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                                                                   Exhibit 10.49

                             SEPARATION AGREEMENT


     This Separation Agreement (this "Agreement"), made and entered into as of
December 21, 2000, by and between The Derby Cycle Corporation, a Delaware
corporation (the "Company"), and Daniel S. Lynch (the "Executive" and, together
with the Company, the "Parties").


                             W I T N E S S E T H:
                             -------------------

     WHEREAS, the Executive has entered into an Employment Agreement dated as of
June 1, 1999 with the Company relating to such Executive's employment by the
Company (the "Employment Agreement");

     WHEREAS, the Parties have agreed to terminate certain provisions of the
Employment Agreement and to provide herein for the termination of the
Executive's employment by the Company;

     NOW, THEREFORE, in consideration of the mutual agreements set forth herein
and intending to be legally bound hereby, the Parties hereby agree as follows:


     1.   Termination of Employment.
          -------------------------

     The Executive hereby agrees to continue to serve as the Chief Financial
Officer of the Company until at least February 28, 2001.  The Parties hereby
agree that, notwithstanding any provision to the contrary contained in the
Employment Agreement, (a) at any time after February 28, 2001, the Company shall
have the right to terminate the employment of the Executive upon at least ten
days prior written notice to the Executive specifying the effective date of such
termination and (b) at any time after February 28, 2001, the Executive shall
have the right to terminate his employment by the Company upon at least ten days
prior written notice to the Company specifying the effective date of such
termination.  Upon the effective date of any such termination (the "Termination
Date"), the Executive shall cease to serve as an officer or director of the
Company or any of its subsidiaries, and the Executive hereby resigns, effective
as of the Termination Date, from all such positions. Until the Termination Date,
the Executive shall perform his duties as Chief Financial Officer of the Company
with reasonable care and in a timely manner.  Without limiting the generality of
the foregoing, until the Termination Date, the Executive shall use his best
efforts to cause all reporting obligations of the Company under its existing
credit facility are timely and accurately satisfied, that all year-end and
interim financial statements and reports are timely and accurately prepared and
finalized, and that all filings required to be made by the Company under the
Securities Exchange Act of 1934, as amended, or any other securities laws or
trading market rules are timely and accurately satisfied.  After the Termination
Date, if requested by the Company, the Executive will assist the Company in
finalizing the Company's year-end 2000 financial statements and its Form 10-K
Report for the year ended December 31, 2000, provided
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that such assistance shall not require a substantial portion of the Executive's
business time. The Executive hereby agrees that if he materially breaches any of
his agreements hereunder prior to the Termination Date as reasonably determined
by the Company's Chairman and, to the extent such breach is subject to cure,
fails to cure such breach as reasonably determined by the Company's Chairman
within 10 days after a written notice thereof is delivered to him, he shall not
be entitled to any of the payments or other benefits provided herein, the
transactions contemplated by Section 2 hereof shall be void, and the Executive
shall return to the Company any amount paid to him pursuant to Section 2(b).

          2.   Repayment of Promissory Note; Repurchase of Common Stock. (a) The
               --------------------------------------------------------
Company and the Executive hereby agree that, effective February 28, 2001, the
purchase price of the Company's Class A Common Stock and Class C Common Stock
(the "Executive Stock") that the Executive purchased from the Company pursuant
to the Management Stock Purchase Agreement dated as of June 1, 1999 between the
Company and the Executive (the "Purchase Agreement") shall be reduced to the
fair market value of the Executive Stock as of such date, and that the
outstanding principal amount of the promissory note (the "Executive Note")
issued by the Executive to the Company pursuant to the Purchase Agreement also
shall be reduced to the amount of the revised purchase price for the Executive
Stock that is pledged to secure its repayment under the Pledge Agreement dated
as of June 1, 1999 between the Company and the Executive (the "Pledge
Agreement"). Immediately after such reduction in the purchase price of the
Executive Stock and principal amount of the Executive Note, the Executive shall
deliver to the Company the Executive Stock that is pledged to secure repayment
of the Executive Note, for cancellation in full payment of the adjusted
principal amount of the Executive Note. Upon the cancellation of the Executive
Stock, the Purchase Agreement, the Executive Note and the Pledge Agreement shall
all terminate in their entirety. The Parties hereby agree to treat the
transactions described in this Section 2(a) as a reduction in the purchase price
for the Executive Stock for United States federal and state income tax purposes.

               (b)  The Company and the Executive hereby agree that on February
28, 2001, the Company shall repurchase all shares of capital stock of the
Company owned by the Executive (other than the Executive Stock that is pledged
to secure repayment of the Executive Note) for an aggregate purchase price of
$157,000. On such date, the Executive shall deliver to the Company the
certificates representing such shares for cancellation and the Company shall pay
such purchase price to the Executive.

          3.   Payments to the Executive.  In lieu of any amounts required to be
               -------------------------
paid to the Executive under Section 3(a) or (b) or Section 4 of the Employment
Agreement, the Company shall make the following payments to the Executive:

               (a)  Until the later of February 28, 2001 and the Termination
Date if the Executive's employment is terminated by the Company pursuant to
Section 1(a) hereof or until the Termination Date if the Executive's employment
is terminated by the Executive under Section 1(b) hereof, the Company shall
continue to pay to the Executive his base salary at the same rate and in the
same manner as such base salary is paid to the Executive as of the date of this
Agreement and shall continue to provide coverage to the

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Executive and his dependents under the Company's health, medical, dental and
life insurance plans on the same basis as provided on the date hereof;

               (b)  On the later of February 28, 2001 and the Termination Date
if the Executive's employment is terminated by the Company pursuant to Section
1(a) hereof or on the Termination Date if the Executive's employment is
terminated by the Executive under Section 1(b) hereof, the Company shall pay to
the Executive a lump sum amount equal to $23,000.

Promptly after the Termination Date, if permissible under its terms, the Company
shall transfer to the Executive the disability insurance policy held by the
Company with respect to the Executive, subject to the Executive's agreement to
satisfy all further obligations thereunder.  Except as provided in this Section
2 and except for expense reimbursements under Section 3(c) of the Employment
Agreement, neither the Company nor any of its subsidiaries shall be obligated to
make any payment (including, without limitation, any bonus payments) to the
Executive in connection with his employment.

          4.   Releases.
               --------

                    (a)  The Executive hereby releases and forever discharges
the Company, each of its subsidiaries, each stockholder or affiliates of the
Company, and each of their respective officers, directors, employees and agents
(the "Company Released Persons") from and waives any and all claims, demands,
controversies, actions, causes of action, obligations, damages and liabilities
of any nature whatsoever, whether at law or in equity, known or unknown,
suspected or unsuspected, absolute or contingent (collectively, "Claims"), that
the Executive ever had, now has, or may hereafter have against any of the
Released Persons arising out of, resulting from or related to the Executive's
service as an officer, director, employee or agent of the Company, any of its
subsidiaries or any of their affiliates, including without limitation any Claims
that may arise out of, result from or relate to the Employment Agreement, except
that nothing contained herein shall release the Company from its obligations
under this Agreement or its obligations to be performed after the date hereof
under the Employment Agreement as modified by this Agreement or any actions
taken by the Company after the date hereof.

                    (b)  The Company (on its own behalf and on behalf of each of
its subsidiaries) hereby releases and forever discharges the Executive from and
waives any and all Claims that the Company or any of its subsidiaries ever had,
now has, or may hereafter have against the Executive arising out of, resulting
from or related to such Executive's service as an officer, director, employee or
agent of the Company, any of its subsidiaries or any of their affiliates,
including without limitation any Claims that may arise out of, result from or
relate to such Executive's Employment Agreement, except that nothing contained
herein shall release the Executive from (i) his obligations under the Employment
Agreement, including, without limitation, his obligations under Sections 5 and 6
of the Employment Agreement, as modified by this Agreement, (ii) any actions
taken by the Executive after the date hereof, or (iii) his obligations under
this Agreement.

          5.   Effect on Employment Agreement.  The Parties hereby agree that
               ------------------------------
Section 3(a) and (b) and Section 4 of the Employment Agreement are hereby
terminated and superceded by the provisions of this Agreement and that in the
event of any conflict

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between the provisions of this Agreement and the provisions of the Employment
Agreement, the provisions of this Agreement shall control.

          6.   Non-Disparagement; References; Search Firm.  The Executive shall
               ------------------------------------------
not disparage the Company, any of its subsidiaries, any of their stockholders or
affiliates, or any of their respective officers, directors, employees or agents.
The Company shall not disparage the Executive. In the event the Company is
requested to provide references or evaluations to another potential employer
with respect to the Executive's employment by the Company, such references shall
be positive. The Company acknowledges and agrees that the Executive in seeking
new employment may utilize executive search firms, including Russell Reynolds
Associates.

          7.   Representations and Warranties.  The Executive hereby represents
               ------------------------------
and warrants to the Company that he has carefully considered and reviewed the
provisions of this Agreement and consulted with his counsel regarding this
Agreement and that this Agreement is a valid and binding obligation of the
Executive enforceable in accordance with its terms.

          8.   Miscellaneous.
               -------------

                    (a)  Successors.  This Agreement shall be binding upon and
                         ----------
inure to the benefit of the respective successors and assigns of each Party.

                    (b)  Interpretation and Construction.  The headings of the
                         -------------------------------
Sections of this Agreement have been inserted for convenience of reference only
and shall not be deemed to be a part of this Agreement. Words such as "herein,"
"hereof," "hereby," "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular Section of this Agreement, unless
the context clearly indicates otherwise.

                    (c)  Severability.  In the event any provision of this
                         ------------
Agreement shall finally be determined to be unlawful or unenforceable, such
provision shall be deemed to be severed from this Agreement, and every other
provision of this Agreement shall remain in full force and effect.

                    (d)  Notices.  All notices, requests and other
                         -------
communications hereunder shall be in writing and shall be deemed to have been
duly given at the time of receipt if delivered by hand or by facsimile
transmission or three days after being mailed, registered or certified mail,
return receipt requested, with postage prepaid to the address or facsimile
number listed below such Party's name on the signature page hereto or if any
Party shall have designated a different address or facsimile number by notice to
the other Parties given as provided above, then to the last address or facsimile
number so designated.

                    (e)  Complete Agreement.  This Agreement sets forth the
                         ------------------
entire understanding of the Parties with respect to the subject matter hereof
and supersedes all prior letters of intent, agreements, covenants, arrangements,
communications,

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representations or warranties, whether oral or written, by any Party or any
officer, employee or representative of any Party.

                    (f)  Third Parties. Except as provided in Section 4(a)
                         -------------
hereof, this Agreement is not intended to, and shall not, create any rights in
or confer any benefits upon anyone other than the Parties and their successors
and assigns.

                    (g)  Governing Law; Consent to Jurisdiction. This Agreement
                         --------------------------------------
shall be governed by, and construed in accordance with, the laws of the State of
New York, without giving effect to the conflicts of laws provisions thereof.

                    (i)  Waiver.  The waiver by any Party of any matter provided
                         ------
for herein shall only be effective if made in writing signed by such Party, but
such waiver shall not be deemed to be a waiver of any other such matter.

                    (j)  Counterparts.  More than one counterpart of this
                         ------------
Agreement may be executed by the Parties, and each fully executed counterpart
shall be deemed an original. This Agreement, and each other agreement or
instrument entered into in connection herewith or therewith or contemplated
hereby or thereby, and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine, shall be treated in all manner
and respects as an original agreement or instrument and shall be considered to
have the same binding legal effect as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to any such
agreement or instrument, each other party hereto or thereto shall re-execute
original forms thereof and deliver them to all other parties. No party hereto or
to any such agreement or instrument shall raise the use of a facsimile machine
to deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of a facsimile machine as a
defense to the formation or enforceability of a contract and each such party
forever waives any such defense.

                    (k)  Amendment of this Agreement.  Any amendment to this
                         ---------------------------
Agreement must be effected by the written consent of each Party who is to be
bound or adversely affected by such Amendment.

                    (l)  Attorneys' Fees.  The Company agrees to pay up to
                         ---------------
$7,500 of attorneys' fees and expenses reasonably incurred by the Executive in
connection with the negotiation and execution of this Agreement. Except as
provided in the immediately preceding sentence, each Party shall bear its own
costs and expenses incurred in connection with the negotiation, execution and
performance of this Agreement.

                    (m)  Withholding.  All payments by the Company to the
                         -----------
Executive hereunder shall be less Social Security taxes and any withholding
taxes for which the Executive is obligated and less any other taxes or amounts
that may be lawfully levied by any governmental authority which the Company may
be required by law from time to time to withhold from such payments.

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       IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
Parties as of the date first above written.


                                     THE DERBY CYCLE CORPORATION


                                     By: /s/ Frederic V. Malek

                                     ______________________
                                     Frederic V. Malek
                                     Chairman
                                     Address:
                                     Derby Cycle Corporation
                                     300 First Stamford Place
                                     Stamford, Connecticut 06902-6765
                                     Facsimile No: 203-961-1673
                                     Attention: Chairman of the Board


                                     /s/ Daniel S. Lynch

                                     _________________________
                                     Daniel S. Lynch

                                     Address:
                                     7 Calhoun Drive
                                     Greenwich CT06831
                                     Fax No.: 203 629 4371

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