PSS WORLD MEDICAL INC
EXHIBIT 10.1 SHARE REPURCHASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>exhibit10_1.txt
<DESCRIPTION>EXHIBIT 10.1 SHARE REPURCHASE AGREEMENT
<TEXT>
EXHIBIT 10.1



             COLLARED ACCELERATED SHARE REPURCHASE MASTER AGREEMENT




                                                                 August 28, 2002

PSS WORLD MEDICAL, INC.
4345 Southpoint Boulevard
Jacksonville, FL 32216




Ladies and Gentlemen:

This letter sets forth the terms and conditions of the collared accelerated
share repurchase master agreement (the "Master Agreement") between Goldman,
Sachs & Co. ("Goldman Sachs") a broker-dealer registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and PSS World Medical,
Inc. (the "Company") and is intended to supplement the terms and provisions of
certain share repurchase transactions (each a "Transaction") entered into from
time to time between Goldman Sachs and the Company. This Master Agreement, taken
alone, is neither a commitment by either party to enter into any Transaction nor
evidence of a Transaction. The terms of any particular Transaction shall be set
forth in a trade supplement (each a "Trade Supplement") in the form of Appendix
A hereto and which references this Master Agreement, in which event the terms
and provisions of this Master Agreement shall be deemed to be incorporated into
and made part of each such Trade Supplement. All provisions contained in this
Master Agreement shall govern a Trade Supplement relating to a Transaction
except as expressly modified below or in the related Trade Supplement. With
respect to any relevant Transaction, this Master Agreement and the related Trade
Supplement shall represent the entire agreement and understanding of the parties
with respect to the subject matter and terms of such Transaction and shall
supersede all prior or contemporaneous written or oral communications with
respect thereto. If, in relation to any Transaction to which this Master
Agreement and related Trade Supplement relate, there is any inconsistency
between this Master Agreement and such Trade Supplement, the Trade Supplement
shall govern.

1.       Terms

         "Assumed Shares" means, for any date of determination, an amount equal
to (i) the number of shares in the Portfolio minus (ii) the sum of, for each
Exchange Business Day in the Valuation Period up to and including the third
Exchange Business Day prior to such date, the number of shares in the Portfolio
divided by the total number of Exchange Business Days in the Valuation Period
(the "Daily Amount"). The Daily Amount will be deemed to be zero for each day on
which the Valuation Period is suspended in accordance with Sections 3(b),(c) and
(d) hereof. In the event that the Valuation Period is extended pursuant to

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                                       2


Section 5(b) hereof, the Calculation Agent may make corresponding adjustments to
the amount of Assumed Shares in relation to the Aggregate Weight (as defined
herein) determined for the related Transaction.

         "Calculation Agent" means Goldman Sachs provided that in the event that
Goldman Sachs is the Defaulting Party, the Company (or an agent selected by the
Company) and Goldman Sachs shall be joint Calculation Agents.

         "Capped Settlement Amount" means, for each Transaction, as set forth in
the related Trade Supplement.

         "Cash Dividend" means the gross dividend declared and paid by the
Company to holders generally of record of a single Underlying Security on the
relevant record date during the period from and including the third Exchange
Business Day following the Trade Date to but excluding the Settlement Date. For
the avoidance of doubt, the "gross dividend" shall represent a sum before the
withholding or deduction of any taxes at the source by or on behalf of any
applicable authority having power to tax in respect of such a dividend, and
shall exclude any imputation or other credits, refunds or deductions granted by
any applicable authority having power to tax in respect of such dividend and any
taxes, credits, refunds or benefits imposed, withheld, assessed or levied
thereon.

         "Default Termination Amount" means the net amount payable in the case
of an Event of Default by one party to the other, calculated by the
Non-Defaulting Party by aggregating and setting-off, as applicable:

          (i) the  payments  due (or that would have been due but for Section 7)
          under this Master  Agreement  to each party  immediately  prior to the
          Default Termination Date;

          (ii) the  Replacement  Value of the  transaction  to be settled  under
          Section 11; and

          (iii) the Non-Defaulting Party's Other Expenses.

          "Dividend Adjustment Amount" means the product of:

          (x) the Cash Dividend multiplied by

          (y) the Assumed Shares on the record date for such Cash Dividend.

         "Early Termination Amount" means the net amount payable in the case of
an Early Termination Event by one party to the other, calculated by Goldman
Sachs by aggregating and setting-off, as applicable:

          (i) the  payments  due (or that would have been due but for Section 7)
          under this Master  Agreement  to each party  immediately  prior to the
          Early Termination Date; and

          (ii) the  Replacement  Value of the  transaction  to be settled  under
          Section 11.

         "Exchange" means the Nasdaq National Market.
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                                       3


         "Exchange Business Day" means any day that each Exchange and each
Related Exchange are open for trading unless the Calculation Agent determines
that any failure of such Exchange or Related Exchange to open does not have a
material effect on the trading market for the Underlying Securities. Each such
day shall be an Exchange Business Day notwithstanding any such Exchange or
Related Exchange closing prior to its regular weekday closing time.

         "Final Portfolio Value" means the sum of (i) the average of the Market
Prices for the Underlying Security for each Exchange Business Day in the
Valuation Period, multiplied by the number of shares in the Portfolio, plus (ii)
except to the extent that the payment of the underlying Cash Dividend has been
reflected in an adjustment made pursuant to paragraph 5, the Dividend Adjustment
Amount.

         "Floored Settlement Amount" means, for each Transaction, as set forth
in the related Trade Supplement.

         "Market Disruption Event" means the occurrence or existence at any time
during the regular trading session, including any extensions thereof and without
regard to pre-open or after hours trading outside of such regular trading
session, on any Exchange Business Day of any material (as determined by the
Calculation Agent) suspension, limitation imposed on, or impairment occurring
with respect to trading (by the relevant Exchange or Related Exchange or
otherwise or by reason of movements in price exceeding limits permitted by the
relevant exchange or otherwise) in (x) the Underlying Securities on the Exchange
or (y) any options contracts or futures contracts relating to the Underlying
Securities on any Related Exchange if, in any such case, the Calculation Agent
determines that such material suspension, limitation or impairment has a
material effect on the trading market for the affected financial instruments or
(B) of a System Disruption. In addition it shall be a Market Disruption Event if
the Exchange or Related Exchange closes prior to their scheduled closing time
(if, in any such case, the Calculation Agent determines that such earlier
closing has a material effect on the trading market for the affected financial
instruments). A "scheduled closing time" is any regular weekday closing time or
any closing time announced by the Exchange or Related Exchange, as the case may
be, prior to the close of the regular trading session on such Exchange or
Related Exchange on the previous Exchange Business Day.

         "Market Price" means, on any day, the volume weighted average daily
price of the Underlying Security for the regular trading session (including any
extensions thereof and without regard to pre-open or after hours trading outside
of such regular trading session) as published by Bloomberg at 4:15 p.m. New York
time on such date.

         "Merger Date" means the closing date of the Merger Event, provided,
that for a Tender Offer, the Merger Date is the date on which shares in the
amount of the applicable percentage threshold are actually purchased (as
determined by the Calculation Agent).

         "Merger Event" means (i) any consolidation, amalgamation or merger of
the Company with or into another entity (other than the consolidation,
amalgamation or merger in which the Company is the continuing corporation and
which does not result in reclassification or change of Underlying Securities),

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                                       4


(ii) the consummation of any other takeover transaction for the Underlying
Securities that results in a transfer of or an irrevocable commitment to
transfer all such Underlying Securities, (iii) any reclassification or change of
the Underlying Securities that results in a transfer of or an irrevocable
commitment to transfer all the Underlying Securities outstanding, (iv) any event
specified in (i) through (iii) above where the Company is the continuing
corporation but the holders of the outstanding shares of the Underlying Security
immediately prior to the Merger Event collectively own less than 50% of the
outstanding shares of the Underlying Security immediately after such Merger
Event, or (v) the consummation of any Tender Offer for 50% or more of the
outstanding voting shares of any class of the Company.

         "Nationalization" means that all the Underlying Securities or all or
substantially all the assets of the Company are nationalized, expropriated or
are otherwise required to be transferred to any governmental agency or entity.

         "Notional Amount" means, for each Transaction, as set forth in the
related Trade Supplement.

         "Other Expenses" means, in relation to an Event of Default, all costs,
losses, expenses, damages or liabilities (including, without limitation, loss of
bargain, costs of funding, legal fees, stamp, registration, documentation and
similar taxes, and value added taxes) incurred or suffered by a party as a
result of (i) the occurrence of an Event of Default with respect to or by the
other party or (ii) the other party's breach of its obligations hereunder,
including, without limitation, the costs and expenses of all steps taken by the
Non-Defaulting Party to implement, protect or enforce its rights under the
Master Agreement and all commercially reasonable steps taken by the
Non-Defaulting Party, including, without limitation, the purchase or sale of
Underlying Securities or other securities in order to unwind any hedges or cover
any market positions, provided, however, that except as otherwise expressly
recoverable hereunder, neither party hereto shall be entitled, in the event of
the occurrence of an Event of Default, to recovery from the other of any
consequential or punitive damages.

         "Portfolio" means, for each Transaction, as set forth in the related
Trade Supplement.

         "Potential Adjustment Event" means any of the following: (i) a
subdivision, consolidation or reclassification of the Underlying Securities
(unless a Merger Event), or a free distribution or dividend of any such
Underlying Securities to existing holders by way of bonus, capitalization or
similar issue; (ii) a distribution or dividend to existing holders of the
Underlying Securities of (A) such Underlying Securities, or (B) other share
capital or securities granting the right to payment of dividends and/or the
proceeds of liquidation of the Company equally or proportionately with such
payments to holders of such Underlying Securities, or (C) any other type of
securities, rights or warrants or other assets, in any case for payment (cash or
other) at less than the prevailing market price as determined by the Calculation
Agent; (iii) an extraordinary dividend; (iv) a call by the Company in respect of
the Underlying Securities that is not fully paid; (v) a repurchase by the
Company of the Underlying Securities, whether out of profits or capital and
whether the consideration for such repurchase is cash, securities or otherwise;
(vi) an event that results in any shareholder rights pursuant to a shareholder
rights agreement or other plan or arrangement of the type commonly referred to
as a "poison pill" being distributed or becoming separated from shares of common
stock or other shares of the capital stock of the Company (provided, that any

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                                       5


adjustment effected as a result of such an event shall be readjusted upon any
redemption of such rights); (vii) the occurrence of a Tender Offer for more than
10% but less than 50% of the outstanding voting shares of any class of the
Company; or (viii) any other similar event that may have a diluting or
concentrative effect on the theoretical value of the Underlying Securities.

         "Reference Price" means, on any day, if the Underlying Security is
listed on the New York Stock Exchange, the American Stock Exchange (or their
respective successors) or any other auction exchange that has a price as of the
Valuation Time at which any trade can be submitted for execution, the price of
the Underlying Security as of the Valuation Time as reported in the official
real-time price dissemination mechanism, and if the Underlying Security is
quoted on The Nasdaq National Market (or its successor) or any other dealer
exchange or dealer quotation system, the mid-point of the best bid and ask
prices quoted as of the Valuation Time (or the last such prices quoted
immediately before the Valuation Time) without regard to quotations that lock or
cross the dealer exchange or quotation system.

         "Related Exchange" means the principal exchange or quotation system on
which option contracts and futures contracts on the Underlying Securities trade
or any successor to such exchange or quotation system.

         "Replacement Value" means the amount, calculated by the Non-Defaulting
Party, that would be required to be paid by or to the Non-Defaulting Party for
an instrument that would have the effect of preserving the economic equivalent
of the payment and/or delivery obligations of the parties under this Master
Agreement that would, but for the occurrence of an Event of Default or an Early
Termination Event, otherwise have fallen due.

         "Settlement Business Day" means a day on which the clearance system for
trades in the Underlying Security is open for acceptance and execution of
settlement instructions.

         "Settlement Date" means, in the event a Transaction is settled in cash,
the third Settlement Business Day following the Termination Date, and in the
event a Transaction is settled in shares pursuant to Section 2, the third
Settlement Business Day following the Net Share Valuation Date (as defined in
Section 2(b) below).

         "Settlement Disruption Event" means an event beyond the control of the
parties as a result of which the relevant clearance system cannot clear the
transfer of the shares.

         "Suspension Period" means the Exchange Business Days during which the
Valuation Period is suspended, and the Termination Date consequently extended,
under Sections 3(b),(c) and (d) hereof.

         "System Disruption" means any event that materially disrupts (as
determined by the Calculation Agent) the ability to effect transactions in the
Underlying Securities on the Exchange or in options contracts or futures
relating to the Underlying Securities on the Related Exchange(s). The types of
disruptions contemplated by this provision include, but are not limited to, (a)
the temporary closure and re-opening of the Exchange(s) or Related Exchange(s)
at any point during the regular trading session and (b) a material systems
failure of the trading, communications and connectivity systems to the
Exchange(s) or Related Exchange(s).

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                                       6


         "Tender Offer" means a tender offer by any entity or person to purchase
the outstanding voting shares of any class of the Company, as determined by the
Calculation Agent, based upon the making of filings with governmental agencies
and/or the nature and terms of the offer.

         "Termination Date" means, for each Transaction, as set forth in the
related Trade Supplement and any subsequent date which results from a suspension
or extension of the Valuation Period as provided herein, and if not an Exchange
Business Day, the next succeeding Exchange Business Day thereafter.

         "Time of the Order" means the time at which the Company places an order
with Goldman Sachs to enter into a Transaction.

         "Trade Date" means, for each Transaction, as set forth in the related
Trade Supplement.

          "Underlying  Security"  means the common  stock of PSS World  Medical,
Inc., par value $0.01 per share.

         "Valuation Period" means each Exchange Business Day during the period
commencing on and including either (i) in the event that the Time of the Order
is prior to open of the Exchange on the Trade Date, the Trade Date or (ii) in
the event that the Time of the Order is after the open of the Exchange on the
Trade Date, the first succeeding Exchange Business Day following the Trade Date
to, and including, the Termination Date (but excluding any day on which the
Valuation Period is suspended in accordance with Sections 3(b), (c) and (d)
hereof and including any day(s) by which the Valuation Period is extended in
accordance with Section 5(b) hereof).

         "Valuation Time" means the close of the regular trading session
(including any extensions thereof) on the Exchange without
regard to pre-open or after hours trading outside of such regular trading
session.

2.       Settlement

         (a) Cash Settlement

         Unless the Company has notified Goldman Sachs at least 10 Exchange
Business Days prior to the originally scheduled Termination Date (the
"Notification Date") of its election to settle by a share settlement ("Share
Settlement") as provided in Section 2(b) below in the case where the Final
Portfolio Value is greater than the Notional Amount and has satisfied the
conditions to effecting a Share Settlement set forth in Section 2(b) below, the
parties will settle a Transaction in cash on the Settlement Date as follows:

          (i) If the Final  Portfolio  Value is less than the  Notional  Amount,
          then Goldman Sachs shall pay to the Company an amount equal to (i) the
          lesser of (a) the Notional  Amount minus the Final Portfolio Value and
          (b) the Floored Settlement Amount or (ii) to the extent that the Trade
          Supplement  specifies  that  the  Floored  Settlement  Amount  is "Not
          Applicable", the Notional Amount minus the Final Portfolio Value;
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                                       7



          (ii) If the Final Portfolio Value is greater than the Notional Amount,
          then the Company shall pay to Goldman Sachs an amount equal to (i) the
          lesser of (x) the Final  Portfolio Value minus the Notional Amount and
          (y) the Capped  Settlement Amount or (ii) to the extent that the Trade
          Supplement  specifies  that  the  Capped  Settlement  Amount  is  "Not
          Applicable", the Final Portfolio Value minus the Notional Amount; and

          (iii) If the Final Portfolio Value is equal to the Notional Amount, no
          payment is made.

In the case of (i) or (ii),  the amount due to a party  (the  "Final  Settlement
Amount")  shall be paid in  immediately  available  funds to the account of such
party as each shall specify in writing.

(b)      Share Settlement

         In the event that the Company owes Goldman Sachs the Final Settlement
Amount and the Company has elected Share Settlement in each case pursuant to
Section 2(a) above, then the settlement procedure shall be as follows:
Settlement shall be made by delivery of the number of shares of the Underlying
Security equal in value to the Final Settlement Amount (the "Settlement
Shares"), with such shares' value based on the Reference Price of the Underlying
Securities on the Net Share Valuation Date. The "Net Share Valuation Date" is
the Exchange Business Day immediately following the Termination Date. Delivery
of such shares shall be made free of any contractual or other restrictions in
good transferable form by the third Exchange Business Day following the Net
Share Valuation Date unless a Settlement Disruption Event prevents delivery of
such shares on that day. If a Settlement Disruption Event does prevent delivery
on that day, then the Settlement Date will be the first succeeding day on which
delivery of the shares can take place (through the relevant clearance system or
in any other commercially reasonable manner). In addition, such delivery shall
be made free and clear of any lien, encumbrance, claim, pledge, charge,
restriction or impediment to transfer of any nature whatsoever (other than under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
any Unregistered Share (as defined below)), the Company warranting to Goldman
Sachs at the time of such delivery that it has good, valid and marketable title
or right to sell and transfer all such Underlying Securities to Goldman Sachs
under the terms of this Master Agreement. Goldman Sachs or any affiliate of
Goldman Sachs designated by Goldman Sachs (Goldman Sachs or such affiliate,
"GS") shall resell the Settlement Shares during a period (the "Resale Period")
commencing on the first Exchange Business Day immediately following the Exchange
Business Day on which the Settlement Shares are delivered. GS shall use it good
faith, commercially reasonable efforts to sell the Settlement Shares as promptly
as possible at commercially reasonable prices based on prevailing market
conditions for the Underlying Securities and the Company.

         The Resale Period shall end on the Exchange Business Day on which GS
completes the sale of all Settlement Shares or a sufficient number of Settlement
Shares so that the realized proceeds of such sales exceed the Final Settlement
Amount. Notwithstanding the foregoing, if resale by GS of the Settlement Shares
would, as determined by GS in its sole discretion (i) occur during a
distribution for purposes of Regulation M under the Exchange Act ("Regulation
M") and if GS would be subject to the restrictions of Rule 101 of Regulation M
in connection with such distribution, the Resale Period will be postponed or
tolled, as the case may be, until the Exchange Business Day immediately
following the end of any "restricted period" as such term is defined in

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                                       8


Regulation M with respect to such distribution under Regulation M or (ii)
conflict with any legal, regulatory or self-regulatory requirements or related
policies and procedures applicable to GS (whether or not such requirements,
policies or procedures are imposed by law or have been voluntarily adopted by
GS), the Resale Period will be postponed or tolled, as the case may be, until
such conflict is no longer applicable. During the Resale Period, if the net
proceeds from the resale of the Settlement Shares exceed the Final Settlement
Amount, GS shall refund such excess in cash to the Company by the close of
business on the third Exchange Business Day immediately following the last day
of the Resale Period. If the Final Settlement Amount exceeds the net proceeds
from such resale, the Company shall transfer to GS by the close of business on
the third Exchange Business Day immediately following the last day of the Resale
Period the amount of such excess (the "Additional Amount") in cash or in the
number of shares of the Underlying Security ("Make-whole Shares") in an amount
that, based on the Reference Price on the last day of the Resale Period, has a
dollar value equal to the Additional Amount. Resale of the Make-whole Shares of
the Underlying Security shall be made during the period commencing on the
Exchange Business Day immediately following the delivery of the Make-whole
Shares. If the Company elects to pay the Additional Amount in shares of the
Underlying Security, the requirements set forth in this Section 2(b) shall
apply. This provision shall be applied successively until the Additional Amount
is equal to zero.

         Share Settlement of a Transaction by the Company is subject to the
following conditions: the Company at its sole expense shall (i) have, prior to
the Termination Date, registered pursuant to an effective registration statement
reasonably satisfactory to GS (the "Registration Statement") filed under the
Securities Act the offering and sale by GS of not less than 150% of the shares
of the Underlying Security necessary to fulfill the Share Settlement delivery
obligation by the Company (determining the number of such shares to be
registered on the basis of the average of the Reference Prices on the five (5)
Exchange Business Days prior to the Termination Date); (ii) maintain the
effectiveness of the Registration Statement from the Termination Date until the
date GS has sold all shares to be delivered by the Company in satisfaction of
its Share Settlement obligations; (iii) have afforded GS a reasonable
opportunity to conduct a due diligence investigation of the Company customary in
scope for transactions in which GS acts as underwriter of equity securities, and
GS shall have been satisfied (with the approval of its Commitments Committee in
accordance with its customary review process) with the results of such
investigation; (iv) shall have negotiated and entered into an agreement with GS
providing for such covenants, conditions, representations and warranties, and
indemnities and contribution rights as are customary for GS equity underwriting
agreements, together with customary certificates and opinions of counsel and
letters of independent auditors of the Company to be delivered to GS prior to
the Termination Date, covering the shares to be delivered by the Company in
satisfaction of its Net Share Settlement obligations; (v) have delivered to GS,
prior to the Termination Date, such number of prospectuses relating thereto as
GS shall have reasonably requested and shall promptly update and provide GS with
replacement prospectuses as necessary to ensure the prospectus does not contain
any untrue statement of a material fact or omit any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; (vi) have retained for
GS, nationally-recognized underwriting counsel acceptable to GS (in its sole
discretion) with broad experience in similar registered securities offerings and
such counsel shall have agreed to act as such; (vii) have taken all steps
necessary for the shares sold by GS to be listed or quoted on the Exchange that
the Underlying Securities are listed or quoted on; (viii) have paid all
reasonable and actual out-of-pocket costs and expenses of GS and all reasonable

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                                       9


and actual fees and expenses of GS's outside counsel and other independent
experts in connection with the foregoing and (ix) take such action as is
required to ensure that GS's sale of the Underlying Securities does not violate,
or result in a violation of, the federal or state securities laws.

         If any of these conditions are not satisfied prior to the Termination
Date then the Company may deliver Unregistered Shares (as defined below) to GS
in accordance with the following conditions. If GS and the Company can agree on
acceptable pricing, procedures and documentation relating to the sale of such
Unregistered Shares (including without limitation, applicable requirements in
(iii) through (ix) above and insofar as pertaining to private offerings), then
such Unregistered Shares shall be deemed to be the "Settlement Shares" for the
purposes of this Master Agreement and the settlement procedure specified in this
Section 2(b) shall be followed except that in the event that the Final
Settlement Amount exceeds the proceeds from the sale of such Unregistered
Shares, then for the purpose of calculating the number of "Make-whole Shares" to
be delivered by the Company, GS shall determine the discount to the Reference
Price at which it can sell the Unregistered Shares. Notwithstanding the delivery
of such Unregistered Shares, the Company shall endeavor in good faith to have a
Registration Statement declared effective by the SEC as soon as practical. In
the event that GS has not sold sufficient Unregistered Shares to satisfy the
Company's obligations to GS contained herein at the time that such Registration
Statement is declared effective, GS shall return all unsold Unregistered Shares
to the Company and the Company shall deliver such number of shares of the
Underlying Security covered by the effective Registration Statement equal to
150% of the amount then owed to GS based on the Reference Price on the Exchange
Business Day that the Registration Statement was declared effective. Such shares
shall be deemed to be the "Settlement Shares" for the purposes of this Master
Agreement and the settlement procedure specified in this Section 2(b) shall be
followed. In all cases GS shall be entitled to take any and all required actions
in the course of its sales of the Settlement Shares, including without
limitation making sales of the Unregistered Shares only to "Qualified
Institutional Buyers" (as such term is defined under the Securities Act), to
ensure that the sales of the Unregistered Shares and the Settlement Shares
covered by the Registration Statement are not integrated resulting in a
violation of the securities laws and the Company agrees to take all actions
requested by GS in furtherance thereof. If GS and the Company cannot agree on
acceptable pricing and documentation relating to the sales of such Unregistered
Shares then the number of Unregistered Shares to be delivered to GS shall not be
based on the Reference Price but rather GS shall determine the value attributed
to each Unregistered Share in a commercially reasonable manner and based on such
value the Company shall deliver a number of Shares equal to the Final Settlement
Amount.

         For the purposes hereof "Unregistered Shares" means shares of the
Underlying Security that have not been registered pursuant to an effective
registration statement under the Securities Act and any state securities laws
("Blue Sky Laws") and that cannot be sold, transferred, pledged or otherwise
disposed of without registration under the Securities Act or under applicable
Blue Sky Laws unless such sale, transfer, pledge or other disposition is made in
a transaction exempt from registration thereunder.


         In the event that the Company delivers Unregistered Shares pursuant to
an election of Share Settlement then the Company agrees to indemnify and hold
harmless GS, its affiliates and its assignees and their respective directors,
officers, employees, agents and controlling persons (GS and each such person

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                                       10


being an "Indemnified Party") from and against any and all losses, claims,
damages and liabilities, joint or several, to which such Indemnified Party may
become subject, relating to or arising out of any of the transactions
contemplated by this Master Agreement concerning Share Settlement with the
Unregistered Shares. The foregoing indemnity shall exclude losses that GS incurs
solely by reason of the proceeds from the sale of the Capped Number (as defined
below) of Unregistered Shares being less than the Final Settlement Amount,
Default Termination Amount or Early Termination Amount. The Company will not be
liable under the foregoing indemnification provision to the extent that any
loss, claim, damage, liability or expense is found in a nonappealable judgment
by a court of competent jurisdiction to have resulted from GS's willful
misconduct, gross negligence or bad faith in performing the services that are
subject of this Master Agreement or from information provided in writing by GS
for inclusion in the Registration Statement. If for any reason the foregoing
indemnification is unavailable to any Indemnified Party or insufficient to hold
harmless any Indemnified Party, then the Company shall contribute, to the
maximum extent permitted by law, to the amount paid or payable by the
Indemnified Party as a result of such loss, claim, damage or liability. In
addition, the Company will reimburse any Indemnified Party for all expenses
(including reasonable counsel fees and expenses) as they are incurred (after
notice to the Company) in connection with the investigation of, preparation for
or defense or settlement of any pending or threatened claim or any action, suit
or proceeding arising therefrom, whether or not such Indemnified Party is a
party thereto and whether or not such claim, action, suit or proceeding is
initiated or brought by or on behalf of the Company. The Company also agrees
that no Indemnified Party shall have any liability to the Company or any person
asserting claims on behalf of or in right of the Company in connection with or
as a result of any matter concerning Share Settlement with the Unregistered
Shares except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Company result from the gross negligence, willful
misconduct or bad faith of the Indemnified Party.


         In no event shall the number of Settlement Shares (including, without
duplication, any Unregistered Shares) and any Make-whole Shares be greater than
450,000 Underlying Securities (the "Reserved Shares") minus the amount of
Underlying Securities actually delivered under any other Transaction(s) under
the Master Agreement (the "Capped Number"). The Reserved Shares may be increased
or decreased in a Trade Supplement and the provisions in such Trade Supplement
shall govern in the event of any inconsistency. The Company represents and
warrants (which shall be deemed to be repeated on each day that a Transaction is
outstanding) that the Capped Number (as amended from time to time in a Trade
Supplement) is equal to or less than the number of Underlying Securities
determined according to the following formula:

                                      A - B

                  Where    A = the number of authorized but unissued Underlying
                           Securities that are not reserved for future issuance
                           on the date of the determination of the Capped
                           Number; and

                           B = the maximum number of Underlying Securities
                           required to be delivered to third parties if the
                           Company elected Share Settlement of all transactions
                           in the Underlying Securities (other than Transactions
                           under this Master Agreement) with all third parties
                           that are then currently outstanding and unexercised.

<PAGE>
                                       11


(c) Any cash amount owed by one party to another party and not paid in
immediately available funds on the third Exchange Business Day following the
Termination Date shall accrue interest commencing on (and including) the third
Exchange Business Day following the Termination Date to (but excluding) the date
of payment at the rate, to the extent permitted by applicable law, of 2 per cent
per annum above Morgan Guaranty Trust Company's prime (or base) commercial loan
rate for short term borrowings as in effect from time to time. For the avoidance
of doubt the Company may elect to pay such interest amount by electing Share
Settlement with respect to such amount in accordance with the provisions of
Section 2(b).

3.       Goldman Sachs Hedging Transactions

     (a) The Company acknowledges that during the Valuation Period Goldman Sachs
may, in its  discretion,  purchase  shares of the  Underlying  Security to hedge
market risk under this Master Agreement and agreements with third parties. These
purchases will be conducted  independently of the Company.  The Company will not
in any way direct the timing of such purchases,  the price paid per share of the
Underlying  Security or the manner in which such  purchases are made. The timing
of such purchases by Goldman  Sachs,  the price paid per share of the Underlying
Security  and the  manner in which such  purchases  are made shall be within the
sole  discretion of Goldman  Sachs.  Goldman Sachs shall make such purchases for
its own account and shall not act as the Company's agent.

     (b) If the Company  concludes that it will be engaged in a distribution  of
the Underlying Security for purposes of Regulation M, the Company agrees that it
will, on one Exchange Business Day's written notice, direct Goldman Sachs not to
purchase  Underlying  Securities  in  connection  with hedging this  transaction
during the "restricted  period" (as defined in Regulation M). If on any Exchange
Business Day the Company  delivers written notice (and confirms by telephone) by
8:30 a.m.  New York Time (the  "Notification  Time") then such  notice  shall be
effective to suspend the Valuation Period as of such  Notification  Time. In the
event that the Company  delivers  notice and/or  confirms by telephone after the
Notification Time, then the Valuation Period shall be suspended  effective as of
8:30 a.m. New York Time on the following  Exchange  Business Day or as otherwise
required by law or agreed between the Company and Goldman  Sachs.  The Valuation
Period shall be suspended  and the  Termination  Date extended for each Exchange
Business Day in such Suspension Period.

     (c) In the event that Goldman Sachs concludes, in its sole discretion, that
it is  appropriate  with  respect to any legal,  regulatory  or  self-regulatory
requirements   or  related   policies  and  procedures   (whether  or  not  such
requirements, policies or procedures are imposed by law or have been voluntarily
adopted  by  Goldman  Sachs),  for  it to  refrain  from  purchasing  Underlying
Securities  on any Exchange  Business Day during the Valuation  Period,  Goldman
Sachs shall use its good faith efforts to give one (1) Exchange  Business  Day's
advance (if permitted by applicable law,  regulations,  policies and procedures)
written  notice to the Company  elect to suspend the  Valuation  Period for such
number of Exchange Business Days as is specified in the notice. The notice shall
not specify,  and Goldman Sachs shall not otherwise  communicate to the Company,
the reason for Goldman  Sachs'  election of a Suspension  Period.  The Valuation

<PAGE>
                                       12


Period shall be suspended  and the  Termination  Date extended for each Exchange
Business Day in such  Suspension  Period.

     (d) On no more than two occasions and upon written  notice to Goldman Sachs
prior to 8:30  a.m.  New York  time on any  Exchange  Business  Day  during  the
Valuation Period, the Company may elect to suspend the Valuation Period for such
number of Exchange  Business  Days as is specified in the notice up to a maximum
of 30 calendar  days.  The notice shall not specify,  and the Company  shall not
otherwise communicate to Goldman Sachs, the reason for the Company's election of
a Suspension Period. The Valuation Period shall be suspended and the Termination
Date extended for each Exchange Business Day in such Suspension Period.

     (e) In the  event  that the  Valuation  Period  is  suspended  pursuant  to
Sections  3(b) or (c) above during the regular  trading  session on the Exchange
then the Calculation  Agent shall,  in calculating  the Final  Portfolio  Value,
calculate  the Market  Price for such  Exchange  Business  Day based on the time
during such Exchange  Business Day that the  Valuation  Period was not suspended
and the historical volume of trades executed during this period.

4.       Company Purchases

     (a)  Except  with  respect  to  block  purchases   conducted   pursuant  to
subparagraph (b) below, the Company (or any "affiliated purchaser" as defined in
Rule 10b-18 under the Exchange Act ("Rule  10b-18")) shall not without the prior
written  consent  of  Goldman  Sachs  purchase  any  Underlying  Securities,  or
securities  that are  convertible  into, or  exchangeable or exercisable for the
Underlying  Securities  during any  Valuation  Period.  During  this  time,  any
purchases of Underlying  Securities by the Company shall be made through Goldman
Sachs,  and in  compliance  with Rule 10b-18 or  otherwise  in a manner that the
Company and Goldman Sachs believe is in compliance with applicable requirements.
Goldman Sachs agrees that any fees or charges to the Company in connection  with
such  purchases  shall be  reasonable.  Each such purchase by the Company of the
Underlying Securities shall be disregarded for purposes of determining the Final
Portfolio Value.  This  subparagraph (a) shall not restrict any purchases by the
Company of Underlying Securities effected during any suspension of any Valuation
Period in  accordance  with Section 3(b) and, as provided in the  definition  of
Final Portfolio Value,  purchases during such suspension shall be disregarded in
calculating the Final Portfolio Value.

     (b) The Company may, through Goldman Sachs,  effect purchases of blocks (as
defined in Rule 10b-18) of the Underlying Securities in transactions intended to
comply with Rule 10b-18  (including  blocks available on stock exchanges) during
the term of this Master  Agreement.  In any such case,  the Company  will advise
Goldman Sachs prior to it or any affiliated purchaser conducting such purchases,
and  Goldman  Sachs  will  cease  its  purchases  of the  Underlying  Securities
contained  in such  block.  Each  such  block  purchase  by the  Company  of the
Underlying Securities shall be disregarded for purposes of determining the Final
Portfolio  Value.  The  Company may also,  without the prior  consent of Goldman
Sachs,  effect  purchases of blocks of the  Underlying  Securities  that are not
solicited by or on behalf of the Company or an affiliated purchaser (as provided
in Rule  10b-18(b)(1)(i)).  The  Company  will  advise  Goldman  Sachs  promptly
following any such purchase,  and such purchase will be disregarded for purposes
of determining the Final Portfolio  Value.


<PAGE>
                                       13


     (c) The Company is entering  into this Master  Agreement  in good faith and
not as part of a plan or scheme to evade the  prohibitions  of Rule 10b5-1 under
the  Exchange  Act ("Rule  10b5-1").  It is the intent of the parties  that this
Master Agreement comply with the requirements of Rule 10b5-1(c)(1)(i)(A) and (B)
and this Master  Agreement shall be interpreted to comply with the  requirements
of Rule  10b5-1(c).  The Company will not seek to control or  influence  Goldman
Sachs   to  make   "purchases   or   sales"   (within   the   meaning   of  Rule
10b5-1(c)(1)(i)(B)(3))   under  this  Master   Agreement,   including,   without
limitation,  Goldman Sachs' decision to enter into any hedging transactions. The
Company  represents  and warrants that it has consulted with its own advisors as
to the legal aspects of its adoption and implementation of this Master Agreement
under Rule 10b5-1.

5.       Adjustment of Terms

     (a) If at any time after the date of this  Master  Agreement,  a  Potential
Adjustment Event shall occur, the Calculation  Agent will determine whether such
Potential  Adjustment  Event  has a  diluting  or  concentrative  effect  on the
theoretical value of the Underlying Securities,  and if so, then the Calculation
Agent will: (i) make the corresponding adjustment(s) to the number of Underlying
Securities,  the Notional Amount and the Final Portfolio Value and, in any case,
any other variable relevant to the exercise, settlement or payment terms of this
Master Agreement as the Calculation Agent determines  appropriate to account for
that diluting or concentrative  effect and (ii) determine the effective  date(s)
of the adjustment(s);  provided that all adjustments will be made pro rata based
on the number of Exchange  Business Days having elapsed in the Valuation  Period
up to the effective date of the event as referenced above. The Calculation Agent
may (but need not) determine the appropriate  adjustment(s)  by reference to the
adjustment(s)  in respect of such Potential  Adjustment Event made by an options
exchange to options on the relevant Underlying Securities traded on that options
exchange.  The  determinations of the Calculation Agent so selected will, absent
bad faith or manifest error, be final.

     (b) The Termination Date (as adjusted for any Suspension  Period elected by
the Company) will be postponed if any Market  Disruption  Event(s) occur. In the
event that one or more Market  Disruption  Events shall occur,  the  Calculation
Agent,  in calculating  the Final Portfolio Value (i) shall determine the Market
Price for the relevant  Exchange  Business Day(s) on which the Market Disruption
Event(s) occurred by reducing the weight of such day(s) based on the duration of
the relevant  Market  Disruption  Event(s) and the  historical  volume of trades
executed  during the period of such Market  Disruption  Event(s)  and (ii) shall
calculate  the  Market  Price  for  the  aggregate   weight  of  the  reductions
attributable to Market Disruption Events (the "Aggregate Weight") by allocating,
subject to the proviso below, the Aggregate Weight to the Exchange  Business Day
following  the scheduled  Termination  Date provided that to the extent that the
aggregate  weight  allocated to such day exceeds the "Daily Maximum Weight," the
Calculation  Agent shall add additional  Exchange Business Days to the Valuation
Period such that no more than the Daily Maximum  Weight is assigned to each such
day. To the extent that a Market  Disruption Event has occurred on 5 consecutive
Exchange Business Days during the Valuation Period,  then,  notwithstanding  the
occurrence of a Market  Disruption  Event,  the  Calculation  Agent shall (after
consultation  with the Company) either determine the Market Price using its good
faith  estimate  of the  Market  Price that  would  have  prevailed  but for the
occurrence  of the Market  Disruption  Event(s)  or elect to further  extend the
Valuation Period as it deems  necessary.  The "Daily Maximum Weight" is equal to

<PAGE>
                                       14


the product of the Portfolio multiplied by a fraction, the numerator of which is
one and the denominator of which is the number of Exchange  Business Days in the
Valuation Period.

     (c) In the event  that any price  published  on the  Exchange  and which is
utilized for any  calculation  or  determination  made under any  Transaction is
subsequently  corrected and published by the Exchange within 3 Exchange Business
Days of the previously  published price, either party may notify the other party
of (i) that  correction  and (ii) the amount that is payable as a result of that
correction  and to the extent  necessary the  Calculation  Agent will adjust the
terms of such Transaction to account for such correction.

6.       Representations, Warranties and Agreements

     (a) The  Company  and  Goldman  Sachs  each  represent  and  warrant to and
covenant with the other that:

     (i) each party is duly organized and validly existing under the laws of the
     jurisdiction of its  organization or  incorporation  and, if relevant under
     such laws, in good standing;

     (ii)  this  Master  Agreement  and each  Trade  Supplement  has  been  duly
     authorized,  executed and delivered by such party and constitutes its valid
     and  legally  binding   obligation,   enforceable  against  such  party  in
     accordance   with   its   terms   (subject   to   applicable    bankruptcy,
     reorganization, insolvency, moratorium or similar laws affecting creditors'
     rights generally and subject, as to enforceability, to equitable principles
     of general  application  (regardless of whether  enforcement is sought in a
     proceeding in equity or at law));

     (iii) the  execution  and delivery of this Master  Agreement and each Trade
     Supplement  by  such  party  does  not,  and the  performance  by it of its
     obligations  hereunder  will not,  violate,  conflict  with or constitute a
     breach under any law applicable to it, any provision of its  constitutional
     documents, any order or judgment of any court or other agency of government
     applicable  to it or any  agreement or  instrument  to which it is party or
     which is binding on any of its  properties or any of its internal  policies
     or procedures;

     (iv) all  governmental  and other  consents  that are required to have been
     obtained  by it with  respect  to this  Master  Agreement  and  each  Trade
     Supplement  have been  obtained  and are in full  force and  effect and all
     conditions of any such consents have been complied with;

     (v) no Event of Default or, to its knowledge,  no Early  Termination  Event
     with  respect to it has  occurred  and is  continuing  and no such event or
     circumstance would occur as a result of its entering into or performing its
     obligations under this Master Agreement;

     (vi) there is not pending or, to its knowledge,  threatened  against it any
     action,  suit or  proceeding  at law or in  equity  or  before  any  court,
     tribunal,

<PAGE>
                                       15


     governmental  body,  agency or official or any arbitrator that is likely to
     affect the legality,  validity or enforceability  against it of this Master
     Agreement  or its  ability to perform  its  obligations  under this  Master
     Agreement; and

     (vii) it is an  "eligible  contract  participant,"  as  defined in the U.S.
     Commodity  Exchange  Act,  as  amended,  and is  entering  into this Master
     Agreement  hereunder  as  principal  and not for the  benefit  of any third
     party.

     (b) In addition to the foregoing,  the Company  represents and warrants to,
and  covenants  with,  Goldman Sachs that (i) as of the date hereof and (ii) for
the period from the Time of the Order for each  Transaction  until the time that
each  party  has  fully  performed  all of its  obligations  under  the  related
Transaction:

     (i) the Company is in compliance with its reporting  obligations  under the
     Exchange Act and its most recent Annual Report on Form 10-K,  together with
     all reports subsequently filed by the Company pursuant to the Exchange Act,
     taken  together  and as  amended  and  supplemented  to the  date  of  this
     representation,  do not contain any untrue  statement of a material fact or
     omit any material fact  required to be stated  therein or necessary to make
     the statements  therein,  in the light of the  circumstances  in which they
     were made, not misleading;

     (ii) the entering into of each  Transaction  will not violate Rule 13e-1 or
     Rule  13e-4  under the  Exchange  Act;  (iii) it is not  entering  into any
     Transaction  on the  basis  of any  material  non-public  information  with
     respect to the Underlying  Securities or in anticipation  of, in connection
     with, or to facilitate,  a distribution  of its  securities,  a self tender
     offer or a third-party tender offer;

     (iv) it is not entering into any Transaction to create, and will not engage
     in any other  securities or derivative  transaction  to create,  a false or
     misleading   appearance  of  active  trading  or  market  activity  in  the
     Underlying Securities (or any security convertible into or exchangeable for
     the Underlying  Securities),  or which would otherwise violate the Exchange
     Act;

     (v) each Transaction is being entered into pursuant to a publicly disclosed
     share  buy-back  program and its Board of Directors has approved the use of
     an  accelerated  share  repurchase  program  to effect  the share  buy-back
     program;

     (vi) it is acting for its own  account,  and is capable of and has made its
     own independent  decisions to enter into each Transaction and as to whether
     such  Transaction  is  appropriate  or  proper  for it  based  upon its own
     judgment and upon advice from such advisers (including, without limitation,
     legal,  tax and accounting) as it has deemed  necessary,  including  advice
     from its tax advisor regarding the tax implications of each Transaction. No
     communication (written or oral) received from Goldman Sachs shall be deemed
     to be an  assurance  or  guarantee  as  to  the  expected  results  of  any
     Transaction.  In particular Goldman Sachs is not making any representations
     or warranties with respect to

<PAGE>
                                       16


     the treatment of any  Transaction  under EITF 00-19 (or any successor issue
     statement) or under FASB's Equities & Liabilities Project;

     (vii) it has been given the opportunity to obtain  information from Goldman
     Sachs concerning the terms and conditions of each Transaction  necessary in
     order  for it to  evaluate  the  merits  and  risks  of  such  Transaction.
     Notwithstanding  the  foregoing,  it is not  relying  on any  communication
     (written  or  oral)  of  Goldman  Sachs  as  investment   advice  or  as  a
     recommendation  to enter into any  Transaction;  it being  understood  that
     information  and  explanations  related  to the terms and  conditions  of a
     Transaction are made incidental to Goldman Sachs' business and shall not be
     considered investment advice or a recommendation to enter any Transaction;

     (viii)  Goldman  Sachs is not acting as a fiduciary for or an adviser to it
     in respect of any Transaction;

     (ix) (A) the Underlying Securities or securities that are convertible into,
     or exchangeable or exercisable for Underlying Securities are not subject to
     a  "restricted  period" as such term is defined in Regulation M and (B) the
     Company (or any "affiliated purchaser" as defined in Rule 10b-18) shall not
     purchase any  Underlying  Securities,  or securities  that are  convertible
     into, or exchangeable or exercisable  for the Underlying  Securities  other
     than in transactions effected through Goldman Sachs;

     (x) the information concerning the total number of shares of the Underlying
     Securities or securities  that are  convertible  into, or  exchangeable  or
     exercisable for Underlying  Securities,  purchased by or for the Company or
     any of its  affiliated  purchasers  during  the four  full  calendar  weeks
     immediately  preceding the  commencement of any Valuation  Period,  will be
     complete and correct in all respects;

     (xi) it has not, and during any Valuation  Period (as extended  pursuant to
     the  provisions of Section 3 and/or  Section 5 herein) will not, enter into
     agreements similar to the Transactions described herein where the valuation
     period in such other  transaction  will overlap at any time (including as a
     result of extensions in such  valuation  period as provided in the relevant
     agreements)  with  any  Valuation  Period  (as  extended  pursuant  to  the
     provisions  of  Section  3 and/or  Section  5  herein)  under  this  Master
     Agreement.  In the event  that the  valuation  period in any other  similar
     transaction  overlaps with a Valuation  Period as a result of any extension
     made  pursuant  to Section 3 and/or  Section 5 herein,  the  Company  shall
     promptly amend such transaction to avoid any such overlap; and

     (xii) Upon entering into each  Transaction  the Company  covenants  that it
     will immediately retire the number of shares of the Underlying  Security in
     the  relevant  Portfolio  purchased by it in  connection  with the relevant
     Transaction  from an entity  affiliated  with Goldman Sachs.


<PAGE>
                                       17


7.       No Event of Default or Early Termination Event

         Each obligation of a party under this Master Agreement to make a
payment or deliver Underlying Securities is subject to the condition precedent
that no Event of Default or Early Termination Event (or event that, with the
lapse of time or the giving of notice or both, would become an Event of
Default), in each case by or with respect to the other party, has occurred and
is continuing. Upon the occurrence of an Event of Default or Early Termination
Event, the provisions of Sections 9, 10 and 11 shall govern.

8.       Accelerated Expiration

         Upon the occurrence of a Merger Event or a Nationalization, with
respect to that portion of any consideration received for the Underlying
Securities that consists of cash, Goldman Sachs may, in its discretion, upon one
Business Day's notice to the Company, terminate and settle (effective on the
Merger Date, or in the case of a Nationalization, the date of the first public
announcement of a firm intention to nationalize as determined by Goldman Sachs)
all (but not less than all) of the portion of the Portfolio represented by the
cash consideration. For the purpose of determining such portion, consideration
for Underlying Securities upon a Merger Event when a holder of Underlying
Securities may elect the type of merger consideration received following a
Merger Event shall be deemed cash consideration to the fullest extent possible.
In exercising such right, Goldman Sachs shall have the rights and obligations of
the Non-Defaulting Party and the Company shall have the rights and obligations
of the Defaulting Party, each as set forth in Section 11(b) through Section
11(e) except that the Early Termination Amount shall only be payable in cash as
provided in Section 11 with the proviso that the penultimate sentence in Section
11(c) shall not apply in the case of an early termination pursuant to this
section.

9.       Termination

(a) If any of the following events (each an "Early Termination Event") shall
occur, then a party shall have the right to terminate and settle this Master
Agreement by providing written notice of such election to the Affected Party.
The date of such notice shall be the "Early Termination Date". The party
exercising its termination rights pursuant to this Section 9 shall have the
rights and obligations of the Non-Defaulting Party and the other party shall
have the rights and obligations of the Defaulting Party, each as set forth in
Section 11(b) through Section 11(e):

     (i) the price of the  Underlying  Securities  on the  Exchange  at any time
     falls  below the  Termination  Price (as  specified  in the  related  Trade
     Supplement)  provided  (for the  avoidance  of doubt  only) that such Early
     Termination  Event shall be an Early Termination Event only with respect to
     the Transaction  documented in such related Trade Supplement.  For purposes
     of this paragraph, the Company shall be the "Affected Party";

     (ii) the unsecured and unsubordinated  long-term obligations of the Company
     (which  will be the  "Affected  Party")  are  rated  either  below  "B+" by

<PAGE>
                                       18


     Standard  & Poor's  Rating  Services  or below  "B2" by  Moody's  Investors
     Services, Inc. (or their successors);

     (iii) the  occurrence of a or a  Nationalization  (effective on the date of
     the  first  public  announcement  of a firm  intention  to  nationalize  as
     determined by the Calculation  Agent) in respect of which the consideration
     received for the  Underlying  Securities  does not consist of cash. For the
     avoidance  of doubt,  in the event  that cash and other  consideration  are
     received for the Underlying Securities,  this Early Termination Event shall
     only apply with  respect to the portion of the  Portfolio  remaining  after
     giving  effect  to the  calculations  pursuant  to  Section  8 this  Master
     Agreement.  For  purposes  of this  paragraph,  the  Company  shall  be the
     "Affected Party";

     (iv) the Underlying  Securities  cease to be listed or quoted by any of the
     New York Stock  Exchange,  Inc.,  the American Stock Exchange or The Nasdaq
     National  Market (or their  respective  successors) and are not immediately
     re-listed (as  determined by the  Calculation  Agent) for any reason (other
     than a Merger Event). For purposes of this paragraph,  the Company shall be
     the "Affected Party"; or

     (v) it becomes  unlawful to perform for the Company or Goldman  Sachs (such
     party to be the "Affected Party") any absolute or contingent  obligation to
     make a payment or  delivery  or to receive a payment or delivery in respect
     of this Master Agreement or to comply with any other material  provision of
     this Master Agreement, due to the adoption of, or any change in, applicable
     law after the date on which this Master  Agreement is entered  into, or due
     to the promulgation of, or any change in, the  interpretation by any court,
     tribunal  or  regulatory  authority  with  competent  jurisdiction  of  any
     applicable law after such date.

     (b) The Company shall have the right to terminate this Master  Agreement at
any time  after the  Termination  Date by  providing  written  notice to Goldman
Sachs.

10.      Default

     If any of the  following  events (each an "Event of  Default")  shall occur
with respect to a party to this Master Agreement (the "Defaulting  Party"),  the
party which is not in default (the "Non-Defaulting Party") shall have the rights
set forth in Section 11(a) through Section 11(e):

     (i) the  Defaulting  Party fails to perform any  obligation  required to be
     performed under this Master Agreement or under any other agreement  between
     the Company and Goldman Sachs or its  affiliated  entities and such failure
     is not cured within one (1) Exchange  Business Day after  receipt of notice
     thereof;

     (ii) the Defaulting Party repudiates any of its obligations hereunder;

          (iii)  a  party  or any  guarantor  of such  Defaulting  Party  (i) is
          dissolved  (other than pursuant to a  consolidation,  amalgamation  or
          merger);  (ii)  becomes  bankrupt,  insolvent or fails or is unable or
          admits in writing  its  inability  generally  to pay its debts as they
          become  due;  (iii)  makes  a  general   assignment,   arrangement  or

<PAGE>
                                       19


          composition with or for the benefit of its creditors;  (iv) institutes
          or has  instituted  against  it a  proceeding  seeking a  judgment  of
          insolvency or  bankruptcy or any other relief under any  bankruptcy or
          insolvency law or other similar law affecting  creditors' rights, or a
          petition is presented for its winding-up or  liquidation,  and, in the
          case of any  such  proceeding  or  petition  instituted  or  presented
          against it, such  proceeding  or petition (A) results in a judgment of
          insolvency  or  bankruptcy  or the entry of an order for relief or the
          making of an order for its  winding-up  or  liquidation  or (B) is not
          dismissed,  discharged,  stayed  or  restrained  in each  case  within
          fifteen (15) days of the institution or presentation  thereof; (v) has
          a  resolution  passed  for  its  winding-up,  official  management  or
          liquidation  (other than pursuant to a consolidation,  amalgamation or
          merger);  (vi)  seeks or  becomes  subject  to the  appointment  of an
          administrator, provisional liquidator, conservator, receiver, trustee,
          custodian or other similar official for it or for all or substantially
          all it assets;  (vii) has a secured  party take  possession  of all or
          substantially  all  of  its  assets  or  has  a  distress,  execution,
          attachment,  sequestration or other legal process levied,  enforced or
          sued on or  against  all or  substantially  all its  assets  and  such
          secured  party  maintains  possession,  or  any  such  process  is not
          dismissed,  discharged,  stayed or  restrained,  in each  case  within
          fifteen (15) days thereafter; (viii) causes or is subject to any event
          with  respect  to  it  which,   under  the  applicable   laws  of  any
          jurisdiction,  has an analogous  effect to any of the events specified
          in  clause  (i) to (vii)  (inclusive);  or (ix)  takes  any  action in
          furtherance  of,  or  indicating  its  consent  to,  approval  of,  or
          acquiescence in, any of the foregoing acts;

          (iv) a representation  made or repeated or deemed to have been made or
          repeated by a party proves to have been incorrect or misleading in any
          material  respect when made or repeated or deemed to have been made or
          repeated; or

          (v) a default, event of default or other similar condition or event in
          respect  of the  Defaulting  Party  under  one or more  agreements  or
          instruments  relating to  indebtedness  of the Defaulting  Party in an
          aggregate  amount in excess of $50,000,000  which has resulted in such
          indebtedness  becoming due and payable before it would  otherwise have
          been  due  and  payable  shall  have  occurred;  or a  default  by the
          Defaulting  Party  in  making  one or more  payments  on the due  date
          thereof in an  aggregate  amount in excess of  $50,000,000  under such
          agreements  or  instruments  (after  giving  effect to any  applicable
          notice requirement or grace period) shall have occurred.

11.      Remedies

     (a) Upon the occurrence of an Event of Default,  the  Non-Defaulting  Party
may by written notice to the Defaulting Party sent at any time while an Event of
Default is continuing and  specifying  the Event of Default,  elect to terminate
and settle this Master  Agreement in accordance with this Section 11 on the date
specified  in  (which  shall  be no  later  than 20 days  after  receipt  by the
Defaulting  Party of the  notice)and no earlier than the date of the notice (the
"Default Termination Date").
<PAGE>
                                       20


     (b) If a Default  Termination  Date or Early  Termination Date (as the case
may be) occurs,  (i) the  Non-Defaulting  Party shall  calculate the Replacement
Value and shall give the other party Company  written notice thereof  (including
reasonable detail of the calculation  thereof) and (ii) the Non-Defaulting Party
shall calculate the Default  Termination  Amount or Early Termination Amount (as
the  case  may be)  payable  by one  party  to the  other  and  shall as soon as
reasonably practicable give to the Defaulting Party a statement thereof.

     (c) The Default Termination Amount or Early Termination Amount (as the case
may be) shall be payable on the Exchange  Business Day immediately  after notice
of its  amount is given to the  Defaulting  Party  and,  unless  payable  by the
Non-Defaulting  Party,  shall be paid in cash (subject to the next  sentence) in
immediately  available funds together with interest thereon from (and including)
the Default  Termination Date or Early  Termination Date (as the case may be) to
(but  excluding)  the date of payment at the rate,  to the extent  permitted  by
applicable  law,  of two (2) per cent per  annum  above  Morgan  Guaranty  Trust
Company's  prime (or base)  commercial loan rate for short term borrowings as in
effect  from time to time.  Except in the case of an early  termination  of this
Master Agreement pursuant to Section 8 hereof, the Company shall have the right,
in its sole  discretion  and by giving  notice to Goldman  Sachs  within one (1)
Exchange  Business  Day after the  notice  fixing an Early  Termination  Date or
Default Termination Date (as the case may be) is effective,  to make the payment
of the Default Termination Amount or the Early Termination Amount (in each case,
including any interest  thereon) by electing to Share Settle the  transaction in
accordance  with the  terms and  conditions  for Share  Settlement  herein.  The
parties intend that this Master Agreement be a "securities  contract" as defined
in Section 741(11) of the U.S. Bankruptcy Code.

     (d) The  parties  hereby  agree  that the  amounts  recoverable  under this
Section 11 are a reasonable pre-estimate of loss and not a penalty. Such amounts
are payable for the loss of bargain.

     (e) The  Non-Defaulting  Party's  rights  under  this  Section  11 shall be
cumulative  and in addition to, and not in limitation or exclusion of, any other
rights which the Non-Defaulting Party may have (whether by agreement,  operation
of law or otherwise) against the Defaulting Party.

12.      Assignment and Transfer

     This  Master  Agreement  and  any  Transaction(s)  may not be  assigned  or
transferred  by either  party  hereto  without the  consent of the other  party,
except  that  Goldman  Sachs  may  transfer   this  Master   Agreement  and  any
Transaction(s)  without the consent of the Company pursuant to an assignment and
delegation of all of Goldman Sachs' rights and obligations hereunder in whatever
form Goldman Sachs determines may be appropriate to a partnership,  corporation,
trust  or  other   organization  in  whatever  form  that  succeeds  to  all  or
substantially  all of Goldman  Sachs'  assets and business and that assumes such
obligations  by contract,  operation of law or  otherwise  and provided  that an
adverse tax event for the Company  would not result other than with respect to a
transfer  to an entity  that the  income of which is  subject to tax only in the
United  States.   Upon  any  such  delegation  and  assumption  or  transfer  of
obligations,  Goldman Sachs shall be relieved of and fully  discharged  from all
obligations  hereunder,  whether  such  obligations  arose  before or after such
delegation and assumption.
<PAGE>
                                       21


13.      Additional Provisions

     (a) No interest in Option  Securities or Hedge.  This Master  Agreement and
each Transaction entered into hereunder do not create any obligation on the part
of Goldman Sachs or any of its affiliates to invest in the Underlying Securities
or to otherwise  hedge its  obligations  hereunder.  To the extent that any such
investment  or hedge is made by  Goldman  Sachs or any of its  affiliates,  such
investment  or hedge will be on its behalf only,  and each of Goldman  Sachs and
the Company acknowledges that this Master Agreement and each Transaction entered
into  hereunder  will not create  for the  Company  either a direct or  indirect
interest in the Underlying Securities or any such hedge or investment.

     (b) No  Collateral.  Goldman  Sachs and the Company  acknowledge  that with
respect to this Master Agreement and each Transaction entered into hereunder the
obligations  of the  Company  are  not  secured  by any  collateral  that  would
otherwise secure the obligations of the Company to Goldman Sachs under any other
agreement.

     (c) Status of Claims in Bankruptcy.  Goldman Sachs  acknowledges and agrees
that this Master Agreement and each Trade Supplement  entered into hereunder are
not intended to, and do not,  convey to Goldman Sachs rights with respect to the
Transactions  hereunder  that  are  senior  to  the  claims  of  holders  of the
Underlying  Securities in any U.S.  bankruptcy  proceedings  with respect to the
Company.

14.      Governing Law

     This Master  Agreement and each related Trade  Supplement shall be governed
by the laws of the State of New York,  without  reference  to its choice of laws
rules. 15. Notices

     Notices  under this Master  Agreement may be made by phone and confirmed in
writing or by facsimile to the addresses or facsimile numbers show below:

         To the Company:

         Attn:  David Bronson, Chief Financial Officer
         4345 Southpoint Boulevard
         Jacksonville, Florida 32216
         Phone: (904) 332-4172
         Fax: (904) 332-3205

         with a copy to:

         Willkie Farr & Gallagher
         787 Seventh Avenue
         New York, NY 10019
         Attn: William J. Grant, Jr.
         Phone:  (212) 728-8223
         Fax:  (212) 728-9223
<PAGE>
                                       22


         To Goldman Sachs:

         Goldman, Sachs & Co.
         One New York Plaza
         New York, NY 10004
         Attn:  James Ziperski
         Phone:  (212) 902-8557
         Fax:  (212) 346-2126

         with a copy to:

         Goldman, Sachs & Co.
         85 Broad Street
         New York, NY 10004
         Attn:  Compliance Control Room
         Phone:  (212) 902-1511
         Fax:(212) 902-4140

16.      Calculations

     The Calculation Agent shall, in good faith, make all calculations  required
by this Master Agreement.

17.      Arbitration

     (a) Arbitration is final and binding on the Company and Goldman Sachs

     (b) The Company and Goldman  Sachs are waiving their right to seek remedies
in court, including the right to a jury trial.

     (c) Pre-arbitration  discovery is generally more limited than and different
from court proceedings.

     (d) The  arbitrator's  award is not required to include factual findings or
legal  reasoning  and any  party's  right to appeal or to seek  modification  of
rulings by the arbitrators is strictly limited.

     (e)  The  panel  of  arbitrators  will  typically  include  a  minority  of
arbitrators who were or are affiliated with the securities industry.

     Any controversy between or among Goldman Sachs or its affiliates, or any of
its or their partners,  directors, agents or employees, on the one hand, and the
Company or its agents  and  affiliates,  on the other  hand,  arising  out of or
relating to this Master  Agreement or any  transaction  entered into  hereunder,
shall be settled by  arbitration,  in accordance with the then current rules of,
at the Company's election,  the American Arbitration  Association ("AAA") or the
Board of Arbitration of the New York Stock  Exchange,  Inc.  ("BANYSE").  If the
Company  does not make such  election by  registered  mail  addressed to Goldman
Sachs within five (5) Exchange Business Days after receipt of notification from

<PAGE>
                                       23


Goldman Sachs requesting such election, then the Company irrevocably authorizes
Goldman Sachs to make such election on behalf of the Company. The award of the
arbitrators shall be final, and judgment upon the award rendered may be entered
in any court, state or Federal, having jurisdiction.

     Neither  party  shall  bring  a  putative  or  certified  class  action  to
arbitration,  nor seek to enforce any pre-dispute  arbitration agreement against
any person who has initiated in court a putative  class action;  who is a member
of a  putative  class who has not opted out of the  class  with  respect  to any
claims encompassed by the putative class action until:

     (i) the class certification is denied;

     (ii) the class is decertified; or

     (iii) the party is excluded from the class by the court.

Such  forbearance  to enforce an agreement to arbitrate  shall not  constitute a
waiver of any rights  under this Master  Agreement  except to the extent  stated
herein.



<PAGE>
                                       24




         Company hereby agrees (a) to check this Master Agreement carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Goldman Sachs) correctly sets forth the terms of the agreement
between Goldman Sachs and Company with respect to this Master Agreement and each
Transaction thereunder, by manually signing this Master Agreement or this page
thereof as evidence of agreement to such terms and providing the other
information requested herein and immediately returning an executed copy to
Equity Derivatives Documentation Department, Facsimile No. 212-428-1980/1983. A
pre-dispute arbitration clause is contained in Section 17 hereof.

                                  Yours truly,

                                  GOLDMAN, SACHS & CO.




                                  By:   /s/ David Ryan, Managing Director
                                        _________________________________
                                        Authorized Signatory




Accepted and agreed this 28th
day of  August,  2002

PSS WORLD MEDICAL, INC.




By: /s/ David D. Klarner
    ____________________________
    Vice President and Treasurer


<PAGE>



                                   Appendix A

                                TRADE SUPPLEMENT

To:                 PSS World Medical, Inc.
                    4345 Southpoint Boulevard
                    Jacksonville, FL 32216

From:               Goldman, Sachs & Co.

Subject:            Accelerated Share Repurchase Transaction

Ref. No:

Date:


--------------------------------------------------------------------------------

     The purpose of this Trade Supplement is to confirm the terms and conditions
of the Transaction  entered into between Goldman,  Sachs & Co. ("Goldman Sachs")
and PSS WORLD MEDICAL, INC. ("Company") (together, the "Contracting Parties") on
the Trade Date  specified  below.  This Trade  Supplement is a binding  contract
between  Goldman  Sachs and the  Company as of the  relevant  Trade Date for the
Transaction referenced below.

     The definitions and provisions  contained in the Master Agreement specified
below  are  incorporated  into  this  Trade  Supplement.  In  the  event  of any
inconsistency   between  those   definitions   and  provisions  and  this  Trade
Supplement, this Trade Supplement will govern.

     1. This Trade Supplement supplements,  forms part of, and is subject to the
Accelerated  Share Repurchase  Master Agreement dated as of August 28, 2002 (the
"Master Agreement") between the Contracting Parties, as amended and supplemented
from time to time. All provisions  contained in the Master Agreement govern this
Trade Supplement except as expressly modified below.

     2. The terms of the Transaction to which this Trade Supplement  relates are
as follows:


<TABLE>
<CAPTION>

<S>                                         <C>
Trade Date:

Fee:

Capped Settlement Amount:           [$[            ] U.S. Dollars.]1 [Not Applicable]2

Floored Settlement Amount:          [$[            ] U.S. Dollars.]3 [Not Applicable]4

Notional Amount:                     $[            ] U.S. Dollars.



                                      A-1
<PAGE>

Portfolio:                            [            ] shares of the Underlying Security.

</TABLE>

Termination Date:

Termination Price:

Capped Number:

     3. Company represents and warrants to Goldman Sachs that set forth below is
the total number of Underlying  Securities or  securities  that are  convertible
into, or exchangeable or exercisable for, Underlying  Securities purchased by or
for the Company or any of its affiliated  purchasers in Rule 10b-18 purchases of
blocks (as defined in Rule 10b-18 under the Exchange Act ("Rule 10b-18")) during
the four  full  calendar  weeks  immediately  preceding  the date of this  Trade
Supplement:


                    Monday's Date       Friday's Date           Share Number

             Week 4:

             Week 3:

             Week 2:

             Week 1:


     The Company  understands  that Goldman Sachs will use this  information  in
calculating trading volume for the purposes of Rule 10b-18.



                                      A-2
<PAGE>





     Company  hereby  agrees (a) to check this Trade  Supplement  carefully  and
immediately  upon  receipt  so that  errors  or  discrepancies  can be  promptly
identified  and  rectified  and (b) to confirm that the  foregoing (in the exact
form provided by Goldman Sachs)  correctly sets forth the terms of the agreement
between Goldman Sachs and Company with respect to this Transaction,  by manually
signing this Trade  Supplement  or this page thereof as evidence of agreement to
such terms and providing the other information  requested herein and immediately
returning  an  executed  copy to Equity  Derivatives  Documentation  Department,
facsimile No. 212-428-1980/83.


                              Yours sincerely,
                              GOLDMAN, SACHS & CO.



                              By:
                                   ___________________________________
                                   Authorized Signatory

Agreed and Accepted
By: PSS WORLD MEDICAL, INC.

By:
     ___________________________________
     Name:  David D. Klarner
     Title: Vice President and Treasurer


                                      A-3
<PAGE>

</TEXT>
</DOCUMENT>
