHASE AND TO PAY FOR DEBENTURES VALIDLY TENDERED
PURSUANT TO THE TENDER OFFER IS CONDITIONED UPON, (I) CONSUMMATION OF THE MERGER
OF HB ACQUISITION CORPORATION WITH AND INTO BELL SPORTS (THE "MERGER"), (II)
COMPLETION OF A NOTE OFFERING BY BELL SPORTS, INC., A WHOLLY-OWNED SUBSIDIARY OF
BELL SPORTS (THE "SUBSIDIARY"), (III) ENTRY INTO A NEW SENIOR CREDIT FACILITY BY
THE SUBSIDIARY IN AN AMOUNT, TOGETHER WITH OTHER FUNDS AVAILABLE TO BELL SPORTS,
SUFFICIENT TO FUND AMOUNTS PAYABLE IN CONNECTION WITH THE MERGER, (IV)
DEBENTURES IN AN AMOUNT NOT LESS THAN $35.0 MILLION AGGREGATE PRINCIPAL AMOUNT
BEING TENDERED IN THE TENDER OFFER, AND (V) THE SATISFACTION OF THE GENERAL
CONDITIONS (AS DEFINED IN THE OFFER TO PURCHASE).
Capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Offer to Purchase.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase;
2. Letter of Transmittal for your use and for the information of your
clients;
3. Notice of Guaranteed Delivery to be used to accept the Tender
Offer if the Debentures and all other required documents, cannot be
delivered to the Depositary, by the Expiration Date;
4. A letter to the Holders of Debentures from Bell Sports:
5. A letter which may be sent to your clients for whose accounts you
hold Debentures registered in your name or in the name of your nominee,
with an instruction form provided for obtaining such clients' instructions
with respect to the Tender Offer; and
<PAGE>
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to backup federal income
tax withholding.
7. A return envelope addressed to Harris Trust & Savings Bank, the
Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE TENDER OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY 29,
1998, UNLESS EXTENDED.
Bell Sports will not pay any fees or commissions to any broker, dealer,
commercial bank, trust company or other person in connection with the
solicitation of tenders of Debentures pursuant to the Tender Offer. Bell
Sports, upon request, will reimburse brokers, dealers, commercial banks, and
trust companies for reasonable and customary mailing and handling expenses
incurred by them in forwarding any of the enclosed materials to their clients.
Bell Sports will pay all transfer taxes to purchase and transfer the Debentures
pursuant to the Tender Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
Any requests for additional copies of the Offer to Purchase, the Letter of
Transmittal and Notice of Guaranteed Delivery should be directed to the
Information Agent and any questions or requests for assistance should be
directed to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF BELL SPORTS, THE DEALER MANAGER, THE
INFORMATION AGENT, THE DEPOSITARY, THE TRUSTEE, OR OF ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE TENDER OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT 99.6
OFFER TO PURCHASE FOR CASH
UP TO $62.5 MILLION AGGREGATE PRINCIPAL AMOUNT OF 4 1/4% CONVERTIBLE
SUBORDINATED DEBENTURES DUE 2000
OF
BELL SPORTS CORP.
- --------------------------------------------------------------------------------
THE TENDER OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY 29, 1998,
UNLESS EXTENDED (THE "EXPIRATION DATE"). HOLDERS OF DEBENTURES MUST TENDER THEIR
DEBENTURES ON OR PRIOR TO THE EXPIRATION DATE IN ORDER TO RECEIVE THE TENDER
OFFER CONSIDERATION. TENDERED DEBENTURES MAY BE WITHDRAWN AT ANY TIME ON OR
PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
June 30, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase (the "Offer to
Purchase") and a Letter of Transmittal (the "Letter of Transmittal" and,
together with the Offer to Purchase, the "Offer Documents") relating to the
offer (the "Tender Offer") by Bell Sports Corp., a Delaware corporation ("Bell
Sports"), to purchase for cash up to $62.5 million aggregate principal amount of
its 4 1/4% Convertible Subordinated Debentures due 2000 (the "Debentures").
WE ARE THE HOLDER OF RECORD OF DEBENTURES HELD BY US FOR YOUR ACCOUNT. A
TENDER OF SUCH DEBENTURES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER DEBENTURES HELD BY US
FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender Debentures
on your behalf in respect of any or all of the Debentures held by us for your
account, upon the terms and subject to the conditions set forth in the Offer
Documents.
Your attention is directed to the following:
1. The consideration for each $1,000 principal amount of Debentures
tendered pursuant to the Tender Offer shall be $890, plus accrued
and unpaid interest from May 15, 1998 up to, but not including, the
date of payment.
2. The Tender Offer is being made in connection with, and Bell Sports'
obligation to accept for purchase and to pay for Debentures validly
tendered pursuant to the Tender Offer is conditioned upon, (i)
consummation of the merger of HB Acquisition Corporation with and
into Bell Sports (the "Merger"), (ii) completion of a note offering
by Bell Sports, Inc., a wholly-owned subsidiary of Bell Sports (the
"Subsidiary"), (iii) entry into a new senior credit facility by the
Subsidiary in an amount, together with other funds available to
Bell Sports, sufficient to fund amounts payable in connection with
the Merger, (iv) Debentures in an amount not less than $35.0
million aggregate principal amount being tendered in the Tender
Offer, and (v) the satisfaction of the General Conditions (as
defined in the Offer to Purchase).
3. The Tender Offer is being made for Debentures having an aggregate
principal of up to $62.5 million. If Debentures having an aggregate
principal amount in excess of $62.5 million are tendered, Bell
Sports will purchase Debentures having an aggregate principal
amount of $62.5 million, pro rata in an amount per Holder equal to
a fraction the numerator of which is such
<PAGE>
Holder's total principal amount of Debentures tendered and the
denominator of which is the total principal amount of Debentures
tendered, multiplied by $62.5 million.
4. The Tender Offer will expire at 5:00 p.m., New York City time, on
July 29, 1998, unless the Tender Offer is extended. Tendered
Debentures may be withdrawn at any time on or prior to the
Expiration Date.
5. If you wish to tender any or all of your Debentures, we must
receive your instructions in ample time to permit us to effect a
valid tender on your behalf of Debentures on or prior to the
Expiration Date.
If you wish to have us tender any or all of your Debentures held by us for
your account upon the terms set forth in the Offer to Purchase, please so
instruct us by completing, executing and returning to us the Instruction Form
contained in this letter. An envelope in which to return your instructions to
us is enclosed. If you authorize the tender of your Debentures, all such
Debentures will be tendered unless otherwise specified on the Instruction Form.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT
A TENDER ON YOUR BEHALF ON OR PRIOR TO THE EXPIRATION DATE.
The Tender Offer is not being made to (nor will tenders of Debentures
be accepted from or on behalf of) Holders of Debentures in any jurisdiction in
which the making or acceptance of the Tender Offer would not be in compliance
with the laws of such jurisdiction. However, Bell Sports, in its sole
discretion, may take such action as it may deem necessary to make the Tender
Offer in any such jurisdiction, and may extend the Tender Offer to Holders of
Debentures in such jurisdiction.
2
<PAGE>
INSTRUCTION FORM WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
UP TO $62.5 MILLION AGGREGATE PRINCIPAL AMOUNT OF
4 1/4 % CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
OF
BELL SPORTS CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated June 30, 1998 and the related Letter of Transmittal, in
connection with the offer (the "Tender Offer") by Bell Sports Corp., a Delaware
corporation (the "Company"), to purchase for cash up to $62.5 million aggregate
principal amount of its 4 1/4% Convertible Subordinated Debentures due 2000 (the
"Debentures").
This will instruct you to tender to the Company the aggregate principal
amount of Debentures indicated below held by you for the account or benefit of
the undersigned (or, if no amount is indicated below, for all of the aggregate
principal amount of Debentures held by you for the account of the undersigned)
upon the terms and subject to the conditions set forth in the Tender Offer.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF THE
UNDERSIGNED. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------ SIGN HERE
Aggregate Principal Amount of
Debentures to be Tendered: _______________________________________
___________________________ _______________________________________
* Signature(s)
- ------------------------------
_______________________________________
Please type or print name(s)
_______________________________________
Date
_______________________________________
Please type or print name(s)
_______________________________________
Area Code and Telephone Number
_______________________________________
Taxpayer Identification or
Social Security Number
</TABLE>
______________
* Unless otherwise indicated, it will be assumed that we should tender all of
the aggregate principal amount of Debentures held by us for your account.
3
<PAGE>
EXHIBIT 99.7
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- -----------------------------------------------
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- -----------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form 55-5, Application for a Social Security Number Card, or
Form 55-4, Application for an Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under Section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under Section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in Section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under Section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.13
HB ACQUISITION CORPORATION
600 ATLANTIC AVENUE
BOSTON, MASSACHUSETTS 02210
February 17, 1998
Mary J. George
33822 Bridgehampton
Dana Point, CA 92677
Dear Mary:
This letter will set forth the terms of your equity participation in Bell
Sports Corp., a Delaware corporation ("Target") in connection with the
recapitalization of Target contemplated by that certain Agreement and Plan of
Recapitalization and Merger dated as of February 17, 1998 (the "Recapitalization
Agreement"), pursuant to which HB Acquisition Corp. ("Newco") will be merged
with and into Target (the "Merger") and Target will be the Surviving
Corporation.
In order to induce Newco to enter into the Recapitalization Agreement and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, prior to and in connection with the Merger, you agree that 100% of
your phantom stock and common stock will be exchanged for the right to receive a
cash payment of $10.50 a share, in accordance with the terms of the
Recapitalization Agreement. You further agree that your remaining equity
interest in Target (represented by your stock options) will be converted into
the right to receive $10.50 per option (less any applicable exercise price) to
the extent necessary for your total cash consideration (including the right to a
cash payment for your phantom stock) to be approximately $1,000,000. You
further agree that your remaining equity interests in Target will be converted
into options to acquire Common Stock and Series A Preferred Stock (the
"Preferred Stock") of Newco (the ratio of options to acquire Common Stock to the
number of options to acquire Preferred Stock will be the same ratio as the
Common Stock and Preferred Stock to be acquired by the Investor) that will be
"in the money" to the same extent that your options in Target so converted were
"in the money" immediately prior to the conversion. We currently anticipate,
based on preliminary numbers that the parties agree may change, that 106,089 of
your Target options will be converted into options to acquire 1,113,936 shares
of Newco Common Stock and Preferred Stock, with the aggregate exercise price of
$748,990. In connection with the issuance to you of equity interests in Newco,
you agree to enter into a mutually acceptable shareholders agreement. It is
contemplated that the terms of these exchanges (the "Exchanges") will
<PAGE>
be embodied in definitive documentation to be entered into as expeditiously as
possible after the execution of the Recapitalization Agreement.
We agree to work with you to accomplish the exchange of your equity in Target
into equity in Newco on a tax-efficient basis and to agree to indemnify you on
an after-tax basis for any tax liability that may occur on the conversion of
your options in Target into options in Newco as a result of a portion of your
options in Newco being exercisable for Preferred Stock (rather than Common
Stock). However, if your tax objectives cannot be achieved in connection with
the Exchange, at your option, your equity position in Newco will be reduced such
that the cash consideration received by you in connection with the Merger will
be increased to the extent of your tax liability incurred in connection with
your investment in Newco.
This letter constitutes the entire agreement between you and us and
supersedes all prior communications, agreements and understandings, written or
oral with respect to your equity participation in Newco and the Surviving
Corporation. Each party understands that this letter was agreed on based upon a
preliminary understanding of the terms and underlying economics of the
Recapitalization Agreement and the terms of your current equity interest in
Target and that any changes to these terms or economics may require changes to
the terms of this letter. This letter may be signed in counterparts,
all of which constitute the same agreement, shall be governed by the domestic
[The remainder of this page has been intentionally left blank.]
2
<PAGE>
substantive laws of Delaware and shall bind and inure to the benefit of the
parties and their respective successors and assigns.
If the foregoing is in accordance with your understanding, please sign this
letter in the space indicated below and return it to us for receipt no later
than February __, 1998,
whereupon this letter will become a binding agreement among the parties.
Very truly yours,
HB ACQUISITION CORPORATION
By: /s/ Tim R.Palmer
--------------------------------------------
The foregoing is hereby
agreed to and accepted:
By: /s/ Mary J. George
--------------------------
Mary J. George
3
<PAGE>
HB ACQUISITION CORPORATION
600 ATLANTIC AVENUE
BOSTON, MASSACHUSETTS 02210
April 8, 1998
Mary J. George
33822 Bridgehampton
Dana Point, CA 92677
Dear Mary:
Reference is made to that certain letter dated February 17, 1998 (the
"Letter of Intent") pursuant to which you agreed to exchange certain equity held
by you and Bell Sports Corp. ("Target") (represented by some of your stock
options) for equity in HB Acquisition Corporation ("Newco") and certain equity
(represented by your common stock, phantom stock, and your remaining options)
for approximately $1,000,000 in cash. This letter will confirm that the Letter
of Intent is hereby confirmed in all respects; provided however, that (i) all
-------- -------
references to "$10.50" shall be revised to read "$10.25", in accordance with the
First Amendment to Agreement and Plan of Recapitalization and Merger, dated as
of April 8, 1998 between Newco and Target (the "Merger Agreement"); (ii) the
cash payment for your phantom stock will be determined in accordance with the
terms thereof; and (iii) we now expect, based on numbers that the parties agree
may change pursuant to the terms of the Letter of Intent, that you will convert
96,336 of your stock options in Target for options (with an aggregate exercise
price of $748,990) to acquire Newco Common Stock and Preferred Stock reflecting
a value at closing (based on the terms of the Merger Agreement) of $1,056,302.
Very truly yours,
HB Acquisition Corporation
By: /s/ Tim R. Palmer
----------------------------
Title: ____________________________________
The foregoing is hereby
agreed to and accepted:
By: /s/ Mary J. George
-----------------------------
Mary J. George
