Document:

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                                EXHIBIT NO. 10.28

                          CONCORD COMMUNICATIONS, INC.

                2000 NON-EXECUTIVE EMPLOYEE EQUITY INCENTIVE PLAN

1.   INTRODUCTION AND PURPOSE

     (a) The purpose of this 2000 Non-Executive Employee Equity Incentive Plan
(the "2000 Plan" or the "Plan") is to provide a means by which selected
Employees of Concord Communications, Inc. (the "Company") and its Affiliates,
may be given an opportunity to benefit from increases in value of the stock of
the Company through the granting of (i) Nonstatutory Stock Options, (ii) Stock
Bonuses, (iii) Restricted Stock, (iv) Stock Appreciation Rights, and (v) other
awards based upon the Company's Common Stock on such terms and conditions as the
Board may determine.

     (b) The Company, by means of the Plan, seeks to retain the services of
persons who are non-executive employees of the Company and its Affiliates, to
secure and retain the services of new Employees and to provide incentives for
such persons to exert maximum efforts for the success of the Company. The
Company may not grant Stock Awards to Officers and Directors of the Company
pursuant to the Plan.

     (c) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c)
hereof, be either (i) Nonstatutory Stock Options granted pursuant to Section 5
hereof, (ii) Stock Bonuses or rights to purchase restricted stock granted
pursuant to Section 6 hereof, (iii) Stock Appreciation Rights granted pursuant
to Section 7 hereof or (iv) other stock based awards granted pursuant to Section
8 hereof.

2.   DEFINITIONS AND RULES OF INTERPRETATION

     (a) DEFINITIONS.

     For the purposes of the Plan, in addition to the definitions set forth
above, the following terms shall have the respective meanings set forth below,
unless something in the subject matter or context is inconsistent therewith:

          (i)    "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

          (ii)   "BOARD" means the Board of Directors of the Company.

          (iii)  "CODE" means the Internal Revenue Code of 1986, as amended.

          (iv)   "COMMITTEE" means the Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.

          (v)    "COMPANY" means Concord Communications, Inc.

          (vi)   "COMPANY COMMON STOCK" means shares of the common stock of the
Company, par value $.01 per share.

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          (vii)   "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT"
means a right granted pursuant to subsection 7(b) hereof.

          (viii)  "CONTINUOUS STATUS AS AN EMPLOYEE" means the employment or
relationship as an Employee, is not interrupted or terminated by the Company or
any Affiliate. The Committee, in its sole discretion, may determine whether
Continuous Status as an Employee shall be considered interrupted in the case of
any leave of absence approved by the Committee, including sick leave, military
leave, or any other personal leave.

          (ix)    "DIRECTOR" means a member of the Board.

          (x)     "DISABILITY" means total and permanent disability as defined
in Section 22(e)(3) of the Code.

          (xi)    "EMPLOYEE" means any person, (excluding Officers and
Directors) employed by the Company or any Affiliate of the Company.

          (xii)   "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

          (xiii)  "FAIR MARKET VALUE" means the price per share on the date of
grant as determined by the Board based upon any reasonable valuation method, or
if publicly-traded, as reported either (a) by a nationally recognized stock
exchange, (b) by the National Association of Securities Dealers Automated
Quotation System, Inc. ("NASDAQ").

          (xiv)   "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT"
means a right granted under subsection 7(b) hereof.

          (xv)    "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option under Section 422(b) of the Internal
Revenue Code of 1986, as amended.

          (xvi)   "OFFICER" means a person who is an officer of the Company
within the meaning of the interpretations of the National Association of
Securities Dealers, Inc. ("NASD") or under the NASD Marketplace Rules.

          (xvii)  "OPTION" means a stock option granted pursuant to the Plan.

          (xviii) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and conditions
of the Plan.

          (xix)   "OPTIONEE" means an Employee who holds an outstanding Option.

          (xx)    "PLAN" or "2000 PLAN" means this 2000 Non-Executive Employee
Equity Incentive Plan, as the same may be amended from time to time.

          (xxi)   "RESTRICTED STOCK" means an award of common stock that is
subject to such restrictions on transferability and other restrictions, if any,
as the Committee may impose at the date of grant or thereafter, which
restrictions may lapse separately or in combination at such times, under such
circumstances, including, without limitation a specific period of employment or
the satisfaction of pre-established performance goals, in such installments, or
otherwise, as the compensation committee may determine.

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          (xxii)   "SECURITIES ACT" means the Securities Act of 1933, as
amended.

          (xxiiii) "STOCK APPRECIATION RIGHT" means any of the various types of
rights which may be granted under Section 7 hereof.

          (xxiv)   "STOCK AWARD" means any right granted under the Plan,
including any Option, any Stock Bonus, any right to purchase Restricted Stock,
and any Stock Appreciation Right.

          (xxv)    "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

          (xxvi)   "STOCK BONUS" means any stock bonus of the type which may be
granted under Section 6 hereof.

          (xxvii)  "SUBSIDIARY" shall mean any corporation, if the corporation
and/or one or more Subsidiaries owns at least fifty percent (50%) of the total
combined voting power of all classes of outstanding stock in such corporation.

          (xxviii) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a
right granted under subsection 7(b) hereof.

          The foregoing terms are not the exclusive definitions as used in the
Plan and reference is made to other capitalized terms defined in the context of
their first use herein.

     (b) RULES OF INTERPRETATION.

          (i)   The headings and subheadings used herein or in any Option or
other instrument evidencing a Stock Award are solely for convenience of
reference and shall not constitute a part of the Plan or such document or affect
the meaning, construction or effect of any provision thereof.

          (ii)  All definitions set forth herein shall apply to the singular as
well as the plural form of such defined term, and all references to the
masculine gender shall include reference to the feminine or neuter gender and
vice versa, as the context may require.

          (iii) Reference to "including" means including without limiting the
generality of any description preceding such term.

          (iv)  Unless otherwise expressly stipulated, any reference in the Plan
to any statute, act, regulation or specific provision thereof shall also extend
to any amendment, restatement or other modification to such statute, act,
regulation or specific provision thereof or any successor statute, act,
regulation or provision of similar import.

          (v)   Unless otherwise expressly provided, any reference in the Plan
to any specific provision of any statute or act shall include any regulations
promulgated thereunder from time to time and interpretations thereof as may be
applicable to the Plan.

3.   ADMINISTRATION

     (a) The Plan shall be administered by the Committee.

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     (b) The Committee shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

          (i)   To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how Stock Awards shall be
granted; whether a Stock Award will be a Nonstatutory Stock Option, a Stock
Bonus, a right to purchase Restricted Stock, a Stock Appreciation Right,
another stock-based award or a combination of the foregoing; the provisions of
each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive stock pursuant to a Stock
Award; whether a person shall be permitted to receive stock upon exercise of an
Independent Stock Appreciation Right; and the number of shares with respect to
which Stock Awards shall be granted to each such person.

          (ii)  To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Committee, in the exercise of this power, may correct any
defect, omission or inconsistency in any Stock Award Agreement, in a manner and
to the extent it shall deem necessary or expedient to make the Stock Award
Agreement fully effective.

          (iii) To provide for such special terms as it may consider necessary
or appropriate to assure the viability of awards granted to Employees performing
services outside the United States by accommodating differences in local law,
tax policy or custom and to approve such supplements to, or amendments,
restatements or alternative versions of the Plan as it may consider necessary or
appropriate for such purposes without thereby affecting the terms of the Plan as
in effect for any other purposes; provided that, no such supplements,
amendments, restatements or alternative versions shall increase the share
limitations contained in Section 4 hereof.

          (iv)  Generally, to exercise such powers and to perform such acts as
the Committee deems necessary or expedient to promote the best interests of the
Company and which are not in conflict with the provisions of the Plan.
Notwithstanding any other provisions of this Section 3, no Stock Awards may be
granted to any Officer or Director.

     (c) Administration of the Plan shall be delegated to a committee appointed
by the Board (the "Committee"). The Committee shall have, in connection with the
administration of the Plan, the powers set forth in the Plan; subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may at any time revest in the
Board the administration of the Plan. Notwithstanding anything in this Section 3
to the contrary, at any time the Board or Committee may delegate to a committee
of one or more officers of the Company the authority to grant Stock Awards to
eligible persons.

     (d) The Board shall have the authority to correct any defect, omission or
inconsistency in the Plan and to amend the Plan as provided in Section 17. The
Board shall have the authority to appoint the Committee and to fill any vacancy
created by reason of the death, resignation or removal of any member thereof by
appointing an eligible successor.

4.   SHARES SUBJECT TO THE PLAN.

     The number of shares of Company Common Stock that may be issued pursuant to
Stock Awards under the Plan shall be determined by the Board; provided, however,
such amount shall not exceed that number of shares permitted under the Exchange
Act, Securities Act or any applicable rule of the NASDAQ. If any Stock Award
shall for any reason expire or otherwise terminate without having been

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exercised in full, the Company Common Stock not purchased shall again become
available for issuance under the Plan. Notwithstanding the foregoing, shares of
Company Common Stock subject to Stock Appreciation Rights exercised in
accordance with Section 7 hereof shall not be available for subsequent issuance
under the Plan.

5.   OPTION PROVISIONS

     Each Option Agreement shall be in such form and shall contain such terms
and conditions as the Committee shall deem appropriate. The provisions of
separate Options need not be identical, but each Option Agreement shall include
(through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions except as otherwise
specifically provided elsewhere in the Plan.

     (a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.

     (b) PRICE. The exercise price of each Stock Option shall be set by the
Committee at the time each Option is granted, but in no event shall any exercise
price be less than the par value of the Company Common Stock.

     (c) PAYMENT FOR STOCK. Stock purchased on exercise of an Option must be
paid in cash or by certified check (acceptable to the Company in accordance with
guidelines established for this purpose), bank draft or money order payable to
the order of the Company, by delivery of a full recourse promissory note of the
Optionee to the Company on terms determined by the Committee, or by such other
method as may be determined by the Committee, including broker assisted same day
sales. In the case of payment made by a promissory note, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest.

     (d) TRANSFERABILITY. A Stock Option may be transferred upon such terms and
conditions as are set forth in the Option Agreement, as the Committee shall
determine in its sole discretion, including (without limitation) pursuant to a
"domestic relations order" or to family members, or to trusts or other entities
maintained for the benefit of family members. Notwithstanding the foregoing, the
person to whom an Option is granted may, by delivering written notice to the
Company in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionee, shall thereafter be entitled to exercise
the Option.

     (e) VESTING. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (e.g., Change in Control, performance or
other criteria) as the Committee may deem appropriate. During the remainder of
the term of the Option (if its term extends beyond the end of the installment
periods), the Option may be exercised from time to time with respect to any
shares then remaining subject to the Option. The provisions of this subsection
5(e) are subject to any Option provisions governing the minimum number of shares
as to which an Option may be exercised.

     (f) TERMINATION OF EMPLOYMENT. In the event an Optionee's Continuous Status
as an Employee terminates (other than upon the Optionee's death, or Disability),
the Optionee may exercise

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his or her Option, but only within such period of time ending on the earlier of
(i) 90 days after termination of the Optionee's Continuous Status as an Employee
or such longer or shorter period of time specified in the Option Agreement, or
(ii) the expiration of the Option's term, and only to the extent that the
Optionee was entitled to exercise it at the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement).

     If, at the date of termination, the Optionee is not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

     An Optionee's Option Agreement may also provide that if the exercise of the
Option following the termination of the Optionee's Continuous Status as an
Employee, (other than upon the Optionee's death or disability) would be
prohibited at any time solely because the issuance of shares would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the first paragraph of this subsection 5(f), or (ii) the expiration of
a period of three (3) months after the termination of the Optionee's Continuous
Status as an Employee, during which the exercise of the Option would not be in
violation of such registration requirements.

     Notwithstanding the preceding, in the event the Company terminates an
Optionee's employment with the Company for cause (as determined by the Company),
the Option shall terminate on the date of termination and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan.

     As used herein, "cause" shall mean (x) any material breach by the Optionee
of any agreement to which the Optionee and the Company are both parties, (y) any
act or omission to act by the Optionee which may have a material and adverse
effect on the Company's business or on the Optionee's ability to perform
services for the Company, including, without limitation, the commission of any
crime (other than ordinary traffic violations), or (z) any material misconduct
or material neglect of duties by the Optionee in connection with the business or
affairs of the Company or any affiliate of the Company.

     (g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status as
an Employee terminates as a result of the Optionee's Disability, the Optionee
may exercise his or her Option, but only within such period of time ending on
the earlier of (i) the date twelve (12) months following such termination (or
such longer or shorter period of time as specified in the Option Agreement), or
(ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, at the date of termination, the Optionee does not exercise his or
her Option within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan. The number of shares subject to an Option which may be
purchased under this Section 5(g) shall be that number which would be vested on
the first anniversary of the Optionee's termination on account of Disability,
unless an applicable Option Agreement specifies otherwise.

     (h) DEATH OF OPTIONEE. In the event of a death of an Optionee during, or
within a period specified in the Option Agreement after the termination of, the
Optionee's Continuous Status as an Employee, the Option may be exercised by the
Optionee's estate, by a person who acquired the right to exercise the Option by
bequest or inheritance, or by a person designated to exercise the option upon
the Optionee's death pursuant to subsection 5(d) hereof, but only within the
period ending on the earlier of: (i) the date twelve (12) months following the
date of death (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of such Option as set forth in
the Option Agreement.

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     If, at the time of death, the Optionee was not entitled to exercise his or
her entire Option, the shares covered by the unexercisable portion of the Option
as determined on the date of death (i.e., no acceleration) shall revert to and
again become available under the Plan. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

     (i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, to exercise the
Option as to any part or all of the shares subject to the Option prior to the
full vesting of the Option; provided, however, any unvested shares shall be
subject to a repurchase right in the Company at the Exercise Price in the event
of the Optionee's termination and any such repurchase right shall comply with
California law for employees who are California residents.

6.   TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

     Each Stock Bonus or Restricted Stock award agreement shall be in such form
and shall contain such terms and conditions as the Committee shall deem
appropriate. The terms and conditions of Stock Bonus or Restricted Stock award
agreements may change from time to time, and the terms and conditions of
separate agreements need not be identical, but each Stock Bonus or Restricted
Stock award agreement shall include (through incorporation of provisions herein
by reference in the agreement or otherwise) the substance of each of the
following provisions as appropriate:

     (a) PURCHASE PRICE. The purchase price under each Restricted Stock award
agreement shall be such amount as the Committee shall determine and designate in
such agreement. Notwithstanding the foregoing, the Committee may determine that
eligible participants in the Plan may be granted a Stock Award pursuant to a
Stock Bonus agreement in consideration for past services actually rendered to
the Company for its benefit.

     (b) TRANSFERABILITY. Except as otherwise provided elsewhere in the Plan, no
rights under a Stock Bonus or Restricted Stock award agreement shall be
assignable by any participant under the Plan, either voluntarily or by operation
of law, except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the rights are granted
only by such person. The person to whom the Stock Award is granted may, by
delivering written notice to the Company in a form satisfactory to the Company,
designate a third party who, in the event of the death of such person, shall
thereafter be entitled to exercise the rights held by such person under the
Stock Bonus or Restricted Stock award agreement.

     (c) PAYMENT FOR STOCK. The purchase price determined under subsection 6(a)
hereof must be paid in cash or by certified check (acceptable to the Company in
accordance with guidelines established for this purpose), bank draft or money
order payable to the order of the Company, or by delivery of a full recourse
promissory note of the Employee to the Company on terms determined by the
Committee, or by such other method as may be determined by the Committee. In the
case of payment made by a promissory note, interest shall be payable at least
annually and shall be charged at the minimum rate of interest necessary to avoid
the treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest.

     (d) VESTING. Shares of Company Common Stock sold or awarded under the Plan
may, but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Committee.

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     (e) TERMINATION OF EMPLOYMENT. In the event an Optionee's Continuous Status
as an Employee terminates, the Company may repurchase or otherwise reacquire any
or all of the shares of Company Common Stock held by that person which have not
vested as of the date of termination under the terms of the Stock Bonus or
Restricted Stock purchase agreement between the Company and such person.

7.   STOCK APPRECIATION RIGHTS

     (a) The Committee shall have full power and authority, exercisable in its
sole discretion, to grant Stock Appreciation Rights to Employees of the Company
or its Affiliates under the Plan under such terms and conditions as it shall
determine. Each such right shall entitle the holder to a distribution based on
the appreciation in the Fair Market Value per share of a designated amount of
Company Common Stock.

     (b) The three types of Stock Appreciation Rights authorized for issuance
under the Plan are: Tandem Stock Appreciation Rights, Concurrent Stock
Appreciation Rights and Independent Stock Appreciation Rights.

8.   OTHER STOCK-BASED AWARDS.

     The Committee shall have the right to grant other Awards based upon Company
Common Stock having such terms and conditions as the Committee may determine,
including the grant of shares based upon certain conditions and the grant of
securities convertible into Company Common Stock.

9.   TAX WITHHOLDING.

     The Company shall have the right to deduct from any settlement of an award
made under the Plan, including the delivery or vesting of shares of Company
Common Stock, up to the minimum amount necessary to cover withholding of any
federal, state or local taxes required by law, or to take such other action as
may be necessary to satisfy any such withholding obligations. The Committee may,
in its discretion and subject to such rules as it may adopt, permit participants
to use shares of Company Common Stock to satisfy the minimum required tax
withholding (with prior approval of the Committee if Shares are owned less than
six months) and such Shares shall be valued at the Fair Market Value as of the
settlement date of the applicable award.

10.  CANCELLATION AND RE-GRANT OF OPTIONS.

     The Board or the Committee shall have the authority to effect, at any time
and from time to time, with the consent of the affected holders of Options
and/or Stock Appreciation Rights, the repricing of any outstanding Options
and/or Stock Appreciation Rights under the Plan and the grant in substitution
therefore of new Options and/or Stock Appreciation Rights under the Plan
covering the same or different numbers of shares of Company Common Stock.
Notwithstanding the foregoing, the Committee may grant an Option and/or Stock
Appreciation Right with an exercise price lower than that set forth above if
such Option and/or Stock Appreciation Right is granted as part of a transaction
to which Section 424(a) of the Code applies.

11.  COVENANTS OF THE COMPANY.

     (a) During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of Company Common Stock required to satisfy
such Stock Awards, but in any event, not more than the number of shares of
Company Common Stock authorized under the Plan.

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     (b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of Company Common Stock under the Stock Awards; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of Company Common Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Company Common Stock under such
Stock Awards unless and until such authority is obtained.

12.  USE OF PROCEEDS FROM STOCK.

     Proceeds from the sale of Company Common Stock pursuant to Stock Awards
shall constitute general funds of the Company.

13.  MISCELLANEOUS.

     (a) The Committee shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

     (b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 5(d) hereof shall be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares of Company Common Stock
subject to such Option unless and until such person has satisfied all
requirements for exercise of the Option pursuant to its terms.

     (c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee or Optionee any right to
continue in the employ of the Company or any Affiliate or shall affect the right
of the Company or any Affiliate to terminate the employment or relationship of
any Employee or Optionee, with or without cause.

     (d) The Committee shall be authorized to establish procedures pursuant to
which Optionees may elect to defer the gain realized upon exercise of an Option,
or such gain derived from other Stock Awards granted under the Plan.

     (e) The Company will not be obligated to deliver any shares of Company
Common Stock pursuant to the Plan or to remove restrictions from such shares
previously delivered under the Plan (a) until all conditions of the Option or
award have been satisfied or removed, (b) until, in the opinion of the Company's
counsel, all applicable federal and state laws and regulations have been
complied with, (c) if the outstanding Company Common Stock is at the time listed
on any stock exchange or The Nasdaq National Market, until the shares to be
delivered have been listed or authorized to be listed on such exchange or market
upon official notice of notice of issuance, and (d) until all other legal
matters in connection with the issuance and delivery of stock has been approved
by the Company's counsel.

     (f) If the sale of shares of Company common stock has not been registered
under the Securities Act, the Company may require, as a condition to exercise of
the award, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of the Securities Act; including the
representation or warranty of the person exercising the Option that the Shares
of Company Common Stock are being purchased only for investment and without any
present intention to sell or

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distribute such shares.

     (g) If an Option is exercised by the Optionee's legal representative or
transferee, the Company will be under no obligation to deliver Company Common
Stock pursuant to such exercise until the Company is satisfied as to the
authority of such representative.

14.  EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN.

     In the event there is any change in the shares of Common Stock of the
Company through the declaration of stock dividends or through recapitalizations
resulting in stock subdivisions or combinations or exchanges of shares or
otherwise, the number of shares available for Options, the exercise price of
outstanding Options, and the number of shares subject to any Option shall be
appropriately adjusted by the Board.

15.  CHANGE IN CONTROL.

     Notwithstanding any other provision of the Plan to the contrary, in the
event of a Change of Control as determined solely by the Board:

     (a) Stock Awards outstanding as of the date such Change of Control is
determined to have occurred shall become exercisable to the extent provided for
in each Optionee's Award agreement.

     (b) In connection with or following a Change of Control, neither the
Committee nor the Board may impose additional conditions upon exercise or
otherwise amend or restrict an Option, SAR, share of Restricted Stock, Deferred
Stock Award or Performance Award, or amend the terms of the Plan in any manner
adverse to the holder thereof, without the written consent of such holder.

     (c) Notwithstanding the foregoing, if any right granted pursuant to this
Section 15 would make a Change of Control transaction ineligible for pooling of
interests accounting under applicable accounting principles that but for this
Section 15 would otherwise be eligible for such accounting treatment, the
Committee shall have the authority to substitute Stock for the cash which would
otherwise be payable pursuant to this Section 15 having a fair market value
equal to such cash.

16.  GRANT OF OPTIONS IN CONNECTION WITH CERTAIN ACQUISITIONS.

     The Board may grant Options under the Plan in substitution for stock
options granted under plans of other employers, if such grant occurs by reason
of a corporate merger, consolidation, separation, reorganization, or liquidation
to which the Company is a party, or by reason of the acquisition of property or
stock of another corporation by the Company. Options granted under the
provisions of this Section 16 may be granted at a price less than the Fair
Market Value of the Common Stock on the date such Option is granted, so long as
the ratio of the Option price to the Fair Market Value of the Common Stock is no
more favorable to the Optionee than the ratio of the Option price to the Fair
Market Value of the stock subject to the old option immediately before such
substitution. Except as otherwise specifically provided in the agreement setting
forth the terms and conditions of such Option, the provisions of this Plan shall
govern any Options granted under this Section 16. Nothing in this Section 16
shall be deemed to authorize the grant of Options under the Plan for a number of
shares in excess of the number determined under Section 4, nor to limit in any
way the authority of the Board to grant substituted Options in connection with
such transactions other than under the Plan.

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17.  AMENDMENT OF THE PLAN AND STOCK AWARDS

     (a) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provision of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Options granted under it into compliance
therewith.

     (b) Rights and obligations under any Stock Award granted before amendment
of the Plan shall not be altered or impaired by any amendment of the Plan unless
(i) the Company requests the consent of the persons to whom the Stock Award was
granted and (ii) such person consents in writing.

     (c) The Committee at any time, and from time to time, may amend the terms
of any one or more Stock Awards; provided, however, that the rights and
obligations under any Stock Award shall not be altered or impaired by any such
amendment unless (i) the Company requests the consent of the person to whom the
Stock Award was granted and (ii) such person consents in writing.

18.  TERMINATION OR SUSPENSION OF THE PLAN.

     (a) The Board may suspend or terminate the Plan at any time. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

     (b) Rights and obligations under any Stock Award granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with consent of the person to whom the Stock Award was granted.

19.  GOVERNING LAW.

     The provisions of the Plan and all Stock Awards made hereunder shall be
governed by and interpreted in accordance with the internal laws of the
Commonwealth of Massachusetts without regard to any applicable conflicts of law
principles.

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                                                                   EXHIBIT 10.49

                                December 27, 2000

Mr. Jay Margolis
49 Holly Lane
Watermill, New York 11976

Re:  Employment Agreement

Dear Jay:

         This letter will evidence the agreement between you and Reebok
International Ltd. ("Reebok" or the "Company") relating to your employment by
Reebok effective as of December 18, 2000 (the "Effective Date"). Our agreement
is as follows:

         1. YOUR POSITION; DUTIES AND RESPONSIBILITIES. Reebok hereby employs
you, and you accept such employment, on the terms and subject to the conditions
set out in this Agreement commencing as of December 18, 2000. You are hereby
designated during the Employment Term (as defined in Section 2 below) as
President of the Specialty Business Group and Executive Vice-President of
Reebok. In such capacity, you will have all duties, responsibilities and
authorities normally associated with such position, including strategic and
operating responsibility for the business conducted in the Rockport Company,
Greg Norman Collection, and Ralph Lauren Footwear divisions on a worldwide
basis. You will devote your full business time and your best efforts in carrying
out the duties, responsibilities and authorities of that position, and you will
operate within corporate policies, guidelines, regulations, and strategies, and
mutually-agreed budgets and capital authorization levels established by the
Board of Directors of the Company or its Chief Executive Officer. You will
report directly to the Chief Executive Officer of Reebok (who currently is Paul
Fireman). Although your responsibilities as of the Effective Date are as
described above, you should understand that changes may occur which result in
some operations being removed and some being added to your responsibility,
provided that any such changes shall be consistent with the terms of this
Agreement.

         You shall not be prevented from accepting positions of responsibility
in outside business and charitable organizations, such as directorships of
outside business corporations and public charities, subject to the limitation
that such activities shall not interfere with your discharge of your
responsibilities to Reebok hereunder and shall not include any involvement with
any competing enterprise. You will comply with whatever policies are in
existence in this regard, including the current policy, which limits senior
executives to serving on no more than two (2) for-profit boards of directors.

         2. EMPLOYMENT TERM; EMPLOYMENT "AT WILL" AFTER END OF EMPLOYMENT TERM.

         A. EMPLOYMENT TERM. The term of your employment under this Agreement
         shall commence as of the Effective Date and will continue until
         December 31, 2002 (the

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         "Employment Term"). Your employment may be terminated prior to the
         expiration of the Employment Term pursuant to Section 10 below, but
         subject to the terms hereof.

         B. CONTINUATION OF EMPLOYMENT AFTER END OF EMPLOYMENT TERM. If you
         remain in the employ of the Company after the end of the Employment
         Term,

         (i)      your employment with the Company will be on "at will" basis,
                  and

         (ii)     except as otherwise provided herein, nothing in this Agreement
                  shall confer upon you any right to continue to receive the
                  compensation and benefits provided in this Agreement after the
                  expiration of the Employment Term; provided, however, that you
                  will be eligible to  participate in each of the Company's
                  employee benefit and incentive compensation plans, policies,
                  or arrangements and to receive all fringe benefits and be
                  entitled to all vacations, for which your status and level of
                  employment qualify you in accordance with the Company's usual
                  policies and arrangements and the Employment Terms of such
                  plans, policies and arrangements, including, without
                  limitation, the standard Reebok Severance Policy then in
                  effect, your Reebok Change in Control Agreement, and your
                  Reebok stock option agreement.

         C. SURVIVAL OF CERTAIN PROVISIONS. The following provisions of this
         Agreement will continue in effect without regard to the termination of
         your employment or the expiration of the Employment Term: Section 4(v)
         [relating to the incentive payment in 2003], Section 9 [relating to the
         modification of certain specified employee agreements], and Sections
         12(i) through 12(vii) [relating to certain miscellaneous provisions].
         In addition, the Employee Agreement, Non-Competition Agreement, and the
         Code of Conduct referred to in Section 9 will continue in effect after
         the termination of your employment with the Company.

         3. BASE SALARY. During the Employment Term, your base salary will be

         (i)      from December 18, 2000, up to December 31, 2001, at the
                  annualized rate of $600,000, and

         (ii)     from January 1, 2002, up to December 31, 2002, at the
                  annualized rate of $800,000,

         payable in accordance with Reebok's normal pay practices.

         4. ANNUAL INCENTIVE COMPENSATION.

         (i)      PARTICIPATION IN EXECUTIVE PERFORMANCE INCENTIVE PLAN. For
                  each calendar year of the Employment Term, you will
                  participate in the same incentive compensation plan as the
                  other senior executives of the Company, and to the extent that
                  you share financial performance criteria with those other
                  executives under the plan, your required level of financial
                  performance will be set at the same level as for those other
                  executives. Actual payment levels under the incentive

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                  compensation program will be based on your achievement of
                  financial and management performance goals, with such goals to
                  be established each year by the Company's Chief Executive
                  Officer or Board of Directors, and payments will be made in
                  accordance with the Employment Terms and subject to the
                  conditions of the incentive plan then in effect for the senior
                  executives of the Company.

         (ii)     INCENTIVE TARGET. For each of the years ending December 31,
                  2001, and December 31, 2002, your annual incentive
                  compensation has been targeted at 90% of your base salary.

         (iii)    PAYMENT IN 2001. You will receive a payment of $200,000 in a
                  single lump sum payment at such time as the other senior
                  executives of the Company receive or would receive the payment
                  of incentive compensation in 2001. It is anticipated that the
                  Company will make such payment in mid-March, 2001. You will
                  receive payment under this Section 4(iii) whether or not you
                  are employed by the Company on the date that the Company would
                  otherwise make payment unless your employment is terminated
                  prior to payment pursuant to Section 10A [voluntary
                  termination without good reason] or Section 10C [termination
                  for cause].

         (iv)     PAYMENT IN 2002. You will receive an incentive payment in 2002
                  (attributable to fiscal year 2001) equal to the greater of (a)
                  $200,000, or (b) the amount otherwise payable under the terms
                  of the incentive plan in effect with respect to 2001. The
                  Company will make such payment in accordance with its usual
                  practice for the payment of incentive compensation to senior
                  executives; however, it is anticipated that the Company will
                  make such payment in mid-March, 2002. You will receive payment
                  under this Section 4(iv) whether or not you are employed by
                  the Company on the date that the Company would otherwise make
                  payment unless your employment is terminated prior to payment
                  pursuant to Section 10A [voluntary termination without good
                  reason] or Section 10C [termination for cause].

         (v)      PAYMENT IN 2003. You will receive an incentive payment
                  relating to performance in 2002, payable in 2003 in accordance
                  with the usual practice under the incentive plan and in
                  accordance with the terms and subject to the conditions of
                  that plan (other than the condition for payment that you be
                  actively employed by the Company on the date of payment);
                  provided, however, that you are actively employed by the
                  Company until the last day of the Employment Term.

         (vi)     DISPUTES. In the event of any disagreement concerning whether
                  incentive plan goals have been achieved and/or the percentage
                  bonus to be awarded, the decision of the Company's Chief
                  Executive Officer shall be final. If you believe that the
                  decision of the Company's Chief Executive Officer has not been
                  made in good faith, you may submit your position on the matter
                  in writing to the Compensation Committee of the Company's
                  Board of Directors, which will consider your position at its
                  next regular meeting and revise the Chief Executive Officer's

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                  decision if it determines that revision is appropriate. The
                  Compensation Committee has full discretion to determine the
                  issue and its determination will fully bind the parties.

         5. SIGNING BONUS. The Company will pay you $200,000 in a single lump
sum no later than December 31, 2000.

         6. STOCK OPTIONS.

         (i)      GENERAL. The Company will grant you so-called "non-qualified"
                  stock options with respect to its common stock under the
                  Company's 1994 Equity Incentive Plan (the 1994 plan and any
                  subsequent successor plan in effect at a relevant time is
                  referred to as the "Option Plan"). The form of option
                  agreement evidencing the grants to you under this Section 6 is
                  attached to this Agreement as EXHIBIT A. The terms of the
                  Option Plan and any agreement under the Option Plan relating
                  to the options will govern the exercise and all other matters
                  relating to the options.

         (ii)     INCEPTION OF EMPLOYMENT. Options will be granted to you under
                  the Option Plan to acquire 150,000 shares of Reebok common
                  stock, at $22.84/share, the market price of Reebok's common
                  stock upon the closing of the market as of December 18, 2000,
                  the Effective Date. These options will expire ten (10) years
                  after the date of grant and will become ratably exercisable on
                  each of your first, second, third and fourth anniversaries of
                  your start date of employment.

         (iii)    LATER GRANT. Options will be granted to you under the Option
                  Plan to acquire an additional 150,000 shares of Reebok common
                  stock, at the market price of Reebok's common stock upon the
                  closing of the market as of the date of grant, at the time the
                  Company grants stock options under the Option Plan to senior
                  executives during the normal annual cycle of grants
                  anticipated to occur at the end of 2001 or the beginning of
                  2002, provided that in the event that stock options are not
                  granted to senior executives at such time, such options shall
                  be granted to you no later than January 31, 2002. These
                  options will expire ten (10) years after the date of grant and
                  will become ratably exercisable over a four year period on the
                  anniversary of the date of grant.

         7. FRINGE BENEFITS AND BUSINESS RELATED EXPENSES.

         (i)      GENERAL. You will be eligible to participate in or receive
                  benefits under any pension plan, 401(k) savings plan, medical
                  and dental benefits plan, life insurance plan, short-term and
                  long-term disability plans, supplemental and/or incentive
                  compensation plans, or any other employee benefit or fringe
                  benefit plan, generally made available by the Company to
                  senior executives in accordance with the eligibility
                  requirements of such plans and subject to the terms and
                  conditions set forth in this Agreement. Notwithstanding the
                  foregoing, you will not be eligible to participate in the
                  Reebok International Ltd. Severance Policy during the
                  Employment Term except to the extent provided in Section 11E
                  below.

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         (ii)     PERSONAL ALLOWANCE. In addition, the Company will provide to
                  you during your employment a personal allowance of $2,500 per
                  month to be used in your discretion.

         (iii)    MOVING AND TRANSITION LIVING EXPENSES. The Company will pay
                  your moving expenses from your current home and transition
                  living expenses for you, your spouse and children through the
                  end of January, 2001, in accordance with the Company's
                  relocation policy for senior executives.

         (iv)     EXPENSES. The Company will promptly reimburse you for the
                  reasonable and necessary business expenses incurred by you in
                  the performance of the duties under this Agreement in
                  accordance with its customary practices applicable to senior
                  executives, provided that such expenses are incurred and
                  accounted for in accordance with the Company's policy.

         8. VACATION. You will be entitled to vacation in accordance with normal
Reebok policy for senior executives, with any additional amount to be determined
by the Company's Chief Executive Officer.

         9. CONFIDENTIALITY, NON-COMPETITION AND CODE OF CONDUCT.

         (i)      GENERAL. During the Employment Term and thereafter you will be
                  subject to the terms and conditions of each of the following
                  agreements as modified pursuant to Section 9(ii) below: the
                  standard Reebok Employee Agreement attached hereto as EXHIBIT
                  B (the "Employee Agreement"); the standard Reebok
                  Non-Competition Agreement attached hereto as EXHIBIT C (the
                  "Non-Competition Agreement"); and the Reebok Code of Conduct
                  attached hereto as EXHIBIT D (the "Code of Conduct"). The
                  Employee Agreement, Non-Competition Agreement, and the Code of
                  Conduct, as modified by this Agreement, will continue in
                  effect after the termination of your employment with the
                  Company.

         (ii)     ANCILLARY AGREEMENT MODIFICATIONS.

                  (a)      EMPLOYEE AGREEMENT [EXHIBIT B]. The Employee
                           Agreement attached hereto as Exhibit B is modified as
                           follows:

                           (I)      Section 5 of the Employee Agreement is
                                    modified by adding a new second sentence to
                                    read as follows: "Notwithstanding the
                                    preceding sentence, in no event will I hold
                                    any equity or other interest of any kind in
                                    Nike, Adidas, Timberland, L.A. Gear, K
                                    Swiss, Puma, Stride Rite, New Balance and
                                    Converse or their affiliates."

                           (II)     Section 7 of the Employee Agreement is
                                    deleted and Section 2 of this Agreement is
                                    substituted therefor.

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                  (b)      NON-COMPETITION AGREEMENT [EXHIBIT C]. The
                           Non-Competition Agreement attached hereto as Exhibit
                           C is modified by adding the following new sentence at
                           the end of Section I.A. to read as follows:
                           "Notwithstanding the preceding sentence, you may
                           invest in 1% or less of the equity securities of any
                           publicly traded company; provided, however, that in
                           no event will you hold any equity or other interest
                           of any kind in Nike, Adidas, Timberland, L.A. Gear, K
                           Swiss, Puma, Stride Rite, New Balance and Converse or
                           their affiliates."

                  (c)      CODE OF CONDUCT [EXHIBIT D]. The Code of Conduct
                           attached hereto as Exhibit D is modified as follows:

                           (I)      The second paragraph of the section entitled
                                    "Investments in or Affiliations with
                                    Suppliers, Customers or Competitors" under
                                    "Conflicts of Interest" is modified to read
                                    as follows: "Generally, ownership interests
                                    of less than 1% of the equity or other
                                    securities of a publicly traded corporation
                                    will not be considered to create a conflict.
                                    However, employees should not hold any
                                    ownership or other interest in the following
                                    competitors of Reebok or their affiliates:
                                    Nike, Adidas, Timberland, L.A. Gear, K
                                    Swiss, Puma, Stride Rite, and New Balance.
                                    From time to time, the Company may
                                    distribute an updated list of some of our
                                    competitors for whom any stock ownership
                                    would be prohibited."

                           (II)     The last paragraph of the Code of Conduct is
                                    modified by adding the following new
                                    sentence at the end thereof to read as
                                    follows: Notwithstanding the foregoing, your
                                    employment shall be subject to the terms and
                                    conditions of any written employment
                                    agreement in effect between you and the
                                    Company.

         10. EMPLOYMENT TERMINATION. Notwithstanding the provisions of Section 2
above, your employment under this Agreement may be terminated prior to the end
of the Employment Term in any of the following cases:

         A. VOLUNTARY TERMINATION WITHOUT GOOD REASON. You may terminate your
         employment under this Agreement, without "good reason," upon ninety
         (90) days prior written notice to the Company. Such written notice will
         set forth the date your employment ends.

         B. VOLUNTARY TERMINATION WITH GOOD REASON. You may terminate your
         employment under this Agreement with "good reason" upon fourteen (14)
         days prior written notice to the Company; provided, however, that you
         must first provide written notice of the "good reason" to the Company,
         and the Company must fail to cure such "good reason" within thirty (30)
         days after the date on which you give written notice of such "good
         reason." For purposes of this Agreement, "good reason" will mean the
         occurrence of any of the following:

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         (i)      A material diminution in the overall level of your
                  responsibilities or authority, except in connection with the
                  cessation of your employment by death, or by the Company for
                  cause or your incapacity, as defined in Section 10E, or by you
                  other than for "good reason."

         (ii)     The failure by the Company to pay you when due any material
                  amount of your current compensation or any material amount of
                  your compensation payable under any plan, agreement or
                  arrangement of or with the Company, within ten (10) days after
                  you make written demand for such amount.

         (iii)    The failure of the Company to maintain your relative level of
                  coverage under the Company's employee benefit, incentive
                  compensation, or material fringe benefit plans, policies,
                  practices, or arrangements in which you participate, both in
                  terms of the amount and timing of benefits provided and the
                  relative level of your participation. For this purpose, the
                  Company may eliminate and/or modify existing employee benefit,
                  incentive compensation, retirement, or material fringe benefit
                  plans, policies, practices, or arrangements and coverage
                  levels on a consistent and non-discriminatory basis applicable
                  to all such executives; provided, however, that your level of
                  coverage under all such programs must be at least as great as
                  is such coverage provided to employees who have the same or
                  lesser levels of reporting responsibilities within the
                  Company's organization.

         C. CAUSE. The Company may terminate your employment under this
         Agreement for cause, upon written notice to you. For purposes of this
         Agreement, "cause" will mean:

         (i)      fraud, embezzlement, or other intentional misappropriation
                  from the Company or an affiliate thereof;

         (ii)     your conviction of a felony or a misdemeanor involving moral
                  turpitude;

         (iii)    any other conduct on your part involving fraud, gross
                  negligence or willful misconduct, or other action which
                  materially damages the reputation of the Company or an
                  affiliate thereof; or

         (iv)     your default of any material obligations under this Agreement,
                  provided, however, that the Company must first provide written
                  notice of the default to you, and you must fail to cure such
                  default within thirty (30) days after the date on which the
                  Company gives you written notice of such default.

         It is understood and agreed that a failure to achieve financial or
         other business results is not a basis for a "for cause" termination. No
         termination of your employment for cause shall be deemed to have
         occurred unless you have been given notice of the reason therefore
         including the allegations which may constitute reason for such
         termination and after (a) you have been provided an opportunity to be
         heard by the Board of Directors of the Company or the Executive
         Committee thereof, and (b) such decision has been upheld by the Board
         or Executive Committee.

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         D. DEATH. Your employment will terminate immediately upon your death,
         subject to the payment obligations set forth in Section 11B below.

         E. INCAPACITY. Upon written notice to you, the Company may terminate
         your employment under this Agreement in the event of your incapacity,
         subject, however, to any legal obligations that mandate continued
         employment. For purposes of this Agreement, "incapacity" will mean such
         incapacity or disability as would qualify you for long-term disability
         coverage under the Company's long-term disability insurance plan.

         F. OTHER REASONS. Subject to the terms of Section 11B, the Company may
         terminate your employment for any reason, upon written notice to you
         stating the date of termination.

         11. PAYMENT OBLIGATION IN THE EVENT OF TERMINATION. In the event of any
termination pursuant to Section 10, Reebok shall have the following payment
obligations:

         A. VOLUNTARY TERMINATION WITHOUT GOOD REASON AND TERMINATION FOR CAUSE.
         In the event your employment is terminated pursuant to Section 10A
         [voluntary termination without good reason] or Section 10C [termination
         for cause],

         (i)      Your right to receive compensation under this Agreement shall
                  cease as of the effective date of such termination.

         (ii)     The Company shall pay the following amounts to you: any
                  accrued but unpaid base salary for services rendered to the
                  date of termination; any accrued but unpaid expenses required
                  to be reimbursed and any vacation accrued to the date of
                  termination.

         (iii)    Except as may be provided under the terms of any incentive
                  compensation, employee benefit, or fringe benefit plan
                  applicable to the you at the time of your termination or
                  resignation of employment prior to the end of the Employment
                  Term, you shall have no right to receive any other
                  compensation, or to participate in any other plan, arrangement
                  or benefit, with respect to future periods after such
                  termination or resignation.

         B. TERMINATION FOR DEATH OR INCAPACITY. In the event of your employment
         is terminated pursuant to Section 10D [death] or Section 10E
         [incapacity], you will be entitled (i) to payment of your base salary
         only until the last day of your employment and (ii) to any payment as
         stated in Sections 4(iii), 4(iv), and 5 that the Company has not yet
         made, and no further payments of any kind will be due you from the
         Company. However, upon termination of your employment because of death
         or upon termination of your employment because of disability, as
         defined in the Option Plan, all outstanding stock options will become
         immediately exercisable pursuant to the provisions of the Option Plan.
         Additionally, you or your beneficiaries will be entitled to receive any
         benefits that are payable with respect to your termination of
         employment under the terms of any pension or profit-sharing plan, or
         life insurance or disability plan of the Company in

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         which you participated before your employment ended; you will, however,
         not be entitled to receive any benefit under any severance plan,
         arrangement or agreement of the Company other than the payments from
         the Company described in this Section 11B.

         C. TERMINATION UNDER SECTIONS 10B OR 10F. In the event that you
         terminate your employment under this Agreement with "good reason"
         pursuant to Section 10B, or the Company terminates your employment for
         any reason under Section 10F, including without cause as cause is
         defined in Section 10C, you will be entitled to the following:

         (i)      to collect your base salary at the times and in the amounts
                  that would have been paid had you remained in the employ of
                  the Company for the balance of the Employment Term,

         (ii)     to receive any payment as stated in Sections 4(iii), 4(iv),
                  and 5 that the Company has not yet made, and

         (iii)    provided that you and your qualifying beneficiaries timely
                  elect so-called COBRA continuation coverage, the Company will
                  pay for the cost for you and of your qualified beneficiaries
                  that timely elect continuation coverage of continuing any
                  Company-provided medical coverage in effect for you and your
                  family as of the date of termination under so-called COBRA
                  continuation coverage until such date as you become eligible
                  for or receive other medical coverage, but in no event any
                  longer than eighteen (18) months following the date of
                  termination.

         The foregoing payments and benefits will be contingent upon your
         execution of a general release and such other documents in a form
         acceptable to the Company, and will be in lieu of payments and other
         benefits, if any, to which you may be entitled under any other
         severance agreement or severance plan or arrangement of the Company
         except as otherwise provided in Section 11E below.

         D. NO MITIGATION. Payments provided by the Company pursuant to Sections
         11A, B and C will not be subject to mitigation.

         E. ADDITIONAL SEVERANCE BENEFITS. In the event that, on or after July
         1, 2002 and prior to the end of the Employment Term, you terminate your
         employment under this Agreement with "good reason" pursuant to Section
         10B, or the Company terminates your employment for any reason under
         Section 10F, including without cause as cause is defined in Section
         10C, you will be eligible to receive severance benefits under the
         Reebok International Ltd. Severance Policy (U.S. Employees) (the
         "Severance Policy") subject to the terms and conditions set forth in
         the Severance Policy as modified by this Section 11E as follows:

         (i)      Your employment will be considered to have been terminated
                  involuntarily for purposes of applying the terms of the
                  Severance Policy if you terminate your employment for "good
                  reason."

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         (ii)     The pay continuation period under the Severance Policy will be
                  52 weeks, provided that the pay continuation period under the
                  Severance Policy shall be (I) reduced by the number of weeks
                  of continuation of base salary payable to you under Section
                  11C(i) above and (II) reduced in accordance with the new
                  employment provisions of the Severance Policy.

         12. MISCELLANEOUS

         (i)      SUCCESSORS, ASSIGNS, AMENDMENT, ETC. This Agreement shall be
                  binding upon and shall inure to the benefit of Reebok and its
                  successors and assigns. Unless such assumption would otherwise
                  occur by operation of law, the Company shall not enter into
                  any agreement for the merger, consolidation, restructuring,
                  sale of assets or other reorganization of the Company, without
                  providing for the express assumption of this Agreement by the
                  Company's successor. This Agreement shall be binding upon you
                  and shall inure to the benefit of your heirs, executors,
                  administrators and legal representatives, but shall not be
                  assignable by you. This Agreement may be amended or altered
                  only by the written agreement of Reebok and you.

         (ii)     NOTICE. All notices, requests, consents and other
                  communications required or permitted hereunder shall be in
                  writing and shall be hand delivered or mailed by certified
                  mail, postage prepaid, addressed as follows: If to Reebok, to
                  General Counsel, Reebok International Ltd., 1895 J. W. Foster
                  Boulevard, Canton, MA 02021, or to such other address as may
                  have been furnished to you in writing as herein provided; or,
                  if to you, to the address set forth above, or to such other
                  address as may have been furnished to Reebok by you as herein
                  provided in writing and with a copy to: Michael S. Mullman,
                  Esq., Blank Rome Tenzer Greenblatt LLP, 405 Lexington Avenue,
                  New York, NY 10174-0208. Any notice or other communication so
                  addressed and so mailed shall be deemed to have been given
                  three days after said mailing.

         (iii)    APPLICABLE LAW. This Agreement has been executed and delivered
                  by both parties in the Commonwealth of Massachusetts and shall
                  be governed by the internal law of the Commonwealth of
                  Massachusetts without reference to its choice of law rules or
                  to any rule of any jurisdiction which would cause the rule of
                  another jurisdiction to apply. The venue of any action
                  relating to this Agreement will be the state and federal
                  courts located in the Commonwealth of Massachusetts.
                  Respecting any such action, the parties waive any right they
                  may have (i) to contest venue on the ground of inconvenient
                  forum and (ii) to have such action heard before a jury or an
                  advisory jury.

         (iv)     SEVERABILITY. Each provision of this Agreement is severable
                  from the others, and if any provision hereof shall be to any
                  extent unenforceable, it and the other provisions hereof shall
                  continue to be enforceable to the full extent allowable by any
                  court of competent jurisdiction, as if such offending
                  provision had not been a part of this Agreement.

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         (v)      WITHHOLDING. The Company may or may cause any federal, state
                  or local income, withholding, employment or other tax to be
                  withheld from payments hereunder.

         (vi)     HEADINGS; CONSTRUCTION. Section headings are for convenience
                  of reference only and do not form part of the text of this
                  Agreement. Whenever the context requires, the singular will
                  include the plural and vice versa.

         (vii)    WAIVER. The failure of a party to insist on strict adherence
                  to any term of this Agreement on any occasion will not be
                  considered a waiver thereof or deprive that party of the right
                  thereafter to insist upon strict adherence to that term or any
                  other term of this Agreement.

         (viii)   ENTIRE AGREEMENT. This Agreement, constitutes the entire
                  agreement between the parties concerning its subject matter,
                  and supersedes any and all prior agreements, understandings,
                  warranties or representations between the parties other than
                  the agreements specifically referred to in this Agreement.

         (ix)     LEGAL FEES. The Company will promptly reimburse you for
                  reasonable and customary legal fees and expenses incurred by
                  you in connection with the negotiation of this Agreement up to
                  a maximum of $7,500. In addition, the Company will promptly
                  reimburse you for reasonable and customary legal fees incurred
                  by you in connection with efforts to enforce the provisions of
                  this Agreement (provided such efforts result in your recovery
                  of any sum from the Company, whether through court award or
                  settlement).

         (x)      INDEMNIFICATION. The Company will indemnify and hold you
                  harmless to the extent permitted by the Company's certificate
                  of incorporation, by-laws or resolutions of the Company's
                  Board of Directors against all liability, expense or loss
                  (including reasonable attorneys's fees and penalties) incurred
                  by you by reason of the fact that you are or were a director
                  or officer of the Company acting within the scope of your
                  duties and authorities.

         (xi)     BACKGROUND CHECK. This Agreement, and the parties' obligations
                  hereunder, are contingent upon Reebok's satisfaction with the
                  results of a background check to which you hereby consent. It
                  is expected that the background check will be completed by
                  December 27, 2000, and Reebok will communicate to you whether
                  it is satisfied with its results by no later than December 31,
                  2000.

         (xii)    COUNTERPARTS. This Agreement my be executed in any number of
                  counterparts, each of which will be considered an original and
                  such counterparts will together be one agreement.

         If you accept and agree to the foregoing, please signify by signing the
enclosed counterpart of this letter in the space provided for that purpose at
the foot thereof and delivering the signed counterpart to me, whereupon this
letter will become a binding agreement between you and the Company as of the
date first above written.

                                       11
<PAGE>   12
[REEBOK LOGO]

                                    Very truly yours,

                                    REEBOK INTERNATIONAL LTD.

                                              By: /s/ James R. Jones III
                                                 -------------------------------
                                                 James R. Jones III
                                                 Senior Vice President and Chief
                                                 Human Resources Officer

Accepted and agreed to as of this 27th day of December, 2000:

/s/ Jay Margolis
---------------------------------
Jay Margolis

                                       12

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