SUPPLEMENTAL INDENTURE



                  This Supplemental Indenture is dated as of July 18, 2001,

among THE DERBY CYCLE CORPORATION, a Delaware corporation ("DCC"), LYON

INVESTMENTS B.V., a company organized under the laws of The Netherlands and a

wholly owned subsidiary of DCC ("Lyon" and, together with DCC, the "Issuers"),

as issuers, and THE BANK OF NEW YORK as successor to IBJ SCHRODER BANK & TRUST

COMPANY, a New York banking corporation, as trustee (the "Trustee"). Each

defined term used herein shall have the meaning assigned to it in the Indenture

(hereinafter defined), unless the context hereof otherwise requires or provides.



                                    RECITALS



                  1.       The Issuers and the Trustee have executed an

Indenture dated as of May 14, 1998 (as amended or supplemented, the "Indenture")

providing for the issuance of DM110,000,000 of the Issuers' 9 3/8% Senior Notes

due 2008 (the "Securities").



                  2.       Section 9.02 of the Indenture generally permits the

Indenture to be amended or supplemented, or compliance with any provision of the

Indenture or the Securities to be waived, with the written consent of the

Holders of not less than a majority in principal amount of the Securities then

outstanding.



                  3.       The Issuers have received written consents of Holders

of not less than a majority in the aggregate principal amount of the Securities

outstanding as of June 13, 2001 (the record date fixed by the Issuers pursuant

to the terms of the Indenture) to the amendments and the waiver of compliance

with certain provisions of the Indenture contemplated by Section 1.01 hereof.



                  4.       The Issuers have always treated their business and

enterprises as being separate and independent business entities and have always

held themselves out to the Holders and the Trustee as being separate and

independent business entities.



                  The Issuers and the Trustee agree as follows for the benefit

of each other and for the equal and ratable benefit of the Holders of the

Securities:



                                   ARTICLE I



              AMENDMENTS AND WAIVERS WITH RESPECT TO THE INDENTURE



                  Section 1.01      AMENDMENTS. The Indenture is hereby amended

as follows:



                  (a)      Section 1.01 of the Indenture is amended as follows:



                           (i)      by inserting the following new definitions

                  in the appropriate alphabetic order:



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                                                                               2



                  "Default Rate" means the interest rate on overdue installments

                  of interest set forth in the Securities.



                  "Derby Nederland" means Derby Nederland B.V. together with its

                  successors and assigns.



                  "DM Percentage" means on any particular date, the quotient of

                  (i) the Euro Equivalent of the principal amount of the

                  Securities then outstanding, divided by (ii) the sum of (A)

                  the Euro Equivalent of the principal amount of the Securities

                  then outstanding plus (B) the Euro Equivalent of the principal

                  amount of the Dollar Securities then outstanding.



                  "Dollar Indenture" means the Indenture (as supplemented from

                  time to time), dated as of May 14, 1998, providing for the

                  issuance of an aggregate principal amount of up to

                  $100,000,000 of 10% Senior Notes due 2008 among DCC and Lyon,

                  as issuers, and The Bank of New York as successor to IBJ

                  Schroder Bank & Trust Company, in its capacity as trustee

                  thereunder.



                  "Dollar Securities" means the securities issued under the

                  Dollar Indenture.



                  "Dollar Trustee" means the party named as trustee in the

                  Dollar Indenture until a successor trustee replaces it and,

                  thereafter, means the successor trustee.



                  "Euro Equivalent" means on any particular date, (i) with

                  respect to any amount denominated in Euros, such amount in

                  Euros, (ii) with respect to any amount denominated in

                  Deutschemarks, such amount divided by 1.95583 and (iii) with

                  respect to any amount denominated in U.S. Dollars, the average

                  of the amount of Euros which could be purchased by each of the

                  Trustee and the Dollar Trustee (in accordance with their

                  normal banking practices) in the London foreign currency

                  deposit market with such amount of such currency at the spot

                  rate of exchange prevailing at or about 11:00 a.m. (London

                  time) on such date.



                  "Gazelle Sale" means the sale of Koninklijke Gazelle B.V. by

                  Derby Nederland to Gazelle Holding B.V., pursuant to the terms

                  and conditions of the Sale and Purchase Agreement, dated on or

                  about June 14, 2001, among DCC, Derby Nederland and Gazelle

                  Holding B.V. (a copy of which was delivered to the Trustee on

                  June 14, 2001).



<PAGE>



                                                                               3



                  "General Asset Disposition" means any sale, lease (other than

                  operating leases entered into in the ordinary course of

                  business), transfer or other disposition (or series of related

                  sales, leases, transfers or dispositions) by DCC or any

                  Subsidiary, including any disposition by means of a merger,

                  consolidation or similar transaction (each referred to for the

                  purposes of this definition as a "disposition"), of (i) any

                  shares of Capital Stock of a Subsidiary (other than directors'

                  qualifying shares or shares required by applicable law to be

                  held by a Person other than DCC or a Subsidiary), (ii) all or

                  substantially all of the assets of any division or line of

                  business of DCC or any Subsidiary or (iii) any other assets of

                  DCC or any Subsidiary outside of the ordinary course of

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