Document:

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                                                                    Exhibit 10.2

                     MANAGEMENT STOCK SUBSCRIPTION AGREEMENT

                  MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, dated as of March 27,
2001 between RACI Holding, Inc., a Delaware corporation ("Holding"), and the
Purchaser whose name appears on the signature page hereof (the "Purchaser").

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

         WHEREAS, pursuant to the terms of the RACI Holding, Inc. 1999 Stock
Incentive Plan (the "Plan"), the Board of Directors of Holding (the "Board") has
granted to the Purchaser Stock Purchase Rights to purchase the aggregate number
of shares of Class A Common Stock, par value $.01 per share ("Common Stock"), of
Holding set forth on the signature page hereof (each a "Share" and,
collectively, the "Shares") at the purchase price provided for herein; and

         WHEREAS, the terms of the offering of the Shares and certain other
shares of Common Stock being made as of the date hereof ("the Offering") are set
forth in a Confidential Offering Memorandum dated March 14, 2001 (the "Offering
Memorandum"), which has been furnished to the Purchaser by Holding;

         NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein, the parties hereto hereby agree as follows:

                  1.  Purchase and Sale of Common Stock.

         (a) Purchase of Common Stock. Subject to all of the terms and
conditions of this Agreement and the Plan, the Purchaser hereby subscribes for
and shall purchase, and Holding shall sell to the Purchaser, the Shares at a
purchase price of $180.00 per Share at the Closing provided for in Section 2(a)
hereof. Notwithstanding anything in this Agreement to the contrary, Holding
shall have no obligation to sell any Common Stock to (i) any person who will not
be an employee of Holding or a direct or indirect subsidiary of Holding
immediately following the Closing at which such Common Stock is to be sold or
(ii) any person who is a resident of a jurisdiction in which the sale of Common
Stock to such person would constitute a violation of the securities, "blue sky"
or other laws of such jurisdiction.

         (b) Consideration. Subject to all of the terms and conditions of this
Agreement and the Plan, the Purchaser shall deliver to Holding at the Closing
(as defined in Section 2(a) hereof) immediately available funds in the amount of
the aggregate purchase price set forth on the signature page hereof.

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                  2.  Closing.

         (a) Time and Place. Except as otherwise mutually agreed by Holding and
the Purchaser, the closing (the "Closing") of the transaction contemplated by
this Agreement shall be held at the offices of Debevoise & Plimpton, 875 Third
Avenue, New York, New York at 10:00 a.m. (New York time) on March 27, 2001.

         (b) Delivery by Holding. At the Closing, Holding shall deliver to the
Purchaser a stock certificate registered in such Purchaser's name and
representing the Shares, which certificate shall bear the legends set forth in
Section 3(b).

         (c) Delivery by the Purchaser. At the Closing, the Purchaser shall
deliver to Holding the consideration referred to in Section 1(b) hereof.

                  3.  Purchaser's Representations, Warranties and Covenants.

         (a) Investment Intention. The Purchaser represents and warrants that
the Purchaser is acquiring the Shares solely for the Purchaser's own account for
investment and not with a view to or for sale in connection with any
distribution thereof. The Purchaser agrees that the Purchaser will not, directly
or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any of the Shares (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of any Shares), except in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder, and in compliance with applicable state and foreign securities or
"blue sky" laws. The Purchaser further understands, acknowledges and agrees that
none of the Shares may be transferred, sold, pledged, hypothecated or otherwise
disposed of (i) unless the provisions of Sections 4 through 8 hereof, inclusive,
shall have been complied with or have expired, (ii) unless (A) such disposition
is pursuant to an effective registration statement under the Securities Act, (B)
the Purchaser shall have delivered to Holding an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to Holding, to the effect
that such disposition is exempt from the provisions of Section 5 of the
Securities Act or (C) a no-action letter from the Commission, reasonably
satisfactory to Holding, shall have been obtained with respect to such
disposition and (iii) unless such disposition is pursuant to registration under
any applicable state or foreign securities laws or an exemption therefrom.

         (b) Legends. The Purchaser acknowledges that the certificate or
certificates representing the Shares shall bear the following legends or other
appropriate legends:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
                  PROVISIONS OF A MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED
                  AS OF MARCH 27, 2001, AND NEITHER THIS CERTIFICATE NOR THE
                  SHARES REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE

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                  TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH
                  MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, AS THE SAME MAY BE
                  AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE WITH THE
                  SECRETARY OF THE ISSUER. THE SHARES REPRESENTED BY THIS
                  CERTIFICATE ARE BOUND BY THE OBLIGATIONS SET FORTH IN AND MAY
                  BE ENTITLED TO SOME OF THE BENEFITS OF A REGISTRATION AND
                  PARTICIPATION AGREEMENT, DATED AS OF NOVEMBER 30, 1993, AMONG
                  THE ISSUER AND CERTAIN STOCKHOLDERS OF THE ISSUER, AS AMENDED
                  AND AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF
                  WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER."

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
                  UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
                  TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
                  OF UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
                  REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
                  AMENDED, (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO HOLDING
                  AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE
                  REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH
                  DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SUCH
                  ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
                  COMMISSION, REASONABLY SATISFACTORY TO THE ISSUER, SHALL HAVE
                  BEEN OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (ii) SUCH
                  DISPOSITION IS PURSUANT TO REGISTRATION UNDER ANY APPLICABLE
                  STATE AND FOREIGN SECURITIES LAWS OR AN EXEMPTION THEREFROM."

         (c) Securities Law Matters. The Purchaser acknowledges receipt of
advice from Holding that (i) the Shares have not been registered under the
Securities Act based on an exemption provided under Rule 701 promulgated under
the Securities Act or qualified under any state or foreign securities or "blue
sky" laws, (ii) it is not anticipated that there will be any public market for
the Shares, (iii) the Shares must be held indefinitely and the Purchaser must
continue to bear the economic risk of the investment in the Shares unless the
Shares are subsequently registered under the Securities Act and such state laws
or an exemption from registration is available, (iv) Rule 144 promulgated under
the Securities Act ("Rule 144") is not presently available with respect to the
sales of the Shares, and Holding has made no covenant to make Rule 144
available, (v) when and if the Shares

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may be disposed of without registration in reliance upon Rule 144, such
disposition can be made only in accordance with the terms and conditions of such
Rule, (vi) Holding does not plan to file reports with the Commission or make
public information concerning Holding available unless required to do so by law
or by the terms of its Financing Agreements (as hereinafter defined), (vii) if
the exemption afforded by Rule 144 is not available, sales of the Shares may be
difficult to effect because of the absence of public information concerning
Holding, (viii) a restrictive legend in the form heretofore set forth shall be
placed on the certificates representing the Shares and (ix) a notation shall be
made in the appropriate records of Holding indicating that the Shares are
subject to restrictions on transfer set forth in this Agreement and, if Holding
should in the future engage the services of a stock transfer agent, appropriate
stop-transfer restrictions will be issued to such transfer agent with respect to
the Shares.

         (d) Compliance with Rule 144. If any of the Shares are to be disposed
of in accordance with Rule 144, the Purchaser shall transmit to Holding an
executed copy of Form 144 (if required by Rule 144) no later than the time such
form is required to be transmitted to the Commission for filing and such other
documentation as Holding may reasonably require to assure compliance with Rule
144 in connection with such disposition.

         (e) Ability to Bear Risk. The Purchaser represents and warrants that
(i) the financial situation of the Purchaser is such that the Purchaser can
afford to bear the economic risk of holding the Shares for an indefinite period
and (ii) the Purchaser can afford to suffer the complete loss of the Purchaser's
investment in the Shares.

         (f) Access to Information. The Purchaser represents and warrants that
the Purchaser has received the Offering Memorandum and has carefully reviewed
the Offering Memorandum (together with the Annexes thereto) and the other
materials furnished to the Purchaser in connection with the transaction
contemplated hereby.

         (g) Registration; Restrictions on Sale upon Public Offering. The
Purchaser shall be entitled to the rights and subject to the obligations created
under the Registration and Participation Agreement, dated as of November 30,
1993, among Holding and certain stockholders of Holding (the "Registration and
Participation Agreement"), to the extent set forth therein. The Purchaser agrees
that, in the event that Holding files a registration statement under the
Securities Act with respect to an underwritten public offering of any shares of
its capital stock, the Purchaser will not effect any public sale or distribution
of any shares of the Common Stock (other than as part of such underwritten
public offering) during the 20 days prior to and the 180 days after the
effective date of such registration statement.

         (h) Section 83(b) Election. The Purchaser agrees that, within 20 days
of the Closing, the Purchaser shall give notice to Holding as to whether or not
the Purchaser has made an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, with respect to the Shares purchased at such
Closing, and acknowledges that

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the Purchaser will be solely responsible for any and all tax liabilities payable
by the Purchaser in connection with the Purchaser's receipt of the Shares or
attributable to the Purchaser's making or failing to make such an election.

                  4. Restrictions on Disposition of Shares. Neither the
Purchaser nor any of the Purchaser's heirs or representatives shall sell,
assign, transfer, pledge or otherwise directly or indirectly dispose of or
encumber any of the Shares to or with any other person, firm, trust,
association, corporation or entity (including, without limitation, transfers to
any other holder of Holding's capital stock, dispositions by gift, by will, by a
corporation as a distribution in liquidation and by operation of law other than
a transfer of Shares by operation of law to the estate of the Purchaser upon the
death of the Purchaser, provided that such estate shall be bound by all
provisions of this Agreement) except as provided in Sections 5 through 8 hereof,
inclusive. The restrictions contained in this Section 4 shall terminate in the
event that an underwritten public offering of the Common Stock led by one or
more underwriters at least one of which is an underwriter of nationally
recognized standing (a "Public Offering") has been consummated and shall not
apply to a sale to the underwriters as part of a Public Offering.

                  5. Options of Holding and the C&D Fund Upon Proposed
Disposition.

         (a) Rights of First Refusal. If the Purchaser desires to accept an
offer (which must be in writing and for cash, be irrevocable by its terms for at
least 60 days and be a bona fide offer as determined in good faith by the Board)
from any prospective purchaser to purchase all or any part of the Shares at any
time owned by the Purchaser, the Purchaser shall give notice in writing to
Holding and The Clayton Dubilier Private Equity Fund IV Limited Partnership, a
Connecticut limited partnership (together with any successor investment vehicle
managed by Clayton, Dubilier & Rice, Inc., the "C&D Fund") (i) designating the
number of Shares proposed to be sold, (ii) naming the prospective purchaser of
such Shares and (iii) specifying the price (the "Offer Price") at and terms (the
"Offer Terms") upon which the Purchaser desires to sell the same. During the
30-day period following receipt of such notice by Holding and the C&D Fund (the
"First Refusal Period"), Holding shall have the right to purchase from the
Purchaser the Shares specified in such notice, at the Offer Price and on the
Offer Terms. Holding hereby undertakes to use reasonable efforts to act as
promptly as practicable following such notice to determine whether it shall
elect to exercise such right. If Holding fails to exercise such rights within
the First Refusal Period, the C&D Fund shall have the right to purchase the
Shares specified in such notice, at the Offer Price and on the Offer Terms, at
any time during the period beginning at the earlier of (x) the end of the First
Refusal Period and (y) the date of receipt by the C&D Fund of written notice
that Holding has elected not to exercise its rights and ending 30 days
thereafter (the "Second Refusal Period"). The rights provided hereunder shall be
exercised by written notice to the Purchaser given at any time during the
applicable period. If such right is exercised, Holding or the C&D Fund, as the
case may be, shall deliver to the Purchaser a certified or bank check for the
Offer Price, payable to the order of the Purchaser, against delivery of

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certificates or other instruments representing the Shares so purchased,
appropriately endorsed by the Purchaser. If such right shall not have been
exercised prior to the expiration of the Second Refusal Period, then at any time
during the 30 days following the expiration of the Second Refusal Period, the
Purchaser may sell such Shares to (but only to) the intended purchaser named in
the Purchaser's notice to Holding and the C&D Fund at the Offer Price and on the
Offer Terms specified in such notice, free of all restrictions or obligations
imposed by, and free of any rights or benefits set forth in, Sections 6 and 7 of
this Agreement, provided that such intended purchaser shall have agreed in
writing, pursuant to an instrument of assumption satisfactory in substance and
form to Holding, to make and be bound by (i) the representations, warranties and
covenants set forth in Section 3 hereof, other than those set forth in Sections
3(f) and 3(h) and (ii) the agreements set forth in Sections 4, 5 and 8 of this
Agreement. The right of the Purchaser to sell Shares set forth in this Section
5(a), subject to the rights of first refusal set forth in this Section 5(a),
shall be suspended during the Option Periods referred to in Section 6 hereof,
but the provisions of Section 6 shall not otherwise restrict the ability of the
Purchaser to sell the Shares, whether before or after such Option Periods,
pursuant to the terms and subject to the restrictions set forth in this Section
5(a).

         (b) Public Offering. In the event that a Public Offering has been
consummated, neither Holding nor the C&D Fund shall have any rights to purchase
the Shares from the Purchaser pursuant to this Section 5 and this Section 5
shall not apply to a sale to the underwriters as part of a Public Offering.

         6. Options Effective on Termination of Employment or Unforeseen
Personal Hardship of the Purchaser.

         (a) Termination of Employment. If the Purchaser's Active Employment
with Holding is terminated for any reason whatsoever (whether before or after
the date of this Agreement), Holding shall have an option to purchase all or any
portion of the Shares then held by the Purchaser (or, if the Purchaser's Active
Employment was terminated by the Purchaser's death, his or her estate) and shall
have 60 days from the later of the date of the Purchaser's termination, or six
months and one day from the date of the Purchaser's acquisition of the Shares
pursuant to this Agreement (such date, the "Option Start Date" and, such 60-day
period, being hereinafter referred to as the "First Option Period") during which
to give notice in writing to the Purchaser (or his or her estate) of its
election to exercise or not to exercise such option, in whole or in part,
provided that, such 60-day period may be extended by mutual agreement between
the Purchaser and Holding. Holding hereby undertakes to use reasonable efforts
to act as promptly as practicable following such termination to make such
election. If Holding (i) fails to give notice that it intends to exercise such
option within the First Option Period or (ii) chooses to repurchase none or only
a portion of the Shares then held by the Purchaser (or his or her estate), by
giving such notice, the C&D Fund shall have the right to purchase all or any
portion of the Shares not repurchased by Holding, and shall have until the
expiration of the earlier of (x) 60 days following the end of the First Option
Period, or (y) 60 days

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from the date of receipt by the C&D Fund of written notice from Holding
indicating it does not intend to exercise its option with respect to all of the
Purchaser's Shares (such 60-day period being hereinafter referred to as the
"Second Option Period"), to give notice in writing to the Purchaser (or his or
her estate) of the C&D Fund's exercise of its option, in whole or in part. If
the options of Holding and the C&D Fund to purchase all of the Shares granted in
this subsection are not fully exercised as provided herein (other than as a
result of Section 11 hereof), the Purchaser (or his or her estate) shall be
entitled to retain any Shares which could have been acquired on exercise
thereof, subject to all of the provisions of this Agreement (including without
limitation Section 5(a)). If Holding and the C&D Fund have failed to exercise
their respective options pursuant to this Section 6(a) or have exercised such
options with respect to less than all of the Shares held by the Purchaser (or
his or her estate) within the time periods specified herein, and if the
Purchaser's Active Employment is terminated (A) by the Purchaser by Retirement
or (B) by reason of the death or Permanent Disability of the Purchaser, then on
notice from the Purchaser (or his or her estate) in writing and delivered to
Holding within 30 days following the end of the Second Option Period, Holding
shall be required to purchase all (but not less than all) of the Shares then
held by the Purchaser (or his or her estate). All purchases pursuant to this
Section 6(a) by Holding or the C&D Fund shall be for a purchase price and in the
manner prescribed by Section 7 hereof.

         (b) Unforeseen Personal Hardship. In the event that the Purchaser,
while in the employment of Holding or any direct or indirect subsidiary of
Holding, experiences Unforeseen Personal Hardship, the Board will carefully
consider any request by the Purchaser that Holding repurchase the Purchaser's
Shares at a price determined in accordance with Section 7 hereof, but Holding
shall have no obligation to repurchase such Shares. The Board shall consider
such request with respect to Unforeseen Personal Hardship as soon as practicable
after receipt by Holding of a written request by the Purchaser, such request to
include sufficient details of the Purchaser's Unforeseen Personal Hardship to
permit the Board to review the request and the circumstances in an informed
manner.

         (c) Certain Definitions. Capitalized terms used in this Agreement
without definition shall have the respective meanings set forth in the Plan. As
used in this Agreement, the following terms shall have the following meanings:

                  (i) "Active Employment" shall mean active employment with
         Holding or any direct or indirect subsidiary of Holding.

                  (ii) "Cause" shall mean (A) the willful failure by the
         Purchaser to perform substantially his duties as an employee of
         Holding, the Company or any Subsidiary (other than any such failure due
         to physical or mental illness) after a demand for substantial
         performance is delivered to the Purchaser by the executive to whom the
         Purchaser reports or by the Board, which notice identifies the manner
         in which such executive or the Board, as the case may be, believes that

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         the Purchaser has not substantially performed his duties, (B) the
         Purchaser's engaging in willful and serious misconduct that is
         injurious to Holding, the Company or any Subsidiary, (C) the
         Purchaser's having been convicted of, or entered a plea of guilty or
         nolo contendere to, a crime that constitutes a felony, (D) the willful
         and material breach by the Purchaser of any written covenant or
         agreement with Holding, the Company or any Subsidiary not to disclose
         any information pertaining to Holding, the Company or any Subsidiary or
         not to compete or interfere with Holding, the Company or any Subsidiary
         or (E) the breach by the Purchaser of the Purchaser's obligations
         pursuant to Section 8 hereof.

                  (iii) "Company" shall mean the Remington Arms Company, Inc., a
         Delaware corporation formerly named RACI Acquisition Corporation, and
         any successor thereto.

                  (iv) "Permanent Disability" shall mean a physical or mental
         disability or infirmity that prevents the performance of Purchaser's
         employment-related duties for a continuous period of six months or
         longer. The Board's reasoned and good faith judgment of Permanent
         Disability shall be final, binding and conclusive on all parties hereto
         and shall be based on such competent medical evidence as shall be
         presented to it by the Purchaser or by any physician or group of
         physicians or other competent medical expert employed by the Purchaser
         or Holding to advise the Board.

                  (v) "Retirement" shall mean retirement at age 65 or later.

                  (vi) "Subsidiary" shall mean any corporation, a majority of
         whose outstanding voting securities is owned, directly or indirectly,
         by the Company or Holding.

                  (vii) "Unforeseen Personal Hardship" shall mean financial
         hardship arising from (x) extraordinary medical expenses or other
         expenses directly related to illness or disability of the Purchaser, a
         member of the Purchaser's immediate family or one of the Purchaser's
         parents or (y) payments necessary or required to prevent the eviction
         of Purchaser from Purchaser's principal residence or foreclosure on the
         mortgage on that residence. The Board's reasoned and good faith
         determination of Unforeseen Personal Hardship shall be binding on
         Holding and the Purchaser.

         (d) Notice of Termination. Holding shall give written notice of any
termination of the Purchaser's Active Employment to the C&D Fund, except that if
such termination (if other than as a result of death) is by the Purchaser, the
Purchaser shall give written notice of such termination to Holding and Holding
shall give written notice of such termination to the C&D Fund.

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         (e) Public Offering. In the event that a Public Offering has been
consummated, none of Holding, the C&D Fund or the Purchaser shall have any
rights to purchase or sell the Shares, as the case may be, pursuant to this
Section 6 and this Section 6 shall not apply to a sale as part of a Public
Offering.

                  7. Determination of the Purchase Price; Manner of Payment.

         (a) Purchase Price. For the purposes of any purchase of the Shares
pursuant to Section 6, and subject to Section 11(c), the purchase price per
Share to be paid to the Purchaser (or his or her estate) for each Share (the
"Purchase Price") shall be the fair market value (the "Fair Market Value") of
such Share as of the later of six months and one day after the date of
Purchaser's acquisition of such Shares or effective date of the termination of
employment that gives rise to the right or obligation to repurchase or, in the
case of a repurchase as a result of Unforeseen Personal Hardship, as of the date
such Shares are repurchased (such date of termination or repurchase, as
applicable, the "Determination Date"); provided that if the Purchaser's
employment is terminated by Holding or any of its direct or indirect
subsidiaries for Cause, the Purchase Price for such Share shall be the lesser of
(i) the Fair Market Value of such Share as of the effective date of the
termination of employment that gives rise to the right or obligation to
repurchase and (ii) the price at which the Purchaser purchased such Share from
Holding pursuant to this Agreement. Whenever determination of the Fair Market
Value of such Shares is required by this Agreement, such Fair Market Value shall
be such amount as is determined in good faith by the Board. In making a
determination of Fair Market Value, the Board shall give due consideration to
such factors as it deems appropriate, including, without limitation, the
earnings and certain other financial and operating information of the Company in
recent periods, the potential value of the Company as a whole, the future
prospects of the Company and the industries in which it competes, the history
and management of the Company, the general condition of the securities markets,
the fair market value of securities of companies engaged in businesses similar
to those of the Company and the Applicable Share Valuation (as defined below).
The determination of Fair Market Value will not give effect to any restrictions
on transfer of the Shares or the fact that such Shares would represent a
minority interest in Holding. For purposes of this Agreement, the term
"Applicable Share Valuation" shall mean the annual valuation of the Common Stock
performed as of the last day of the last fiscal year of Holding ending prior to
the Determination Date by an independent valuation firm chosen by the Board,
except that, in the case of a Determination Date occurring during the period
beginning on September 1 of any fiscal year of Holding and ending on December 31
of that fiscal year beginning with the period beginning on September 1, 2000 and
ending on December 31, 2000, the term "Applicable Share Valuation" shall mean
the annual valuation of the Common Stock performed as of the last day of such
fiscal year by an independent valuation firm chosen by the Board. Such annual
valuations shall be performed as promptly as practicable following the end of
each fiscal year of Holding, beginning with the 2000 fiscal year of Holding. The
Fair Market Value as determined in good faith by the Board and in the absence of
fraud shall be binding and conclusive upon all parties

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hereto and the C&D Fund. If Holding subdivides (by any stock split, stock
dividend or otherwise) the Common Stock into a greater number of shares, or
combines (by reverse stock split or otherwise) the Common Stock into a smaller
number of shares after the Board shall have determined the Purchase Price for
the Shares (without taking into consideration such subdivision or combination)
and prior to the consummation of the purchase, the Purchase Price (including any
minimum or maximum Purchase Price specified herein or in effect as a result of a
prior adjustment) shall be appropriately adjusted to reflect such subdivision or
combination and the Board's determination as to any such judgment in good faith
shall be binding and conclusive on all parties hereto and the C&D Fund.

                  (b) Payment. Subject to Section 11 hereof, the completion of a
purchase pursuant to Section 6 hereof shall take place at the principal office
of Holding on the tenth business day following (i) the receipt by the Purchaser
(or his or her estate) of the notice of the C&D Fund or Holding, as the case may
be, of its exercise of its option to purchase pursuant to Section 6(a) or (ii)
Holding's receipt of notice by the Purchaser (or his or her estate) of the
election to sell Shares pursuant to Section 6(a) or (iii) the Board's
determination (which shall be delivered to the Purchaser) that it is willing and
able to purchase Shares as a result of Unforeseen Personal Hardship pursuant to
Section 6(b). The Purchase Price shall be paid by delivery to the Purchaser (or
his or her estate) of a certified or bank check for the Purchase Price payable
to the order of the Purchaser (or his or her estate), against delivery of
certificates or other instruments representing the Shares so purchased,
appropriately endorsed by the Purchaser (or his or her estate), free and clear
of all security interests, liens, claims, encumbrances, charges, options,
restrictions on transfer, proxies and voting and other agreements of whatever
nature; provided, however, that if the Determination Date occurs during the
period between September 1 and December 31 of any fiscal year of Holding or
during the first fiscal quarter of any fiscal year of Holding, Holding or the
C&D Fund, as the case may be, may elect to pay the Purchase Price in two
installments. In any such event, (i) at the closing of the purchase of the
Shares, Holding or the C&D Fund, as the case may be, shall pay to the Purchaser
(or his or her estate) an amount (the "First Installment Amount") equal to 80%
of the Fair Market Value of the Shares, determined pursuant to Section 7(a)
hereof on the basis of the most recent available valuation of the Shares, and
(ii) no later than the tenth business day following receipt by Holding of the
Applicable Share Valuation, Holding or the C&D Fund, as the case may be, shall
pay an additional amount to the Purchaser (or his or her estate) equal to the
sum of (1) the excess (the "Excess Payment"), if any, of (A) the Purchase Price
for the Shares, over (B) the First Installment Amount and (2) an amount
calculated by multiplying the Excess Payment by a percentage equal to the
average annual prime rate charged during such period by The Chase Manhattan Bank
or such other nationally recognized bank as may be designated by Holding.

         (c) Application of the Purchase Price to Certain Loans. The Purchaser
agrees that Holding and the C&D Fund shall be entitled to apply any amounts to
be paid by

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Holding or the C&D Fund, as the case may be, to repurchase Shares pursuant to
Section 5 or 6 hereof to discharge any indebtedness of the Purchaser to Holding
or any of its direct or indirect subsidiaries, including, without limitation,
indebtedness of the Purchaser incurred to purchase the Shares or indebtedness
that is guaranteed by Holding or any of its direct or indirect subsidiaries.

                  8.  Take-Along Rights.

         (a) Take-Along Notice. So long as the C&D Fund holds a number of shares
of Common Stock equal to at least one-third of the Common Stock originally
purchased by the C&D Fund at the closing of the Acquisition of the Company, if
the C&D Fund intends to effect a sale of all of its shares of Common Stock to a
third party (a "100% Buyer") and elects to exercise its rights under this
Section 8, the C&D Fund shall deliver written notice (a "Take-Along Notice") to
the Purchaser, which notice shall (a) state (i) that the C&D Fund wishes to
exercise its rights under this Section 8 with respect to such transfer, (ii) the
name and address of the 100% Buyer, (iii) the per share amount and form of
consideration the C&D Fund proposes to receive for its shares of Common Stock
and (iv) the terms and conditions of payment of such consideration and all other
material terms and conditions of such transfer, (b) contain an offer (the
"Take-Along Offer") by the 100% Buyer to purchase from the Purchaser all of its
Shares on and subject to the same terms and conditions offered to the C&D Fund
and (c) state the anticipated time and place of the closing of the purchase and
sale of the shares (a "Section 8 Closing"), which (subject to such terms and
conditions) shall occur not fewer than five (5) days nor more than ninety (90)
days after the date such Take-Along Notice is delivered, provided that if such
Section 8 Closing shall not occur prior to the expiration of such 90-day period,
the C&D Fund shall be entitled to deliver another Take-Along Notice with respect
to such Take-Along Offer.

         (b) Conditions to Take-Along. Upon delivery of a Take-Along Notice, the
Purchaser shall have the obligation to transfer all of its Shares pursuant to
the Take-Along Offer, as the same may be modified from time to time, provided
that the C&D Fund transfers all of its Shares to the 100% Buyer at the Section 8
Closing. Within 10 days of receipt of the Take-Along Notice, the Purchaser shall
(i) execute and deliver to the C&D Fund a power of attorney and a letter of
transmittal and custody agreement in favor of, and in form and substance
satisfactory to, the C&D Fund constituting the C&D Fund, Clayton, Dubilier &
Rice, Inc. or one or more of their respective affiliates designated by the C&D
Fund (the "Custodian"), the true and lawful attorney-in-fact and custodian for
the Purchaser, with full power of substitution, and authorizing the Custodian to
take such actions as the Custodian may deem necessary or appropriate to effect
the sale and transfer of the Shares to the 100% Buyer, upon receipt of the
purchase price therefor at the Section 8 Closing, free and clear of all security
interests, liens, claims, encumbrances, charges, options, restrictions on
transfer, proxies and voting and other agreements of whatever nature, and to
take such other action as may be necessary or appropriate in connection with
such sale, including consenting to any amendments,

                                       11
<PAGE>   12

waivers, modifications or supplements to the terms of the sale (provided that
the C&D Fund also so consents, and sells and transfers its Shares on the same
terms as so amended, waived, modified or supplemented) and (ii) deliver to the
C&D Fund certificates representing the Shares, together with all necessary duly
executed stock powers.

         (c) Remedies. The Purchaser acknowledges that the C&D Fund would be
irreparably damaged in the event of a breach or a threatened breach by the
Purchaser of any of its obligations under this Section 8 and the Purchaser
agrees that, in the event of a breach or a threatened breach by the Purchaser of
any such obligation, the C&D Fund shall, in addition to any other rights and
remedies available to it, in respect of such breach, be entitled to an
injunction from a court of competent jurisdiction granting it specific
performance by the Purchaser of its obligations under this Section 8. In the
event that the C&D Fund shall file suit to enforce the covenants contained in
this Section 8 (or obtain any other remedy in respect of any breach thereof),
the prevailing party in the suit shall be entitled to recover, in addition to
all other damages to which it may be entitled, the costs incurred by such party
in conducting the suit, including reasonable attorney's fees and expenses. In
the event that, following a breach or a threatened breach by the Purchaser of
the provisions of this Section 8, the C&D Fund does not obtain an injunction
granting it specific performance of the Purchaser's obligations under this
Section 8 in connection with such proposed sale prior to the time the C&D Fund
completes the sale of its shares or, in its sole discretion, abandons such sale,
then Holding shall have the option to purchase the Shares from the Purchaser at
a purchase price per Share equal to the lesser of (i) the Fair Market Value of
such Shares as of the date of the breach or threatened breach that gives rise to
the right to repurchase and (ii) the price at which the Purchaser purchased such
Shares from Holding.

         (d) Public Offering. In the event that a Public Offering has been
consummated, the provisions of this Section 8 shall terminate and cease to have
further effect.

         9. Representations and Warranties of Holding. Holding represents and
warrants to the Purchaser that (a) Holding has been duly incorporated and is an
existing corporation in good standing under the laws of the State of Delaware,
(b) this Agreement has been duly authorized, executed and delivered by Holding
and constitutes a valid and legally binding obligation of Holding enforceable
against Holding in accordance with its terms, (c) the Shares, when issued,
delivered and paid for in accordance with the terms hereof, will be duly and
validly issued, fully paid and nonassessable, and free and clear of any liens or
encumbrances other than those created pursuant to this Agreement, or otherwise
in connection with the transactions contemplated hereby, and (d) the Shares,
when issued and held by the Purchaser, by the Purchaser's estate upon transfer
by operation of law on the Purchaser's death or by the C&D Fund, shall be
"Registrable Securities" as provided in the Registration and Participation
Agreement.

                                       12
<PAGE>   13

                  10.  Covenants of Holding.

         (a) Rule 144. Holding agrees that at all times after it has filed a
registration statement after the date hereof pursuant to the requirements of the
Securities Act or Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), relating to any class of equity securities of Holding
(other than (i) the registration of equity securities of Holding and/or options
or interests in respect thereof to be offered primarily to directors and/or
members of management or employees of Holding or its direct or indirect
subsidiaries, and senior executives of corporations in which entities managed or
sponsored by Clayton, Dubilier & Rice, Inc. have made equity investments and/or
other persons with whom Clayton, Dubilier & Rice, Inc. has consulting or other
advisory relationships, or (ii) the registration of equity securities and/or
options or other interests in respect thereof solely on Form S-4 or S-8 or any
successor form), it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder (or, if Holding is not required to file such reports, it
will, upon the request of the Purchaser, make publicly available such
information as necessary to permit sales pursuant to Rule 144 under the
Securities Act), and will take such further action as the Purchaser may
reasonably request, all to the extent required from time to time to enable the
Purchaser to sell Shares without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144, as such Rule may be
amended from time to time, or (ii) any successor rule or regulation hereafter
adopted by the Commission.

                  (b) State Securities Laws. Holding agrees to use efforts to
comply with all state and foreign securities or "blue sky" laws applicable to
the sale of the Shares to the Purchaser, provided that Holding shall not be
obligated to qualify or register the Shares under any such law or to qualify as
a foreign corporation or file any consent to service of process under the laws
of any jurisdiction or subject itself to taxation as doing business in any such
jurisdiction.

                  11.  Certain Restrictions on Repurchases.

         (a) Financing Agreements, etc. Notwithstanding any other provision of
this Agreement, Holding shall not be permitted or obligated to repurchase any
Shares from the Purchaser if (i) such repurchase (or the payment by the Company
of a dividend to Holding to fund such repurchase) would result in a violation of
the terms or provisions of, or result in a default or an event of default under,
(A) the Amended and Restated Credit Agreement, dated as of April 28, 2000 (the
"Credit Agreement"), among the Company, The Chase Manhattan Bank ("Chase"), as
administrative agent, Bank of America, N.A., as syndication agent, Goldman Sachs
Credit Partners, L.P., as documentation agent, and the other banks and financial
institutions party thereto from time to time, (B) the Guarantee, dated as of
April 28, 200 (the "Guarantee"), made by Holding, as Guarantor, in favor of
Chase as administrative agent for the several banks and other financial
institutions named thereunder, (C) the Indenture, dated as of November 30, 1993,
(the

                                       13
<PAGE>   14

"Indenture") among the Company, Holding, as guarantor, and First Trust National
Association, as Trustee, or (D) any other financing or security agreement or
document entered into in connection with the acquisition by Holding of
substantially all the assets of the corporation then named Sporting Goods
Properties, Inc. ("Sporting Goods") and certain related assets of Sporting
Goods' parent E.I. du Pont de Nemours and Company ("DuPont"), a Delaware
corporation, from Sporting Goods and DuPont, on December 1, 1993 (the
"Acquisition"), or the financing of the Acquisition, or the Credit Agreement, or
in connection with the operations of Holding or its subsidiaries from time to
time (the Credit Agreement, the Guarantee, any Indenture, and such other
agreements and documents, as each may be amended, modified or supplemented from
time to time, are hereinafter referred to as the "Financing Agreements"), in
each case as the same may be amended, modified or supplemented from time to
time, (ii) such repurchase would violate any of the terms or provisions of the
Certificate of Incorporation of Holding or (iii) Holding has no funds legally
available therefor under the General Corporation Law of the State of Delaware.

         (b) Delay of Repurchase. In the event that a repurchase by Holding,
otherwise permitted or required under Section 6(a) is prevented solely by the
terms of Section 11(a), (i) such repurchase will be postponed and will take
place without the application of further conditions or impediments (other than
as set forth in Section 7 hereof or in this Section 11) at the first opportunity
thereafter when Holding has funds legally available therefor and when such
repurchase will not result in any default, event of default or violation under
any of the Financing Agreements or in a violation of any term or provision of
the Certificate of Incorporation of Holding and (ii) such repurchase obligation
shall rank against other similar repurchase obligations with respect to Shares
or options in respect thereof according to priority in time of (A) the effective
date of the termination of employment in connection with any repurchase
obligation arising pursuant to an exercise of the option of Holding under
Section 6(a), or (B) as to any repurchase obligation arising pursuant to an
exercise of any Purchaser's right to require a repurchase under Section 6(a),
the date upon which Holding receives written notice of such exercise, provided
that any such repurchase obligations as to which a common date determines
priority under clause (A) or (B) above shall be of equal priority and shall
share pro rata in any repurchase payments made pursuant to clause (i) above and
provided, further, that any repurchase commitment arising from Permanent
Disability, death or Retirement or any repurchase commitment made by the Board
pursuant to Section 6(b) shall have priority over any other repurchase
obligation.

         (c) Purchase Price Adjustment. In the event that a repurchase of Shares
from the Purchaser is delayed pursuant to this Section 11, the purchase price
per Share when the repurchase of such Shares eventually takes place as
contemplated by Section 11(b) shall be the sum of (a) the Purchase Price
determined in accordance with Section 7 hereof at the time that the repurchase
of such Shares would have occurred but for the operation of this Section 11,
plus (b) an amount equal to interest on such Purchase Price for the period from
the date on which the completion of the repurchase would have taken place but
for

                                       14
<PAGE>   15

the operation of this Section 11 to the date on which such repurchase actually
takes place (the "Delay Period") at a rate equal to the average prime rate
charged during such period by The Chase Manhattan Bank or such other nationally
recognized bank as may be designated by Holding.

                  12. Miscellaneous.

         (a) Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified or express mail, return
receipt requested, postage prepaid, or by any recognized international
equivalent of such mail delivery, to Holding, the C&D Fund or the Purchaser, as
the case may be, at the following addresses or to such other address as Holding,
the C&D Fund or the Purchaser, as the case may be, shall specify by notice to
the others:

                  (i) if to Holding, to it at:

                           RACI Holding, Inc.
                           c/o Remington Arms Company, Inc.
                           870 Remington Drive
                           P.O. Box 700
                           Madison, North Carolina  27025-0700

                  (ii) if to the Purchaser, to the Purchaser at the address set
         forth on the signature page hereof.

                  (iii) if to the C&D Fund, to:

                           The Clayton & Dubilier Private Equity
                              Fund IV Limited Partnership
                           270 Greenwich Avenue
                           Greenwich, Connecticut  06830
                           Attention:  Clayton & Dubilier Associates
                                            IV Limited Partnership,
                                            Joseph L. Rice, III

All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:

                  Clayton, Dubilier & Rice, Inc.
                  375 Park Avenue
                  New York, New York  10152
                  Attention:  Joseph L. Rice, III

                                       15
<PAGE>   16

                  and

                  Debevoise & Plimpton
                  875 Third Avenue
                  New York, New York  10022
                  Attention:  Franci J. Blassberg, Esq.

The C&D Fund also shall be given a copy of any notice or other communication
between the Purchaser and Holding under this Agreement at its address as set
forth above.

         (b) Binding Effect; Benefits. This Agreement shall be binding upon the
parties to this Agreement and their respective successors and assigns and shall
inure to the benefit of the parties to the Agreement, the C&D Fund and their
respective successors and assigns. Except as provided in Sections 4 through 8,
inclusive, nothing in this Agreement, express or implied, is intended or shall
be construed to give any person other than the parties to this Agreement, the
C&D Fund or their respective successors or assigns any legal or equitable right,
remedy or claim under or in respect of any agreement or any provision contained
herein.

         (c) Waiver; Amendment.

                  (i) Waiver. Any party hereto or beneficiary hereof may by
         written notice to the other parties (A) extend the time for the
         performance of any of the obligations or other actions of the other
         parties under this Agreement, (B) waive compliance with any of the
         conditions or covenants of the other parties contained in this
         Agreement and (C) waive or modify performance of any of the obligations
         of the other parties under this Agreement, provided that any waiver of
         the provisions of Sections 4 through 8, inclusive, must be consented to
         in writing by the C&D Fund. Except as provided in the preceding
         sentence, no action taken pursuant to this Agreement, including,
         without limitation, any investigation by or on behalf of any party or
         beneficiary shall be deemed to constitute a waiver by the party or
         beneficiary taking such action of compliance with any representations,
         warranties, covenants or agreements contained herein. The waiver by any
         party hereto or beneficiary hereof of a breach of any provision of this
         Agreement shall not operate or be construed as a waiver of any
         preceding or succeeding breach and no failure by a party to exercise
         any right or privilege hereunder shall be deemed a waiver of such
         party's or beneficiary's rights or privileges hereunder or shall be
         deemed a waiver of such party's or beneficiary's rights to exercise the
         same at any subsequent time or times hereunder.

                (ii) Amendment. This Agreement may not be amended, modified or
         supplemented orally, but only by a written instrument executed by the
         Purchaser and Holding, and (in the case of any amendment modification
         or supplement to or affecting Section 8 hereof, or that adversely
         affects the rights of the C&D Fund hereunder) consented to by the C&D
         Fund in writing. The parties hereto

                                       16
<PAGE>   17

         acknowledge that Holding's consent to an amendment or modification of
         this Agreement may be subject to the terms and provisions of the
         Financing Agreements.

         (d) This Agreement, together with the Management Deferred Share Award
Agreement and election form entered into between the Purchaser and Holding on or
prior to the date hereof, is the entire agreement of the parties with respect to
the subject matter hereof and supersedes all other prior agreements,
understandings, documents, statements, representations and warranties, oral or
written, express or implied, between the parties hereto and their respective
affiliates, representatives and agents in respect of the subject matter hereof.

         (e) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by Holding or the Purchaser without the prior written consent of the
other parties and the C&D Fund. The C&D Fund may assign from time to time all or
any portion of its rights under Sections 4 through 8 hereof to one or more
persons or other entities designated by it.

         (f) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT
THE CORPORATE LAW OF THE STATE OF DELAWARE SPECIFICALLY AND MANDATORILY APPLIES.

         (g) Section and Other Headings, etc. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.

         (h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.

         (i) Delegation by the Board. All of the powers, duties and
responsibilities of the Board specified in this Agreement may, to the full
extent permitted by applicable law, be exercised and performed by any duly
constituted committee thereof to the extent authorized by the Board to exercise
and perform such powers, duties and responsibilities.

                                       17
<PAGE>   18

                  IN WITNESS WHEREOF, Holding and the Purchaser have executed
this Agreement as of the date first above written.

                                          RACI HOLDING, INC.

                                          By:___________________________________
                                                Name:
                                                Title:

                                          THE PURCHASER:

                                          --Name--

                                          By:___________________________________
                                                Name:
                                                Attorney-in-Fact:

                                          Address of the Purchaser:

                                          --Address--

Total Number of Shares
of Common Stock to be
Purchased:                                --Shares--

Cash Purchase
Price:                                    $--Share Amount--

                                       18<PAGE>   1
                                                                    EXHIBIT 10.1

                              SEPARATION AGREEMENT

THIS SEPARATION AGREEMENT ("Separation Agreement") is entered into by and among
MICHAEL A. LUSTIG ("Lustig") and THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.,
a Georgia corporation ("PRG").

                                   WITNESSETH

WHEREAS, Lustig has served as a director and the President and Chief Operating
Officer of PRG and as an officer and director of subsidiaries and affiliates of
PRG and his employment was being terminated without cause by agreement between
PRG and Lustig on October 25, 2000; and

WHEREAS, the Parties agree that for all purposes hereof, the parties will treat
Lustig's termination from the Company as a resignation which became effective as
of October 25, 2000; and

WHEREAS, PRG and Lustig desire to settle fully and finally all differences which
may arise out of or relate to Lustig's employment with PRG, all other claims
Lustig has through the date of this Separation Agreement against PRG and all
other claims PRG has through the date of this Separation Agreement against
Lustig, and terminate the employment relationship between Lustig and PRG and all
agreements, other than this Separation Agreement, relating to such employment
relationship.

NOW THEREFORE, in consideration of the promises undertaken and releases herein
contained, it is agreed by the parties hereto, as follows:

1.       TERMINATION OF EMPLOYMENT; TERMINATION BENEFITS.

         A.       Termination of Employment. PRG and Lustig hereby agree that
Lustig's employment by PRG and any and all of the subsidiaries of PRG is
terminated effective as of October 25, 2000. Except for PRG's obligation to
indemnify Lustig as provided herein and the restrictive covenants contained in
paragraph 6.(a)-(c) of the October 17, 1997 Employment Agreement between Lustig
and The Profit Recovery Group International 1, Inc., which obligation remains in
full force and effect, and except as otherwise specifically provided in this
Separation Agreement, any and all agreements between Lustig and PRG relating to
employment, compensation, and any other benefits are hereby terminated and
cancelled. Specifically excluded from this termination and cancellation
provision are the stock options Lustig received while employed by PRG which had
vested prior to his termination, but including in this termination and
cancellation provision any options that may have become vested as a result of
his termination.

         B.       Resignation from Offices and Board of Directors. Lustig hereby
confirms that he has resigned from all positions he may have had as an officer
and director of PRG and of all subsidiaries and affiliates of PRG, effective
October 25, 2000.

<PAGE>   2

         C.       Termination Benefits. PRG and Lustig agree that Lustig shall
be entitled to receive the following, severance payments and rights, which
collectively are the sole termination benefits to which he is entitled
(collectively, items (i), (ii) and (iii) below being the "Termination
Benefits"):

                  (i)      Commencing January 31, 2001, PRG shall pay Lustig an
         aggregate of $660,000, payable in eighteen (18) equal monthly
         installments (without interest), on the last pay date each month, in
         accordance with PRG's customary payroll practices and subject to all
         applicable federal and state tax withholding and other deductions;
         provided, that in the event that prior to the end of such
         eighteen-month period either (a) any person or group of affiliated
         persons who, immediately prior to any transaction(s) hereinafter
         described, did not own 5% or more of the issued and outstanding shares
         of common stock of PRG, acquire beneficial ownership (as defined in
         Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
         amended), in a transaction or series of related transactions, shares of
         common stock of PRG which represent more than 50% of all issued and
         outstanding shares of common stock of PRG (other than (A) in a
         transaction in which PRG has issued the shares of its common stock to
         such person or group of affiliated persons or (B) acquisitions which
         are not effected with the purpose of accomplishing a change in control
         of PRG, as evidenced in the Schedule 13D or Schedule 13G filed by such
         person or group of affiliated persons), or (b) PRG sells all or
         substantially all of its assets to an unrelated third party in a
         transaction or series of related transactions, then any unpaid amounts
         under this Section 1.C(i) shall be immediately due and payable.

                  (ii)     In addition, PRG shall pay Lustig on the eighth day
         after he executes this Agreement a one-time lump-sum payment of
         $937,500 (less any payments made to Lustig after October 25, 2000) in
         full, final and complete satisfaction of any salary, bonus, deferred
         compensation, unvested stock options, stock purchase, fringe benefits
         or other employee benefits for which Lustig may have been eligible as
         an employee, officer and director of PRG.

                  (iii)    The parties acknowledge and agree that as of the date
         hereof and as a result of the termination of Lustig's employment,
         Lustig has received and is entitled to own and receive 63,000 shares of
         capital stock in PRG (the "Transferred Stock") otherwise granted to
         Lustig under and as provided under prior restricted stock award
         agreements. The parties further agree that for and in consideration of
         the payments made to Lustig by PRG under subparagraph (ii) hereof,
         Lustig is hereby conveying and transferring solely the Transferred
         Stock to PRG free and clear of any claims of Lustig to the continuing
         ownership thereof.

                   (iv)    The parties acknowledge and agree that, separate and
         apart from the Transferred Stock identified in subparagraph (iii) of
         this provision, Lustig currently owns 27,845 shares of capital stock in
         PRG (the "Retained Stock"). Notwithstanding anything contained herein
         to the contrary, Lustig shall continue to exclusively own the Retained

                                       2
<PAGE>   3

         Stock and shall remain entitled to assert any and all claims pertaining
         to his ownership of the Retained Stock and his status as a shareholder
         of PRG resulting from such ownership.

                  (v)      The parties acknowledge and agree that, during his
         employment with PRG, Lustig was granted options allowing him to
         purchase 638,850 shares of PRG stock pursuant to various written option
         agreements. PRG acknowledges that prior to Lustig's termination,
         306,150 of those options had fully vested and Lustig shall retain the
         right to exercise those options in accordance with the terms of the
         various options agreements. Notwithstanding language to the contrary in
         the option agreements, PRG agrees that Lustig shall have 120 days from
         the date of his termination, or until February 23, 2001, whichever is
         earlier, to exercise those options.

                   (vi)    PRG agrees that Lustig may retain the cell phone and
         the lap-top computer provided by PRG that he currently uses and
         acknowledges that Lustig has already delivered the computer and, to the
         extent applicable, the cell phone to PRG for removal of all
         Confidential Information (as defined herein) and all software programs
         owned by or licensed to PRG thereon.

                  (vii)    PRG will provide Lustig with a separate notification
         about his rights under COBRA to elect to continue group insurance
         benefits for a specified period.

                  (viii)   Lustig shall retain and shall be provided appropriate
         election forms for distribution or rollover of Lustig's balance under
         the PRG 401(k) plan all in accordance with the PRG 401(k) plan.

                  (ix)     PRG will assign to Lustig, to the extent assignable,
         and free and clear of all rights or claims or liens of PRG, at Lustig's
         request, all insurance policies owned by PRG on the life of Lustig and
         Lustig will assume all obligations thereunder.

2.       GENERAL RELEASE. In consideration of the Termination Benefits provided
herein to which Lustig was not already entitled under the terms of his
Employment Agreement and his Amendment to Employment and Compensation Agreements
and the promises contained in this Separation Agreement, Lustig, for himself and
for his successors, assigns, dependents, heirs, legatees, executors,
administrators, and personal and legal representatives, hereby forever
irrevocably and unconditionally grants to PRG this general release, acquits,
remises, and discharges PRG and its present and former officers, directors,
stockholders, employees, agents, representatives, attorneys, insurers, corporate
affiliates, divisions, subsidiaries, related companies and entities, controlling
persons, predecessors, successors, and assigns (the "Released Parties") from any
claims, demands, complaints, causes of action, suits, damages, costs, losses,
debts, expenses, contracts, charges, controversies, obligations, liabilities,
promises, or agreements whatsoever, in law or in equity, whether known or
unknown, fixed or contingent, which Lustig has had or may now have against any
of the Released Parties arising from or connected with any matter, including
without limitation, his employment with PRG, the termination of that employment
or, except as otherwise specifically provided herein, any post-termination
severance, salary, bonus, deferred compensation, unvested stock options, stock
awards, auto

                                       3
<PAGE>   4

allowance, fringe benefits or other employee benefits for which Lustig was
eligible as an employee, officer or director of PRG and any subsidiary or
affiliate thereof (collectively, the "Claims") but specifically excluding
whatever rights or remedies or claims Lustig might have either (i) to
indemnification or payment of expenses arising under PRG's charter, liability
insurance or bylaws or those of any subsidiary or affiliate of PRG, (ii) in his
capacity as a shareholder of PRG from and after the date of his termination or,
(iii) by reason of PRG's default, failure or breach under this Agreement
(collectively the "Reserved Rights"). Such released Claims shall include, but
not be limited to, any claims, demands, suits or causes of. action (i) in
connection with any privacy right, civil rights claim, claim for emotional or
mental distress, claims of defamation, claims for personal injury, claims for
breach of contract, and claims for harassment or (ii) pursuant to any federal or
state securities laws or regulations (other than the Reserved Rights), federal,
state, or local employment laws, regulations, executive orders, or other
requirements, including without limitation those that may relate to sex, race,
or other forms of discrimination. Lustig also agrees that, so long as John Cook
is Chief Executive Officer of the Company, Lustig will not join in any attempt
to (1) oust John Cook from his position as a director or as Chief Executive
Officer; or (2) buy the Company through an unsolicited and unwelcome bid. In
addition, except for the Reserved Rights, Lustig releases, remises, waives and
discharges each of the Released Parties of and from any claims upon which he may
have a right to recover in any lawsuit brought by any other person on Lustig's
behalf or which includes Lustig in any class.

         Without limiting the generality of the foregoing, Lustig hereby
acknowledges and covenants that he has knowingly relinquished and forever
released any and all rights and remedies which might otherwise be available to
him against any of the Released Parties under federal and state employment laws
regarding his employment with PRG, including the Age Discrimination in
Employment Act of 1967, as amended, 29 U.S.C. ss.621, et seq., the Civil Rights
Act of 1964, as amended (including amendments made through the Civil Rights Act
of 1991), 42 U.S.C. ss.2000e et seq., 42 U.S.C. ss.1981, as amended, the
Americans With Disabilities Act, as amended, 42 U.S.C. ss.12101, et seq., the
Rehabilitation Act of 1973, as amended, 29 U.S.C. ss.701 et seq., the Employee
Retirement Income Security Act of 1974, as amended, 29 U.S.C. ss.031 et seq.,
the Worker Adjustment and Retraining Notification Act, 29 U.S.C. ss.2101, et
seq., the Family and Medical Leave Act of 1993, as amended, 29 U.S.C. ss.2601
et seq., the Fair Labor Standards Act, as amended, 29 U.S.C. ss.201 et seq.,
and all Georgia Code provisions, state and federal workers' compensation laws,
and any claims for attorneys' fees under federal, state or local laws.

PRG, on behalf of itself, its affiliates and its and their respective owners,
stockholders, agents, directors, officers, employees, representatives,
attorneys, predecessors, successors and assigns (collectively the "PRG
Releasees") hereby irrevocably and unconditionally remises, releases, and
forever discharges Lustig and Lustig's heirs, representatives, successors and
assigns (collectively the "Lustig Parties") of and from any and all actions,
causes of actions, suits, debts, charges, allegations, assertions, complaints,
claims, liabilities, obligations, promises, agreements, controversies, damages,
and expenses (including attorneys' fees and costs actually incurred), of any
nature whatsoever, in law or equity, whether presently known or unknown,
discovered or undiscovered, whether or not accrued or fully matured
(collectively the "Company Claims")

                                       4
<PAGE>   5

which Company Claims the Company Releasees ever had or which arises on or before
the Effective Date of this Agreement, related to Lustig's employment with or
termination from PRG or his status as an employee, officer, director, agent,
shareholder or representative of any one or more of the Company Releasees;
provided that this release shall not apply to and PRG hereby retains its rights
to assert any and all claims PRG may have by reason of Lustig's default, failure
or breach under this Agreement.

         By signing at the space indicated below, the Parties acknowledge that
they have carefully read this general release and affirm that it constitutes a
general release of all known and unknown Claims against the Released Parties and
the PRG Releasees.

/s/  C. MCKELLAR, JR.                                   /s/  MICHAEL A. LUSTIG
---------------------------                             ------------------------
For PRG                                                 Michael A. Lustig

3.       COVENANT NOT TO SUE; NON-COOPERATION PROVISION. The Parties agree that
they will not directly or indirectly institute, solicit, encourage, consult or
advise, or in any way participate in the commencement and/or prosecution of any
administrative proceeding or lawsuit against any of the Released Parties or the
Lustig Parties in regard to the claims released herein or any other claims or
causes of action arising from acts or omissions taken or made prior to the date
of this Separation Agreement. All Parties further agree that they will not
either directly or indirectly assist in, cooperate or consult with, or encourage
any other parties or their attorneys to commence or prosecute any present or
future administrative proceeding or lawsuit against the other Party or any of
the Released Parties or the Lustig Parties. Nothing in this provision will
prevent either Party from taking any actions deemed reasonably necessary to
defend against any allegation, inquiries, accusations, proceeding, claim,
demand, lawsuit or investigation of any nature whatsoever and by whomever
initiated.

4.       DUTY TO COOPERATE. For a one year period from the effective date of
this Agreement, and thereafter, with respect to any litigation in which he is a
defendant, Lustig agrees that he will cooperate with and provide assistance to
PRG and its attorneys in connection with any and all investigations, inquiries
or litigation whether in any judicial, administrative, or public, quasi-public
or private forum, in which PRG is involved, whether or not Lustig is a defendant
in such investigations, inquiries, proceedings or litigation. Lustig will
provide such cooperation without cost (except for reimbursement for
out-of-pocket expenses) on all matters involving litigation in which Lustig is a
defendant. Such cooperation and assistance shall consist of, inter alia, meeting
with counsel for PRG on a reasonable schedule and providing background
information to counsel in such meetings, providing truthful testimony in any
proceeding, and providing other support and cooperation as PRG may reasonably
request. Additionally, Lustig shall use his best efforts to be available to
assist any employee or representative of PRG via telephone or in person at PRG's
executive offices to the extent that PRG, in its sole and exclusive discretion,
determines that Lustig's assistance is necessary. PRG agrees that any requests
made pursuant to this paragraph will be made in writing with adequate advance
notice and any assistance provided by Lustig will be provided in a manner that
does not interfere with any subsequent employment that Lustig procures. In
addition, during the one year period, Lustig agrees that he will assist the
Company in matters unrelated to litigation in which he is a defendant for up to
one day (8 hours)

                                       5
<PAGE>   6

per month without additional payment to him except for reimbursement for direct,
out of pocket expenses, if any, incurred by Lustig in connection with such
cooperation. PRG agrees it will compensate Lustig for any time spent assisting
or cooperating with the Company beyond one day per month at the rate of $1200
per day plus reimbursement for direct out-of-pocket expenses, if any, incurred
by Lustig in connection with cooperation unrelated to litigation in which he is
a defendant. After the one year period expires, any assistance Lustig agrees to
provide to the Company (other than assistance related to litigation in which
Lustig is a defendant) will be compensated at the rate of $1200 per day plus
reimbursement for direct out-of-pocket expenses, if any, incurred by Lustig in
connection with such cooperation. PRG also agrees to indemnify, defend and hold
Lustig harmless from and against any claims, obligations, liabilities, loss or
other damages incurred or sustained by Lustig in connection with all acts,
undertakings or omissions committed by Lustig in providing PRG with any
requested assistance.

5.       NO DISPARAGEMENT. Lustig agrees that he will neither say, write nor
communicate in any manner to any person or entity anything derogatory or
negative about PRG and its officers, directors, employees, affiliates, and
representatives, and any of its practices, policies, services or products,
regardless of the truth or falsity of the information. PRG agrees that neither
it nor any PRG Releasees will likewise say, write nor communicate in any manner
to any person or entity anything derogatory or negative about Lustig. The
Parties agree that this paragraph will not restrict either Party from providing
information required by law, governmental or judicial order or to defend
themselves in legal proceedings.

6.       CONFIDENTIAL INFORMATION AND CONTINUING RESTRICTIVE COVENANTS. As used
in this Separation Agreement, the term "Confidential Information" shall mean all
information regarding PRG, PRG's activities, PRG's businesses including, but not
limited to, PRG's accounting and other business procedures or PRG's customers
that is not generally known to persons not employed by PRG, that is not
generally disclosed by PRG to persons not employed by PRG, and that is the
subject of reasonable efforts to protect its confidentiality. "Trade Secrets"
shall mean information defined as a trade secret by the Georgia Trade Secrets
Act.

         (a)      Lustig understands and agrees that the Confidential
Information and Trade Secrets constitute valuable assets of PRG and its
affiliated entities, and should not be disclosed to any third parties without
express permission from PRG. Lustig hereby represents and warrants that he has
not revealed, divulged or disclosed to any third parties not affiliated with PRG
any Confidential Information or Trade Secrets that he may have become aware of
over the course of his employment with PRG and/or in the process of discussing
the terms of his departure with PRG. Lustig further agrees that he shall not,
directly or indirectly, at any time in future, reveal, divulge, or disclose to
any person, not expressly authorized by PRG, any Trade Secrets. Lustig further
agrees that he shall not, directly or indirectly, for a period of two years from
the date of this Agreement, reveal, divulge, or disclose to any person, not
expressly authorized by PRG, any Confidential Information.

         (b)      Lustig understands and agrees that the restrictive covenants
contained in paragraph 6.(a)-(c) of his Employment Agreement dated October 17,
1997, with PRG's subsidiary, The Profit Recovery Group International 1, Inc.,
shall remain in full force and effect.

                                       6
<PAGE>   7

7.       OTHER REPRESENTATIONS.  Lustig represents and warrants to PRG as
follows:

         (a)      that from October 25, 2000, through the date of execution of
this Separation Agreement, he has not acted in any manner that, after the date
of execution of this Separation Agreement, would be a violation of the terms of
the Separation Agreement;

         (b)      that he has not made any false statements or
misrepresentations in connection with this Separation Agreement, that he has not
assigned or transferred to any person or entity not a party to this Separation
Agreement any Claim or other right released hereunder and that he shall defend,
indemnify, and hold harmless PRG from and against any claim (including the
payment of attorneys fees and costs actually incurred whether or not litigation
has commenced) based on or in connection with or arising out of any such
assignment or transfer made by Lustig;

         (c)      that he has not, prior to the date and time of his execution
of this Separation Agreement, initiated any lawsuit or any administrative
proceedings against PRG with any governmental agency or any court; and

         (d)      that a portion of the consideration he is receiving under this
Separation Agreement is valuable consideration to which he would not otherwise
be entitled.

         (e)      that, in accordance with Lustig's existing and continuing
obligations to PRG, except for the cellular telephone and lap top computer which
he may retain pursuant to Section 1.C. (vi) hereof, he has returned or will
immediately return to PRG all property and equipment of PRG in his possession,
control or custody, including, without limitation, any of the following:
pager(s), calling card(s), corporate credit card(s), office key(s), security
card(s), all files, records, documents, correspondence, data, computer access
codes, computer programs, business plans and other property which he prepared or
helped prepare in connection with his employment by PRG and Lustig will not
retain any copies or reproductions of any such property and equipment of PRG;
and

8.       INDEMNIFICATION BY LUSTIG. Lustig will defend, indemnify, and hold
harmless PRG from and against any loss, expense or liability (including the
reasonable attorneys fees and costs actually incurred whether or not litigation
has commenced) suffered or incurred by PRG based on or in connection with or
arising out of any disclosure by Lustig of Confidential Information prior to, on
or after the date of execution of this Separation Agreement to any recipient who
at the time of disclosure was not an officer, director or employee of PRG or
otherwise authorized by PRG to received the Confidential Information.

9.       INDEMNIFICATION BY PRG. Irrespective of Lustig's termination and with
respect to those acts, errors or omissions undertaken or committed by Lustig on
or before the date hereof in the performance of his duties as an officer,
director or representative of any one or more of PRG or the PRG Releasees,
Lustig will remain entitled to receive and PRG and each of the PRG Releases
shall provide and extend to Lustig all rights of indemnification (including
without limit obligations to defend) provided as available under either (i) the
Articles of Incorporation, By-

                                       7
<PAGE>   8

Laws or the indemnification agreement of any one or more of PRG or the PRG
Releasees to the maximum extent now or hereafter in effect and (ii) all
professional or other liability insurance policies maintained by any one or more
of PRG or the PRG Releasees to the maximum extent now or hereafter available.
Additionally, PRG, on behalf of itself and each PRG Releasee, agrees that it
shall continue to maintain all professional or other liability insurance
covering its directors and officers and this liability insurance shall continue
to provide Lustig with beneficial coverage for all acts or omissions undertaken
by Lustig on or before the date hereof in the performance of his duties as an
officer, director or representative of any one or more of PRG or the PRG
Releasees.

10.      REMEDIES. In the event either Party breaches any obligations under this
Agreement, the non-breaching Party will be entitled to recover from the
breaching Party attorneys' fees and all other costs and expenses incurred in
enforcing this Agreement or in prosecuting any counterclaim or cross claim or
appeal based hereon and to obtain all other relief provided by law or equity.
Such rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Parties at law or in equity.

         The Parties agree that if either Party is unsuccessful in any challenge
to the terms of this Separation Agreement, or to the Separation Agreement as a
whole, the unsuccessful Party shall be fully responsible for any expenses or
damages incurred by the prevailing Party, including court costs and reasonable
attorneys fees arising as a result of the unsuccessful Party's challenge.

11.      NO ADMISSION. This Separation Agreement shall not be construed as an
admission by either Party of any liability, or any acts of wrongdoing, or the
violation of any federal, state or local law, ordinance or regulation, nor shall
it be considered as evidence of any such alleged liability, wrongdoing, or
violation of any federal, state or local law, ordinance or regulation.

12.      CONFIDENTIALITY OF SEPARATION AGREEMENT. The nature and terms of this
Separation Agreement are strictly confidential and shall not be disclosed by
Lustig at any time to any person other than his immediate family, his lawyer and
accountants without the prior written consent of PRG, except as necessary in any
legal proceedings brought to enforce the provisions and terms of this Separation
Agreement, to prepare and file income tax returns, pursuant to court order or to
defend himself in legal proceedings. If either PRG or Lustig are asked about the
termination of the relationship by parties outside PRG's group of employees and
agents who have a legitimate business reason to know of the terms hereof, they
will respond that Lustig voluntarily resigned.

13.      GOVERNING LAW. This Separation Agreement is made and entered into in
the State of Georgia and will in all material respects be interpreted, enforced,
and governed under the laws of said state. The provisions of this Separation
Agreement are severable, and if any part of the Separation Agreement is found to
be unenforceable or invalid, the remainder of the Separation Agreement shall not
in any way be affected or impaired and those provisions will continue to be
valid and effective.

14.      NO OTHER CONSIDERATION. Lustig affirms that the only consideration
received by Lustig for entering into this Separation Agreement is as stated
herein, and that no other promise,

                                       8
<PAGE>   9

representation or agreement of any kind whatsoever has been made to, or relied
upon by, Lustig in connection with Lustig's execution of this Separation
Agreement. Lustig further acknowledges that he has read the entire Separation
Agreement and fully understands the meaning and intent of the Separation
Agreement, including, but not limited to, its final and binding effect in
relation to the general release of all claims. Lustig acknowledges that, with
the exception of the payments and benefits described herein, he is not entitled
to any other payments, compensation or fringe benefits of any kind whatsoever
after the date of this Separation Agreement.

15.      CONSULTATION WITH ATTORNEY. Lustig further acknowledges that he has
been advised by PRG to consult with an attorney in connection with this
Separation Agreement. Lustig further acknowledges that he was given the
opportunity to take at least twenty-one (21) days from the time he first
received this Separation Agreement within which to consider whether to sign it.
Additionally, Lustig acknowledges that he will have seven (7) days from the date
of the execution of this Separation Agreement by Lustig within which to change
his mind and revoke the Separation Agreement, upon which event the payments and
other obligations of PRG will cease. Lustig acknowledges and agrees that any
revocation of this Separation Agreement must be made in writing and delivered
within the seven 7-day revocation period to:

                  The Profit Recovery Group International, Inc.
                           Attn: Clinton McKellar, Jr.
                      2300 Windy Ridge Parkway, Suite 100 N
                           Atlanta, Georgia 30339-8426

Lustig further acknowledges that the effective date of this Separation Agreement
will be the eighth (8th) day after it has been executed by Lustig.

16.      MERGER AND INTEGRATION. It is expressly understood and agreed that this
Separation Agreement constitutes a full and final settlement and general release
of all Claims. This Separation Agreement, therefore, supersedes and extinguishes
any and all other promises, representations or agreements, whether written or
oral, made at any time prior to the date of this Separation Agreement by and
between the parties or any of their current and former officers, directors,
stockholders, partners, principals, employees, agents, parent corporations,
subsidiaries, affiliates, predecessors, estates, successors, assigns, and
attorneys regarding the resolution of the Claims. The parties agree that, except
with respect to any charter, bylaw or other agreement which provides
indemnification obligations to Lustig and which PRG has agreed to extend to
Lustig in accordance with Section 9 hereof, this Separation Agreement contains
the entire agreement between the parties with respect to the Claims and that the
terms of this Separation Agreement are contractual and not mere recitals. This
Separation Agreement may not be changed, modified, amended or altered except by
written agreement signed by all parties hereto.

17.      KNOWING EXECUTION. Lustig warrants, represents, and acknowledges that
this Separation Agreement is entered into by Lustig KNOWINGLY AND VOLUNTARILY as
an act of Lustig's OWN FREE WILL; that Lustig is of sound mind; that Lustig is
laboring under no physical, psychological, or

                                       9
<PAGE>   10

mental infirmity which would affect his capacity either to understand the terms
of this Separation Agreement or to freely enter into and be bound by the
provisions of this Separation Agreement.

I HAVE PERSONALLY READ THE FOREGOING AGREEMENT, AND I AM VOLUNTARILY AND
KNOWINGLY ENTERING INTO THE TERMS AND PROVISIONS CONTAINED IN IT, WITH FULL
UNDERSTANDING OF ITS CONSEQUENCES.

                           LUSTIG

                           /s/  MICHAEL A. LUSTIG
                           -----------------------------------------
                           MICHAEL A. LUSTIG

                           Date:  2-2-01
                                ------------------------------------

                           PRG THE PROFIT RECOVERY GROUP
                           INTERNATIONAL, INC.

                           By:  /s/  C. MCKELLAR, JR.
                               -------------------------------------

                           Title:    S.V.P
                                  ----------------------------------

                           Date:     2/2/01
                                ------------------------------------

                                       10
<PAGE>   11

                               ACKNOWLEDGEMENT OF
              KNOWING AND VOLUNTARY EXECUTION BEFORE EXPIRATION OF
                  MANDATORY TWENTY-ONE DAY CONSIDERATION PERIOD
       UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED

I, MICHAEL A. LUSTIG, understand that I may take a minimum of twenty-one (21)
days within which to consider and execute the above Separation Agreement.
However, I acknowledge, represent and warrant that I have had sufficient time to
review and consider this Separation Agreement, and I have freely and voluntarily
chosen to execute the said Separation Agreement before the twenty-one (21) day
period has expired. I further acknowledge that I have been advised by THE PROFIT
RECOVERY GROUP INTERNATIONAL, INC. to consult an attorney prior to executing
this acknowledgement below.

Date:    February 2, 2001                            /s/ Michael A. Lustig
     ---------------------------------------         ---------------------------
                                                     MICHAEL A. LUSTIG

                                       11

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