8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 8, 2004

PSS WORLD MEDICAL, INC.

(Exact Name of Registrant as Specified in Charter)

Florida	0-23832	59-2280364
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4345 Southpoint Blvd., Jacksonville, Florida 32216

(Addresses of Principal Executive Offices, including Zip Code)

(904) 332-3000

(Registrant’s Telephone Number, including Area Code)

Item 5. Other Events

PSS World Medical, Inc. (the “Company”) herewith files a copy of the Purchase Agreement, dated as of March 2, 2004, among the Company, Goldman, Sachs & Co., Banc of America Securities LLC and Lehman Brothers Inc. (collectively, the “Purchasers”); the Registration Rights Agreement, dated as of March 8, 2004, among the Company and the Purchasers; the Indenture, dated as of March 8, 2004, between the Company and Wachovia Bank, N.A. as Trustee; the Form of 2.25% Convertible Senior Note due 2024; and the Third Amendment to Credit Agreement, dated as of March 1, 2004, among the Company, each of the Company’s subsidiaries named therein, the Lenders party to the amendment, and Bank of America, N.A., as agent for the Lenders. All of these agreements were entered into in connection with the Company’s unregistered offering of $150.0 million principal amount of 2.25% convertible senior notes due 2024.

Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits.

(c) Exhibits.

The following exhibits are filed herewith:

Exhibit No.	Description
4.1	Registration Rights Agreement, dated as of March 8, 2004, by and among the Company, Goldman, Sachs & Co., Banc of America Securities LLC and Lehman Brothers Inc.
4.2	Indenture, dated as of March 8, 2004, by and between the Company and Wachovia Bank, N.A., as Trustee.
4.3	Form of 2.25% Convertible Senior Note due 2024 (included in Exhibit 4.2 filed herewith).
10.1	Third Amendment to Credit Agreement, dated as of March 1, 2004, among the Company, each of the Company’s subsidiaries therein named, the Lenders party to the amendment, and Bank of America, N.A., as agent for the Lenders.
99.1	Purchase Agreement, dated as of March 2, 2004, by and among the Company, Goldman, Sachs & Co., Banc of America Securities LLC and Lehman Brothers Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PSS WORLD MEDICAL, INC.

/s/    DAVID M. BRONSON        

David M. Bronson

Executive Vice President and

Chief Financial Officer

Date: March 9, 2004

INDEX TO EXHIBITS

Exhibit No.	Description
4.1	Registration Rights Agreement, dated as of March 8, 2004, by and among the Company, Goldman, Sachs & Co., Banc of America Securities LLC and Lehman Brothers Inc.
4.2	Indenture, dated as of March 8, 2004, by and between the Company and Wachovia Bank, N.A., as Trustee.
4.3	Form of 2.25% Convertible Senior Note due 2024 (included in Exhibit 4.2 filed herewith).
10.1	Third Amendment to Credit Agreement, dated as of March 1, 2004, among the Company, each of the Company’s subsidiaries therein named, the Lenders party to the amendment, and Bank of America, N.A., as agent for the Lenders.
99.1	Purchase Agreement, dated as of March 2, 2004, by and among the Company, Goldman, Sachs & Co., Banc of America Securities LLC and Lehman Brothers Inc.

EX-4.1

EXHIBIT 4.1

Execution

Version

PSS World Medical, Inc.

2.25% Convertible Senior Notes due March 15, 2024

Registration Rights Agreement

March 8, 2004

Goldman, Sachs & Co.,

As representative of the several Purchasers

    named in Schedule I to the Purchase Agreement

c/o Goldman, Sachs & Co.

85 Broad Street

New York, New York 10004

Ladies and Gentlemen:

PSS WORLD MEDICAL, INC., a Florida corporation (the “Company”), proposes to issue and sell to the Purchasers (as defined herein) upon the terms set forth in the Purchase Agreement (as defined herein) its 2.25% Convertible Senior Notes due 2024 (the “Securities”). As an inducement to the Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Purchasers thereunder, the Company agrees with the Purchasers for the benefit of Holders (as defined herein) from time to time of the Registrable Securities (as defined herein) as follows:

1. Definitions.

(a) Capitalized terms used herein without definition shall have the meanings ascribed to them in the Purchase Agreement. As used in this Agreement, the following defined terms shall have the following meanings:

“Affiliate” of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Closing Date” means the First Time of Delivery as defined in the Purchase Agreement.

“Commission” means the United States Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose.

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“Common Stock” means the Company’s common stock, par value $0.01 per share together with any associated preferred share purchase rights.

“DTC” means The Depository Trust Company.

“Effective Date” has the meaning assigned thereto in Section 2(b)(i) hereof.

“Effective Failure” has the meaning assigned thereto in Section 7(b) hereof.

“Effectiveness Period” has the meaning assigned thereto in Section 2(b)(i) hereof.

“Effective Time” means the time at which the Commission declares the Shelf Registration Statement effective or at which the Shelf Registration Statement otherwise becomes effective.

“Electing Holder” has the meaning assigned thereto in Section 3(a)(iii) hereof.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

“Holder” means any person that is the record owner of Registrable Securities (and includes any person that has a beneficial interest in any Registrable Security in book-entry form).

“Indenture” means the Indenture, dated as of March 8, 2004, between the Company and Wachovia Bank, N.A., as amended and supplemented from time to time in accordance with its terms.

“Liquidated Damages” has the meaning assigned thereto in Section 7(a) hereof.

“Managing Underwriters” means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering, if any, conducted pursuant to Section 6 hereof.

“NASD Rules” means the Rules of the National Association of Securities Dealers, Inc., as amended from time to time.

“Notice and Questionnaire” means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Appendix A hereto.

The term “person” means an individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

“Prospectus” means the prospectus (including, without limitation, any preliminary prospectus, any final prospectus and any prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Securities Act) included in the Shelf Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by the Shelf Registration Statement and by all other amendments and supplements to such prospectus, including all material incorporated by reference in such prospectus and all documents filed after the date of such prospectus by the Company under the Exchange Act and incorporated by reference therein.

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“Purchase Agreement” means the purchase agreement, dated as of March 2, 2004, between the Purchasers and the Company relating to the Securities.

“Purchasers” means the Purchasers named in Schedule I to the Purchase Agreement.

“Registrable Securities” means all or any portion of the Securities issued from time to time under the Indenture in registered form and the shares of Common Stock issuable upon conversion of such Securities; provided, however, that a security ceases to be a Registrable Security when it is no longer a Restricted Security.

“Registration Default” has the meaning assigned thereto in Section 7(a) hereof.

“Restricted Security” means any Security or share of Common Stock issuable upon conversion thereof except any such Security or share of Common Stock that (i) has been effectively registered under the Securities Act and sold in a manner contemplated by the Shelf Registration Statement, (ii) has been transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or is transferable pursuant to paragraph (k) of such Rule 144 (or any successor provision thereto) or (iii) has otherwise been transferred and a new Security or share of Common Stock not subject to transfer restrictions under the Securities Act has been delivered by or on behalf of the Company in accordance with Section 2.1 of the Indenture.

“Rules and Regulations” means the published rules and regulations of the Commission promulgated under the Securities Act or the Exchange Act, as in effect at any relevant time.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Shelf Registration” means a registration effected pursuant to Section 2 hereof.

“Shelf Registration Statement” means a registration statement filed under the Securities Act providing for the registration of, and the sale on a continuous or delayed basis by the Holders of, all of the Registrable Securities pursuant to Rule 415 under the Securities Act and/or any similar rule that may be adopted by the Commission, filed by the Company pursuant to the provisions of Section 2 of this Agreement, including the Prospectus contained therein, any amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

“Suspension Period” has the meaning assigned thereto in Section 2(c) hereof.

“Trust Indenture Act” means the Trust Indenture Act of 1939, or any successor thereto, and the rules, regulations and forms promulgated thereunder, as the same shall be amended from time to time.

The term “underwriter” means any underwriter of Registrable Securities in connection with an offering thereof under a Shelf Registration Statement.

(b) Wherever there is a reference in this Agreement to a percentage of the “principal amount” of Registrable Securities or to a percentage of Registrable Securities, Common Stock shall be treated as representing the principal amount of Securities that was surrendered for conversion or exchange in order to receive such number of shares of Common Stock.

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2. Shelf Registration.

(a) The Company shall, no later than 120 calendar days following the Closing Date, file with the Commission a Shelf Registration Statement relating to the offer and sale of the Registrable Securities by the Holders from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement and, thereafter, shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act no later than 180 calendar days following the Closing Date; provided, however, that the Company may, upon written notice to all Holders, postpone having the Shelf Registration Statement declared effective for a reasonable period not to exceed 90 days if the Company possesses material non-public information, the disclosure of which would have a material adverse effect on the Company and its subsidiaries taken as a whole or if a pending transaction that would be material to the Company and its subsidiaries, taken as a whole, could be materially adversely affected as a result; provided, further, however, that no Holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement or to use the Prospectus forming a part thereof for resales of Registrable Securities unless such Holder is an Electing Holder.

(b) The Company shall use its reasonable best efforts:

(i) to keep the Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by Holders until the earliest of (1) the sale of all Registrable Securities registered under the Shelf Registration Statement; (2) the expiration of the period referred to in Rule 144(k) of the Securities with respect to all Registrable Securities held by Persons that are not Affiliates of the Company; and (3) two years from the date (the “Effective Date”) such Shelf Registration Statement is declared effective (such period being referred to herein as the “Effectiveness Period”);

(ii) after the Effective Time of the Shelf Registration Statement, promptly upon the request of any Holder of Registrable Securities that is not then an Electing Holder, to take any action reasonably necessary to enable such Holder to use the Prospectus forming a part thereof for resales of Registrable Securities, including, without limitation, any action necessary to identify such Holder as a selling securityholder in the Shelf Registration Statement; provided, however, that nothing in this subparagraph shall relieve such Holder of the obligation to return a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(a)(ii) hereof; and

(iii) if at any time the Securities, pursuant to Section 4.2 of the Indenture, are convertible into securities other than Common Stock, to cause, or to cause any successor under the Indenture to cause, such securities to be included in the Shelf Registration Statement no later than the date on which the Securities may then be convertible into such securities.

The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the Effectiveness period if the Company voluntarily takes any action that would result in Holders of Registrable Securities covered thereby not being able to offer and sell any of such Registrable Securities during such period, unless such action is (A) required by applicable law and the Company thereafter promptly complies with the requirements of paragraph 3(j) below or (B) permitted pursuant to Section 2(c) below.

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(c) The Company may suspend the use of the Prospectus for a period not to exceed 30 days in any 90-day period or an aggregate of 90 days in any 12-month period (each, a “Suspension Period”) if the Board of Directors of the Company shall have determined in good faith that because of valid business reasons (not including avoidance of the Company’s obligations hereunder), including the acquisition or divestiture of assets, pending corporate developments and similar events, it is in the best interests of the Company to suspend such use, and prior to suspending such use the Company provides the Holders with written notice of such suspension, which notice need not specify the nature of the event giving rise to such suspension.

3. Registration Procedures. In connection with the Shelf Registration Statement, the following provisions shall apply:

(a) (i) Not less than 30 calendar days prior to the Effective Time of the Shelf Registration Statement, the Company shall mail the Notice and Questionnaire to the Holders of Registrable Securities. No Holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement as of the Effective Time, and no Holder shall be entitled to use the Prospectus forming a part thereof for resales of Registrable Securities until such Holder has returned a completed and signed Notice and Questionnaire to the Company; provided, however, to be included in the Registration Statement as of the Effective Time, Holders of Registrable Securities shall have at least 28 calendar days from the date on which the Notice and Questionnaire is first mailed to such Holders to return a completed and signed Notice and Questionnaire to the Company.

(ii) After the Effective Time of the Shelf Registration Statement, the Company shall, upon the request of any Holder of Registrable Securities that is not then an Electing Holder, promptly send a Notice and Questionnaire to such Holder. From and after the Effective Time of the Shelf Registration Statement, the Company shall (A) as promptly as is practicable after the date a completed and signed Notice and Questionnaire is delivered to the Company, and in any event within ten Business Days after such date, prepare and file with the Commission (x) a supplement to the Prospectus or, if required by applicable law, a post-effective amendment to the Shelf Registration Statement and (y) any other document required by applicable law, so that the Holder delivering such Notice and Questionnaire is named as a selling securityholder in the Shelf Registration Statement and is permitted to deliver the Prospectus to purchasers of such Holder’s Registrable Securities in accordance with applicable law, and (B) if the Company shall file a post-effective amendment to the Shelf Registration Statement, use its reasonable best efforts to cause such post-effective amendment to become effective under the Securities Act as promptly as is practicable; provided, however, that if a Notice and Questionnaire is delivered to the Company during a Suspension Period, the Company shall not be obligated to take the actions set forth in this clause (ii) until the termination of such Suspension Period.

(iii) The term “Electing Holder” shall mean any Holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(a)(i) or 3(a)(ii) hereof.

(b) The Company shall furnish to each Electing Holder, prior to the Effective Time, a copy of the Shelf Registration Statement initially filed with the Commission, and shall furnish to such Holders, prior to the filing thereof with the Commission, copies of each amendment

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thereto and each amendment or supplement, if any, to the Prospectus included therein, and shall use its reasonable best efforts to reflect in each such document, at the Effective Time or when so filed with the Commission, as the case may be, such comments as such Holders and their respective counsel reasonably may propose.

(c) The Company shall promptly take such action as may be necessary so that (i) each of the Shelf Registration Statement and any amendment thereto and the Prospectus forming a part thereof and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case) complies in all material respects with the Securities Act and the Exchange Act and the respective rules and regulations thereunder, (ii) each of the Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) each of the Prospectus forming a part of the Shelf Registration Statement, and any amendment or supplement to such Prospectus, does not at any time during the Effectiveness Period include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(d) The Company shall promptly advise each Electing Holder, and shall confirm such advice in writing if so requested by any such Electing Holder:

(i) when a Shelf Registration Statement and any amendment thereto has been filed with the Commission and when a Shelf Registration Statement or any post-effective amendment thereto has become effective, in each case making a public announcement thereof by release made to Reuters Economic Services and Bloomberg Business News;

(ii) of any request by the Commission for post-effective amendments or supplements to the Shelf Registration Statement or the Prospectus included therein or for additional information;

(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of any proceedings for such purpose;

(iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included in the Shelf Registration Statement for sale in any jurisdiction or the initiation of any proceeding for such purpose; and

(v) subject to the limitations of Section 2(c) above, of the occurrence of any event or the existence of any state of facts that requires the making of any changes in the Shelf Registration Statement or the Prospectus included therein so that, as of such date, such Shelf Registration Statement and Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to such Holders to suspend the use of the Prospectus until the requisite changes have been made).

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(e) The Company shall use its reasonable best efforts to prevent the issuance, and if issued to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Shelf Registration Statement.

(f) The Company shall furnish (i) to each Electing Holder, without charge, at least one copy of the Shelf Registration Statement and all post-effective amendments thereto, including financial statements and schedules and (ii) if such Electing Holder so requests in writing, all reports, other documents and exhibits that are filed with or incorporated by reference in the Shelf Registration Statement (such obligation to be satisfied by publicly available filings with the Commission if the Company is then subject to Section 13 or 15(d) of the Exchange Act).

(g) The Company shall, during the Effectiveness Period, deliver to each Electing Holder, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such Electing Holder may reasonably request; and the Company consents (except during the periods specified in Section 2(c) above or during the continuance of any event or the existence of any state of facts described in Section 3(d)(v) above) to the use of the Prospectus and any amendment or supplement thereto by each of the Electing Holders in connection with the offering and sale of the Registrable Securities covered by the Prospectus and any amendment or supplement thereto during the Effectiveness Period.

(h) Prior to any offering of Registrable Securities pursuant to the Shelf Registration Statement, the Company shall (i) register or qualify or cooperate with the Electing Holders and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or “blue sky” laws of such jurisdictions within the United States as any Electing Holder may reasonably request, (ii) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers and sales in such jurisdictions for so long as may be necessary to enable any Electing Holder or underwriter, if any, to complete its distribution of Registrable Securities pursuant to the Shelf Registration Statement, and (iii) take any and all other actions necessary or advisable to enable the disposition in such jurisdictions of such Registrable Securities; provided, however, that in no event shall the Company be obligated to (A) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to so qualify but for this Section 3(h) or (B) file any general consent to service of process in any jurisdiction where it is not as of the date hereof so subject.

(i) Unless any Registrable Securities shall be in book-entry only form, the Company shall cooperate with the Electing Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to the Shelf Registration Statement, which certificates, if so required by any securities exchange upon which any Registrable Securities are listed, shall be penned, lithographed or engraved, or produced by any combination of such methods, on steel engraved borders, and which certificates shall be free of any restrictive legends and in such permitted denominations and registered in such names as Electing Holders may request in connection with the sale of Registrable Securities pursuant to the Shelf Registration Statement.

(j) Upon the occurrence of any event or the existence of any state of facts contemplated by paragraph 3(d)(v) above, the Company shall promptly prepare a post-effective amendment to any Shelf Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of

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the Registrable Securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Company notifies the Electing Holders of the occurrence of any event or the existence of any state of facts contemplated by paragraph 3(d)(v) above, the Electing Holder shall suspend the use of the Prospectus until the requisite changes to the Prospectus have been made.

(k) Not later than the Effective Time of the Shelf Registration Statement, the Company shall provide a CUSIP number for the Registrable Securities that are debt securities.

(l) The Company shall use its reasonable best efforts to comply with all applicable Rules and Regulations, and to make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after (i) the effective date (as defined in Rule 158(c) under the Securities Act) of the Shelf Registration Statement, (ii) the effective date of each post-effective amendment to the Shelf Registration Statement, and (iii) the date of each filing by the Company with the Commission of an Annual Report on Form 10-K that is incorporated by reference in the Shelf Registration Statement, an earnings statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158).

(m) Not later than the Effective Time of the Shelf Registration Statement, the Company shall cause the Indenture to be qualified under the Trust Indenture Act; in connection with such qualification, the Company shall cooperate with the Trustee under the Indenture and the Holders (as defined in the Indenture) to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and the Company shall execute, and shall use all reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner. In the event that any such amendment or modification referred to in this Section 3(m) involves the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

(n) In the event of an underwritten offering conducted pursuant to Section 6 hereof, the Company shall, if requested, promptly include or incorporate in a Prospectus supplement or post-effective amendment to the Shelf Registration Statement such information as the Managing Underwriters reasonably agree should be included therein and to which the Company does not reasonably object and shall make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after it is notified of the matters to be included or incorporated in such Prospectus supplement or post-effective amendment.

(o) The Company shall enter into such customary agreements (including an underwriting agreement in customary form in the event of an underwritten offering conducted pursuant to Section 6 hereof) and take all other appropriate action in order to expedite and facilitate the registration and disposition of the Registrable Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures substantially identical to those set forth in Section 5 hereof with respect to all parties to be indemnified pursuant to Section 5 hereof.

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(p) The Company shall:

(i)(A) make reasonably available for inspection by the Electing Holders, any underwriter participating in any disposition pursuant to the Shelf Registration Statement, and any attorney, accountant or other agent retained by such Electing Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and (B) cause the Company’s officers, directors and employees to supply all information reasonably requested by such Electing Holders or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as is customary for similar due diligence examinations; provided, however, that all records, information and documents that are designated in writing by the Company, in good faith, as confidential shall be kept confidential by such Electing Holders and any such underwriter, attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such records, information or documents become available to the public generally or through a third party without an accompanying obligation of confidentiality; and provided further that, if the foregoing inspection and information gathering would otherwise disrupt the Company’s conduct of its business, such inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of the Electing Holders and the other parties entitled thereto by one counsel designated by and on behalf of the Electing Holders and other parties;

(ii) in connection with any underwritten offering conducted pursuant to Section 6 hereof, make such representations and warranties to the Electing Holders participating in such underwritten offering and to the Managing Underwriters, in form, substance and scope as are customarily made by the Company to underwriters in primary underwritten offerings of equity and convertible debt securities and covering matters set forth in the Purchase Agreement, it being understood and agreed that representations and warranties comparable to those contemplated by the Purchase Agreement, as amended to reflect a registered offering, shall be satisfactory;

(iii) in connection with any underwritten offering conducted pursuant to Section 6 hereof, obtain opinions of counsel to the Company (which counsel and opinions in form, scope and substance shall be reasonably satisfactory to the Managing Underwriters, it being understood and agreed that opinions comparable to those contemplated by the Purchase Agreement, as amended to reflect a registered offering, shall be satisfactory) addressed to each Electing Holder participating in such underwritten offering and the underwriters, covering such matters as are customarily covered in opinions requested in primary underwritten offerings of equity and convertible debt securities (it being agreed that the matters to be covered by such opinions shall include opinions in form, scope and substance comparable to the opinions contemplated by the Purchase Agreement, as amended to reflect a registered offering, as of the date of the opinion and as of the Effective Time of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from the Shelf Registration Statement and the Prospectus, including the documents incorporated by reference therein, of an untrue statement of a material fact or the omission of a material fact required to be stated therein or necessary to make the statements therein not misleading);

(iv) in connection with any underwritten offering conducted pursuant to Section 6 hereof, obtain “cold comfort” letters and updates thereof from the independent public accountants of the Company (and, if necessary, from the independent public accountants of any subsidiary of the Company or of any business acquired by the

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Company for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each Electing Holder participating in such underwritten offering (if such Electing Holder has provided such letter, representations or documentation, if any, required for such cold comfort letter to be so addressed) and the underwriters, in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with primary underwritten offerings by the Company of equity and convertible debt securities, it being understood and agreed that “cold comfort” letters comparable to those contemplated by the Purchase Agreement, as amended to reflect a registered offering, shall be satisfactory;

(v) in connection with any underwritten offering conducted pursuant to Section 6 hereof, deliver such documents and certificates as may be reasonably requested by any Electing Holders participating in such underwritten offering and the Managing Underwriters, if any, including, without limitation, certificates to evidence compliance with Section 3(j) hereof and with any conditions contained in the underwriting agreement or other agreements entered into by the Company.

(q) The Company will use its reasonable best efforts to cause the Common Stock issuable upon conversion of the Securities to be quoted on The Nasdaq National Market System or other stock exchange or trading system on which the Common Stock primarily trades on or prior to the Effective Time of the Shelf Registration Statement hereunder.

(r) In the event that any broker-dealer registered under the Exchange Act shall be an “affiliate” (as defined in Rule 2720(b)(1) of the NASD Rules (or any successor provision thereto)) of the Company or has a “conflict of interest” (as defined in Rule 2720(b)(7) of the NASD Rules (or any successor provision thereto)) and such broker-dealer shall underwrite, participate as a member of an underwriting syndicate or selling group or assist in the distribution of any Registrable Securities covered by the Shelf Registration Statement, whether as a Holder of such Registrable Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company shall assist such broker-dealer in complying with the requirements of the NASD Rules, including, without limitation, by (A) engaging a “qualified independent underwriter” (as defined in Rule 2720(b)(15) of the NASD Rules (or any successor provision thereto)) to participate in the preparation of the registration statement relating to such Registrable Securities, to exercise usual standards of due diligence in respect thereto and to recommend the public offering price of such Registrable Securities, (B) indemnifying such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof, and (C) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the NASD Rules.

(s) The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration, offering and sale of the Registrable Securities covered by the Shelf Registration Statement contemplated hereby.

4. Registration Expenses. Except as otherwise provided in Section 3, the Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 2, 3 and 6 hereof and shall bear or reimburse the Electing Holders for the fees and disbursements of a single counsel selected by a plurality of all Electing Holders who own an aggregate of not less than 25% of the Registrable Securities covered by the Shelf Registration Statement to act as counsel therefore in connection therewith. Each Electing

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Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Electing Holder’s Registrable Securities pursuant to the Shelf Registration Statement.

5. Indemnification and Contribution.

(a) Indemnification by the Company. Upon the registration of the Registrable Securities pursuant to Section 2 hereof, the Company shall indemnify and hold harmless each Electing Holder and each underwriter, selling agent or other securities professional, if any, which facilitates the disposition of Registrable Securities, and each of their respective officers and directors and each person who controls such Electing Holder, underwriter, selling agent or other securities professional within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being sometimes referred to as an “Indemnified Person”) against any losses, claims, damages or liabilities, joint or several, to which such Indemnified Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement under which such Registrable Securities are to be registered under the Securities Act, or any Prospectus contained therein or furnished by the Company to any Indemnified Person, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company hereby agrees to reimburse such Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable to any such Indemnified Person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Shelf Registration Statement or Prospectus, or amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by such Indemnified Person expressly for use therein.

(b) Indemnification by the Electing Holders and any Agents and Underwriters. Each Electing Holder agrees, as a consequence of the inclusion of any of such Electing Holder’s Registrable Securities in such Shelf Registration Statement, and each underwriter, selling agent or other securities professional, if any, which facilitates the disposition of Registrable Securities shall agree, as a consequence of facilitating such disposition of Registrable Securities, severally and not jointly, to (i) indemnify and hold harmless the Company, its directors, officers who sign any Shelf Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which the Company or such other persons may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Shelf Registration Statement or Prospectus, or any amendment or supplement, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Electing Holder, underwriter, selling agent or other securities professional expressly for use therein, and (ii) reimburse the Company for any legal or other expenses

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reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred.

(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under this Section 5, notify such indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under the indemnification provisions of or contemplated by subsection (a) or (b) above. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party under this Section 5 for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party.

(d) Contribution. If the indemnification provided for in this Section 5 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation (even if the Electing Holders or any underwriters, selling agents or other securities professionals or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 5(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to

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contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Electing Holders and any underwriters, selling agents or other securities professionals in this Section 5(d) to contribute shall be several in proportion to the percentage of principal amount of Registrable Securities registered or underwritten, as the case may be, by them and not joint.

(e) Notwithstanding any other provision of this Section 5, in no event will any (i) Electing Holder be required to undertake liability to any person under this Section 5 for any amounts in excess of the dollar amount of the proceeds to be received by such Holder from the sale of such Holder’s Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) pursuant to any Shelf Registration Statement under which such Registrable Securities are to be registered under the Securities Act and (ii) underwriter, selling agent or other securities professional be required to undertake liability to any person hereunder for any amounts in excess of the discount, commission or other compensation payable to such underwriter, selling agent or other securities professional with respect to the Registrable Securities underwritten by it and distributed to the public.

(f) The obligations of the Company under this Section 5 shall be in addition to any liability which the Company may otherwise have to any Indemnified Person and the obligations of any Indemnified Person under this Section 5 shall be in addition to any liability which such Indemnified Person may otherwise have to the Company. The remedies provided in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to an indemnified party at law or in equity.

6. Underwritten Offering. Any Holder of Registrable Securities who desires to do so may sell Registrable Securities (in whole or in part) in an underwritten offering; provided that (i) the Electing Holders of at least 33-1/3% in aggregate principal amount of the Registrable Securities then covered by the Shelf Registration Statement shall request such an offering and (ii) at least such aggregate principal amount of such Registrable Securities shall be included in such offering; and provided further that the Company shall not be obligated to cooperate with more than one underwritten offering during the Effectiveness Period. Upon receipt of such a request, the Company shall provide all Holders of Registrable Securities written notice of the request, which notice shall inform such Holders that they have the opportunity to participate in the offering. In any such underwritten offering, the investment banker or bankers and manager or managers that will administer the offering will be selected by, and the underwriting arrangements with respect thereto (including the size of the offering) will be approved by, the holders of a majority of the Registrable Securities to be included in such offering; provided, however, that such investment bankers and managers and underwriting arrangements must be reasonably satisfactory to the Company. No Holder may participate in any underwritten offering contemplated hereby unless (a) such Holder agrees to sell such Holder’s Registrable Securities to be included in the underwritten offering in accordance with any approved underwriting arrangements, (b) such Holder completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such approved underwriting arrangements, and (c) if such Holder is not then an Electing Holder, such Holder returns a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(a)(ii) hereof within a reasonable amount of time before such underwritten offering. The Holders participating in any underwritten offering shall be responsible for any underwriting discounts and commissions and fees and, subject to Section 4 hereof, expenses of their own counsel. The Company shall pay all expenses customarily borne by issuers in an underwritten offering, including but not limited to filing fees, the fees and disbursements of its counsel and independent public accountants and any printing

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expenses incurred in connection with such underwritten offering. Notwithstanding the foregoing or the provisions of Section 3(n) hereof, upon receipt of a request from the Managing Underwriter or a representative of holders of a majority of the Registrable Securities to be included in an underwritten offering to prepare and file an amendment or supplement to the Shelf Registration Statement and Prospectus in connection with an underwritten offering, the Company may delay the filing of any such amendment or supplement for up to 90 days if the Board of Directors of the Company shall have determined in good faith that the Company has a bona fide business reason for such delay.

7. Liquidated Damages.

(a) Notwithstanding any postponement of effectiveness permitted by Section 2(a) hereof, if (i) on or prior to the 120th day following the Closing Date, a Shelf Registration Statement has not been filed with the Commission or (ii) on or prior to the 180th day following the Closing Date, such Shelf Registration Statement is not declared effective by the Commission (each, a “Registration Default”), the Company shall be required to pay liquidated damages (“Liquidated Damages”), from and including the day following such Registration Default until and including the day immediately prior to the day such Shelf Registration Statement is either (i) filed or (ii) declared effective, as applicable, at a rate per annum equal to an additional one-quarter of one percent (0.25%) of the principal amount of the Securities, to and including the 90th day following such Registration Default and one-half of one percent (0.50%) thereof from and after the 91st day following such Registration Default.

(b) In the event that (i) the Shelf Registration Statement ceases to be effective, (ii) the Company suspends the use of the Prospectus pursuant to Section 2(c) or 3(j) hereof, (iii) the Holders are not authorized to use the Prospectus pursuant to Section 3(g) hereto or (iv) the Holders are otherwise prevented or restricted by the Company from effecting sales pursuant to the Shelf Registration Statement (an “Effective Failure”) for more than 30 days, whether or not consecutive, in any 90-day period, or for more than 90 days, whether or not consecutive, during any 12-month period, then the Company shall pay Liquidated Damages at a rate per annum equal to an additional one-half of one percent (0.50%) of the principal amount of the Securities from the 31^st day of the applicable 90-day period or the 91st day of the applicable 12-month period, as the case may be, that any such Effective Failure has existed until the earlier of (1) the time (i) the Shelf Registration Statement again becomes effective or (ii) the Holders of Registrable Securities are again able to make sales under the Shelf Registration Statement or (2) the expiration of the Effectiveness Period.

(c) Any amounts to be paid as Liquidated Damages pursuant to paragraphs (a) or (b) of this Section 7 shall be paid in cash semi-annually in arrears, with the first semi-annual payment due on the first Interest Payment Date (as defined in the Indenture), as applicable, following the date of such Registration Default or Effective Failure, as applicable. Such Liquidated Damages will accrue in respect of the Securities at the rates set forth in paragraphs (a) or (b) of this Section 7, as applicable, on the principal amount of the Securities.

(d) Except as provided in Section 8(b) hereof, the Liquidated Damages as set forth in this Section 7 shall be the exclusive monetary remedy available to the Holders of Registrable Securities for such Registration Default or Effective Failure. In no event shall the Company be required to pay Liquidated Damages in excess of the applicable maximum amount of one-half of one percent (0.50%) set forth above, regardless of whether one or multiple Registration Defaults or Effective Failures exist.

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8. Miscellaneous.

(a) Other Registration Rights. The Company may grant registration rights that would permit any person that is a third party the right to piggy-back on any Shelf Registration Statement, provided that if the Managing Underwriter of any underwritten offering conducted pursuant to Section 6 hereof notifies the Company and the Electing Holders that the total amount of securities which the Electing Holders and the holders of such piggy-back rights intend to include in any Shelf Registration Statement is so large as to materially threaten the success of such offering (including the price at which such securities can be sold), then the amount, number or kind of securities to be offered for the account of holders of such piggy-back rights will be reduced to the extent necessary to reduce the total amount of securities to be included in such offering to the amount, number and kind recommended by the Managing Underwriter prior to any reduction in the amount of Registrable Securities to be included in such Shelf Registration Statement.

(b) Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if the Company fails to perform any of its obligations hereunder and that the Purchasers and the Holders from time to time may be irreparably harmed by any such failure, and accordingly agree that the Purchasers and such Holders, in addition to any other remedy to which they may be entitled at law or in equity and without limiting the remedies available to the Electing Holders under Section 7 hereof, shall be entitled to compel specific performance of the obligations of the Company under this Registration Rights Agreement in accordance with the terms and conditions of this Registration Rights Agreement, in any court of the United States or any State thereof having jurisdiction.

(c) Amendments and Waivers. This Agreement, including this Section 8(c), may be amended, and waivers or consents to departures from the provisions hereof may be given, only by a written instrument duly executed by the Company and the holders of a majority in aggregate principal amount of Registrable Securities then outstanding. Each Holder of Registrable Securities outstanding at the time of any such amendment, waiver or consent or thereafter shall be bound by any amendment, waiver or consent effected pursuant to this Section 8(c), whether or not any notice, writing or marking indicating such amendment, waiver or consent appears on the Registrable Securities or is delivered to such Holder.

(d) Notices. All notices and other communications provided for or permitted hereunder shall be given as provided in the Indenture.

(e) Parties in Interest. The parties to this Agreement intend that all Holders of Registrable Securities shall be entitled to receive the benefits of this Agreement and that any Electing Holder shall be bound by the terms and provisions of this Agreement by reason of such election with respect to the Registrable Securities which are included in a Shelf Registration Statement. All the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors and assigns of the parties hereto and any Holder from time to time of the Registrable Securities to the aforesaid extent. In the event that any transferee of any Holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be entitled to receive the benefits of and, if an Electing Holder, be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement to the aforesaid extent.

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(f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(g) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(h) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

(i) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law.

(j) Survival. The respective indemnities, agreements, representations, warranties and other provisions set forth in this Agreement or made pursuant hereto shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Electing Holder, any director, officer or partner of such Holder, any agent or underwriter, any director, officer or partner of such agent or underwriter, or any controlling person of any of the foregoing, and shall survive the transfer and registration of the Registrable Securities of such Holder.

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Please confirm that the foregoing correctly sets forth the agreement between the Company and you.

Very truly yours,
PSS WORLD MEDICAL, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

Accepted as of the date hereof:

Goldman, Sachs & Co.

/s/    Goldman, Sachs & Co.        

(Goldman, Sachs & Co.)

On behalf of each of the Purchasers

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Appendix A

PSS WORLD MEDICAL, INC.

Notice of Registration Statement

and

Selling Securityholder Questionnaire

[Date]

PSS WORLD MEDICAL, INC. (the “Company”) has filed with the United States Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (the “Shelf Registration Statement”) for the registration and resale under Rule 415 of the United States Securities Act of 1933, as amended (the “Securities Act”), of the Company’s 2.25 % Convertible Senior Notes due March 15, 2024 (the “Securities”) and the shares of common stock, par value $0.01 per share (the “Common Stock”), issuable upon conversion thereof, in accordance with the Registration Rights Agreement, dated as of March 8, 2004 (the “Registration Rights Agreement”), between the Company and the purchasers named therein. A copy of the Registration Rights Agreement is attached hereto. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

In order to have Registrable Securities included in the Shelf Registration Statement (or a supplement or amendment thereto), this Notice of Registration Statement and Selling Securityholder Questionnaire (“Notice and Questionnaire”) must be completed, executed and delivered to the Company at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. No holder of Registrable Securities will be entitled:

• to be named as a selling security holder in the Shelf Registration Statement as of the date the Shelf Registration Statement is declared effective; or

• to use the prospectus forming a part of the Shelf Registration Statement for offers and resales of Registrable Securities at any time,

unless such holder has returned a completed and signed Notice and Questionnaire to the Company. Holders of Registrable Securities who have not returned a Notice and Questionnaire by the deadline specified above will be included in the Shelf Registration Statement through a prospectus supplement or a post-effective amendment to the Shelf Registration Statement, subject to restrictions on timing provided in the Registration Rights Agreement.

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and related Prospectus.

The term “Registrable Securities” is defined in the Registration Rights Agreement to mean all or any portion of the Securities issued from time to time under the Indenture in registered form and the shares of Common Stock issuable upon conversion of such Securities; provided, however, that a security ceases to be a Registrable Security when it is no longer a Restricted Security.

The term “Restricted Security” is defined in the Registration Rights Agreement to mean any Security or share of Common Stock issuable upon conversion thereof except any such Security or share of Common Stock that (i) has been effectively registered under the Securities Act and sold in a manner contemplated by the Shelf Registration Statement, (ii) has been transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or is transferable pursuant to paragraph (k) of such Rule 144 (or any successor provision thereto), or (iii) has otherwise been transferred and a new

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Security or share of Common Stock not subject to transfer restrictions under the Securities Act has been delivered by or on behalf of the Company in accordance with the Indenture.

ELECTION

The undersigned holder (the “Selling Securityholder”) of Registrable Securities hereby elects to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement, including, without limitation, Section 6 of the Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto.

Upon any sale of Registrable Securities pursuant to the Shelf Registration Statement, the Selling Securityholder will be required to deliver to the Company and the Trustee the Notice of Transfer (completed and signed) set forth in Exhibit 1 to this Notice and Questionnaire.

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The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

QUESTIONNAIRE

(1)	(a)	Full Legal Name of Selling Securityholder:
	(b)	Full Legal Name of Registered Holder (if not the same as in (a) above) of Registrable Securities Listed in Item (3) Below:
	(c)	Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) Through Which Registrable Securities Listed in Item (3) Below are Held:
(2)		Address for Notices to Selling Securityholder:

Telephone:

Fax:

Contact Person:

(3)		Beneficial Ownership of the Securities:
		Except as set forth below in this Item (3), the undersigned Selling Securityholder does not beneficially own any Registerable Securities or shares of Common Stock issued upon conversion, repurchase or redemption of any Registerable Securities.
	(a)	Principal amount of Registrable Securities (as defined in the Registration Rights Agreement) beneficially owned:
		CUSIP No(s). of such Registrable Securities:
		Number of shares of Common Stock (if any) issued upon conversion, repurchase or redemption of Registrable Securities:
	(b)	Principal amount of Securities other than Registrable Securities beneficially owned:

CUSIP No(s). of such other Securities:

	Number of shares of Common Stock (if any) issued upon conversion of such other Securities:
(c)	Principal amount of Registrable Securities which the undersigned wishes to be included in the Shelf Registration Statement:

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		CUSIP No(s). of such Registrable Securities to be included in the Shelf Registration Statement:
		Number of shares of Common Stock (if any) issued upon conversion of Registrable Securities which are to be included in the Shelf Registration Statement:
(4)		Beneficial Ownership of Other Securities of the Company:
		Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any shares of Common Stock or any other securities of the Company, other than the Securities and shares of Common Stock listed above in Item (3).
		State any exceptions here:
(5)		Relationships with the Company:
		Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
		State any exceptions here:
(6)		Nature of the Selling Securityholder:
	(a)	Is the selling Securityholder a reporting company under the Securities Exchange Act, a majority owned subsidiary of a reporting company under the Securities Exchange Act or a registered investment company under the Investment Company Act? If so, please state which one.
		If the entity is a majority owned subsidiary of a reporting company, identify the majority stockholder that is a reporting company.
		If the entity is not any of the above, identify the natural person or persons having voting and investment control over the Company’s securities that the entity owns.
	(b)	Is the Selling Securityholder a registered broker-dealer? Yes        No
		State whether the Selling Securityholder received the Registrable Securities as compensation for underwriting activities and, if so, provide a brief description of the transaction(s) involved.

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	State whether the Selling Securityholder is an affiliate of a broker-dealer and if so, list the name(s) of the broker-dealer affiliate(s). Yes        No
	If the answer is “Yes,” you must answer the following:
	If the Selling Securityholder is an affiliate of a registered broker-dealer, the Selling Securityholder purchased, the Registrable Securities (i) in the ordinary course of business and (ii) at the time of the purchase of the Registrable Securities, had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities.
	Yes                 No
	If the answer is “No”, state any exceptions here:
	If the answer is “No,” this may affect your ability to be included in the registration statement.
(7)	Plan of Distribution:
	Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder or, alternatively, through underwriters, broker-dealers or agents. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market or (iv) through the writing of options. In connection with sales of the Registrable Securities or otherwise, the Selling Securityholder may enter into transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume. The Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.
	State any exceptions here:
	By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the prospectus delivery and other provisions of the Securities Act and the Exchange Act and the rules and regulations thereunder, particularly Regulation M.
	In the event that the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights Agreement.

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By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and related Prospectus.

In accordance with the Selling Securityholder’s obligation under Section 3(a) of the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains in effect. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail or air courier guaranteeing overnight delivery as follows:

(i)     To the Company:

PSS World Medical, Inc.

4345 Southport Boulevard

Jacksonville, Florida 32216

Attn: David D. Klarner

(ii)    With a copy to:

Alston & Bird LLP

601 Pennsylvania Avenue., N.W.

North Building, 10^th Floor

Washington, D.C. 2004

Attn: David E. Brown, Jr.

Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item (3) above). This Agreement shall be governed in all respects by the laws of the State of New York.

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated: _________________________________________

    ________________________________________________________________________________________________________

Selling Securityholder

(Print/type full legal name of beneficial owner of Registrable Securities)

By:

Name:

Title:

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PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY AT:

PSS World Medical, Inc.

4345 Southport Boulevard

Jacksonville, Florida 32216

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Exhibit 1

to Appendix A

NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

PSS World Medical, Inc.

4345 Southpoint Blvd.

Jacksonville, Florida 32216

Attention: [General Counsel]

[Wachovia Bank N.A.]

[Address of Trustee]

Attention: [Corporate Trust Services]

Re: PSS World Medical, Inc. (the “Company”) 2.25% Convertible Senior Notes due March 15, 2024 (the “Notes”)

Dear Sirs:

Please be advised that                              has transferred $                 aggregate principal amount of the above-referenced Notes or shares of the Company’s common stock, issued upon conversion, repurchase or redemption of Notes, pursuant to an effective Registration Statement on Form S-3 (File No. 333-            ) filed by the Company.

We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied with respect to the transfer described above and that the above-named beneficial owner of the Notes or common stock is named as a selling securityholder in the Prospectus dated [date], or in amendments or supplements thereto, and that the aggregate principal amount of the Notes or number of shares of common stock transferred are a portion of the Notes or shares of common stock listed in such Prospectus as amended or supplemented opposite such owner’s name.

Dated:

	Very truly yours,
	(Name)
By:
	(Authorized Signature)

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EX-4.2

EXHIBIT 4.2

Execution

Version

PSS World Medical, Inc.

as Issuer,

and

Wachovia Bank, National Association,

as Trustee

INDENTURE

Dated as of March 8, 2004

2.25% Convertible Senior Notes due March 15, 2024

CROSS-REFERENCE TABLE

TIA Section	Indenture Section
310(a)(1)	11.10
(a)(2)	11.10
(a)(3)	N.A.
(a)(4)	N.A.
(a)(5)	11.10
(b)	11.3; 11.8; 11.10; 15.2
(c)	N.A.
311(a)	11.11
(b)	11.11
(c)	N.A.
312(a)	2.5
(b)	15.3
(c)	N.A.
313(a)	11.6
(b)(1)	N.A.
(b)(2)	11.6
(c)	11.6; 15.2
(d)	11.6
314(a)	3.7; 3.8
(b)	N.A.
(c)(1)	15.4
(c)(2)	15.4
(c)(3)	15.4
(d)	N.A.
(e)	15.5
(f)	N.A.
315(a)	11.1(b); 11.1(g); 11.2
(b)	11.5; 15.2
(c)	11.1(a)
(d)	11.1(c)
(e)	10.9
316(a)(last sentence)	2.9; 15.6
(a)(1)(A)	10.7
(a)(1)(B)	10.7
(a)(2)	N.A.
(b)	10.4
(c)	14.4
317(a)(1)	10.2
(a)(2)	10.2
(b)	2.4
318(a)	15.1

N.A. means not applicable

Note: This Cross-Reference table shall not, for any purpose, be deemed to be part of this Indenture.

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TABLE OF CONTENTS

		Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1.	Definitions	1
SECTION 1.2.	Incorporation by Reference of Trust Indenture Act	11
SECTION 1.3.	Rules of Construction	11
ARTICLE II
THE NOTES
SECTION 2.1.	Form, Dating and Terms	12
SECTION 2.2.	Execution and Authentication	18
SECTION 2.3.	Registrar, Conversion Agent and Paying Agent	19
SECTION 2.4.	Paying Agent To Hold Money and Securities in Trust	20
SECTION 2.5.	Holder Lists	20
SECTION 2.6.	Transfer and Exchange	21
SECTION 2.7.	Form of Certificate To Be Delivered in Connection with Transfers to Institutional Accredited Investors	22
SECTION 2.8.	Mutilated, Destroyed, Lost or Stolen Notes	24
SECTION 2.9.	Outstanding Notes	25
SECTION 2.10.	Temporary Notes	25
SECTION 2.11.	Cancellation	25
SECTION 2.12.	Payment of Interest; Defaulted Interest	26
SECTION 2.13.	Computation of Interest	27
SECTION 2.14.	CUSIP Numbers	27
SECTION 2.15.	Issuance, Transfer and Exchange of Common Stock Issuable Upon Conversion of the Notes	27
SECTION 2.16.	Calculations in Respect of the Notes	28
ARTICLE III
COVENANTS
SECTION 3.1.	Payment of Notes	28
SECTION 3.2.	Maintenance of Office or Agency	29
SECTION 3.3.	Money and Securities for Note Payments To Be Held in Trust	29
SECTION 3.4.	Corporate Existence	30

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SECTION 3.5.	Further Instruments and Acts	31
SECTION 3.6.	Liquidated Damages Notices	31
SECTION 3.7.	SEC Reports	31
SECTION 3.8.	Compliance Certificates	31
SECTION 3.9.	Rule 144A Information Requirement	31
SECTION 3.10.	Stay, Extension and Usury Laws	32
SECTION 3.11.	Notice of Default	32
SECTION 3.12.	Contingent Debt Treatment	32
ARTICLE IV
SUCCESSOR COMPANY
SECTION 4.1.	Merger and Consolidation	33
SECTION 4.2.	Successor Corporation Substituted	34
ARTICLE V
REDEMPTION OF NOTES
SECTION 5.1.	Optional Redemption	34
SECTION 5.2.	Applicability of Article	34
SECTION 5.3.	Election to Redeem; Notice to Trustee	34
SECTION 5.4.	Selection by Trustee of Notes To Be Redeemed	34
SECTION 5.5.	Notice of Redemption	35
SECTION 5.6.	Deposit of Redemption Price	36
SECTION 5.7.	Notes Payable on Redemption Date	36
SECTION 5.8.	Notes Redeemed in Part	37
SECTION 5.9.	Arrangement on Call for Redemption	37
ARTICLE VI
REPURCHASE UPON A FUNDAMENTAL CHANGE
SECTION 6.1.	Repurchase at the Option of the Holder upon a Fundamental Change	38
SECTION 6.2.	Notice of Fundamental Change	38
SECTION 6.3.	Exercise of Option	38
SECTION 6.4.	Procedures	39
ARTICLE VII
OPTIONAL REPURCHASE
SECTION 7.1.	Repurchase of Notes by the Company at the Option of the Holder	40

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ARTICLE VIII
CONDITIONS AND PROCEDURES FOR REPURCHASES AT OPTION OF HOLDERS
SECTION 8.1.	Notice of Repurchase Date or Fundamental Change	42
SECTION 8.2.	Effect of Repurchase Notice or Fundamental Change Repurchase Notice	43
SECTION 8.3.	Notes Repurchased in Part	44
SECTION 8.4.	Covenant to Comply with Securities Laws upon Repurchase of Notes	44
SECTION 8.5.	Repayment to the Company	44
SECTION 8.6.	Exchange in Lieu of Repurchase	45
ARTICLE IX
CONVERSION OF NOTES
SECTION 9.1.	Right To Convert	45
SECTION 9.2.	Determination of Satisfaction of Certain Conversion Triggers	47
SECTION 9.3.	Conversion Procedures	48
SECTION 9.4.	Cash Payments in Lieu of Fractional Shares	50
SECTION 9.5.	Taxes on Conversion	50
SECTION 9.6.	Exchange in Lieu of Conversion	50
SECTION 9.7.	Covenants of the Company	51
SECTION 9.8.	Adjustments to Conversion Rate	51
SECTION 9.9.	Calculation Methodology	55
SECTION 9.10.	When No Adjustment Required	55
SECTION 9.11.	Notice of Adjustment	56
SECTION 9.12.	Voluntary Increase	56
SECTION 9.13.	Notice to Holders Prior to Certain Actions	57
SECTION 9.14.	Effect of Reclassification, Consolidation, Merger, Binding Share Exchange or Sale	57
SECTION 9.15.	Responsibility of Trustee	58
SECTION 9.16.	Successive Adjustments	58
SECTION 9.17.	General Considerations	59
SECTION 9.18.	Payment of Cash in Lieu of Common Stock	59
ARTICLE X
DEFAULTS AND REMEDIES
SECTION 10.1.	Events of Default	60

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SECTION 10.2.	Payment of Notes on Default; Suit Therefor	62
SECTION 10.3.	Application of Moneys Collected by Trustee	63
SECTION 10.4.	Proceedings by Holders	64
SECTION 10.5.	Proceedings by Trustee	64
SECTION 10.6.	Remedies Cumulative and Continuing	65
SECTION 10.7.	Direction of Proceedings; Waiver of Defaults by Majority of Holders	65
SECTION 10.8.	Notice of Defaults	65
SECTION 10.9.	Undertaking to Pay Costs	66
ARTICLE XI
TRUSTEE
SECTION 11.1.	Duties of Trustee	66
SECTION 11.2.	Rights of Trustee	67
SECTION 11.3.	Individual Rights of Trustee	69
SECTION 11.4.	Trustee’s Disclaimer	69
SECTION 11.5.	Notice of Defaults	69
SECTION 11.6.	Reports by Trustee to Holders	69
SECTION 11.7.	Compensation and Indemnity	70
SECTION 11.8.	Replacement of Trustee	70
SECTION 11.9.	Successor Trustee by Merger	71
SECTION 11.10.	Eligibility; Disqualification	72
SECTION 11.11.	Preferential Collection of Claims Against Company	72
ARTICLE XII
CONTINGENT INTEREST
SECTION 12.1.	Contingent Interest	72
SECTION 12.2.	Payment of Contingent Interest	72
SECTION 12.3.	Notice of Contingent Interest	72
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 13.1.	Satisfaction and Discharge of Indenture	73
SECTION 13.2.	Application by Trustee of Funds Deposited for Payment of Notes	74
SECTION 13.3.	Repayment of Moneys Held by Paying Agent	74

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SECTION 13.4.	Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years	74
SECTION 13.5.	Indemnity for U.S. Government Obligations	74
ARTICLE XIV
AMENDMENTS
SECTION 14.1.	Without Consent of Holders	75
SECTION 14.2.	With Consent of Holders	75
SECTION 14.3.	Compliance with Trust Indenture Act	76
SECTION 14.4.	Revocation and Effect of Consents and Waivers	76
SECTION 14.5.	Notation on or Exchange of Notes	77
SECTION 14.6.	Trustee To Sign Amendments	77
ARTICLE XV
MISCELLANEOUS
SECTION 15.1.	Trust Indenture Act Controls	77
SECTION 15.2.	Notices	77
SECTION 15.3.	Communication by Holders with Other Holders	78
SECTION 15.4.	Certificate and Opinion as to Conditions Precedent	78
SECTION 15.5.	Statements Required in Certificate or Opinion	78
SECTION 15.6.	When Notes Disregarded	79
SECTION 15.7.	Rules by Trustee, Paying Agent and Registrar	79
SECTION 15.8.	Governing Law	79
SECTION 15.9.	No Recourse Against Others	79
SECTION 15.10.	Successors	80
SECTION 15.11.	Multiple Originals	80
SECTION 15.12.	Variable Provisions	80
SECTION 15.13.	Qualification of Indenture	80

EXHIBITS AND ANNEXURES

EXHIBIT A	Form of Note
EXHIBIT B	Form of Transfer Certificate for Transfer of Restricted Stock
ANNEX A	Projected Payment Schedule

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INDENTURE, dated as of March 8, 2004, between PSS World Medical, Inc., a Florida corporation (the “Company”), and Wachovia Bank, National Association, a national banking association, as trustee (the “Trustee”).

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of up to $150,000,000 principal amount of the Company’s 2.25% Convertible Senior Notes due March 15, 2024, convertible into common stock, par value $0.01 per share (the “Common Stock”), of the Company (the “Notes”).

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Notes:

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1. Definitions.

“9.8(g) Current Market Price” means the average of the Closing Sale Prices of the Common Stock for the five consecutive Trading Days beginning on the Trading day next succeeding the date of the repurchase triggering the adjustment in Section 9.8(g).

“actual knowledge” has the meaning set forth in Section 11.2(g).

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent Members” has the meaning set forth in Section 2.1(g)(ii).

“Applicable Stock Price” means the average of the Closing Sale Prices of the Common Stock for the five consecutive Trading Day period beginning on the third Trading Day following the Conversion Date.

“Authenticating Agent” has the meaning set forth in Section 2.2.

“Bankruptcy Code” means the United States Bankruptcy Code, 11 United States Code § 101 et seq., or any successor statute thereto.

“Beneficial Owner” has the meaning set forth in Rule 13d-3 of the Exchange Act.

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“Board of Directors” means either the board of directors of the Company or other body fulfilling the function of a board of directors of a corporation or other Person or any committee of such board.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of a company to have been duly adopted by the board of directors of such company and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to close.

“Capital Stock” of any Person means any and all shares (including ordinary shares or “American Depositary Shares”), interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such Person.

“Cash Amount Per Note” has the meaning set forth in Section 9.18(b).

A “Change in Control” shall be deemed to have occurred at such time after the original issuance of the Notes that any of the following occurs:

(a) any person, including any syndicate or group deemed to be a “person” under Section 13(d) (3) of the Exchange Act, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person, syndicate or group has become the direct or indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of more than 50% of the Company’s Capital Stock that are entitled to vote generally in elections of directors, other than an acquisition by the Company, any of its Subsidiaries or any of its employee benefit plans;

(b) the Company consummates any share exchange, consolidation or merger pursuant to which the Common Stock will be converted into cash, securities, or other property, or the Company conveys, sells, transfers or leases all or substantially all of its consolidated assets to another Person, other than any transaction pursuant to which the holders of the Company’s Common Stock immediately prior to the transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Capital Stock entitled to vote generally in the election of directors of the continuing or surviving corporation immediately after the transaction.

Notwithstanding the foregoing provisions, a Change in Control shall not be deemed to have occurred if: (i) the Closing Sale Price of the Common Stock for any five Trading Days within the period of ten consecutive Trading Days ending immediately after the later of the Change in Control or the public announcement of the Change in Control, in the case of a Change in Control relating to an acquisition of Capital Stock under clause (a) of this definition, or the period of ten consecutive Trading Days ending immediately before the Change in Control,

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in the case of a Change in Control relating to a merger, consolidation, asset sale or otherwise under clause (b) of this definition, equals or exceeds 105% of the Conversion Price in effect on each of those five Trading Days; or (ii) all of the consideration paid for the Common Stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in a merger or consolidation or a conveyance, sale, transfer or lease otherwise constituting a Change in Control under clause (a) and/or clause (b) of this definition consists of shares of Capital Stock traded on a national securities exchange or quoted on Nasdaq or its successor (or will be so traded or quoted immediately following the merger or consolidation) and, as a result of the merger or consolidation, the Notes become convertible into shares of such Capital Stock.

“Closing Sale Price” of the Common Stock on any date means the closing per share sale price per share (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions by The Nasdaq National Market or, if the Common Stock is not then quoted on The Nasdaq National Market, then on the principal U.S. national or regional securities exchange or market on which the Common Stock is then listed or quoted. The Closing Sale Price shall be determined without reference to after-hours or extended market trading. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange and not reported by The Nasdaq National Market on the relevant date, the Closing Sale Price shall be the last quoted bid for the Common Stock in the over-the-counter market on the relevant date as reported by the National Quotation Bureau or similar organization. If the Common Stock is not so quoted, the Closing Sale Price shall be the average of the midpoint of the last bid and asked prices for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firm selected by the Company for this purpose.

“Commission” means the Securities and Exchange Commission.

“Common Stock” has the meaning stated in the first recital of this Indenture.

“Company” means PSS World Medical, Inc., a Florida corporation, and, subject to Article IV, its successors and assigns.

“Company Notice” has the meaning set forth in Section 8.1.

“Company Notice Date” has the meaning set forth in Section 8.1.

“Company Order” has the meaning set forth in Section 2.2.

“Contingent Interest” means the interest amounts payable pursuant to Section 12.1.

“Conversion Agent” means the office or agency designated by the Company where Notes may be presented for conversion.

“Conversion Date” has the meaning set forth in Section 9.3.

3

“Conversion Obligation” has the meaning set forth in Section 9.18.

“Conversion Price” means $1,000 divided by the Conversion Rate.

“Conversion Rate” has the meaning set forth in Section 9.1.

“Corporate Trust Office” means the designated corporate trust office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 40 Broad Street, 5^th floor, New York, New York 10004, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the designated corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company).

“Current Market Price” means the average of the Closing Sale Prices of the Common Stock for the five consecutive Trading Days ending on or at the Time of Determination.

“Default” means any event or condition that is, or after notice or passage of time or both would be, an Event of Default.

“Defaulted Interest” has the meaning set forth in Section 2.12.

“Definitive Notes” means the Notes that are in registered definitive form.

“Depositary” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depositary institution hereinafter appointed by the Company.

“Distributed Assets” has the meaning set forth in Section 9.8(c).

“Equity Interests” means any Capital Stock, partnership, joint venture, member or limited liability or unlimited liability company interest, beneficial interest in a trust or similar entity or other equity interest or equity investment of whatever nature.

“Event of Default” means any event or condition specified as such in Section 10.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“ex-date” or “ex-dividend date” has the meaning set forth in Section 9.1(g).

“Expiration Time” has the meaning set forth in Section 9.8(f).

“Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to

4

complete the transaction. Fair Market Value shall be determined by the Board of Directors acting reasonably and in good faith.

“Fundamental Change” means the occurrence of a Change in Control or a Termination of Trading.

“Fundamental Change Repurchase Date” has the meaning set forth in Section 6.1.

“Fundamental Change Repurchase Notice” has the meaning set forth in Section 6.3.

“Fundamental Change Repurchase Price” has the meaning set forth in Section 6.1.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the date hereof.

“Global Notes” means Notes that are in the form of the Note attached hereto as Exhibit A and that are issued to a Depositary.

“Holder” means, in the case of any Note, the Person in whose name such Note is registered in the Note Register kept by the Registrar for that purpose in accordance with the terms hereof.

“IAI” means institutional accredited investors (as defined in Rules 501(a)(1), (2), (3) and (7) under the Securities Act) who are not QIBs.

“Indebtedness” as applied to any Person, means (i) all indebtedness, obligations and other liabilities, contingent or otherwise, (A) for borrowed money, including overdrafts, foreign exchange contracts, currency exchange agreements, interest rate protection agreements, any liability for the deferred purchase price of property or services, and any loans or advances from banks, whether or not evidenced by notes or similar instruments, or (B) evidenced by credit or loan agreements, bonds, debentures, notes or similar instruments, whether or not the recourse of the lender is to the whole of such Person’s assets or to only a portion thereof, other than any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services; (ii) all reimbursement obligations and other liabilities, contingent or otherwise, with respect to letters of credit, bank guarantees, bankers’ acceptances or other similar credit transactions; (iii) all obligations and liabilities, contingent or otherwise, in respect of leases required, in conformity with GAAP, to be accounted for as capitalized lease obligations on such Person’s balance sheet; (iv) all obligations and other liabilities, contingent or otherwise, under any lease or related document, including a purchase agreement, conditional sale or other title retention agreement, in connection with the lease of real property or improvements thereon (or any personal property included as part of any such lease) which provides that such Person is contractually obligated to purchase or cause a third party to

5

purchase the leased property or pay an agreed upon residual value of the leased property, including such Person’s obligations under such lease or related document to purchase or cause a third party to purchase such leased property or pay an agreed upon residual value of the leased property to the lessor; (v) all such Person’s obligations, contingent or otherwise, with respect to an interest rate or other swap, cap, floor or collar agreement or hedge agreement, forward contract or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement; (vi) all such Person’s direct or indirect guarantees or similar agreements by such Person in respect of, and all of its obligations or liabilities to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of, indebtedness, obligations or liabilities of another Person of the kinds described in clauses (i) through (v); and (vii) any and all deferrals, renewals, extensions, refinancings and refundings of, or amendments, modifications or supplements to, any indebtedness, obligation or liability of the kinds described in clauses (i) through (vi).

“Indenture” means this Indenture as amended or supplemented from time to time, including, for all purposes of this instrument and any supplemental indenture or amendment hereto, the provisions of the TIA that are deemed to be a part of and govern this instrument and any such supplemental indenture or amendment, respectively.

“Initial Public Offering” means, in the event of a Spin-Off, the first time securities of the same class or type as the securities being distributed in the Spin-Off are bona fide offered to the public for cash.

“Initial Purchasers” means the initial purchasers of the Notes.

“Interest Payment Date” has the meaning set forth in the form of Note attached hereto as Exhibit A.

“Interest Period” has the meaning set forth in Section 12.1.

“Liquidated Damages” has the meaning set forth in Section 3.6. For all purposes under this Indenture, the term “interest” shall include Liquidated Damages, if any, with respect to the Notes.

“Liquidated Damages Notice” has the meaning set forth in Section 3.6.

“Market Capitalization” means the product of (i) 9.8(g) Current Market Price multiplied by (ii) number of Common Stocks outstanding on the date of the repurchase triggering the adjustment set forth under Section 9.8(g).

“Measurement Period” has the meaning set forth in Section 12.1.

“Moody’s” means Moody’s Investor Services, Inc. (or its successors).

“non-electing share” has the meaning set forth in Section 9.14.

6

“Note” or “Notes” has the meaning stated in the first recital of this Indenture or, as the case may be, means Notes that have been authenticated and delivered pursuant to this Indenture, including the Global Note(s).

“Notes Custodian” means the Trustee or any Person appointed by the Trustee to act as custodian of Global Notes for the Depositary.

“Note Register” has the meaning set forth in Section 2.3.

“Notes Custodian” means the custodian with respect to the Global Note (as appointed by the Depositary or any successor Person thereto) and shall initially be the Trustee.

“Officer” means the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company.

“Officers’ Certificate” means a certificate signed by any two Officers of the Company. Each such certificate shall include the statements provided for in Section 15.5, if and to the extent required by the provisions of Section 15.4.

“Opinion of Counsel” means a written opinion from legal counsel. The counsel may be an employee of or counsel to the Company. Each such opinion shall include the statements provided for in Section 15.5, if and to the extent required by the provisions of Section 15.4.

“Outstanding Notes” has the meaning set forth in Section 2.9.

“Paying Agent” means the office or agency designated by the Company where Notes may be presented for payment, initially the Trustee.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Principal Value Conversion” has the meaning set forth in Section 9.1(c).

“protected purchaser” has the meaning set forth in Section 2.8.

“Purchased Shares” has the meaning set forth in Section 9.8(f)(i).

“QIB” means any “qualified institutional buyer” (as defined in Rule 144A under the Securities Act).

“Redemption Date” means the date fixed for redemption of the Notes.

“Redemption Price” has the meaning set forth in paragraph 6 of the Notes.

“Registrar” means the office or agency maintained by the Company where Notes may be presented for registration of transfer or exchange, initially the Trustee.

7

“Registration Rights Agreement” means that certain registration rights agreement dated as of the date of this Indenture by and between the Company and the Initial Purchasers.

“Regular Record Date” has the meaning set forth in the form of Note attached hereto as Exhibit A.

“Repurchase Date” has the meaning set forth in Section 7.1(a).

“Repurchase Notice” has the meaning set forth in Section 7.1(a)(1).

“Repurchase Premium” has the meaning set forth in Section 9.8(g).

“Repurchase Price” has the meaning provided in paragraph 8 of the Notes.

“Resale Restriction Termination Date” has the meaning set forth on Section 2.6(a).

“Responsible Officer,” when used with respect to the Trustee, means any officer assigned by the Trustee to administer its corporate trust matters and who is located at the Corporate Trust Office and who shall have the direct responsibility for the administration of this Indenture.

“Restricted Note Legend” means the legend set forth in Section 2.1(d).

“Restricted Stock Legend” means the legend required by Section 2.1(e).

“Securities Act” means the Securities Act of 1933, as amended.

“Shelf Registration Statement” shall have the meaning set forth in the Registration Rights Agreement.

“Significant Subsidiary” means any Subsidiary that is a “Significant Subsidiary” of the Company within the meaning of Rule 1-02(w) under Regulation S-X promulgated by the Commission.

“Special Interest Payment Date” has the meaning set forth in Section 2.12(a).

“Special Record Date” has the meaning set forth in Section 2.12(a).

“Spin-Off” means a dividend or other distribution of shares of Capital Stock of any class or series, or similar Equity Interests, of or relating to a Subsidiary or other business unit of the Company.

“Spin-Off Market Price” (a) per share of Common Stock means (i) in the event a Spin-Off is not effected simultaneously with an Initial Public Offering, the average of the Closing Sale Prices of the Common Stock for the ten Trading Days after the effective date of such Spin-Off or (ii) in the event an Initial Public Offering is effected simultaneously with the Spin-Off, the Closing Sale Price of the Common Stock on the Trading Day on which the initial public offering price of securities being distributed in the Initial Public Offering is determined and

8

(b) per Equity Interest of a Subsidiary or other business unit of the Company means (i) in the event a Spin-Off is not effected simultaneously with an Initial Public Offering, the average of the closing sale prices of such Equity Interest to be distributed with respect to one share of Common Stock for the ten Trading Days after the “ex date” with respect to such Spin-Off or (ii) in the event an Initial Public Offering is effected simultaneously with the Spin-Off, the initial public offering price in the Initial Public Offering of such Equity Interest to be distributed with respect to one share of Common Stock.

“Standard & Poor’s” means Standard & Poor’s Rating Services (or its successors).

“Stated Maturity,” when used with respect to the Notes, means March 15, 2024.

“Subsidiary” of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or Persons performing similar functions) or (b) any partnership, joint venture, limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

“Successor Company” shall have the meaning assigned thereto in clause (i) of Section 4.1(a).

“Tax Original Issue Discount” means the amount of ordinary interest income on a Note that must be accrued as original issue discount for United States federal income tax purposes pursuant to United States Treasury Regulation Section 1.1275-4 or any successor provision.

“Termination of Trading” will be deemed to have occurred if the Common Stock (or other Common Stock into which the Notes are then convertible) is neither approved for trading on The Nasdaq National Market or another established automated over-the-counter trading market in the United States nor listed for trading on a U.S. national securities exchange.

“TIA” or “Trust Indenture Act” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as in effect from time to time.

“Time of Determination” means the time and date of the determination of stockholders entitled to receive rights, warrants or options or a distribution, in each case, to which Section 9.1(g), 9.8(a) or (b) applies (or, if such date is not a Trading Day, then on the last Trading Day prior to such date).

“Trading Day” means a day during which trading in securities generally occurs on The Nasdaq National Market or, if the Common Stock is not then quoted on The Nasdaq

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National Market, then on another national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on The Nasdaq National Market or a national or regional securities exchange, on the principal other market on which the Common Stock is then traded or quoted.

“Trading Price,” with respect to the Notes, on any date of determination means the average of the secondary market bid quotations per Note obtained by the Trustee, at any time the Company instructs the Trustee to determine the Trading Price, for $5.0 million principal amount of the Notes at approximately 3:30 p.m., New York City time, on such determination date from two independent nationally recognized securities dealers selected by the Company, which may include the Initial Purchasers, provided that if at least two such bids cannot reasonably be obtained by the Trustee, but one such bid can reasonably be obtained by the Trustee, this one bid shall be used. If the Trustee cannot reasonably obtain at least one bid for $5.0 million principal amount of the Notes from a nationally recognized securities dealer, or in the reasonable judgment of the Company, the bid quotations are not indicative of the secondary market value of the Notes, then the Trading Price of the Notes will equal (a) the applicable Conversion Rate of the Notes multiplied by (b) the Closing Sale Price of the Common Stock on such determination date; provided that, for purposes of Section 12.1, if the Trustee cannot reasonably obtain at least one bid for $5.0 million principal amount of the Notes from a nationally recognized securities dealer, or in the reasonable judgment of the Company, the bid quotations are not indicative of the secondary market value of the Notes, then the Trading Price of the Notes will equal (x) the applicable Conversion Rate of the Notes multiplied by (y) the average of the Closing Sales Prices of the Common Stock during the Measurement Period.

“Transfer Restricted Notes” has the meaning set forth in Section 2.1(d).

“Trustee” means the Person identified as “Trustee” in the first paragraph hereof and, subject to the provisions of Article XI, shall also include any successor trustee.

“Trust Officer” means, with respect to the Trustee, any officer assigned to the Corporate Trust Office, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time in the State of New York.

“U.S. Government Obligations” means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such

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custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt.

SECTION 1.2. Incorporation by Reference of Trust Indenture Act . This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings:

“indenture securities” means the Notes.

“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Trustee.

“obligor” on the indenture securities means the Company and any other obligor on the indenture securities.

All other TIA terms used in this Indenture that are defined by the TIA, defined by the TIA by reference to another statute or defined by Commission rule have the meanings assigned to them by such definitions.

SECTION 1.3. Rules of Construction . Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

(4) words in the singular include the plural and words in the plural include the singular;

(5) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;

(6) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP;

(7) the table of contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof;

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(8) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

(9) all references to “$” or “dollars” shall refer to the lawful currency of the United States of America;

(10) the words “include,” “included” and “including” as used herein shall be deemed in each case to be followed by the phrase “without limitation,” if not expressly followed by such phrase or the phrase “but not limited to”;

(11) references to sections of or rules under the Securities Act, the Exchange Act or the TIA shall be deemed to include substitute, replacement or successor sections or rules adopted by the Commission from time to time thereunder; and

(12) any reference to a Section or Article refers to such Section or Article of this Indenture unless otherwise indicated.

ARTICLE II

THE NOTES

SECTION 2.1. Form, Dating and Terms.

(a) The maximum aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is $150,000,000. Furthermore, Notes may be authenticated and delivered upon registration or transfer, or in lieu of, other Notes pursuant to Section 2.6, 2.8 or 14.5.

The Notes shall be known and designated as 2.25% Convertible Senior Notes due March 15, 2024. Pursuant to the provisions of Article IX, the Notes shall be convertible into Common Stock.

Each Note shall bear the applicable legends, if any, set forth in Section 2.1(d) and transfers of the Notes shall be made only in accordance with the restrictions described in the applicable legend. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage, in addition to those set forth on Exhibit A and in Section 2.1(d). The Company and the Trustee shall approve the forms of the Notes and any notation, endorsement or legend on them. Each Note shall be dated the date of its authentication. The terms of the Note set forth in Exhibit A are part of the terms of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms.

The principal of and interest on the Notes shall be payable at the office or agency of the Company maintained for such purpose in the City of New York, or at such other office or agency of the Company as may be maintained for such purpose pursuant to Section 2.3. Payments

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in respect of a Definitive Note (including principal, interest and Liquidated Damages, if any) shall be made in U.S. dollars at the office of the Trustee. At the Company’s option, however, the Company may make such payments by mailing a check to the registered address of each Holder thereof as such address as shall appear on the Note Register or with respect to Notes represented by a Global Note, by wire transfer of immediately available funds to the accounts specified by the Depositary. If a payment date is a date other than a Business Day, payment may be made at that place on the next succeeding day that is a Business Day and no interest shall accrue for the intervening period.

(b) Notes offered and sold to QIBs in reliance on Rule 144A and resold to IAIs in the United States of America shall be issued in the form of one or more permanent Global Notes, without interest coupons, substantially in the form of Exhibit A. Such Global Notes shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian for the Depositary for the accounts of participants in the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of a Global Note may from time to time be increased or decreased by adjustments made on the records of the Notes Custodian, as hereinafter provided.

(c) The Notes shall be issuable only in fully registered form, without coupons, and only in denominations of $1,000 and any integral multiple thereof.

(d) Every Note that bears or is required under this Section 2.1(d) to bear the legend set forth in this Section 2.1(d) (the “Transfer Restricted Notes”) shall be subject to the restrictions on transfer set forth in this Section 2.1(d) (including those set forth in the legend set forth below), and the Holder of each such Transfer Restricted Note, by such Holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in Sections 2.1(d) and 2.1(e), the term “transfer” includes any sale, pledge, transfer or other disposition whatsoever of any Transfer Restricted Note. The Registrar shall not register any transfer of a Transfer Restricted Note not made in accordance with the restrictions on transfer set forth in this Section 2.1.

Subject to the last paragraph of this Section 2.1(d) and Section 2.15 with respect to Common Stock, until the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision), any certificate evidencing any Note (and all securities issued in exchange therefor or substitution thereof, including Common Stock, if any, issued upon conversion thereof, which shall bear the legend set forth in Section 2.1(e), if applicable), shall bear a legend in substantially the following form:

“THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘SECURITIES ACT’), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

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THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

“THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND SUCH SHARES OF COMMON STOCK SHALL BE DEEMED BY THE ACCEPTANCE OF THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.”

Any Note (or security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms or that has been transferred pursuant to a registration statement that has been declared effective under the Securities Act may, upon surrender of such Note to the Registrar for exchange in accordance with the provisions of this Section 2.1, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the Restricted Note Legend required by this Section 2.1(d).

(e) Every stock certificate representing Common Stock issued upon conversion of a Transfer Restricted Note that bears or is required under this Section 2.1(e) to bear the legend set forth in this Section 2.1(e) shall be subject to the restrictions on transfer set forth in this Section 2.1(e) (including those set forth in the legend set forth below), and the Holder of such Common Stock issued upon conversion of a Transfer Restricted Note, by such Holder’s

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acceptance thereof, agrees to be bound by all such restrictions on transfer and the further restrictions set forth in Section 2.15. The Company shall not register any transfer of Common Stock issued upon conversion of such a Transfer Restricted Note not made in accordance with the restrictions on transfer set forth in this Section 2.1.

Until the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision), any stock certificate representing Common Stock issued upon conversion of a Transfer Restricted Note shall bear a legend in substantially the following form, unless such Common Stock has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or such Common Stock has been issued upon conversion of Notes that have been transferred pursuant to a registration statement that has been declared effective under the Securities Act:

“THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

“THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (X) (I) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (III) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (Y) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,

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NOTIFY ANY PURCHASER OF THE SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.”

“THIS SECURITY AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.”

Any stock certificate (or security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms or that has been transferred pursuant to a registration statement that has been declared effective under the Securities Act may, upon surrender of such stock certificate to the Registrar for exchange in accordance with the provisions of this Section 2.1 and Section 2.15, be exchanged for a new stock certificate, of like tenor and aggregate number of shares, which shall not bear the Restricted Stock Legend required by this Section 2.1(e).

(f) Each Global Note, whether or not a Transfer Restricted Note, shall bear the following legend:

“THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DEPOSITARY”), OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS THE OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

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“TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.”

(g) The following book-entry provisions shall apply only to Global Notes deposited with the Notes Custodian:

(i) Each Global Note initially shall (x) be registered in the name of the Depositary for such Global Note or the nominee of such Depositary, (y) be delivered to the Notes Custodian and (z) bear legends as set forth in Section 2.1(d).

(ii) Except as provided herein, members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Notes Custodian or under such Global Note, and the Depositary may be treated by the Company, the Trustee, the Notes Custodian and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of a Beneficial Owner of an interest in any Global Note.

(iii) The registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

(iv) In connection with any transfer of a portion of the beneficial interest in a Global Note pursuant to Section 2.1(h) to Beneficial Owners who are required to hold Definitive Notes, the Trustee shall reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Definitive Notes of like tenor and amount.

(v) In connection with the transfer of an entire Global Note to Beneficial Owners pursuant to Section 2.1(h), such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall

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authenticate and deliver, to each Beneficial Owner identified by the Depositary in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations.

(vi) Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through a book-entry system maintained by (a) the Holder of such Global Note (or its agent) or (b) any Holder of a beneficial interest in such Global Note, and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry.

(h) Except as provided below, owners of beneficial interests in Global Notes will not be entitled to receive Definitive Notes. If required to do so pursuant to any applicable law or regulation, Beneficial Owners may obtain Definitive Notes in exchange for their beneficial interests in a Global Note upon written request in accordance with the Depositary’s and the Registrar’s procedures. In addition, Definitive Notes shall be transferred to all Beneficial Owners in exchange for their beneficial interests in a Global Note if (i) the Depositary notifies the Company that it is unwilling or unable to continue as depositary for such Global Note or the Depositary ceases to be a clearing agency registered under the Exchange Act, at a time when the Depositary is required to be so registered in order to act as Depositary, and in each case a successor depositary is not appointed by the Company within 90 days of such notice or (ii) the Company, in its sole discretion, executes and delivers to the Trustee and Registrar an Officers’ Certificate stating that such Global Note shall be so exchangeable or (iii) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depositary.

In the event that the Definitive Notes are not issued to each such Beneficial Owner promptly after the Registrar has received a request from the Holder of a Global Note to issue such Definitive Notes, the Company expressly acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to Section 10.4 or 10.6 hereof, the right of any Beneficial Owner of Notes to pursue such remedy with respect to the portion of the Global Note that represents such Beneficial Owner’s Notes as if such Definitive Notes had been issued.

(i) Any Definitive Note delivered in exchange for an interest in a Global Note pursuant to Section 2.1(g)(iv) or (v) shall, except as otherwise provided by Section 2.6, bear the Restricted Note Legend applicable to the Definitive Note set forth in Section 2.1(d).

(j) In connection with the exchange of a portion of a Definitive Note for a beneficial interest in a Global Note, the Trustee shall cancel such Definitive Note, and the Company shall execute, and the Trustee shall authenticate and deliver, to the transferring Holder a new Definitive Note representing the principal amount not so transferred.

SECTION 2.2. Execution and Authentication. An Officer shall sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

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A Note shall not be valid until an authorized signatory of the Trustee manually authenticates the Note. The signature of the Trustee on a Note shall be conclusive evidence that such Note has been duly and validly authenticated and issued under this Indenture.

At any time and from time to time after the execution and delivery of this Indenture, the Trustee shall, upon the written direction or order of the Company, authenticate and make available for delivery: Notes for original issue in an aggregate principal amount of up to $150,000,000 upon a written order of the Company signed by two Officers of the Company (the “Company Order”). Such Company Order shall specify the amount of the Notes to be authenticated.

The Trustee may appoint an agent (the “Authenticating Agent”) reasonably acceptable to the Company to authenticate the Notes. Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.

In case the Company pursuant to Article IV shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article IV, any of the Notes authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Notes executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Notes surrendered for such exchange and of like principal amount; and the Trustee, upon Company Order of the successor Person, shall authenticate and deliver Notes as specified in such order for the purpose of such exchange. If Notes shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section 2.2 in exchange or substitution for or upon registration of transfer of any Notes, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Notes at the time outstanding for Notes authenticated and delivered in such new name.

SECTION 2.3. Registrar, Conversion Agent and Paying Agent. The Trustee shall initially serve as the Registrar, Conversion Agent and Paying Agent for the Notes. The Registrar, the Conversion Agent and the Paying Agent shall each maintain an office or agency in the Borough of Manhattan, The City of New York. The Registrar shall keep a register of the Notes and of their transfer and exchange (the “Note Register”). The Company may have one or more co-registrars and one or more additional conversions agents and paying agents. The term Paying Agent includes any additional paying agents, the term Conversion Agent includes any additional conversion agents and the term Registrar includes any co-registrar. The Company may appoint and change any Paying Agent, Conversion Agent or Registrar without prior notice to any Holder.

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The Company shall enter into an appropriate agency agreement with any Registrar, Conversion Agent or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee in writing of the name and address of each such agent. If the Company fails to maintain a Registrar, Conversion Agent or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 11.7. The Company or any of its domestically incorporated Subsidiaries may act as Paying Agent, Conversion Agent or Registrar.

The Company may remove any Registrar, Conversion Agent or Paying Agent upon written notice to such Registrar, Conversion Agent or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar, Conversion Agent or Paying Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar, Conversion Agent or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar, Conversion Agent or Paying Agent may resign at any time upon written notice to the Company and the Trustee.

SECTION 2.4. Paying Agent To Hold Money and Securities in Trust. Except as otherwise provided herein, on or prior to 10:00 a.m. (New York City time) on each due date of payment in respect of any Note, the Company shall deposit with the Paying Agent a sum of money (in immediately available funds) sufficient to make such payments when due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by such Paying Agent for the payment of principal of, interest on, and other payments in respect of the Notes, and shall notify the Trustee in writing of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund for the benefit of the Holders of the Notes. The Company at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee and to account for any funds disbursed by such Paying Agent. Upon complying with this Section 2.4, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve as Paying Agent for the Notes.

SECTION 2.5. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar or to the extent otherwise required under the TIA, the Company, on its own behalf, shall furnish to the Trustee, in writing at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may reasonably request in writing within 15 days, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders and the Company shall otherwise comply with TIA § 312(a).

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SECTION 2.6. Transfer and Exchange.

(a) The following provisions shall apply with respect to any proposed transfer of a Note prior to the date which is two years after the later of the date of its original issue and the last date on which the Company or any Affiliate of the Company was the owner of such Notes (or any predecessor thereto) (the “Resale Restriction Termination Date”):

(i) a transfer of a Note or a beneficial interest therein to a QIB shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form of the Form of Certificate to be Delivered Upon Exchange or Registration of Transfer of Securities set forth on the reverse of the Note that the transferee is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and

(ii) a transfer of a Note or a beneficial interest therein to an IAI shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.7 from the proposed transferee and the delivery of an Opinion of Counsel, certification and/or other information satisfactory to each of them.

(b) Upon the transfer, exchange or replacement of Notes not bearing a Restricted Note Legend, the Registrar shall deliver Notes that do not bear a Restricted Note Legend. Upon the transfer, exchange or replacement of Notes bearing a Restricted Note Legend, the Registrar shall deliver only Notes that bear such Restricted Note Legend unless (i) a Note is being transferred pursuant to an effective registration statement or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act.

(c) The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.1 or this Section 2.6 until the Notes have matured and been paid in full. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

(d) The following obligations with respect to transfers and exchanges of Notes shall apply:

(i) To permit registrations of transfers and exchanges, the Company shall, subject to the other terms and conditions of this Article II, execute and the Trustee shall upon receipt of a Company Order, authenticate Definitive Notes and Global Notes at the Registrar’s request.

(ii) No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments or similar governmental charge payable in connection therewith

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(other than any such transfer taxes, assessments or similar governmental charges payable upon exchange or transfer pursuant to Section 6.4, 7.1 or 9.5).

(iii) The Registrar shall not be required to register the transfer of or exchange of any Note (A) for a period beginning at the opening of business 15 days before any selection of Notes for redemption or repurchase and ending at the close of business on the day notice of such redemption or repurchase is deemed to have been given to all Holders of Notes to be so redeemed or repurchased or (B) selected for redemption or repurchase in whole or in part, except for the transfer of the unredeemed portion of any Note being redeemed in part.

(iv) Prior to the due presentation for registration of transfer of any Note, the Company, the Trustee, Paying Agent, the Conversion Agent or the Registrar may deem and treat the Person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest (including Liquidated Damages, if any) on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee, the Paying Agent, the Conversion Agent or the Registrar shall be affected by notice to the contrary.

(v) All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

SECTION 2.7. Form of Certificate To Be Delivered in Connection with Transfers to Institutional Accredited Investors.

[Date]

PSS World Medical, Inc.

c/o Wachovia Bank, National Association

225 Water Street

Jacksonville, FL 32202

Attention: John Speichert

Ladies and Gentlemen:

This certificate is delivered to request a transfer of $                     principal amount of the 2.25% Convertible Senior Notes due March 15, 2024 (the “Notes”) of PSS World Medical, Inc. (the “Company”).

Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows:

Name: ___________________________________________________

Address: _________________________________________________

Taxpayer ID Number: _______________________________________

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The undersigned represents and warrants to you that:

1. We are an institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)) purchasing for our own account or for the account of such an institutional accredited investor at least $250,000 principal amount of the Notes, and we are acquiring the Notes not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risk of our investment in the Notes and we invest in or purchase securities similar to the Notes in the normal course of our business. We and any accounts for which we are acting are each able to bear the economic risk of the complete loss of our or its investment.

2. We understand that the Notes have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Notes to offer, sell or otherwise transfer such Notes prior to the date that is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Notes (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (a) to the Company, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act (“Rule 144A”), to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a “QIB”) that purchases for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) to an institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional accredited investor, in each case in a minimum principal amount of Notes of $250,000 or (e) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Notes is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional accredited investor (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and that it is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to any offer, sale or other transfer prior to the Resale Termination Date of the Notes pursuant to clauses (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee.

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TRANSFEREE:

BY:

SECTION 2.8. Mutilated, Destroyed, Lost or Stolen Notes. If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, subject to compliance with the provisions of the next sentence of this Section 2.8, the Company shall issue and the Trustee, upon Company Order, shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met such that the Holder (a) notifies the Company and the Trustee within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking and the Registrar has not registered a transfer prior to receiving such notification, (b) makes such request to the Company prior to the Company having notice that the Note has been acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a “protected purchaser”) and (c) satisfies any other reasonable requirements of the Company and the Trustee. Such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Conversion Agent and the Registrar from any loss which any of them may suffer if a Note is replaced, then, in the absence of notice to the Company, or the Trustee, Paying Agent, Conversion Agent or Registrar, that such Note has been acquired by a protected purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion, but subject to any conversion rights, may, instead of issuing a new Note, pay such Note upon satisfaction of the conditions set forth in the preceding paragraph.

Upon the issuance of any new Note under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including attorneys’ fees and expenses and the fees and expenses of the Trustee) in connection therewith.

Every new Note issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company and any other obligor upon the Notes, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

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SECTION 2.9. Outstanding Notes . Notes outstanding at any time (“Outstanding Notes”) are all Notes authenticated by the Trustee except for:

(a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation:

(b) Notes for the payment or redemption of which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes, provided that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor reasonably satisfactory to the Trustee has been made;

(c) Notes which have been paid pursuant to Section 2.8 or in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Company; and

(d) Notes converted into Common Stock pursuant to Article IX;

provided, however that in determining whether the Holders of the requisite principal amount of Outstanding Notes are present at a meeting of Holders of Notes for quorum purposes or have given, made or taken any request, demand, authorization, direction, notice, consent or waiver or other action hereunder, Notes owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be Outstanding Notes, except that, in determining whether the Trustee shall be protected in relying upon any such determination as to the presence of a quorum or upon any such request, demand, authorization, direction, notice, consent or waiver or other action, only Notes which a Responsible Officer of the Trustee has been notified in writing to be so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding Notes if the pledgee is not the Company or any Affiliate of the Company, and the Trustee shall be protected in relying upon an Officer’s Certificate to such effect.

SECTION 2.10. Temporary Notes. In the event that Definitive Notes are to be issued under the terms of this Indenture, until such Definitive Notes are ready for delivery, the Company may prepare and, upon receipt of a Company Order, the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at any office or agency maintained by the Company for that purpose and such exchange shall be without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute, and the Trustee shall authenticate and make available for delivery in exchange therefor, one or more Definitive Notes representing an equal principal amount of Notes. Until so exchanged, the Holder of temporary Notes shall in all respects be entitled to the same benefits under this Indenture as a Holder of Definitive Notes.

SECTION 2.11. Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee

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any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and return to the Company all Notes surrendered for registration of transfer, exchange, payment, redemption, purchase, conversion or cancellation. All Notes so delivered to the Trustee shall be cancelled promptly by the Trustee. The Company may not issue new Notes to replace Notes it has paid or delivered to the Trustee for cancellation.

At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred, paid, redeemed, repurchased, converted or canceled, such Global Note shall be returned by the Depositary or the Notes Custodian to the Trustee for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, paid, redeemed, repurchased, converted or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the Global Note and on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

SECTION 2.12. Payment of Interest; Defaulted Interest. Interest (and Contingent Interest, if any) on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more predecessor Notes) is registered at the close of business on the Regular Record Date for such interest (and Contingent Interest, if any) at the office or agency of the Company maintained for such purpose pursuant to Section 2.3.

Any interest (and Contingent Interest, if any) on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the Regular Record Date, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

(a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date (not less than 30 days after such notice) of the proposed payment (the “Special Interest Payment Date”), and the Company shall make arrangements reasonably satisfactory to the Trustee to deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a record date (the “Special Record Date”) for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the Special Interest Payment Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company,

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shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 15.2, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

(b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of, or in exchange for, or in lieu of any other Note shall carry the rights to interest accrued and unpaid which were carried by such other Note.

SECTION 2.13. Computation of Interest. Interest (and Contingent Interest, if any) on the Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

SECTION 2.14. CUSIP Numbers. The Company in issuing the Notes and Common Stock upon conversion of the Notes may use CUSIP numbers (if then generally in use). The Trustee shall not be responsible for the use of CUSIP numbers, and the Trustee makes no representation as to their correctness as printed on any Note, certificate of Common Stock or notice to Holders and that reliance may be placed only on the other identification numbers printed on the Notes, and any redemption shall not be affected by any defect in or omission of such CUSIP numbers. The Company shall promptly notify the Trustee in writing of any change in the CUSIP numbers.

SECTION 2.15. Issuance, Transfer and Exchange of Common Stock Issuable Upon Conversion of the Notes.

(a) Shares of Common Stock to be issued upon conversion of Notes prior to the effectiveness of a Shelf Registration Statement shall be physically delivered in certificated form to the Holders converting such Notes and the certificate representing such shares of Common Stock shall bear the Restricted Stock Legend unless removed in accordance with Section 2.1(e).

(b) If (i) shares of Common Stock to be issued upon conversion of Notes prior to the effectiveness of a Shelf Registration Statement are to be registered in a name other than that of the Holder of such Notes or (ii) shares of Common Stock represented by a certificate bearing the Restricted Stock Legend are transferred subsequently by such Holder, then, unless the Shelf Registration Statement has become effective and such shares are being transferred pursuant to the Shelf Registration Statement, the Holder must deliver to the transfer agent for the

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Common Stock and to the Company a certificate in substantially the form of Exhibit B as to compliance with the restrictions on transfer applicable to such shares of Common Stock and neither the transfer agent nor the registrar for the Common Stock shall be required to register any transfer of such Common Stock not so accompanied by a properly completed certificate.

(c) Except in connection with a Shelf Registration Statement, if certificates representing shares of Common Stock are issued upon the registration of transfer, exchange or replacement of any other certificate representing shares of Common Stock bearing the Restricted Stock Legend, or if a request is made to remove such Restricted Stock Legend from certificates representing shares of Common Stock, the certificates so issued shall bear the Restricted Stock Legend, or the Restricted Stock Legend shall not be removed, as the case may be, unless there is delivered to the Company such reasonably satisfactory evidence, which, in the case of a transfer made pursuant to Rule 144 under the Securities Act, may include an Opinion of Counsel, as may be reasonably required by the Company, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144 under the Securities Act and that such shares of Common Stock are securities that are not “restricted” within the meaning of Rule 144 under the Securities Act. Upon provision to the Company of such reasonably satisfactory evidence, the Company shall cause the transfer agent for the Common Stock to countersign and deliver certificates representing shares of Common Stock that do not bear the Restricted Stock Legend.

SECTION 2.16. Calculations in Respect of the Notes. The Company shall be responsible for making all calculations called for under the Notes. These calculations include, but are not limited to, determinations of the Trading Prices of the Notes and the Closing Sale Price of the Common Stock, any accrued interest, Contingent Interest and Liquidated Damages, if any, payable on the Notes and the Conversion Rate of the Notes, and the projected payment schedule. The Company shall make these calculations in good faith and, absent manifest error, such calculations will be final and binding on Holders of the Note. The Company shall provide to the Trustee a schedule of its calculations, and the Trustee, subject to Sections 11.1 and 11.2, shall be entitled to rely upon the accuracy of such calculations without independent verification. The Trustee shall forward the Company’s calculations to any Holder of the Notes upon the request of such Holder.

ARTICLE III

COVENANTS

SECTION 3.1. Payment of Notes. The Company shall promptly pay the principal of and interest, Contingent Interest and Liquidated Damages, if any, on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal, interest, Contingent Interest and Liquidated Damages, if any, shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal, interest, Contingent Interest and Liquidated Damages, if any, then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

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The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other taxes imposed by the United States of America or any state or local government from principal or interest (including, Contingent Interest and Liquidated Damages, if any) payments hereunder.

SECTION 3.2. Maintenance of Office or Agency. The Company will maintain in the City of New York, as required by Section 2.3, an office or agency where the Notes may be presented or surrendered for payment, where, if applicable, the Notes may be surrendered for registration of transfer or exchange or conversion and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The office of the Trustee, at 40 Broad Street, 5^th floor, New York, New York 10004, Attention: Corporate Trust Office, shall be such office or agency of the Company for payment, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other offices or agencies (in or outside of the City of New York) where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency.

SECTION 3.3. Money and Securities for Note Payments To Be Held in Trust. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of any payment in respect of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum of money in same day funds (or New York Clearing House funds if such deposit is made prior to the date that such deposit is required to be made), sufficient to make such payments when so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee in writing of its action or failure to so act.

Whenever the Company shall have one or more Paying Agents for the Notes, it will, on or before each due date of any payment in respect of the Notes, deposit with any Paying Agent a sum of money in same day funds (or New York Clearing House funds if such deposit is made prior to the date on which such deposit is required to be made, that shall be available to the Trustee by 11:00 a.m. New York City time on such due date, sufficient to pay the amount so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such payment,

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and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee in writing of such action or any failure to so act.

The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 3.3, that such Paying Agent will:

(a) hold all money held by it for the making of any payments in respect of the Notes in trust for the benefit of the Persons entitled thereto until such money shall be paid to such Persons or otherwise disposed of as herein provided;

(b) give the Trustee prompt written notice of any Default by the Company (or any other obligor upon the Notes) in the making of any payment in respect of the Notes; and

(c) at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all money so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all money held in trust by the Company or such Paying Agent, such money to be held by the Trustee upon the same trusts as those upon which such money were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money and/or shares of Common Stock.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of any amounts due in respect of the Notes and remaining unclaimed for two years after such payment has become due and payable shall be paid to the Company on Company Order, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment to the Company, shall at the expense of the Company cause to be published once, in a leading daily newspaper (if practicable, The Wall Street Journal (Eastern Edition)) printed in the English language and of general circulation in New York City, notice that such money and/or shares of Common Stock remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication nor shall it be later than two years after such payment shall have become due and payable, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 3.4. Corporate Existence. Subject to Article IV, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate rights (charter and statutory) licenses and franchises of the Company; provided, however, that the Company shall not be required to preserve any such existence, right, license or franchise if the Board of Directors shall determine that the preservation thereof is no

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longer desirable in the conduct of the business of the Company, and that the loss thereof is not, and will not be, disadvantageous in any material respect to the Holders.

SECTION 3.5. Further Instruments and Acts. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

SECTION 3.6. Liquidated Damages Notices. In the event that the Company is required to pay liquidated damages to Holders of Notes pursuant to the Registration Rights Agreement (“Liquidated Damages”), the Company will provide a direction or order in the form of a written notice (“Liquidated Damages Notice”) to the Trustee of its obligation to pay Liquidated Damages no later than five Business Days prior to the proposed payment date set for the amount of Liquidated Damages, and the Liquidated Damages Notice shall set forth the amount of Liquidated Damages to be paid by the Company on such Payment Date and direct the Trustee to make payment.

SECTION 3.7. SEC Reports. The Company shall file all reports and other information and documents which it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, and within 15 days after it files them with the Commission, the Company shall send copies of all such reports, information and other documents to the Trustee. The Company shall file such reports, information and documents as may be required by TIA § 314(a) with the Trustee and the Commission. The Company shall transmit to the Holders, in the manner required by TIA § 313(c), such reports, information or documents as shall be required by TIA § 314(a)(3).

SECTION 3.8. Compliance Certificates. The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company (beginning with the fiscal year ending April 2, 2004), an Officers’ Certificate as to the signer’s knowledge of the Company’s compliance with all conditions and covenants on their part contained in this Indenture and stating whether or not the signer knows of any Default or Event of Default. If such signer knows of such a Default or Event of Default, the Officers’ Certificate shall describe the Default or Event of Default and the efforts to remedy the same. For the purposes of this Section 3.8, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture.

SECTION 3.9. Rule 144A Information Requirement. Within the period prior to the expiration of the holding period applicable to sales of the Notes under Rule 144(k) under the Securities Act (or any successor provision), the Company covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, upon the request of any Holder or beneficial holder of the Notes or any Common Stock issued upon conversion thereof make available to such Holder or beneficial holder of Notes or any Common Stock issued upon conversion thereof in connection with any sale thereof and any prospective purchaser of Notes or such Common Stock designated by such Holder or beneficial holder, the information required pursuant to Rule 144A(d)(4) under the Securities Act and they will take such further action as any Holder or beneficial holder of such Notes or such Common Stock may reasonably request, all to the extent required from time to time to enable such Holder or

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beneficial holder to sell its Notes or Common Stock without registration under the Securities Act within the limitation of the exemption provided by Rule 144A, as such Rule may be amended from time to time. Upon the request of any Holder or any beneficial holder of the Notes or such Common Stock, the Company will deliver to such Holder a written statement as to whether such Holder and prospective purchaser have complied with such requirements

SECTION 3.10. Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of, interest, Contingent Interest or Liquidated Damages, if any, on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenant that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 3.11. Notice of Default. In the event that any Default that could mature into an Event of Default under Section 10.1(c) hereof shall occur, the Company shall give written notice of such Default to the Trustee within 30 days of such Default.

SECTION 3.12. Contingent Debt Treatment. The Company agrees, and by acceptance of a beneficial interest in a Note, each Holder and any Beneficial Owner of a Note shall be deemed to agree, to treat, for United States tax purposes, the Notes as debt instruments that are subject to Treasury Regulation Section 1.1275-4(b) or any successor provision (the “contingent debt regulations”). For United States tax purposes, the Company shall accrue, and each Holder or Beneficial Owner of a Note shall accrue, interest with respect to outstanding Notes as Tax Original Issue Discount according to the “noncontingent bond method,” set forth in Treasury Regulation Section 1.1275-4(b), using the comparable yield set forth in Annex A to this Indenture compounded semiannually and the projected payment schedule attached as Annex A to this Indenture.

The Company acknowledges and agrees, and by acceptance of a beneficial interest in a Note each Holder and any Beneficial Owners of a Note shall be deemed to acknowledge, and agree, that (i) the comparable yield means the annual yield the Company would pay, as of the issue date, on a noncontingent, nonconvertible, fixed-rate debt instrument with terms and conditions otherwise similar to those of the Notes and (ii) the comparable yield and projected payment schedule that Holder or Beneficial Owner may obtain as described above do not constitute a representation by the Company regarding the actual amounts that will be paid on the Notes or the value of the Common Stock into which the Notes may be converted.

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ARTICLE IV

SUCCESSOR COMPANY

SECTION 4.1. Merger and Consolidation. The Company shall not (1) consolidate with or merge with or into, or convey, sell, transfer, lease or otherwise dispose of all or substantially all its properties and assets to, any other Person in any one transaction or series of related transactions, or (2) permit any Person to consolidate with or merge into the Company, unless:

(a) in the case of a merger or consolidation, either the Company is the surviving Person, or if the Company is not the surviving Person, the surviving Person formed by such consoldation or into which the Company is merged or to which the properties and assets of the Company are transferred (such surviving Person in any such case, the “Successor Company”) shall be a corporation organized and existing under the laws of the United States of America, any State of the United States or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the payment when due of the principal of and interest (including Contingent Interest and Liquidated Damages, if any) on the Notes and the performance of each of the Company’s other obligations under the Notes and this Indenture;

(b) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and

(c) the Company shall have delivered to the Trustee on or prior to the proposed transaction an Officers’ Certificate and an Opinion of Counsel, each stating that (i) such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture, (ii) the Successor Company agrees to be bound by this Indenture and (iii) that all conditions precedent herein provided for relating to such transaction have been complied with.

For purposes of this Article IV, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

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SECTION 4.2. Successor Corporation Substituted. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all the properties and assets of the Company in accordance with Section 4.1, the Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if the Successor Company had been named as the Company herein, and thereafter, except in the case of a lease of all or substantially all of its assets, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Notes.

ARTICLE V

REDEMPTION OF NOTES

SECTION 5.1. Optional Redemption. On or after March 15, 2009, the Notes may be redeemed for cash, as a whole or from time to time in part, subject to the conditions specified in the form of Note set forth in Exhibit A hereto, which is hereby incorporated by reference and made a part of this Indenture, in an amount equal to the Redemption Price.

SECTION 5.2. Applicability of Article. Redemption of Notes at the election of the Company or otherwise, as permitted or required by any provision of this Indenture or the Notes, shall be made in accordance with such provision and this Article.

SECTION 5.3. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Notes pursuant to Section 5.1 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not later than the earlier of the date that is 35 days prior to the Redemption Date fixed by the Company and the date on which notice is given to the Holders (except as provided in Section 5.5 or unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed, deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to Section 5.4 and direct the Trustee to redeem the Notes in accordance with the Board Resolution. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect.

SECTION 5.4. Selection by Trustee of Notes To Be Redeemed. If less than all the Notes are to be redeemed at any time pursuant to an optional redemption, the particular Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the outstanding Notes not previously called for redemption, in compliance with the requirements of the principal securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements) and which may provide for the selection for redemption of portions of the principal of the Notes; provided, however, that Notes selected for partial redemption shall be in denominations of $1,000 and integral multiples thereof.

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The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the method it has chosen for the selection of Notes and the principal amount thereof to be redeemed and upon the Company’s written approval of such selection, the Trustee shall redeem the selected Notes.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

SECTION 5.5. Notice of Redemption. Notice of redemption shall be given by first class mail not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed. At the Company’s written request, the Trustee shall give notice of redemption in the Company’s name and at the Company’s expense; provided, however, that the Company shall deliver to the Trustee, at least 35 days prior to the Redemption Date (unless a shorter notice period shall be satisfactory to the Trustee) a Company Order requesting that the Trustee give such notice at the Company’s expense and setting forth the information to be stated in such notice as provided in the following items:

(a) the Redemption Date,

(b) the Redemption Price and the amount of accrued interest (including Contingent Interest, if any) to but excluding the Redemption Date payable as provided in Section 5.7, if any,

(c) the then existing Conversion Rate,

(d) if less than all outstanding Notes are to be redeemed, the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption,

(e) in case any Note is to be redeemed in part only, the notice that relates to such Note shall state that on and after the Redemption Date, upon surrender of such Note, the Holder will receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed,

(f) that on the Redemption Date, 100% of the principal amount of the Notes to be redeemed (and accrued interest, if any, and Contingent Interest, if any, to but excluding the Redemption Date payable as provided in Section 5.7) will become due and payable upon each such Note, or the portion thereof, to be redeemed, and, unless the Company defaults in making the redemption payment, that interest (and Contingent Interest and Liquidated Damages, if any) on Notes called for redemption (or the portion thereof) will cease to accrue on and after said date,

(g) the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued interest and Contingent Interest, if any,

(h) the name and address of the Paying Agent and the Conversion Agent,

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(i) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price,

(j) the CUSIP number of the Notes to be redeemed, provided that no representation is made as to the accuracy or correctness of the CUSIP number, if any, listed in such notice or printed on the Notes, and any redemption shall not be affected by any defect in such CUSIP numbers,

(k) the paragraph of the Notes pursuant to which the Notes are to be redeemed,

(l) that the Notes called for redemption may be converted at any time before the close of business one Business Day prior to the Redemption Date,

(m) whether the Company intends to satisfy its obligation by delivering Common Stock, cash or a combination of cash and Common Stock (and in such case, the dollar amount per Note to be satisfied in cash) in the event that Holders elect to convert their Notes in connection with the redemption, and

(n) the Holders who wish to convert Notes must comply with the procedures in Article IX and paragraph 10 of the Notes.

If the Company exercises its right to redeem the Notes, in whole or in part, the Company shall disseminate a press release containing information regarding the redemption, through a public medium that is customary for such press releases or publish the information on its website or through such other public medium as the Company may use at that time.

SECTION 5.6. Deposit of Redemption Price. On or before 10:00 a.m. on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 2.4) an amount of money sufficient to pay the Redemption Price of the Notes which are to be redeemed on that date, other than Notes or portions of Notes called for redemption that are beneficially owned by the Company and have been delivered by the Company to the Trustee for cancellation or Notes that have been converted.

SECTION 5.7. Notes Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Notes or portions of Notes so to be redeemed shall, on the Redemption Date, become due and payable at a price equal to the Redemption Price, except for Notes which are converted in accordance with the terms of this Indenture, and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Notes shall cease to bear interest (and Contingent Interest and Liquidated Damages, if any). Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price on the Redemption Date (subject to the rights of Holders of record on the relevant Regular Record Date to receive interest and Contingent Interest, if any, due on the relevant Interest Payment Date).

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If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest (and Contingent Interest and Liquidated Damages, if any) from the Redemption Date at the rate borne by the Notes.

SECTION 5.8. Notes Redeemed in Part. Any Note which is to be redeemed only in part (pursuant to the provisions of this Article) shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 2.3 (with due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Note at the expense of the Company, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal amount of the Note so surrendered, provided, that each such new Note will be in a principal amount of $1,000 or integral multiple thereof.

If a Holder converts a portion of its Note prior to receipt of the redemption notice for a Note to be redeemed only in part, the converted portion will be deemed to be from the portion selected for redemption. In the event of any redemption in part, the Company will not be required to (i) issue, register the transfer of or exchange any Note during a period beginning at the opening of business 15 days before any selection of Notes for redemption and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all Holders of Notes to be so redeemed; or (ii) register the transfer of or exchange any Note so selected for redemption, in whole or in part, except the unredeemed portion of any Note being redeemed in part.

SECTION 5.9. Arrangement on Call for Redemption.

(a) In connection with any redemption of Notes, the Company may arrange at or shortly before the time of the redemption for the purchase and conversion of any Notes called for redemption by an agreement with one or more investment banks or other purchasers to purchase such Notes by paying to the Trustee in trust for the Holders, on or prior to 11:00 a.m. (New York City time) on the Redemption Date, an amount that, together with any amounts deposited with the Trustee by the Company for the redemption of such Notes, is not less than the Redemption Price of such Notes. Notwithstanding anything to the contrary contained in this Article V, the obligation of the Company to pay the Redemption Prices of such Notes shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers; provided, however, that nothing in this Section 5.9 shall relieve the Company of its obligation to pay the Redemption Price (plus accrued interest, Contingent Interest and Liquidated Damages, if any to, but excluding, the relevant Redemption Date) on Notes called for redemption.

(b) If such an agreement is entered into, any Notes called for redemption that are not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders as of the close of business on the Redemption Date, subject to payment of the above amount as aforesaid.

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(c) At the written direction of the Company, the Trustee shall hold and pay to the Holders whose Notes are selected for redemption any such amount paid to it for purchase in the same manner as it would moneys deposited with it by the Company for the redemption of Notes. Without the Trustee’s prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Notes shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase of any Notes between the Company and such purchasers, including the reasonable costs and out-of-pocket expenses incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Section 5.9.

ARTICLE VI

REPURCHASE UPON A FUNDAMENTAL CHANGE

SECTION 6.1. Repurchase at the Option of the Holder upon a Fundamental Change. If a Fundamental Change shall occur, each Holder shall have the right, at such Holder’s option, to require the Company to purchase any or all of such Holder’s Notes not previously called for redemption for cash on the date that is no less than 20 Business Days and no more than 35 Business Days after the date of the Company Notice of the occurrence of such Fundamental Change (subject to extension to comply with applicable law, as provided in Section 8.4) (the “Fundamental Change Repurchase Date”). The Notes shall be repurchased in integral multiples of $1,000 of the principal amount. The Company shall purchase such Notes at a price (the “Fundamental Change Repurchase Price”) equal to 100% of the principal amount of the Notes to be purchased plus accrued and unpaid interest, if any, Contingent Interest, if any, and Liquidated Damages, if any, to, but not including, the Fundamental Change Repurchase Date.

SECTION 6.2. Notice of Fundamental Change. The Company, or at its request (which must be received by the Paying Agent at least three Business Days (or such lesser period as agreed to by the Paying Agent) prior to the date the Paying Agent is requested to give such notice as described below), the Paying Agent in the name of and at the expense of the Company, shall mail to all Holders and the Trustee a Company Notice of the occurrence of a Fundamental Change and of the purchase right arising as a result thereof, including the information required by Section 8.1, on or before the 30^th day after the occurrence of such Fundamental Change. In addition, simultaneous with mailing the Company Notice, the Company will disseminate a press release containing information about the Fundamental Change and the repurchase right arising as a result of the Fundamental Change through a public medium that is customary for such press releases or publish the information on the Company’s website or through such other public medium as the Company may use at that time.

SECTION 6.3. Exercise of Option. For a Note to be so purchased at the option of the Holder, the Trustee must receive such Note duly endorsed for transfer, together with a written notice of repurchase (the “Fundamental Change Repurchase Notice”) in the form

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attached to the Note, before the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, subject to extension to comply with applicable law, as provided in Section 8.4. The Fundamental Change Repurchase Notice shall state:

(a) if the Notes are certificated, the certificate numbers of the Notes which the Holder shall deliver to be purchased, or, if the Notes are not certificated, the Fundamental Change Repurchase Notice must comply with appropriate Depositary procedures;

(b) the portion of the principal amount of the Notes which the Holder shall deliver to be purchased, which portion must be $1,000 in principal amount or an integral multiple thereof; and

(c) that such Notes shall be purchased as of the Fundamental Change Repurchase Date pursuant to the terms and conditions specified in paragraph 9 of the Notes and in this Indenture.

SECTION 6.4. Procedures. The Company shall purchase from a Holder, pursuant to this Article VI, Notes if the principal amount of such Notes is $1,000 or a multiple of $1,000 if so requested by such Holder.

Any purchase by the Company contemplated pursuant to the provisions of this Article VI shall be consummated by the delivery of the Fundamental Change Repurchase Price to be received by the Holder promptly following the later of the Fundamental Change Repurchase Date or the time of book-entry transfer or delivery of the Notes.

The Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental Change Repurchase Notice.

On or before 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date, the Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company is acting as the Paying Agent, shall segregate and hold in trust) cash, sufficient to pay the aggregate Fundamental Change Repurchase Price of the Notes to be purchased pursuant to this Article VI. Payment by the Paying Agent of the Fundamental Change Repurchase Price for such Notes shall be made promptly following the later of the Fundamental Change Repurchase Date or the time of book-entry transfer or delivery of such Notes. If the Paying Agent holds, in accordance with the terms of this Indenture, cash sufficient to pay the Fundamental Change Repurchase Price of such Notes on the Business Day immediately following the Fundamental Change Repurchase Date, then, on and after such date, such Notes shall cease to be outstanding and interest (including Contingent Interest and Liquidated Damages, if any) on such Notes shall cease to accrue, whether or not book-entry transfer of such Notes is made or such Notes are delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the right to receive the Fundamental Change Repurchase Price upon delivery or transfer of the Notes). Nothing herein shall preclude the withholding of any tax required by law or regulations.

The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all cash held by the Paying Agent for the payment of the Fundamental Change Repurchase Price and

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shall notify the Trustee of any Default by the Company in making any such payment. The Company at any time may require a Paying Agent to deliver all cash held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon doing so, the Paying Agent shall have no further liability for the cash delivered to the Trustee.

All questions as to the validity, eligibility (including time of receipt) and acceptance of any Notes for repurchase shall be determined by the Company, whose determination shall be final and binding.

ARTICLE VII

OPTIONAL REPURCHASE

SECTION 7.1. Repurchase of Notes by the Company at the Option of the Holder.

(a) On each of March 15, 2009, March 15, 2014 and March 15, 2019 (each, a “Repurchase Date”), Holders shall have the option to require the Company to purchase any Notes at 100% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest and Contingent Interest and Liquidated Damages, if any, to but not including such Repurchase Date, subject to the satisfaction by or on behalf of the Holder of the requirements set forth below:

(1) Repurchases of Notes under this Section 7.1 shall be made, at the option of the Holder thereof, upon delivery to the Paying Agent by the Holder of a written notice of repurchase (a “Repurchase Notice”) in the form attached to the Note at any time from the opening of business on the date that is 20 Business Days prior to a Repurchase Date until the close of business on the last Business Day immediately prior to such Repurchase Date, stating:

(i) if the Notes are certificated, the certificate numbers of the Notes which the Holder will deliver to be purchased, or, if the Notes are not certificated, the Repurchase Notice must comply with appropriate Depositary procedures;

(ii) the portion of the principal amount of the Notes which the Holder will deliver to be purchased, which portion must be $1,000 in principal amount or an integral multiple thereof; and

(iii) that such Notes shall be purchased as of the Repurchase Date pursuant to the terms and conditions specified in paragraph 8 of the Notes and in this Indenture; and

(2) delivery or book-entry transfer of such Notes to the Paying Agent prior to, on or after the Repurchase Date (together with all necessary endorsements) at the offices of the Paying Agent, such delivery or transfer being a condition to receipt by the Holder

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of the Repurchase Price therefor; provided, however, that such Repurchase Price shall be so paid pursuant to this Section 7.1 only if the Notes so delivered or transferred to the Paying Agent shall conform in all respects to the description thereof in the related Repurchase Notice.

The Repurchase Price with respect to Notes purchased on a Repurchase Date shall be paid solely in cash.

(b) The Company shall purchase from a Holder, pursuant to the terms of this Section 7.1, Notes if the principal amount of such Notes is $1,000 or a multiple of $1,000 if so requested by such Holder.

(c) Any purchase by the Company contemplated pursuant to the provisions of this Section 7.1 shall be consummated by the delivery of the Repurchase Price to be received by the Holder promptly following the later of the Repurchase Date and the time of book-entry transfer or delivery of the Notes.

(d) Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Repurchase Notice contemplated by this Section 7.1 shall have the right at any time prior to the close of business on the Business Day prior to the Repurchase Date to withdraw such Repurchase Notice (in whole or in part) by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 8.2.

(e) The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Notice or written notice of withdrawal thereof.

(f) On or before 11:00 a.m. on the Repurchase Date, the Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company is acting as the Paying Agent, shall segregate and hold in trust) cash sufficient to pay the aggregate Repurchase Price of the Notes to be purchased pursuant to this Section 7.1. Payment by the Paying Agent of the Repurchase Price for such Notes shall be made promptly following the later of the Repurchase Date and the time of book-entry transfer or delivery of such Notes. If the Paying Agent holds, in accordance with the terms of this Indenture, cash sufficient to pay the Repurchase Price of such Notes on the Business Day immediately following the Repurchase Date, then, on and after such date, such Notes shall cease to be outstanding and interest, Contingent Interest, if any, and Liquidated Damages, if any, on such Notes shall cease to accrue, whether or not book-entry transfer of such Notes is made or such Notes are delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the right to receive the Repurchase Price upon delivery or transfer of the Notes).

(g) The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all cash held by the Paying Agent for the payment of the Repurchase Price and shall notify the Trustee of any Default by the Company in making any such payment. The Company at any time may require a Paying Agent to deliver all cash held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon doing so, the Paying Agent shall have no further liability for the cash and/or Common Stock, as the case may be, delivered to the Trustee.

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ARTICLE VIII

CONDITIONS AND PROCEDURES FOR REPURCHASES AT OPTION OF HOLDERS

SECTION 8.1. Notice of Repurchase Date or Fundamental Change. The Company shall send notices (each, a “Company Notice”) to the Holders (and to Beneficial Owners as required by applicable law) at their addresses shown in the Note Register not less than 20 Business Days prior to each Repurchase Date, in accordance with Section 7.1 hereof, or on or before the 30^th day after the occurrence of a Fundamental Change, in accordance with Section 6.2 hereof, as the case may be (each such date of delivery, a “Company Notice Date”). The Company shall also deliver a copy of such Company Notice to the Trustee and any Paying Agent. Each Company Notice shall include a form of Repurchase Notice or Fundamental Change Repurchase Notice to be completed by a Holder and shall state:

(a) the applicable Repurchase Price or Fundamental Change Repurchase Price, excluding accrued and unpaid interest, Conversion Rate at the time of such notice (and any adjustments to the Conversion Rate) and, to the extent known at the time of such notice, the amount of accrued and unpaid interest, Contingent Interest, if any, and Liquidated Damages, if any, that will be payable with respect to the Notes on the applicable Repurchase Date or Fundamental Change Repurchase Date;

(b) if the notice relates to a Fundamental Change, the events causing the Fundamental Change and the date of the Fundamental Change;

(c) the Repurchase Date or Fundamental Change Repurchase Date;

(d) the last date on which a Holder may exercise its purchase right;

(e) the name and address of the Paying Agent and the Conversion Agent;

(f) that Notes must be surrendered to the Paying Agent to collect payment of the Repurchase Price or Fundamental Change Repurchase Price;

(g) that Notes as to which a Repurchase Notice or Fundamental Change Repurchase Notice has been given may be converted only if the applicable Repurchase Notice or Fundamental Change Repurchase Notice has been withdrawn in accordance with the terms of this Indenture;

(h) that the Repurchase Price or Fundamental Change Repurchase Price for any Notes as to which a Repurchase Notice or a Fundamental Change Repurchase Notice, as applicable, has been given and not withdrawn shall be paid by the Paying Agent promptly following the later of the Repurchase Date or Fundamental Change Repurchase Date, as applicable, and the time of book-entry transfer or delivery of such Notes;

(i) the procedures the Holder must follow under Article VI or VII hereof, as applicable, and this Article VIII;

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(j) briefly, the conversion rights of the Notes;

(k) that, unless the Company defaults in making payment of such Repurchase Price or Fundamental Change Repurchase Price on Notes covered by any Repurchase Notice or Fundamental Change Repurchase Notice, as applicable, interest, Contingent Interest, if any, and Liquidated Damages, if any, will cease to accrue on and after the Repurchase Date or Fundamental Change Repurchase Date, as applicable;

(l) the CUSIP or ISIN number of the Notes; and

(m) the procedures for withdrawing a Repurchase Notice or Fundamental Change Repurchase Notice.

In connection with providing such Company Notice, the Company will issue a press release and publish a notice containing the information in such Company Notice in a newspaper of general circulation in the City of New York or publish such information on the Company’s then existing website or through such other public medium as the Company may use at the time.

If any of the Notes is in the form of a Global Note, then the Company shall modify such Company Notice to the extent necessary to accord with the procedures of the Depositary applicable to the repurchase of Global Notes.

At the Company’s request, made at least one Business Day prior to the date upon which such notice is to be mailed, and at the Company’s expense, the Paying Agent shall give the Company Notice in the Company’s name to the Holders; provided, however, that, in all cases, the text of the Company Notice shall be prepared by the Company.

SECTION 8.2. Effect of Repurchase Notice or Fundamental Change Repurchase Notice. Upon receipt by the Company of a properly completed and executed Repurchase Notice or Fundamental Change Repurchase Notice specified in Section 7.1 or Section 6.3, as applicable, the Holder of the Notes in respect of which such Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, was given shall (unless such Repurchase Notice or Fundamental Change Repurchase Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Repurchase Price or Fundamental Change Repurchase Price with respect to such Notes. Such Repurchase Price or Fundamental Change Repurchase Price shall be paid by the Paying Agent to such Holder promptly following the later of (i) the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, with respect to such Notes (provided the conditions in Section 7.1 or Section 6.2, as applicable, have been satisfied) and (ii) the time of delivery or book-entry transfer of such Notes to the Paying Agent by the Holder thereof in the manner required by Section 7.1 or Section 6.4, as applicable. Notes in respect of which a Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, has been given by the Holder thereof may not be converted for shares of Common Stock on or after the date of the delivery of such Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, unless such Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, has first been validly withdrawn as specified in the following two paragraphs.

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A Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent (with a copy to the Company) at any time prior to the close of business on the Business Day prior to the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, to which it relates specifying:

(a) if the Notes are certificated, the certificate number of the Notes in respect of which such notice of withdrawal is being submitted, or, if not certificated, the written notice of withdrawal must comply with appropriate Depositary procedures;

(b) the principal amount of the Notes with respect to which such notice of withdrawal is being submitted; and

(c) the principal amount, if any, of such Notes which remains subject to the original Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, and which has been or shall be delivered for purchase by the Company.

The Paying Agent shall promptly return to the respective Holders thereof any Notes with respect to which a Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, has been withdrawn in compliance with this Indenture.

SECTION 8.3. Notes Repurchased in Part. Any Notes that are to be repurchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and the Trustee or the Authenticating Agent shall authenticate and deliver to the Holder of such Notes, without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Notes so surrendered which is not purchased.

SECTION 8.4. Covenant to Comply with Securities Laws upon Repurchase of Notes. In connection with any offer to repurchase Notes under Article VI or Article VII hereof, the Company shall, to the extent required by applicable law, (a) comply with Rules 13e-4 and 14e-1 (and any successor provisions thereto) and any other rules relating to tender offers under the Exchange Act, if applicable; (b) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act, if applicable; and (c) otherwise comply in all material respects with all applicable federal and state securities laws so as to permit the rights and obligations under Article VI or Article VII to be exercised in the time and in the manner specified in Article VI or Article VII.

SECTION 8.5. Repayment to the Company. The Trustee and the Paying Agent shall return to the Company any cash or property that remains unclaimed as provided in paragraph 13 of the Notes and Section 3.3 hereof, together with interest (including Contingent Interest, if any) that the Trustee or Paying Agent, as the case may be, has agreed to pay, if any, held by them for the payment of a Repurchase Price or Fundamental Change Repurchase Price, as the case may be; provided, however, that to the extent that the aggregate amount of cash or property

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deposited by the Company pursuant to Section 7.1(f) or 6.4, as applicable, exceeds the aggregate Repurchase Price or Fundamental Change Repurchase Price, as the case may be, of the Notes or portions thereof which the Company is obligated to purchase as of the Repurchase Date or Fundamental Change Repurchase Date, as the case may be, then promptly on and after the Business Day immediately following the Repurchase Date or Fundamental Change Repurchase Date, as the case may be, the Trustee and the Paying Agent shall return any such excess to the Company together with interest (including Contingent Interest, if any) that the Trustee or Paying Agent, as the case may be, has agreed to pay, if any.

SECTION 8.6. Exchange in Lieu of Repurchase. The Company shall have the option, exercisable at any time or from time to time, by an instrument in writing signed by the Company and provided to the Paying Agent, to designate a, or change the existing designation of the, financial institution (a “Repurchase Party”) to which Notes surrendered by a Holder for repurchase in accordance with Article VI or Article VII, as applicable, will be initially offered by the Paying Agent on behalf of a Holder for exchange in lieu of repurchase. In order to accept any Notes surrendered for repurchase, the Repurchase Party must agree to deliver, in exchange for such Notes, the Repurchase Price or the Fundamental Change Repurchase Price, as the case may be, for such Notes in the amount that would be payable if the Notes were repurchased by the Company in accordance with Article VI or Article VII, as applicable. If the Repurchase Party accepts any Notes for repurchase, it will deliver to the Paying Agent, and the Paying Agent will deliver to Holders that surrendered such Notes for repurchase, the Repurchase Price or the Fundamental Change Repurchase Price, as applicable, payable with respect to such Notes. In the event that the Repurchase Party agrees to accept any Notes for repurchase but fails to deliver the Repurchase Price or the Fundamental Change Repurchase Price to the Paying Agent by the Repurchase Date, the Notes will be repurchased by the Company in accordance with Article VI or Article VII, as applicable, and the Company will, as promptly as practical thereafter, but not later than one Business Day following the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, cause the Repurchase Price or the Fundamental Change Repurchase Price, as the case may be, for the Notes to be paid (provided, however, that interest, Contingent Interest and Liquidated Damages, if any, shall continue to accrue on the Notes to be repurchased until the Repurchase Price or the Fundamental Change Repurchase Price, as the case may be, has been paid). Any Notes purchased by the Repurchase Party shall remain outstanding. The designation by the Company of a Repurchase Party does not require such Repurchase Party to accept any Notes. If the Repurchase Party declines to accept any Notes surrendered for repurchase, the Company will repurchase the Notes on the terms provided in this Indenture. The Company will not pay any consideration to, or otherwise enter into any arrangement with, the Repurchase Party for or with respect to such designation.

ARTICLE IX

CONVERSION OF NOTES

SECTION 9.1. Right To Convert. Subject to and upon compliance with the provisions of this Article IX, a Holder may convert its Notes into shares of Common Stock at the

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applicable Conversion Rate (defined below) at any time during which the following conditions are met:

(a) on any Business Day during a calendar quarter (and only during that calendar quarter) prior to March 15, 2019, if the Closing Sale Price of the Common Stock for at least 20 Trading Days in a period of 30 consecutive Trading Days ending on the last Trading Day of the previous calendar quarter, is greater than 120% of the applicable Conversion Price;

(b) at any time after March 15, 2019, if the Closing Sale Price of the Common Stock is greater than 120% of the applicable Conversion Price;

(c) during the five consecutive Business Day period following any five consecutive Trading Day period in which the Trading Price for a Note for each day of that trading period was less than 98% of the Closing Sale Price of the Common Stock on such corresponding Trading Day multiplied by the applicable Conversion Rate; provided, however, that if, on the Trading Day immediately prior to the Conversion Date, the Closing Sale Price of the Common Stock is greater than 100% of the applicable Conversion Price but less than or equal to 120% of the applicable Conversion Price, a Note is surrendered for conversion and the Notes are not otherwise convertible, then Holders will receive, in lieu of Common Stock based on the Conversion Rate, cash, Common Stock or a combination of cash and Common Stock, at the Company’s option, with a value equal to 100% of the principal amount of the Note to be converted plus accrued and unpaid interest and Contingent Interest, if any, to but not including the Conversion Date (a “Principal Value Conversion”). If a Holder surrenders its Notes for a Principal Value Conversion pursuant to this Section 9.1(c), the Company will notify such Holder through the Conversion Agent whether the Company will pay such Holder all or a portion of the principal amount plus accrued and unpaid interest, if any, of such Notes in cash, Common Stock or a combination of cash and Common Stock and in what percentage or amount at any time on or before the date that is two Trading Days following the Conversion Date. Settlement (in cash and/or Common Stock) will occur on the third Business Day following the final day of the five consecutive Trading Day period beginning on the third Trading Day following the Conversion Date. Any Common Stock delivered upon a Principal Value Conversion in accordance with this Section 9.1(c) shall be valued at 100% of the average of the Closing Sale Prices of the Common Stock for the five consecutive Trading Days commencing on the third Trading Day following the Conversion Date;

(d) during such period, if any, in which (i) the Company’s long-term issuer rating assigned by Moody’s is at or below Caa1 and the corporate credit rating by Standard & Poor’s is at or below B-, or (ii) if the Company is no longer rated by at least one of Moody’s or Standard & Poor’s;

(e) in the event that the Company calls the Notes for redemption pursuant to Article V hereof, prior to the close of business on the Business Day prior to the Redemption Date, even if the Notes are not otherwise convertible at such time, provided that if the Company elects to redeem less than all the Notes, only those Notes called for redemption may be redeemed pursuant to this Section 9.1(e);

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(f) the Company becomes a party to a consolidation, merger or binding share exchange pursuant to which all or substantially all of the Common Stock would be converted into cash, securities or other property, in which case a Holder may surrender Notes for conversion at any time from and after the date that is 15 days prior to the anticipated effective date for the transaction until 15 days after the actual effective date of such transaction; or

(g) the Company elects to (i) distribute to all holders of Common Stock assets, debt securities or rights to purchase securities, other than rights referred to in clause (ii) below of the Company, which distribution has a per share value as determined by the Board of Directors exceeding 10% of the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the declaration date for such distribution, or (ii) distribute to all holders of Common Stock rights, options or warrants entitling them to purchase shares of Common Stock at less than the Current Market Price. In the case of the foregoing clauses (i) and (ii), the Company must notify the Holders at least 20 days immediately prior to the ex-dividend date for such distribution. Once the Company has given such notice, Holders may surrender their Notes for conversion at any time thereafter until the earlier of the close of business on the Business Day immediately prior to the ex-dividend date and the Company’s announcement that such distribution will not take place, even if the Notes are not otherwise convertible at such time; provided, however, that a Holder may not exercise this right to convert if the Holder is otherwise entitled to participate in the distribution without conversion. As used herein, the term “ex-dividend date” or “ex-date” when used with respect to any issuance or distribution, shall mean the first date upon which a sale of shares of Common Stock does not automatically transfer the right to receive the relevant dividend or distribution from the seller of such Common Stock to its buyer.

Upon the Company’s determination that Holders are or will be entitled to convert Notes into shares of Common Stock in accordance with the provisions of this Section 9.1, the Company will issue a press release through a public medium that is customary for such press releases or publish the information on the Company’s website or through such other public medium as the Company may use at that time.

The number of shares of Common Stock issuable upon conversion of a Note per $1,000 principal amount (the “Conversion Rate”) shall be that set forth in paragraph 10 in the Notes, subject to adjustment as herein set forth. The initial Conversion Rate is 58.4949 shares of Common Stock issuable upon conversion of a Note per $1,000 principal amount.

A Holder may convert a portion of the principal amount of Notes if the portion is $1,000 or a multiple of $1,000.

SECTION 9.2. Determination of Satisfaction of Certain Conversion Triggers.

(a) The Conversion Agent shall, on the Company’s behalf, determine if the Notes are convertible in accordance with Sections 9.1(a) or 9.1(b) and shall notify the Company and the Trustee if the Notes become convertible; provided that the Company shall provide to the Conversion Agent, upon written request, the Closing Sale Price of the Common Stock. Prior to March 15, 2019, the Conversion Agent shall make such determination during the last 30 consecutive Trading Days ending on the last Trading Day of each calendar quarter. Beginning after March 15, 2019, the Conversion Agent shall make such determination on a daily basis.

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(b) The Conversion Agent will, on behalf of the Company, determine if the Notes are convertible in accordance with Section 9.1(c) and notify the Company and the Trustee if the Notes become convertible; provided, however, that the Conversion Agent shall have no obligation to determine the Trading Price of the Notes unless the Company has requested such determination in writing and the Company shall have no obligation to make such request unless requested in writing to do so by a Holder. Upon request by the Company to the Conversion Agent to determine the Trading Price, the Company shall instruct the Conversion Agent to determine the Trading Price of the Notes beginning on the next succeeding Trading Day and on each successive Trading Day until the Trading Price of the Notes is greater than or equal to 98% of the product of the Closing Sale Price of the Common Stock and the applicable Conversion Rate.

SECTION 9.3. Conversion Procedures. To convert Notes, a Holder must satisfy the requirements in this Section 9.3 and in paragraph 10 of the Notes. The date on which the Holder satisfies all those requirements and delivers an irrevocable conversion notice, together, if the Notes are in certificated form, with the certificated Note, to the Conversion Agent, along with appropriate endorsements and transfer documents, and pays any transfer or similar tax, is the conversion date (the “Conversion Date”). As soon as practicable, but in no event later than the third Business Day following the determination of the Applicable Stock Price, the Company shall deliver to the Holder, through the Conversion Agent, a certificate for the number of full shares of Common Stock issuable upon the conversion which shall be equal to (1) the aggregate original principal amount of the Notes to be converted divided by 1,000, multiplied by (2) the Conversion Rate rounded down to the nearest whole share, and cash in lieu of any fractional share determined pursuant to Section 9.4. Upon conversion, the Company may choose to deliver, in lieu of Common Stock, cash or a combination of cash and Common Stock as set forth in Section 9.18. The Person in whose name the certificate is registered shall only be treated as a stockholder of record on and after the Conversion Date; provided, however, that no surrender of Notes on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the Person or Persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the Person or Persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding Business Day on which such stock transfer books are open; such conversion shall be at the Conversion Rate in effect on the date that such Notes were surrendered for conversion, as if the stock transfer books of the Company had not been closed. Upon conversion of Notes, such Person shall no longer be a Holder of such Notes.

No payment or adjustment shall be made for dividends on or other distributions with respect to any Common Stock except as provided in Section 9.8 or as otherwise provided in this Indenture.

Except as provided in this paragraph, a converting Holder of Notes shall not be entitled to received any accrued and unpaid cash interest (including Contingent Interest) on any such Notes being converted. By delivery to the Holder of the number of shares of Common Stock or other consideration issuable or payable upon conversion in accordance with this Section 9.3, any accrued and unpaid cash interest (including Contingent Interest) on such Notes will be deemed to have been paid in full. If any Conversion Date occurs subsequent to the Regular Record Date preceding an Interest Payment Date but prior to such Interest Payment Date, the Holder of such Notes at the close of business New York City time on any Regular Record Date shall receive the cash interest (including Contingent Interest) payable on such Note on such Interest Payment Date notwithstanding the conversion thereof. Notes surrendered for conversion during the period from the close of business New York City time on any Regular Record

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Date (except in the case of Notes which have been called for redemption on a Redemption Date within such period) shall be accompanied by payment from converting Holders, for the account of the Company, in New York Clearing House funds, of an amount equal to the interest (including Contingent Interest) payable on such Interest Payment Date on the Notes being surrendered for conversion; provided, however, if the Company elects to redeem Notes on a date that is after the Regular Record Date but on or prior to the corresponding Interest Payment Date, and such Holder elects to convert those Notes, the Holder will not be required to pay the Company, at the time that Holder surrenders those Notes for conversion, the amount of cash interest (including Contingent Interest) such Holder will receive on the Interest Payment Date. Upon conversion of Notes, that portion of accrued but unpaid cash interest, if any, (including Contingent Interest, if any) with respect to the converted Notes shall not be canceled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) or cash or a combination of cash and Common Stock in exchange for the Notes being converted pursuant to the provisions hereof, and the cash or the Fair Market Value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for cash interest (including Contingent Interest) accrued and unpaid through the Conversion Date and the balance, if any, of such cash or the Fair Market Value of such Common Stock (and any such cash payment) shall be treated as issued in exchange for the principal amount of the Notes being converted pursuant to the provisions hereof. The Company will not adjust the Conversion Rate to account for accrued cash interest (including Contingent Interest) on any Note.

If a Holder converts more than one Note at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the total principal amount of the Notes converted.

Upon surrender of a Note that is converted in part, the Company shall execute, and the Trustee or the Authenticating Agent shall authenticate and deliver to the Holder, a new Note in an authorized denomination equal in principal amount to the unconverted portion of the Note surrendered.

If the last day on which Notes may be converted is not a Business Day in a place where a Conversion Agent is located, the Notes may be surrendered to that Conversion Agent on the next succeeding Business Day.

Holders that have already delivered a Repurchase Notice or a Fundamental Change Repurchase Notice with respect to a Note, may not surrender such Note for conversion until the Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, has been withdrawn in accordance with the procedures set forth in Section 8.2.

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SECTION 9.4. Cash Payments in Lieu of Fractional Shares. The Company shall not issue a fractional share of Common Stock upon conversion of Notes. Instead the Company shall deliver cash for the Fair Market Value of the fractional share. The Fair Market Value of a fractional share shall be determined to the nearest 1/10,000th of a share by multiplying the Applicable Stock Price of a full share of Common Stock by the fractional amount and rounding the product to the nearest whole cent. Whether fractional shares are issuable upon a conversion will be determined on the basis of the total number of Notes that the Holder is then converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

SECTION 9.5. Taxes on Conversion. If a Holder converts Notes, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder’s name. The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder’s name until the Conversion Agent receives a sum sufficient to pay any tax which shall be due because the shares are to be issued in a name other than the Holder’s name. Nothing herein shall preclude the withholding of any tax required by law or regulations.

SECTION 9.6. Exchange in Lieu of Conversion. The Company shall have the option, exercisable at any time or from time to time, by an instrument in writing signed by the Company and provided to the Conversion Agent, to designate a financial institution, or change the existing designation of the financial institution, to which Notes surrendered by a Holder for conversion will be initially offered by the Conversion Agent on behalf of a Holder for exchange in lieu of conversion (the “Exchange Party”). In order to accept any Notes surrendered for conversion, the Exchange Party must agree to deliver in exchange for such Notes, a number of full shares of Common Stock issuable on conversion thereof based on the applicable Conversion Rate, plus cash for any fractional shares, or cash or a combination of cash and Common Stock in lieu thereof in the form that would otherwise have been deliverable by the Company under this Article IX. If the Exchange Party accepts any Notes for conversion, it will deliver to the Conversion Agent, and the Conversion Agent will deliver to converting Holders, the shares of Common Stock or other consideration payable with respect to such Notes. In the event that the Exchange Party agrees to accept any Notes for conversion but fails to deliver the consideration for the converted Notes by the second Business Day following the determination of the Applicable Stock Price, the Notes will be converted by the Company in accordance with this Article IX and the Company will, as promptly as practical thereafter, but not later than three Business Days following the determination of the Applicable Stock Price, deliver to the Holder shares of Common Stock (together with any cash payment in lieu of fractional shares) or cash or a combination of cash and shares of Common Stock in accordance with Section 9.3. Any Notes exchanged by the Exchange Party shall remain outstanding. The designation by the Company of an Exchange Party does not require such Exchange Party to accept any Notes for conversion. If the Exchange Party declines to accept any Notes surrendered for conversion, the Company will convert the Notes on the terms provided in this Indenture. The Company will not pay any consideration to, or otherwise enter into any arrangement with, the Exchange Party for or with respect to such designation.

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SECTION 9.7. Covenants of the Company. The Company shall, prior to issuance of any Notes hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Notes.

All shares of Common Stock delivered upon conversion of the Notes shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim placed thereon by the Company.

The Company shall endeavor promptly to comply with all federal and state securities laws regulating the order and delivery of shares of Common Stock upon the conversion of Notes, if any, and shall cause to have listed or quoted all such shares of Common Stock on each United States national securities exchange or over-the-counter or other domestic market on which the Common Stock is then listed or quoted.

SECTION 9.8. Adjustments to Conversion Rate. The Conversion Rate shall be subject to adjustment from time to time, without duplication, as follows:

(a) In case the Company shall (i) pay a dividend, or make a distribution on its Common Stock, payable exclusively in shares of Common Stock or other Capital Stock of the Company; (ii) subdivide or split its outstanding Common Stock into a greater number of shares; (iii) combine or reclassify its outstanding Common Stock into a smaller number of shares; or (iv) issue by reclassification of the shares of Common Stock any shares of the Company’s Capital Stock, the Conversion Rate in effect immediately prior to the record date or effective date, as the case may be, for the adjustment pursuant to this Section 9.8(a) as described below, shall be adjusted so that the Holder of any Notes thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock and/or Capital Stock which such Holder would have owned or have been entitled to receive after the happening of any of the events described above had such Notes been converted immediately prior to such record date or effective date, as the case may be. An adjustment made pursuant to this Section 9.8(a) shall become effective immediately after the applicable record date in the case of a dividend or distribution and shall become effective immediately after the applicable effective date in the case of subdivision, combination or reclassification of the Common Stock. If any dividend or distribution of the type described in clause (i) above is not so paid or made, the Conversion Rate shall again be immediately readjusted, effective as of the date the Board of Directors determines not to pursue such action, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. If any subdivision or split, combination or reclassification or issuance of the type described in clauses (ii) through (iv) of this Section 9.8(a) is not so made, the Conversion Rate shall again be immediately readjusted, effective as of the date the Board of Directors determines not to pursue such action, to the Conversion Rate that would then be in effect if such subdivision or split, combination or reclassification or issuance had not been declared.

(b) In case the Company at any time or from time to time after the issuance of the Notes shall issue rights or warrants to all or substantially all holders of the Common Stock entitling them to purchase Common Stock for a period of 60 days from the date of issuance of such rights or warrants at a price per share less (or having a conversion price per share less) than

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the Current Market Price per share of Common Stock, the Conversion Rate shall be adjusted so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on the record date fixed for determination of stockholders entitled to receive such rights or warrants (prior to any adjustment in accordance with this Section 9.8(b)) by a fraction of which (i) the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered for subscription or purchase, and (ii) the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at the Current Market Price per share of Common Stock on the earlier of such record date and the Trading Day immediately preceding the ex date for such issuance of rights or warrants. Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Rate shall immediately be readjusted to the Conversion Rate which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights or warrants are not so issued, the Conversion Rate shall again be immediately readjusted to be the Conversion Rate which would then be in effect if such record date for the determination of shareholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to purchase shares of Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors.

(c) In case the Company shall, by dividend or in a merger, amalgamation or consolidation or otherwise, distribute to all or substantially all holders of Common Stock any evidences of Indebtedness, shares of Capital Stock of any class or series, other securities, cash or assets (excluding (i) any dividend, distribution or issuance covered by those referred to in Section 9.8(a) or 9.8(b) hereof, (ii) any dividend or distribution paid exclusively in cash referred to in Section 9.8(d), 9.8(f) or 9.8(g) hereof or (iii) any dividend or distribution that constitutes a Spin-Off which is covered by Section 9.8(e) hereof), or rights or warrants to purchase any of its securities (including the distribution of rights to all holders of Common Stock pursuant to a stockholders rights plan or the detachment of such rights under the terms of such stockholder rights plan but excluding those rights or warrants referred to in Section 9.8(b)) (any of the foregoing hereinafter in this Section 9.8(c) called the “Distributed Assets”), then in each such case the Conversion Rate shall be adjusted so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which (A) the numerator shall be the Current Market Price per share of the Common Stock and (B) the denominator shall be (1) the Current Market Price per share of the Common Stock less (2) the Fair Market Value on such record date (as determined in good faith by the Board of Directors, whose determination shall be conclusive evidence of such Fair Market Value, and described in a certificate filed with the Trustee and the Paying Agent) of the portion of the Distributed Assets so distributed applicable to one share of Common Stock. Such adjustment

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shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution; provided, however, that, if (i) the Fair Market Value of the portion of the Distributed Assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock or (ii) the Current Market Price of the Common Stock is greater than the Fair Market Value per share of such Distributed Assets by less than $1.00, then, in lieu of the adjustment provided in this Section 9.8(c), adequate provision shall be made so that each Holder shall have the right to receive upon conversion, in addition to the shares of Common Stock, the kind and amount of assets, debt securities, or rights or warrants comprising the Distributed Assets the Holder would have received had such Holder converted such Notes immediately prior to the record date for the determination of stockholders entitled to receive such distribution. In the event that such distribution is not so paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate which would then be in effect if such distribution had not been declared.

(d) In case the Company shall make any distributions, by dividend or otherwise, consisting exclusively of cash to all or substantially all holders of outstanding shares of Common Stock, then, and in each such case, the Conversion Rate shall be adjusted so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such distribution by a fraction of which (A) the numerator shall be the Current Market Price per share of the Common Stock and (B) the denominator shall be (1) the Current Market Price per share of Common Stock minus (2) the amount per share of such distributions (appropriately adjusted from time to time for any stock dividends on or subdivisions or combination of Common Stock); provided, however, that if (i) the per share amount of such distribution equals or exceeds the Current Market Price of the Common Stock or (ii) the Current Market Price of the Common Stock exceeds the per share amount of such distribution by less than $1.00, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of a Note shall have the right to receive upon conversion, such dividend or distribution such Holder would have received had such Holder converted each Note immediately prior to the record date for the determination of stockholders entitled to receive the distribution.

(e) In the event that the Company makes any distribution to all holders of Common Stock that constitutes a Spin-Off, the Conversion Rate shall be adjusted so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such distribution by a fraction of which (i) the numerator shall be the Spin-Off Market Price per share of the Common Stock on such record date plus the Spin-Off Market Price per Equity Interest of the Subsidiary or other business unit of the Company on such record date applicable to each share of Common Stock and (ii) the denominator shall be the Spin-Off Market Price per share of the Common Stock. The adjustment to the Conversion Rate set forth in this Section 9.8(e) will occur at the earlier of (1) the 10^th Trading Day from, and including, the effective date of the Spin-Off and (2) the date of the Initial Public Offering of the securities being distributed in the Spin-Off, if that Initial Public Offering is effected simultaneously with the Spin-Off; provided, however, that, if (i) the Spin-Off Market Price per Equity Interest of the Subsidiary so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock or (ii) the Current Market Price of the Common Stock is greater than the Spin-Off Market price per Equity Interest

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of the Subsidiary by less than $1.00, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of a Note shall have the right to receive upon conversion, such distribution such Holder would have received had such Holder converted each Note immediately prior to the record date for the determination of stockholders entitled to receive the distribution.

(f) In case a tender or exchange offer made by the Company or any Subsidiary shall expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the payment to stockholders of consideration per share of Common Stock having a Fair Market Value (as determined in good faith by the Company’s Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors) that as of the last time (the “Expiration Time”) tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended) exceeds the Closing Sale Price of a share of Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate by a fraction,

(i) the numerator of which shall be the sum of (x) the Fair Market Value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted up to any such maximum, being referred to as the “Purchased Shares”) and (y) the product of (a) the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and (b) the Closing Sale Price of a share of Common Stock on the Trading Day next succeeding the Expiration Time, and

(ii) the denominator of which shall be the number of shares of Common Stock outstanding (including any Purchased Shares) at the Expiration Time multiplied by the Closing Sale Price of a share of Common Stock on the Trading Day next succeeding the Expiration Time, such adjustment to become effective immediately prior to the opening of business on the day following the Expiration Time. If the Company is obligated to purchase shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again immediately be readjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made.

(g) In the event that the Company or any Subsidiary makes any payment in cash to repurchase Common Stocks, the consideration for which exceeded the average Closing Sale Prices of the Common Stock for the five consecutive Trading Days ending on the last date of such repurchase (the excess amount, the “Repurchase Premium”), and such repurchase (together with any other repurchases of Common Stock by the Company or any Subsidiary concluded within 12 months of such repurchase, the consideration for which involved a Repurchase Premium) resulted in the payment by the Company or any Subsidiary of an aggregate consideration exceeding an amount equal to 10% of the Company’s Market Capitalization, the Conversion

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Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate by a fraction,

(i) the numerator of which shall be the 9.8(g) Current Market Price, and

(ii) the denominator of which shall be (A) the 9.8(g) Current Market Price, minus (B) the quotient of (x) aggregate amount of all of the Repurchase Premium paid in connection with all such repurchases and (u) the number of share of Common Stock outstanding on the next succeeding the date of the repurchase triggering the adjustment in this Section 9.8(g), as determined by the Board of Directors.

(h) Upon conversion of the Notes, the Holders shall receive, if they receive shares of Common Stock, in addition to the Common Stock issuable upon such conversion, the rights issued under any shareholder rights plan the Company implements (notwithstanding the occurrence of an event causing such rights to separate from the Common Stock at or prior to the time of conversion) unless, prior to conversion, the rights have expired, terminated or been redeemed or exchanged in accordance with the rights plan. If, and only if, the Holders of Notes receive rights under such shareholder rights plans as described in the preceding sentence upon conversion of their Notes, then no other adjustment pursuant to this Section 9.8 shall be made in connection with such shareholder rights plans.

(i) For purposes of this Section 9.8, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company.

SECTION 9.9. Calculation Methodology. Except as stated in this Article IX, the Conversion Rate will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing. If after an adjustment a Holder of a Note upon conversion of such Note may receive shares of two or more classes of Capital Stock of the Company, the Conversion Rate shall thereafter be subject to adjustment upon the occurrence of an action with respect to any such class of Capital Stock as is contemplated by this Article IX with respect to the Common Stock, on terms comparable to those applicable to Common Stock in this Article IX. All calculations under Article VIII, Section 9.8 and this Section 9.9 shall be made to the nearest cent or to the nearest 1/10,000th of a share, as the case may be.

SECTION 9.10. When No Adjustment Required. No adjustment to the Conversion Rate need be made:

(a) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under any such plan;

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(b) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries;

(c) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security not described in paragraph (ii) above and outstanding as of the date of this Indenture;

(d) for a change in the par value of the Common Stock; or

(e) for accrued and unpaid interest (including Contingent Interest and Liquidated Damages owed, if any).

To the extent the Notes become convertible into cash, assets, or property (other than Capital Stock of the Company or securities to which Section 9.14 applies), no adjustment shall be made thereafter as to the cash, assets or property. Interest shall not accrue on such cash.

No adjustment need be made for a transaction referred to in Sections 9.8(b), (c) or (e) if Holders of the Notes may participate in the transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction.

SECTION 9.11. Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall promptly mail, or cause to be mailed, by first class mail to Holders in accordance with Section 15.2 a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent a certificate signed by the Chief Financial Officer of the Company setting forth the adjusted Conversion Rate. The certificate shall, absent manifest error, be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof.

SECTION 9.12. Voluntary Increase. The Company may make such increases in the Conversion Rate, in addition to those required by Section 9.8, as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. To the extent permitted by applicable law, the Company may from time to time increase the Conversion Rate by any amount for any period of time if the period is at least 20 days, the increase is irrevocable during the period and the Board of Directors shall have made a determination that such increase would be in the best interests of the Company, which determination shall be conclusive. Whenever the Conversion Rate is so increased, the Company shall mail to Holders and file with the Trustee and the Conversion Agent a notice of such increase. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such notice except to exhibit the same to any Holder desiring inspection thereof. The Company shall mail the notice at least 15 days before the date the increased Conversion Rate takes effect. The notice shall state the increased Conversion Rate and the period it shall be in effect.

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SECTION 9.13. Notice to Holders Prior to Certain Actions. In case:

(a) The Company shall declare a dividend (or any other distribution) on its Common Stock that would require an adjustment in the Conversion Rate pursuant to Section 9.8;

(b) The Company shall authorize the granting to all or substantially all the holders of its Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants;

(c) Of any reclassification or reorganization of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or

(d) Of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company shall cause to be filed with the Conversion Agent and shall cause to be mailed to each Holder at its address appearing on the Note Register, as promptly as possible but in any event at least 15 days (10 days in the case of (a) or (b) above) prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, or rights or warrants are to be determined or (y) the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities, cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.

SECTION 9.14. Effect of Reclassification, Consolidation, Merger, Binding Share Exchange or Sale. If any of the following events occur, namely (a) any reclassification or change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination); (b) any consolidation, merger, combination or binding share exchange of the Company with another corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock; or (c) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture, providing that each Note shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, binding share exchange, sale or conveyance by a holder of a number of shares of Common Stock issuable upon conversion of such Note immediately prior to such reclassification, change, consolidation, merger, combination, binding

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share exchange, sale or conveyance assuming such holder of Common stock did not exercise his rights of election, if any, as to the kind or amount of stock, other securities or other property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, binding share exchange, sale or conveyance (provided that, if the kind or amount of stock, other securities or other property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised (“non-electing share”), then for the purposes of this Section 9.14 the kind and amount of stock, other securities or other property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, binding share exchange, sale or conveyance for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article IX.

The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at its address appearing on the Note Register, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

The above provisions of this Section 9.14 shall similarly apply to successive reclassifications, changes, consolidations, mergers, combinations, binding share exchanges, sales and conveyances.

If this Section 9.14 applies to any event or occurrence, Section 9.8 shall not apply.

SECTION 9.15. Responsibility of Trustee. Except as specifically required in Section 9.2 herein, the Trustee and any Conversion Agent shall not at any time be under any duty or responsibility to any Holder to either calculate the Conversion Rate or determine whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same and, subject to Sections 11.1 and 11.2 hereof and the provisions of this Article IX, shall be protected in relying upon an Officers’ Certificate with respect to the same. The Trustee and any Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Notes and the Trustee and any Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Notes for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained herein.

SECTION 9.16. Successive Adjustments. After an adjustment to the Conversion Rate under Section 9.8, any subsequent event requiring an adjustment under Section 9.8 shall cause an adjustment to the Conversion Rate as so adjusted.

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SECTION 9.17. General Considerations. Whenever successive adjustments to the Conversion Rate are called for pursuant to this Article IX, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Article IX and to avoid unjust or inequitable results as determined in good faith by the Board of Directors of the Company.

SECTION 9.18. Payment of Cash in Lieu of Common Stock. If a Holder elects to convert all or any portion of a Note into shares of Common Stock as set forth in Section 9.1 and delivers an irrevocable conversion notice, together, if the Notes are in certificated form, with the certificated Note as set forth in Section 9.3, the Company may choose to satisfy all or any portion of its conversion obligation with respect to a Note (the “Conversion Obligation”) in cash or a combination of cash and Common Stock. Upon such election, the Company will notify such Holder through the Conversion Agent of the Company’s election to pay cash in lieu of delivery of some or all of the shares of Common Stock and the dollar amount per Note to be satisfied in cash (which must be expressed either as 100% of the Conversion Obligation or as a fixed dollar amount) at any time on or before the date that is two Business Days following the Conversion Date unless the Company has previously informed Holders of its election in connection with a redemption of the Notes in accordance with Section 5.1 of this Indenture. Settlement (in cash and/or Common Stock) will occur on the third Business Day following the final day of the five consecutive Trading Day period beginning on the third Trading Day after the Conversion Date. Settlement amounts will be computed as follows:

(a) if the Company elects to satisfy the entire Conversion Obligation in cash, the Company will deliver to such Holder cash in an amount equal to the product of: (1) a number equal to (x) the aggregate original principal amount of Notes to be converted divided by 1,000, multiplied by (y) the Conversion Rate, and (2) the Applicable Stock Price; and

(b) if the Company elects to satisfy a fixed portion (other than 100%) of the Conversion Obligation in cash, the Company will deliver to such Holder (1) cash in an amount equal to (x) the aggregate principal amount of Notes to be converted divided by 1,000, multiplied by (y) such cash amount per $1,000 aggregate original principal amount Notes to be converted (“Cash Amount Per Note”) and (2) a number of shares of Common Stock equal to (x) the aggregate original principal amount of Notes to be converted by such Holder divided by 1,000, multiplied by (y) a fraction, the numerator of which is (A) the Applicable Stock Price multiplied by the Conversion Rate, less (B) the Cash Amount Per Note, and the denominator of which is the Applicable Stock Price; provided, however, that the Company will pay cash in lieu of fractional shares of Common Stock in accordance with Section 9.4.

The Company has adopted a stated policy that it will settle in cash the principal amount of any Notes that are converted. At any time prior to maturity, the Company may, at its option, elect, by notice to the Trustee and the Holders, that upon conversion of the Notes at any time following the date of such notice, the Company shall be required to deliver cash in an amount at least equal to the principal amount of the Notes converted. If the Company makes such election, it shall also be required to deliver cash only in connection with any Principal Value Conversion pursuant to Section 9.1(c).

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ARTICLE X

DEFAULTS AND REMEDIES

SECTION 10.1. Events of Default. “Event of Default,” wherever used herein with respect to the Notes, means any one or more of the following events:

(a) default in the payment of any installment of interest, Contingent Interest or Liquidated Damages, if any, upon any of the Notes as and when the same shall become due and payable, and continuance of such Default for a period of 30 days; or

(b) default in the payment of the principal of any of the Notes as and when the same shall become due and payable either at maturity, upon redemption, required repurchase, by declaration or otherwise (including the failure to purchase Notes in accordance with Articles VI, VII and VIII); or

(c) failure on the part of the Company to perform any other of the covenants or agreements on the part of the Company in the Notes or in this Indenture for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; or

(d) default by the Company or any of its Significant Subsidiaries in the payment of principal, interest or premium at final maturity under any instrument or instruments evidencing Indebtedness (other than the Notes), which Default is in an aggregate amount exceeding $10.0 million or its equivalent in any other currency or currencies and continues in effect for more than 30 days after the expiration of any grace period or extension of time for payment applicable thereto; or

(e) default by the Company or any of its Significant Subsidiaries under any instrument or instruments evidencing Indebtedness (other than the Notes) having an outstanding principal amount of $10.0 million (or its equivalent in any other currency or currencies) or more, which results in acceleration of the maturity of such Indebtedness, unless such acceleration has been rescinded or annulled within 30 days after the date on which written notice of such acceleration has been received by the Company or such defaulting Significant Subsidiary; or

(f) default on the part of the Company in its obligation to convert the Notes upon exercise of a Holder’s conversion right in accordance with the terms of the Notes and Article IX hereof and such conversion Default is not cured or such conversion is not rescinded within five days after written notice of Default is given by registered mail to the Company by the Trustee or to the Company and the Trustee by the Holder of such Note; or

(g) default on the part of the Company in its obligation give notice to Holders of their right to require the Company to repurchase Notes following the occurrence of a Fundamental Change within the time required to give such notice; or

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(h) a court of competent jurisdiction shall enter an order for relief with respect to the Company or a Subsidiary under the Bankruptcy Code or a court of competent jurisdiction shall enter a judgment, order or decree adjudging the Company or a Subsidiary a bankrupt or insolvent, or enter an order for relief for reorganization, arrangement, adjustment or composition of or in respect of the Company under the Bankruptcy Code or applicable state insolvency law and the continuance of any such judgment, order or decree is unstayed and in effect for a period of 60 consecutive days; or

(i) the Company or a Subsidiary shall institute proceedings for entry of an order for relief with respect to the Company or a Subsidiary under the Bankruptcy Code or for an adjudication of insolvency, or shall consent to the institution of bankruptcy or insolvency proceedings against it, or shall file a petition seeking, or seek or consent to reorganization, arrangement, composition or relief under the Bankruptcy Code or any applicable state law, or shall consent to filing of such petition or to the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or similar official (other than a custodian pursuant to 8 Delaware Code § 226 or any similar statute under other state laws) of the Company or of substantially all of its property, or the Company or a Subsidiary shall make a general assignment for the benefit of creditors as recognized under the Bankruptcy Code.

If an Event of Default with respect to the Notes then outstanding occurs and is continuing (other than an Event of Default specified in Section 10.1(h) or Section 10.1(i)), then and in each and every such case, unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding, by notice in writing to the Company (and to the Trustee if given by Holders), may declare the principal of all the Notes and the interest and Contingent Interest, if any, accrued thereon and Liquidated Damages, if any, thereon to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Notes contained to the contrary notwithstanding. This provision, however, is subject to the condition that if at any time after the principal (or such specified amount) of the Notes shall have been so declared due and payable and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest and Contingent Interest, if any, and Liquidated Damages, if any, upon all of the Notes and the principal of any and all Notes, which shall have become due otherwise than by acceleration (with interest on overdue installments of interest (including Contingent Interest), if any, to the extent that payment of such interest is enforceable under applicable law and on such principal at the rate borne by the Notes to the date of such payment or deposit) and shall pay the reasonable compensation, disbursements, expenses and advances of the Trustee, and any and all Defaults under this Indenture, other than the nonpayment of principal of and accrued interest, if any, Contingent Interest, if any, and Liquidated Damages, if any, on the Notes, which shall have become due solely by reason of the acceleration, shall have been cured or shall have been waived in accordance with this Indenture, then and in every such case the declaration of acceleration shall be automatically annulled and rescinded; but no such rescission and annulment shall extend to or shall affect any subsequent Default, or shall impair any right consequent thereon. If any Event of Default with respect to the Company specified in Section 10.1(h) or 10.1(i) occurs, all unpaid principal and accrued interest, Contingent Interest and Liquidated Damages, if any, on all Notes then outstanding shall ipso facto become

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and be immediately due and payable without any declaration or other act by the Trustee or any Holder.

If the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Trustee and the Holders shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the Holders shall continue as though no such proceeding had been taken.

In determining whether the Holders of the requisite aggregate principal amount of the Notes outstanding have given any request, demand, authorization or consent under this Indenture, the principal amount of Notes that will be deemed to be outstanding will be the amount of the principal of the Notes that would be due and payable as of the date of the determination upon a declaration of acceleration of the maturity of the Notes.

SECTION 10.2. Payment of Notes on Default; Suit Therefor. The Company covenants that (a) if a Default shall be made in the payment of any installment of interest (including Contingent Interest) upon the Notes then outstanding as and when the same shall become due and payable, and such Default shall have continued for a period of 30 days, or (b) if a Default shall be made in the payment of the principal of any of the Notes as and when the same shall have become due and payable, whether at maturity of the Notes or upon redemption or by declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the Holders of the Notes, the whole amount that then shall have become due and payable on all such Notes for principal or interest (including Contingent Interest), if any, or both, as the case may be, with interest (including Contingent Interest) upon the overdue principal and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest (including Contingent Interest), if any, at the rate borne by the Notes; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable costs and expenses of the Trustee, its agents, attorneys and counsel and any expenses or liabilities incurred by the Trustee hereunder other than through its negligence or bad faith.

If the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company and collect in the manner provided by law out of the property of the Company, wherever situated, the moneys adjudged or decreed to be payable.

If there shall be pending proceedings for the bankruptcy or for the reorganization of the Company under any bankruptcy, insolvency or other similar law now or hereafter in effect, or if a receiver or trustee or similar official shall have been appointed for the property of the Company, or in the case of any other similar judicial proceedings relative to the Company, or to the creditors or property of the Company, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and

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irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 10.2, shall be entitled and empowered by intervention in such proceedings or otherwise to file and prove a claim or claims for the whole amount of principal and interest (including Contingent Interest), if any, owing and unpaid in respect of the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Holders allowed in such judicial proceedings relative to the Company, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its reasonable expenses, and any receiver, assignee or trustee or similar official in bankruptcy or reorganization is hereby authorized by each of the Holders to make such payments to the Trustee, and, if the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it pursuant to Section 11.7 hereof for reasonable expenses. To the extent that such payment of reasonable expenses out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, moneys, securities and other property which the Holders of the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.

All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.

SECTION 10.3. Application of Moneys Collected by Trustee . Any moneys collected by the Trustee pursuant to Section 10.2 with respect to the Notes then outstanding shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:

FIRST: To the payment of all amounts due to the Trustee pursuant to Section 11.7 except as a result of its negligence or bad faith;

SECOND: If the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest, Contingent Interest and Liquidated Damages, if any, on the Notes, in the order of the maturity of the installments of such interest, if any, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest, Contingent Interest and Liquidated Damages, if any, at the rate borne by the Notes, such payment to be made ratably to the Persons entitled thereto;

THIRD: If the principal of the outstanding Notes shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Notes for principal and interest (including Contingent Interest), if any, with interest on the overdue principal and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest, if any, at the rate borne by the Notes; and

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in case such moneys shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal and interest, Contingent Interest and Liquidated Damages, if any, without preference or priority of principal over interest, Contingent Interest and Liquidated Damages or of interest, Contingent Interest and Liquidated Damages over principal, or of any installment of interest, Contingent Interest and Liquidated Damages over any other installment of interest, Contingent Interest and Liquidated Damages, or of any Note over any other Note, ratably to the aggregate of such principal and accrued and unpaid interest (including Contingent Interest); and

FOURTH: To the payment of any surplus then remaining to the Company, its successors or assigns, or as a court of competent jurisdiction shall direct in writing.

SECTION 10.4. Proceedings by Holders. No Holder of any Notes then outstanding shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or the Notes or for the appointment of a receiver or trustee or similar official, or for any other remedy hereunder or thereunder, unless (i) such Holder previously shall have given to the Trustee written notice of a continuing Event of Default, (ii) the Holders of at least 25% in aggregate principal amount of the Notes then outstanding shall have made a written request to the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder, (iii) the Trustee, after its receipt of such notice, shall have neglected or refused to institute any such action, suit or proceeding for 60 days, and (iv) during such 60-day period the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction inconsistent with the request, it being understood and intended, and being expressly covenanted by the Holder of every Note with every other Holder and the Trustee, that no one or more Holders of the Notes shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture or of the Notes to affect, disturb or prejudice the rights of any other Holder of such Notes or to obtain or seek to obtain priority over or preference as to any other such Holder, or to enforce any right under this Indenture or the Notes, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Notes.

Notwithstanding any other provisions in this Indenture, the right of any Holder of any Note to receive payment of the principal of and interest, if any, Contingent Interest, if any, and Liquidated Damages, if any, on such Note, on or after the respective due dates expressed in this Indenture and such Note, to institute suit for the enforcement of any such payment or any right to convert on or after such respective dates or to convert its Notes in accordance with the Indenture is absolute and unconditional and shall not be impaired or affected without the consent of such Holder.

SECTION 10.5. Proceedings by Trustee. In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem necessary to protect and enforce any of such rights, either by suit in equity or by action at law or by proceedings in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

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SECTION 10.6. Remedies Cumulative and Continuing. All powers and remedies given by this Article X to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Holders, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Holder to exercise any right or power accruing upon any Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such Default or an acquiescence therein; and, subject to the provisions of Section 10.4, every power and remedy given by this Article X or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders, respectively.

SECTION 10.7. Direction of Proceedings; Waiver of Defaults by Majority of Holders. Subject to Sections 10.4 and 14.2, the Holders of a majority in aggregate principal amount of the Notes then outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Notes; provided, however, that (subject to the provisions of Section 11.1) the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine upon advice of counsel that the action or proceeding so directed may not lawfully be taken or is in conflict with this Indenture or if the Trustee in good faith by its board of directors, its executive committee, or a trust committee of directors or Responsible Officers or both shall determine that the action or proceeding so directed would involve the Trustee in personal liability or would be unduly prejudicial to the rights of the other Holders of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences (including acceleration and any related payment Default from such acceleration) except a Default in the payment of interest, Contingent Interest and Liquidated Damages, if any, on, or the principal of, the Notes or a Default in the compliance with any provision hereunder that cannot be amended or supplemented pursuant to Article XIV without the consent of each Holder of Notes affected. For the avoidance of doubt, nothing in this Section 10.7 shall affect the annulment and rescission of acceleration under Section 10.1. Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 10.7, said Default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to be not continuing.

SECTION 10.8. Notice of Defaults. The Trustee shall, within 90 days after the occurrence of a Default or Event of Default, with respect to the Notes then outstanding, mail to all Holders of the Notes, as the names and the addresses of such Holders appear upon the Note Register, notice of all defaults known to the Trustee with respect to the Notes, unless such defaults shall have been cured before the giving of such notice (the term “defaults” for the purpose of this Section 10.8 being hereby defined to be the events specified in clauses (a), (b), (c), (d), (e), (f), (g), (h) and (i)of Section 10.1, not including periods of grace, if any, provided for therein and irrespective of the giving of the written notice specified in said clause (c), but in the case of any default of the character specified in said clause (c) no such notice to Holders shall be given

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until at least 60 days after the giving of written notice thereof to the Company pursuant to said clause (c)); provided, however, that, except in the case of default in the payment of the principal of or interest, Contingent Interest or Liquidated Damages, if any, on any of the Notes, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or Responsible Officers or both of the Trustee in good faith determines that the withholding of such notice is in the best interests of the Holders.

SECTION 10.9. Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the cost of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 10.9 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Notes then outstanding, or to any suit instituted by any Holders for the enforcement of the payment of the principal of or interest (including Contingent Interest), if any, on any Note against the Company on or after the due date thereto expressed in such Note.

ARTICLE XI

TRUSTEE

SECTION 11.1. Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs; provided that if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have provided the Trustee indemnity or security reasonably satisfactory to the Trustee against loss, liability or expense.

(b) Except during the continuance of an Event of Default:

(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein,

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upon certificates, directions, notices or opinions furnished to the Trustee. However, in the case of any such certificates, directions, notices or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i) this paragraph does not limit the effect of paragraph (b) of this Section;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 10.4.

(d) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.

(e) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(f) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 11.1 and to the provisions of the TIA.

(h) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have provided to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction.

SECTION 11.2. Rights of Trustee.

(a) The Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any paper or document believed by it to be genuine and to have been signed or presented by the proper Person or Persons. The Trustee need not investigate any fact or matter stated in the document.

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(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.

(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any attorney or agent appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s conduct does not constitute willful misconduct or negligence.

(e) The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel appointed with due care with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or other paper or document; but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company at reasonable times, in a reasonable manner and upon reasonable advance notice, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(g) The Trustee shall not be deemed to have knowledge of any Default or Event of Default except, (i) during any period it is serving as Registrar and Paying Agent for the Notes, any Event of Default occurring pursuant to Sections 10.1(a), 10.1(b) or 10.1(e) or (ii) any Default or Event of Default of which a Responsible Officer shall have received written notification or obtained actual knowledge. The term “actual knowledge” shall mean the actual fact or statement of knowing by a Responsible Officer without independent investigation with respect thereto.

(h) Delivery of the reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

(i) In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(j) The rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified, are extended to, and shall be enforceable by, the

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Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(k) The Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any Person authorized to sign an Officers’ Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded.

SECTION 11.3. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 11.10 and 11.11. In addition, the Trustee shall be permitted to engage in transactions with the Company; provided, however, that if the Trustee acquires any conflicting interest (as such term is defined in Section 310(b) of the TIA) the Trustee must (i) eliminate such conflict within 90 days of acquiring such conflicting interest, (ii) apply to the Commission for permission to continue acting as Trustee or (iii) resign as Trustee hereunder.

SECTION 11.4. Trustee’s Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the Notes or the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued or offering circular (or similar document) used in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication or for the use or application of any funds received by any Paying Agent other than the Trustee.

SECTION 11.5. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if a Responsible Officer has actual knowledge thereof, the Trustee shall mail to each Holder notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, or interest (including Contingent Interest) on any Note (including payments pursuant to the required repurchase provisions of such Note, if any), the Trustee may withhold the notice if and so long as its board of directors, a committee of its board of directors or a committee of its Responsible Officers and/or a Responsible Officer in good faith determines that withholding the notice is in the interests of registered Holders.

SECTION 11.6. Reports by Trustee to Holders. As promptly as practicable after each May 15 beginning with the May 15 following the date of this Indenture, and in any event prior to December 15 in each year, the Trustee shall mail to each Holder a brief report dated as of such May 15 that complies with TIA § 313(a), if and to the extent such report may be required by the TIA. The Trustee also shall comply with TIA § 313(b). The Trustee shall also transmit by mail all reports required by TIA § 313(c).

A copy of each report at the time of its mailing to Holders shall be filed with the Commission and each stock exchange (if any) on which the Notes are listed. The Company

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agrees to notify promptly the Trustee in writing whenever the Notes become listed on any stock exchange and of any delisting thereof.

SECTION 11.7. Compensation and Indemnity. The Company shall pay to the Trustee from time to time such reasonable compensation for its services as the parties shall agree in writing from time to time. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon written request for all reasonable and documented out-of-pocket expenses incurred or made by it, including, but not limited to, costs of collection, costs of preparing and reviewing reports, certificates and other documents, costs of preparation and mailing of notices to Holders and reasonable costs of counsel retained by the Trustee in connection with the delivery of an Opinion of Counsel or otherwise, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and reasonable and documented out-of-pocket expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Company shall indemnify the Trustee, and each of its officers, directors, counsel and agents, against any and all loss, liability or expense (including, but not limited to, reasonable attorneys’ fees and expenses) incurred by it in connection with the administration of this trust and the performance of its duties hereunder, including the costs and expenses of enforcing this Indenture (including this Section 11.7) and of defending itself against any claims (whether asserted by any Holder, the Company or otherwise). The Trustee shall notify the Company promptly of any claim of which a Responsible Officer receives written notice for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder except to the extent the Company is prejudiced thereby. The Company shall defend the claim and the Trustee may have separate counsel and, if the Trustee determines in its reasonable judgment that a conflict of interest exists between the Trustee and the Company, the Company shall pay the fees and expenses of such counsel. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct, negligence or bad faith, subject to the exceptions contained in Section 11.1(c) hereof.

To secure the Company’s payment obligations in this Section 11.7, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest (including Contingent Interest) on particular Notes.

The Company’s payment obligations pursuant to this Section and any lien arising hereunder shall survive the discharge of this Indenture and the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default specified in Section 10.1(g) or (h) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Code.

SECTION 11.8. Replacement of Trustee. The Trustee may resign at any time by so notifying the Company. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Company and the Trustee in writing and the Company may appoint a successor Trustee. The Company shall remove the Trustee if:

(i) the Trustee fails to comply with Section 11.10;

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(ii) the Trustee is adjudged bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the Trustee or its property; or

(iv) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed by the Company or by the Holders of a majority in principal amount of the Notes and the Company does not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Holders of a majority in aggregate principal amount of the Notes may appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 11.7.

If the Company has not appointed a successor Trustee within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Notes may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 11.10, unless the Trustee’s duty to resign is stayed as provided in TIA § 310(b), any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section 11.8, the Company’s obligations under Section 11.7 shall continue for the benefit of the retiring Trustee.

SECTION 11.9. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have.

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SECTION 11.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA § 310(a). The Trustee shall have a combined capital and surplus of at least $50 million as set forth in its most recently filed annual report of condition. The Trustee shall comply with TIA § 310(b).

SECTION 11.11. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company, the Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

ARTICLE XII

CONTINGENT INTEREST

SECTION 12.1. Contingent Interest. The Company will pay Contingent Interest to Holders during any six-month period from March 15 to September 14 or from September 15 to March 14 (“Interest Period”) beginning with the six-month period commencing on or after March 15, 2009, if the average Trading Price of the Notes for the five Trading Day measurement period ending on the second Trading Day immediately preceding the first day of the applicable Interest Period (the “Measurement Period”) equals 120% or more of the principal amount of the Notes as of the last day of the Measurement Period. The amount of Contingent Interest payable in any Interest Period pursuant to this Section 12.1 shall equal 0.25% of the average Trading Price of the Notes for the applicable Measurement Period.

SECTION 12.2. Payment of Contingent Interest. The Company shall pay Contingent Interest owed pursuant to Section 12.1 for any Interest Period on the Interest Payment Date immediately succeeding the applicable Interest Period, to Holders of Notes as of the Regular Record Date related to such Interest Payment Date.

SECTION 12.3. Notice of Contingent Interest.

(a) As soon as practicable following the first Business Day of an Interest Period for which Contingent Interest will be payable pursuant to Section 12.1, the Company shall notify the Holders of the right of such Holders to receive Contingent Interest and shall issue a press release containing this information and publish the information on its website.

(b) On any Interest Payment Date on which Contingent Interest is payable pursuant to this Article XII, the Company shall issue a press release stating the amount of such Contingent Interest and setting forth the manner in which such amount was calculated, and publish such information on its website.

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ARTICLE XIII

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

SECTION 13.1. Satisfaction and Discharge of Indenture . If at any time (a) the Company shall have paid or caused to be paid the principal of and interest, Contingent Interest and Liquidated Damages, if any, on all the Notes outstanding (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.8) as and when the same shall have become due and payable, or (b) the Company shall have delivered to the Trustee for cancellation all Notes theretofore authenticated (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.8); and if, in any such case, the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect, and the Trustee, on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the satisfaction and discharge contemplated by this provision have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction and discharging this Indenture. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred, and to compensate the Trustee for any services thereafter reasonably and properly rendered, by the Trustee in connection with this Indenture or the Notes.

If at any time the exact amount described in clause (ii) below can be determined at the time of making the deposit referred to in such clause (ii), (i) all of the Notes not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) (a) the Company shall have irrevocably deposited or caused to be deposited with the Trustee as funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Notes, cash in an amount (other than moneys repaid by the Trustee or any Paying Agent to the Company in accordance with Section 13.4) or U.S. Government Obligations, maturing as to principal and interest (including Contingent Interest), if any, at such times and in such amounts as will insure the availability of cash or securities sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay the principal of and interest (including Contingent Interest), if any, on all of the Notes on each date that such principal or interest (including Contingent Interest), if any, is due and payable in accordance with the terms of this Indenture and the Notes, and (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; then the Company shall be deemed to have paid and discharged the entire indebtedness on all the Notes on the date of the deposit referred to in this clause (ii), and the provisions of this Indenture with respect to the Notes shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Notes, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Holders of Notes to receive payments of principal thereof and interest (including Contingent Interest), if any, thereon upon the original stated due dates therefor (but not upon acceleration), (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Notes as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them (vi) rights of Holders of Notes to

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convert the Notes pursuant to Article IX and (vii) the obligations of the Company under Section 3.3 with respect to the Notes) and the Trustee, on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent contemplated by this provision have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction and discharging such Indebtedness.

SECTION 13.2. Application by Trustee of Funds Deposited for Payment of Notes. All moneys deposited with the Trustee or any Paying Agent shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company acting as its own paying agent), to the Holders of the Notes for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest (including Contingent Interest), if any, but such money need not be segregated from other funds except to the extent required by law.

SECTION 13.3. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all moneys then held by any Paying Agent under the provisions of this Indenture with respect to the Notes shall, upon demand of the Company, be repaid to it and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

SECTION 13.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or any Paying Agent for the payment of the principal of or interest (including Contingent Interest), if any, on the Notes and not applied but remaining unclaimed for two years after the date upon which such principal or interest (including Contingent Interest), if any, shall have become due and payable, shall, upon the written request of the Company and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Company by the Trustee or such Paying Agent, and the Holder of the Notes shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Company for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such moneys shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment with respect to moneys deposited with it for any payment in respect of the Notes, shall, at the expense of the Company, mail by first-class mail to Holders of the Notes at their addresses as they shall appear on the Note register notice that such moneys remain and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 13.5. Indemnity for U.S. Government Obligations. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 13.1 or the principal or interest (including Contingent Interest) received in respect of such obligations.

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ARTICLE XIV

AMENDMENTS

SECTION 14.1. Without Consent of Holders. The Company and the Trustee may amend this Indenture or the Notes without notice to or consent of any Holder:

(a) to cure any ambiguity, omission, defect or inconsistency;

(b) to provide for the assumption by a Successor Company of the Company’s obligations under this Indenture and the Notes;

(c) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(d) to secure the Notes or to provide guarantees of the Notes;

(e) to add covenants that would benefit the Holders of the Notes or to surrender any rights of the Company under this Indenture;

(f) to comply with any requirements to effect or maintain the qualification of this Indenture under the TIA;

(g) to add Events of Default with respect to the Notes; or

(h) to make any change that does not adversely affect any outstanding Notes in any material respect.

After an amendment under this Section becomes effective, the Company shall prepare and cause the Trustee to mail to Holders, a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

SECTION 14.2. With Consent of Holders. The Company and the Trustee may amend this Indenture or the Notes without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding. However, without the consent of each Note then outstanding, an amendment, supplement or waiver may not:

(a) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(b) reduce the rate of accrual of interest, Contingent Interest or Liquidated Damages or modify the method for calculating interest, Contingent Interest or Liquidated Damages or change the time for payment of interest, Contingent Interest or Liquidated Damages on the Notes;

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(c) modify the provisions with respect to a Holder’s rights upon a Fundamental Change in a manner adverse to the Holders of the Notes, including the Company’s obligations to repurchase the Notes following a Fundamental Change;

(d) reduce the principal amount of Notes or change their Stated Maturity;

(e) reduce the Redemption Price or Repurchase Price of the Notes or change the time at which the Notes may or must be redeemed or repurchased;

(f) make payments on the Notes payable in currency other than as originally stated in the Notes;

(g) impair the Holder’s right to institute suit for the enforcement of any payment on the Notes;

(h) make any change in the percentage of principal amount of Notes necessary to waive compliance with provisions of this Indenture or to make any change to this Section 14.2 or Section 14.3;

(i) waive a continuing Default or Event of Default regarding any payment on the Notes; or

(j) adversely affect the conversion or repurchase provisions of the Notes.

It shall not be necessary for the consent of the Holders under this Section 14.2 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Section 14.2 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 14.2.

SECTION 14.3. Compliance with Trust Indenture Act. Every amendment to this Indenture or the Notes shall comply with the TIA as then in effect.

SECTION 14.4. Revocation and Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver made pursuant to Section 14.2 shall become effective upon receipt by the Trustee of the requisite number of written consents.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above

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or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall become valid or effective more than 120 days after such record date.

SECTION 14.5. Notation on or Exchange of Notes. If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

SECTION 14.6. Trustee To Sign Amendments. The Trustee shall sign any amendment authorized pursuant to this Article XIV if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be provided with, and (subject to Section 11.1) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture.

ARTICLE XV

MISCELLANEOUS

SECTION 15.1. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the provision required by the TIA shall control.

SECTION 15.2. Notices. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows:

If to the Company:

PSS World Medical, Inc.

4345 Southpoint Blvd.

Jacksonville, FL 32216

Attention: David D. Klarner

Facsimile No.: (904) 332-3214

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With copies to:

Alston & Bird LLP

601 Pennsylvania Avenue, N.W.

North Building, 10^th Floor

Washington, DC 20004

Attention: David E. Brown, Jr.

Facsimile No.: (202) 756-3333

If to the Trustee:

Wachovia Bank, National Association

225 Water Street

Jacksonville, FL 32202

Attention: John Speichert

Facsimile No.: (904) 489-5410

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder’s address as it appears on the Note Register and shall be sufficiently given if so mailed within the time prescribed. Notices shall be deemed to have been given as of the date of mailing.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

SECTION 15.3. Communication by Holders with Other Holders. Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Trustee shall comply with TIA § 312(b). The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

SECTION 15.4. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the TIA. Each such certificate or opinion shall be given in the form of one or more Officers’ Certificates, if to be given by an Officer, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the TIA and any other requirements set forth in this Indenture. Notwithstanding the foregoing, in the case of any such request or application as to which the furnishing of any Officers’ Certificate or Opinion of Counsel is specifically required by any provision of this Indenture relating to such particular request or application, no additional certificate or opinion need be furnished.

SECTION 15.5. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (except for certificates provided for in Section 4.1(c)) shall include:

(1) a statement that the individual making such certificate or opinion has read such covenant or condition;

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(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

In giving an Opinion of Counsel, counsel may rely as to factual matters on an Officers’ Certificate or such other certificates of Officer(s) as it may deem appropriate and on certificates of public officials.

SECTION 15.6. When Notes Disregarded. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

SECTION 15.7. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by, or a meeting of, Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.

SECTION 15.8. Governing Law. This Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 15.9. No Recourse Against Others. No recourse for the payment of the principal of, or interest (including Contingent Interest and Liquidated Damages, if any) on any Note and no recourse under or upon any obligation, covenant, agreement of the Company in this Indenture, the Notes or in any supplemental indenture, or because of the creation of any Indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, officer, director, or subsidiary, past, present or future, of the Company or of any successor corporation or entity, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being understood that all such liability is hereby waived and released as a condition to, and as a consideration for, the execution and delivery of this Indenture and the issue of the Notes.

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SECTION 15.10. Successors. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.

SECTION 15.11. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.

SECTION 15.12. Variable Provisions. The Company initially appoints the Trustee as Paying Agent and Registrar and custodian with respect to any Global Notes.

SECTION 15.13. Qualification of Indenture. The Company shall qualify this Indenture under the TIA in accordance with the terms and conditions of the Registration Rights Agreement and shall pay all reasonable costs and expenses (including attorneys’ fees and expenses for the Company and the Trustee) incurred in connection therewith, including, but not limited to, costs and expenses of qualification of the Indenture and the Notes and printing this Indenture and the Notes. The Trustee shall be entitled to receive from the Company any such Officers’ Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the TIA.

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SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above.

PSS WORLD MEDICAL, INC., as Issuer
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

WACHOVIA BANK, National Association, as Trustee
By:	/s/    JOHN C. STEPHENS III
Name:	John C. Stephens III
Title:	Vice President

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EXHIBIT A

[FORM OF FACE OF SECURITY]

THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND SUCH SHARES OF COMMON STOCK SHALL BE DEEMED BY THE ACCEPTANCE OF THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.

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THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DEPOSITARY”), OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS THE OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

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No. 1 Principal Amount $150,000,000, as revised by the Schedule of Increases and Decreases in the Global Note attached hereto

CUSIP NO. 69366A AA 8

PSS World Medical, Inc.

2.25% Convertible Senior Notes due March 15, 2024

PSS World Medical, Inc., a Florida corporation, promises to pay to Cede & Co., or registered assigns, the principal sum of $150,000,000 Dollars, as revised by the Schedule of Increases and Decreases in the Global Note attached hereto, on March 15, 2024.

Interest Payment Dates: March 15, and September 15.

Regular Record Dates: March 1 and September 1.

Additional provisions of this Note are set forth on the other side of this Note.

PSS WORLD MEDICAL, INC.

By:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION Dated: WACHOVIA BANK, National Association, as Trustee, certifies that this is one of the Notes referred to in the within-mentioned Indenture.
By:
	Authorized Signatory

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[FORM OF REVERSE SIDE OF NOTE]

2.25% Convertible Senior Notes due March 15, 2024

1. Interest

PSS World Medical, Inc., a Florida corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company will pay interest semiannually on March 15 and September 15 of each year. Interest on the Notes will accrue from the most recent date to which interest has been paid on the Notes or, if no interest has been paid, from March 8, 2004. The Company shall, to the fullest extent permitted by law, pay interest on overdue principal and overdue installments of interest, if any and Contingent Interest, if any (plus interest on such interest to the extent lawful), at the rate borne by the Notes, which interest shall be payable upon demand. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

2. Contingent Interest

From and after March 15, 2009, the Company will pay Contingent Interest on this Note under the circumstances and in the amounts described in Article 12 of the Indenture. Such Contingent Interest, if any, shall be payable semi-annually in arrears on each Interest Payment Date. Contingent Interest, if any, will be computed on the basis of a 360-day year of twelve 30-day months.

3. Method of Payment

By no later than 11:00 a.m. (New York City time) on the date on which any principal of or interest (including Contingent Interest, if any) on any Note is due and payable, the Company shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal and/or interest. The Company will pay interest (except Defaulted Interest) on the principal amount of the Notes on each March 15 and September 15 to the Persons who are registered Holders of Notes at the close of business on the March 1 and September 1 next preceding the Interest Payment Date even if Notes are canceled or repurchased after the Regular Record Date and on or before the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal and interest (including Contingent Interest, if any) in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company will make all payments in respect of a Definitive Note (including principal and interest) in U.S. dollars at the office of the Trustee. At the Company’s option, however, the Company may make such payments by mailing a check to the registered address of each Holder thereof as such address shall appear on the Note Register or, with respect to Notes represented by a Global Note, by wire transfer of immediately available funds to the accounts specified by the Depositary. If a payment date is a date other than a Business Day, payment may be made at that place on the next succeeding day that is a Business Day and no interest shall accrue for the intervening period.

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4. Paying Agent, Conversion Agent and Registrar

Initially, Wachovia Bank, National Association (“Trustee”) will act as Paying Agent, Conversion Agent and Registrar. The Company may appoint and change any Paying Agent, Conversion Agent, Registrar or co-registrar without notice to any Holder. The Company or any of its domestically incorporated Subsidiaries may act as Paying Agent, Conversion Agent, Registrar or co-registrar.

5. Indenture

The Company issued the Notes under an Indenture dated as of March 8, 2004 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”), among the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect from time to time (the “Act”). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Act for a statement of those terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture shall control.

The Notes are senior unsecured obligations of the Company limited to $150,000,000 aggregate principal amount.

6. Redemption at the Option of the Company

No sinking fund is provided for the Notes. The Notes are redeemable for cash in whole, or in part, at any time on or after March 15, 2009 at the option of the Company at a redemption price (“Redemption Price”) equal to 100% of the principal amount of the Notes, plus any accrued and unpaid interest (including Contingent Interest and Liquidated Damages, if any) to, but not including, the Redemption Date.

7. Notice of Redemption at the Option of the Company

Notice of redemption at the option of the Company shall be mailed at least 30 days but not more than 60 days before a Redemption Date to the Trustee, the Paying Agent and each Holder of Notes to be redeemed at the Holder’s registered address. If money sufficient to pay the Redemption Price of all Notes (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, on and after the Redemption Date, interest (including Contingent Interest and Liquidated Damages, if any), if any, shall cease to accrue on such Notes or portions thereof. Notes in denominations larger than $1,000 principal amount may be redeemed in part but only in integral multiples of $1,000 principal amount.

8. Repurchase by the Company at the Option of the Holder

Subject to the terms and conditions of the Indenture, a Holder shall have the option to require the Company to purchase the Notes held by such Holder on March 15, 2009,

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March 15, 2014 and March 15, 2019 (each, a “Repurchase Date”) at a purchase price (the “Repurchase Price”) equal to 100% of the principal amount of the Notes to be purchased plus any accrued and unpaid interest, if any (including Contingent Interest and Liquidated Damages, if any), to but not including such Repurchase Date, upon delivery of a Repurchase Notice containing the information set forth in the Indenture from the opening of business on the date that is 20 Business Days prior to such Repurchase Date until the close of business on the Business Day immediately prior to such Repurchase Date and upon delivery of the Notes to the Paying Agent by the Holder as set forth in the Indenture. The Company will pay the Repurchase Price in cash with respect each Repurchase Date.

Notes in denominations larger than $1,000 principal amount may be purchased in part, but only in integral multiples of $1,000 principal amount.

9. Repurchase at the Option of the Holder Upon a Fundamental Change

If a Fundamental Change shall occur, each Holder shall have the right, at such Holder’s option and subject to the terms and conditions of the Indenture, to require the Company to purchase any or all of such Holder’s Notes or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple of $1,000 on the day that is no less than 20 days and no more than 35 days after the date of the Company Notice of the occurrence of the Fundamental Change (subject to extension to comply with applicable law) for a Fundamental Change Repurchase Price equal to 100% of the principal amount of Notes purchased plus accrued and unpaid interest (including Contingent Interest and Liquidated Damages, if any) to but not including the Fundamental Change Repurchase Date, which Fundamental Change Repurchase Price shall be paid in cash.

Holders have the right to withdraw any Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, by delivery to the Paying Agent of a written notice of withdrawal in accordance with the provisions of the Indenture.

10. Conversion

Subject to the procedures set forth in the Indenture, a Holder may convert Notes into Common Stock on or before the close of business on March 14, 2024 during the periods and upon satisfaction of the conditions set forth in the Indenture.

Notes in respect of which a Holder has delivered a notice of exercise of the option to require the Company to purchase such Notes pursuant to Article VI or VII of the Indenture may be converted only if the notice of exercise is withdrawn in accordance with the terms of the Indenture.

The initial Conversion Rate is 58.4949 shares of Common Stock per $1,000 principal amount, subject to adjustment in certain events described in the Indenture. The Company may, at its option, deliver in lieu of shares of Common Stock, cash or a combination of cash and shares of Common Stock.

To convert the Notes a Holder must (1) complete and manually sign the irrevocable conversion notice on the back of the Notes (or complete and manually sign a facsimile of

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such notice) and deliver such notice to the Conversion Agent at the office maintained by the Conversion Agent for such purpose, (2) surrender the Notes to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if required.

11. Denominations; Transfer; Exchange

The Notes are in registered form without coupons in denominations of principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes (A) for a period beginning at the opening of business 15 days before any selection of Notes for redemption or repurchase and ending at the close of business on the day notice of such redemption or repurchase is deemed to have been given to all Holders of Notes to be so redeemed or repurchased or (B) selected for redemption or repurchase in whole or in part, except for the transfer of the unredeemed portion of any Note being redeemed in part.

12. Persons Deemed Owners

The registered Holder of this Note may be treated as the owner of this Note for all purposes.

13. Unclaimed Money

If money for the payment of the principal of, or interest (including Contingent Interest, if any) on the Note remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

14. Amendment, Waiver

Subject to certain exceptions set forth in the Indenture, (i) the Indenture and the Notes may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) and (ii) any default (other than with respect to nonpayment) or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).

15. Defaulted Interest

Except as otherwise specified with respect to the Notes, any Defaulted Interest on any Note shall forthwith cease to be payable to the registered Holder thereof on the relevant Regular Record Date or accrual date, as the case may be, by virtue of having been such Holder,

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and such Defaulted Interest may be paid by the Company as provided for in Section 2.12 of the Indenture.

16. No Recourse Against Others

No recourse for the payment of the principal of or interest (or including Contingent Interest and Liquidated Damages, if any) on this Note and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture, this Note or in any supplemental indenture, or because of the creation of any Indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, officer, director, or subsidiary, past, present or future, of the Company or of any successor corporation or entity, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being understood that all such liability is hereby waived and released as a condition to, and as a consideration for, the execution and delivery of the Indenture and the issue of this Note.

17. Authentication

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Note.

18. Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

19. CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers placed thereon.

20. Governing Law

This Note shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely in such state, without regard to principles of conflicts of law.

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The Company will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Note. Requests may be made to:

PSS World Medical, Inc.

4345 Southpoint Blvd.

Jacksonville, FL 32216

Attention: David D. Klarner

Facsimile No.: (904) 332-3214

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

____________________________________________________________

(Print or type assignee’s name, address and zip code)

_______________________________________________

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                      agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:                     Your Signature:                                

Signature Guarantee:
	(Signature must be guaranteed)

Sign exactly as your name appears on the other side of this Note.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Notes evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Notes are being:

CHECK ONE BOX BELOW:

1.	¨	acquired for the undersigned’s own account, without transfer; or
2.	¨	transferred to the Company; or
3.	¨	transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”); or
4.	¨	transferred pursuant to an effective registration statement under the Securities Act; or
5.	¨	transferred to an institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter appears as Section 2.7 of the Indenture); or
6.	¨	transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

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Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Notes, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, such as the exemption provided by Rule 144 under such Act.

	Signature
Signature Guarantee:
(Signature must be guaranteed)	Signature

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:	NOTICE: To be executed by an executive officer
	[INSERT NAME OF ASSIGNOR]
	By:
		Name: Title:

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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Note have been made:

Date of
Exchange
Amount of decrease in Principal
Amount of this Global Note
Amount of increase in Principal
Amount of this Global Note
Principal Amount of this
Global Note following such
decrease or increase
Signature of authorized
signatory of Trustee or Notes
Custodian

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OPTION OF HOLDER TO ELECT REPURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 7.1 or Article VI of the Indenture, check the box: ¨

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 7.1 or Article VI of the Indenture, state the amount in principal amount (must be an integral multiple of $1,000): $                    .

Date:	Your Signature:
		(Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:
	(Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

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FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

Re: 2.25% Convertible Senior Notes due March 15, 2024 of PSS World Medical, Inc. (the “Company”).

This Certificate relates to $                                                      principal amount of Notes held in *                 book-entry or *                 definitive form by                                                       (the “Transferor”).

The Transferor has requested the Trustee by written order to exchange or register the transfer of a Note or Notes.

In connection with such request and in respect of each such Note, the Transferor does hereby certify that the Transferor is familiar with the Indenture, dated as of March 8, 2004 (as amended or supplemented to date, the “Indenture”), between the Company and Wachovia Bank, National Association, as trustee (the “Trustee”), relating to the above-captioned Notes and that the transfer of this Note does not require registration under the Securities Act (as defined below) because:*

¨ Such Note is being acquired for the Transferor’s own account without transfer.

¨ Such Note is being transferred to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)), in accordance with Rule 144A under the Securities Act.

¨ Such Note is being transferred (i) pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act (and based upon an opinion of counsel if the Company or the Trustee so requests) or (ii) pursuant to an effective registration statement under the Securities Act.

¨ Such Note is being transferred in reliance on and in compliance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company or the Trustee so requests).

* Fill in blank or check appropriate box, as applicable.

A-14

You are entitled to rely upon this certificate and you are irrevocably authorized to produce this certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

[INSERT NAME OF TRANSFEROR]
By:
	Name:
	Title:
	Address:
	Date:

A-15

CONVERSION NOTICE

To convert this Note into Common Stock of the Company, check the box:

¨

To convert only part of this Note, state the principal amount to be converted (must be in integral multiples of $1,000):

$

If you want the stock certificate made out in another person’s name, fill in the form below:

(Insert other person’s soc. sec. or tax I.D. no.)

(Print or type other person’s name, address and zip code)

Date:	Signature(s):
		(Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)

A-16

Signature(s) guaranteed by:

(Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)

A-17

EXHIBIT B

FORM OF TRANSFER CERTIFICATE FOR TRANSFER

OF RESTRICTED COMMON STOCK

[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]

Re: PSS World Medical, Inc. 2.25% Convertible Senior Notes Due March 15, 2024 (the “Notes”)

Reference is hereby made to the Indenture dated as of March 8, 2004 between the Company and the Trustee (collectively, the “Indenture”). Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

This letter relates to                  shares of Common Stock represented by the accompanying certificate(s) that were issued upon conversion of Notes and which are held in the name of [name of transferor] (the “Transferor”) to effect the transfer of such Common Stock.

In connection with the transfer of such shares of Common Stock, the undersigned confirms that such shares of Common Stock are being transferred and do not require registration under the Securities Act (as defined below) because:

CHECK ONE BOX BELOW:

¨ Such Common Stock is being acquired for the Transferor’s own account without transfer.

¨ Such Common Stock is being transferred to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)), in accordance with Rule 144A under the Securities Act.

¨ Such Common Stock is being transferred (i) pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act (and based upon an opinion of counsel if the Company or the Trustee so requests) or (ii) pursuant to an effective registration statement under the Securities Act.

¨ Such Common Stock is being transferred in reliance on and in compliance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company or the Trustee so requests).

B-1

Unless one of the boxes is checked, the transfer agent will refuse to register any of the Common Stock evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (2), (3) or (4) is checked, the transfer agent may require, prior to registering any such transfer of the Common Stock such certifications and other information, including opinions of counsel, as the Company has reasonably requested in writing, by delivery to the transfer agent of a standing letter of instruction, to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

[Name of Transferor],
By:
	Name:
	Title:
Dated:

B-2

ANNEX A

Projected Payment Schedule*

Semi-Annual Period	Date	Total Projected Payment
0	3/8/2004	$	(1,000.00	)
1	9/15/2004	$	11.25
2	3/15/2005	$	11.25
3	9/15/2005	$	11.25
4	3/15/2006	$	11.25
5	9/15/2006	$	11.25
6	3/15/2007	$	11.25
7	9/15/2007	$	11.25
8	3/15/2008	$	11.25
9	9/15/2008	$	11.25
10	3/15/2009	$	11.25
11	9/15/2009	$	11.25
12	3/15/2010	$	14.36
13	9/15/2010	$	14.53
14	3/15/2011	$	14.71
15	9/15/2011	$	14.90
16	3/15/2012	$	15.10
17	9/15/2012	$	15.31
18	3/15/2013	$	15.53
19	9/15/2013	$	15.77
20	3/15/2014	$	16.02
21	9/15/2014	$	16.28
22	3/15/2015	$	16.56
23	9/15/2015	$	16.85
24	3/15/2016	$	17.16
25	9/15/2016	$	17.48
26	3/15/2017	$	17.82
27	9/15/2017	$	18.19
28	3/15/2018	$	18.57
29	9/15/2018	$	18.97
30	3/15/2019	$	19.40
31	9/15/2019	$	19.84
32	3/15/2020	$	20.32
33	9/15/2020	$	20.81
34	3/15/2021	$	21.34
35	9/15/2021	$	21.90
36	3/15/2022	$	22.48
37	9/15/2022	$	23.10
38	3/15/2023	$	23.75
39	9/15/2023	$	24.44
40	3/15/2024	$	3,241.86

* The comparable yield means the annual yield the Company would pay, as of the date of issue of a Note, on a fixed-rate nonconvertible debt security with no contingent payments, but with terms and conditions otherwise comparable to those of the Notes, and the schedule of projected payments has been determined on the basis of an assumption of linear growth of the stock price and a constant dividend yield and has not been determined for any purpose other than for the determination of interest accruals and adjustments thereof in respect of the Notes for United States federal income tax purposes. The comparable yield and the schedule of projected payments do not constitute a projection or representation regarding the amounts payable on Notes.

B-3

EX-10.1

EXHIBIT 10.1

THIRD AMENDMENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made and entered into as of this 1st day of March, 2004, among PSS World Medical, Inc., a Florida corporation (“PSS”), Gulf South Medical Supply, Inc., a Delaware corporation (“Gulf South”), and Physician Sales & Services Limited Partnership, a Florida limited partnership (“PSS LP”; PSS, Gulf South and PSS LP are referred to hereinafter each individually as a “Borrower” and collectively as “Borrowers”), PSS Holding, Inc., a Florida corporation (“PSS Holding”), PSS Service, Inc., a Florida corporation (“PSS Service”), Physician Sales & Service, Inc., a Florida corporation (“Physician Sales & Service”), Highpoint Healthcare Distribution, Inc., a Nevada corporation (“Highpoint Healthcare”), ProClaim, Inc., a Tennessee corporation (“ProClaim”), Ancillary Management Solutions, Inc., a Tennessee corporation (“Ancillary”), and ThriftyMed, Inc., a Florida corporation (“ThriftyMed”; PSS Holding, PSS Service, Physician Sales & Service, Highpoint Healthcare, ProClaim, Ancillary and ThriftyMed are referred to hereinafter each individually as a “Guarantor” and collectively as “Guarantors”), the Lenders party to this Amendment (the “Lenders”), and Bank of America, N.A., as Agent for the Lenders (the “Agent”).

W I T N E S S E T H :

WHEREAS, Borrowers, Guarantors, the Lenders and the Agent entered into that certain Amended and Restated Credit Agreement, dated as of May 20, 2003, pursuant to which the Lenders agreed to make certain loans to Borrowers (as amended, modified, supplemented and restated from time to time, the “Credit Agreement”); and

WHEREAS, Borrowers, Guarantors, the Lenders and the Agent desire to enter into this Amendment for the purpose of amending the Credit Agreement in certain respects.

NOW, THEREFORE, in consideration of the foregoing premises, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. All capitalized terms used herein and not otherwise expressly defined herein shall have the respective meanings given to such terms in the Credit Agreement.

2. The Agent and the Lenders acknowledge that the issuance of the Senior Convertible Notes (as hereafter defined) shall not constitute a default under Section 7.9(c) of the Credit Agreement.

3. The Credit Agreement is amended by adding the following new subsection (h) to Section 7.13 of the Credit Agreement, immediately following subsection (g) thereof:

(h) Debt incurred pursuant to the Senior Convertible Notes and the Senior Convertible Notes Indenture.

4. The Credit Agreement is amended by deleting Section 7.14 of the Credit Agreement and replacing it with the following in lieu thereof:

7.14 Prepayment. Neither any Obligor nor any Subsidiary shall voluntarily prepay any Debt, except (a) the Obligations in accordance with the terms of this Agreement, (b) in connection with Refinancings permitted under Section 7.13(d), (c) intercompany Debt, provided no such intercompany Debt will be prepaid to any non-Obligor if an Event of Default exists, (d) non-cash conversions of all or part of the Debt outstanding under the Senior Convertible Notes into equity securities of PSS in accordance with the terms of the Senior Convertible Notes Indenture, and (e) and Permitted SCN Redemptions.

5. The Credit Agreement is amended by deleting Section 7.23 of the Credit Agreement and replacing it with the following in lieu thereof:

7.23 Financial Covenants. The Borrowers and their consolidated Subsidiaries shall:

(a) have EBITDA for each period of four consecutive fiscal quarters ending on the last day of each fiscal quarter set forth below of not less than the applicable amount set forth below:

Period Ending	Minimum EBITDA
Each four fiscal quarter period ending on or after March 28, 2003 but prior to the fiscal quarter ending on or about April 2, 2004	$	38,000,000
Each four fiscal quarter period ending on or after April 2, 2004 but prior to the fiscal quarter ending on or about April 1, 2005	$	45,000,000
Each four fiscal quarter period ending thereafter	$	50,000,000

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(b) maintain a Leverage Ratio as of each fiscal quarter ending as of the applicable date set forth below of not more than the applicable ratio set forth below:

Fiscal Quarter Ending	Maximum Leverage Ratio
Each four fiscal quarter period ending on or after March 28, 2003 but prior to the fiscal quarter ending on or about April 1, 2005	3.5 to 1
Each four fiscal quarter period ending thereafter	3.25 to 1

; provided, however, the Borrowers shall only be required to comply with this Section 7.23 with respect to any fiscal quarter end if, at any time during such fiscal quarter then ended, Excess Availability was less than $25,000,000.

6. The Credit Agreement is amended by deleting the definition of “Change of Control” set forth in Appendix A to the Credit Agreement and replacing it with the following in lieu thereof:

“Change of Control” means the occurrence of any of the following: (a) a Person or “group” of Persons (within the meaning of Section 13(d) of the Exchange Act), shall acquire, beneficially or of record, 30% or more of the outstanding voting stock (stock entitled to vote for election of directors) of PSS; (b) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the Board of Directors of PSS (together with any new directors whose election by the Board of Directors of PSS or whose nomination for election by the shareholders of PSS, as the case may be, was approved by a vote of a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of PSS, as the case may be, then in office; (c) PSS shall cease to own 100% of the voting stock of any other Obligor or such ownership shall cease to vest in PSS voting control with respect to any other Obligor, except as a result of a transaction permitted under this Agreement; or (d) a “Fundamental Change” shall occur under (and as defined in) the Senior Convertible Notes Indenture.

7. The Credit Agreement is amended by deleting the definition of “Funded Debt” set forth in Appendix A to the Credit Agreement and replacing it with the following in lieu thereof:

“Funded Debt” means, as of any date of determination, (a) all principal of Debt under this Agreement, and, without duplication, (b) (i) Debt for money borrowed, (ii) Debt, whether or not in any such case the same was for money borrowed, (A) represented by notes payable, and drafts accepted, that represent extensions of credit, (B) constituting obligations evidenced by bonds, debentures, notes or similar instruments,

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or (C) upon which interest charges are customarily paid or that was issued or assumed as full or partial payment for property (other than trade credit that is incurred in the ordinary course of business), including Debt to be paid in one or more installments under non-compete arrangements entered into in connection with Permitted Acquisitions, (iii) Debt that constitutes an obligation under a Capital Lease, and (iv) Debt that is such by virtue of clause (d) of the definition thereof, but only to the extent that the obligations guaranteed are obligations that would constitute Funded Debt; provided, however, the amount of Funded Debt on any date of determination shall be reduced by an amount, not to exceed the outstanding principal amount of Revolving Loans on such date, equal to the remainder of (1) the net amount of the Borrowers’ Cash Equivalents (plus collected funds in bank accounts of the Borrowers at the Bank) as of such date that are subject to the Agent’s perfected Liens and no prior Liens and that are capable of being liquidated within two Business Days without any penalty or premium and available for the general operations of the Borrowers, minus (2) the aggregate outstanding amount of (y) checks and similar instruments that have been written against the Borrowers’ bank accounts as of such date but have not yet cleared, whether or not such checks have been mailed or delivered or are being held by a Borrower, plus (z) automatic clearing house and other transfers that are pending against the Borrowers’ bank accounts as of such date, it being understood that the calculation of both items (1) and (2) above shall be made by the Borrowers in such detail as the Agent may require and shall be subject to the final approval of the Agent.

8. The Credit Agreement is amended by deleting the definition of “Permitted Stock Redemptions” set forth in Appendix A to the Credit Agreement and replacing it with the following in lieu thereof:

“Permitted Stock Redemptions” means redemptions of capital stock of PSS so long as: (a) the aggregate redemption price for such redemptions occurring on or after the Closing Date does not exceed $42,000,000, (b) no Default or Event of Default exists before or after giving effect to any such redemption, (c) after giving effect to the consummation of any such redemption (including any Loans made hereunder to finance such redemption), Excess Availability is greater than $20,000,000; (d) after giving effect to the consummation of any such redemption, the Obligors are in compliance with the financial covenants set forth in Section 7.23 on a pro forma basis (it being understood that this requirement shall apply whether or not Excess Availability is greater than $25,000,000 after giving effect to the consummation of any such redemption), provided, that such financial covenants shall be measured as of the most recently ended fiscal month for which the Borrowers have delivered the financial statements required under Section 5.2(b) or (c), as the case may be, for the twelve fiscal month period then ended; (e) the Accounts Payable Turnover,

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calculated as of the date of any such proposed redemption and as of the most recently ended fiscal month for which the Borrowers have delivered the financial statements required under Section 5.2(b) or (c), as the case may be, shall not in either case exceed 45 days; (f) after giving effect to the consummation of such redemption (including any Loans made hereunder to finance such redemption) the Aggregate Revolver Outstandings shall not exceed the Maximum Revolver Amount minus $20,000,000; and (g) a Responsible Officer delivers to the Agent a certificate (i) demonstrating compliance with clauses (a), (c), (d), (e) and (f) above, and (ii) stating that no Default or Event of Default exists before or after giving effect to any such redemption; provided, that, in the case of a series of redemptions over consecutive Business Days, unless otherwise required by the Agent, the Borrowers shall only be required to deliver the foregoing certificate as of the first date of such series of redemptions (such certificate to be delivered on the first date of such series of redemptions) and as of the last date of such series of redemptions (such certificate to be delivered within two Business Days after the last date of such series of redemptions).

9. The Credit Agreement is amended by adding the following new definition of “Permitted SCN Redemptions” to Annex A to the Credit Agreement, in proper alphabetical sequence:

“Permitted SCN Redemptions” means cash redemptions or conversions of Senior Convertible Notes so long as: (a) the aggregate redemption or conversion price does not exceed $50,000,000, (b) no Default or Event of Default exists before or after giving effect to any such redemption or conversion, (c) after giving effect to the consummation of any such redemption or conversion (including any Loans made hereunder to finance such redemption or conversion), Excess Availability is greater than $25,000,000; (d) after giving effect to the consummation of any such redemption or conversion, the Obligors are in compliance with the financial covenants set forth in Section 7.23 on a pro forma basis (it being understood that this requirement shall apply whether or not Excess Availability is greater than $25,000,000 after giving effect to the consummation of any such redemption or conversion), provided, that such financial covenants shall be measured as of the most recently ended fiscal month for which the Borrowers have delivered the financial statements required under Section 5.2(b) or (c), as the case may be, for the twelve fiscal month period then ended; (e) the Accounts Payable Turnover, calculated as of the date of any such proposed redemption or conversion and as of the most recently ended fiscal month for which the Borrowers have delivered the financial statements required under Section 5.2(b) or (c), as the case may be, shall not in either case exceed 45 days; (f) after giving effect to the consummation of such redemption or conversion (including any Loans made hereunder to finance such redemption or

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conversion) the Aggregate Revolver Outstandings shall not exceed the Maximum Revolver Amount minus $20,000,000; and (g) a Responsible Officer delivers to the Agent a certificate (i) demonstrating compliance with clauses (a), (c), (d), (e) and (f) above, and (ii) stating that no Default or Event of Default exists before or after giving effect to any such redemption or conversion.

10. The Credit Agreement is amended by adding the following new definition of “Senior Convertible Notes” to Annex A to the Credit Agreement, in proper alphabetical sequence:

“Senior Convertible Notes” means those certain [Convertible Senior Notes] by PSS dated March     , 2004, due                     , 2024, in the aggregate original principal amount of up to $150,000,000, issued pursuant to the Senior Convertible Notes Indenture.

11. The Credit Agreement is amended by adding the following new definition of “Senior Convertible Notes Indenture” to Annex A to the Credit Agreement, in proper alphabetical sequence:

“Senior Convertible Notes Indenture” means that certain [Indenture] dated March     , 2004, between PSS and Wachovia Bank, N.A., as trustee, that provides for the issuance of the Senior Convertible Notes.

12. Notwithstanding anything to the contrary set forth in the Credit Agreement or any other Loan Document, the Applicable Margins shall be set at Level V (0.00% for Base Rate Loans and 2.00% for LIBOR Loans) until the scheduled adjustment thereto based on the Leverage Ratio for the fiscal year ending on or about April 1, 2005, provided that the foregoing shall not limit the application of the Default Rate as set forth in the Credit Agreement during the existence of an Event of Default.

13. The effectiveness of this Amendment is expressly conditioned upon the following:

(a) the due execution and delivery of this Amendment by each of the parties hereto;

(b) the delivery to the Agent of duly executed originals of each of the documents set forth on the Closing Checklist, a copy of which is attached hereto as Exhibit A;

(c) the payment by the Borrowers of the amendment fee described in Section 14 of this Amendment; and

(d) the Agent shall have received a true and correct copy of the Senior Convertible Notes Indenture, substantially in conformance with the most recent Description

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of Notes delivered to the Agent prior to the execution and delivery of this Amendment by the Agent.

14. In consideration of the Agent’s and the Lenders’ willingness to enter into this Amendment, Borrowers jointly and severally agree to pay to the Agent an amendment fee in the amount of $250,000, in immediately available funds on the date hereof, to be distributed by the Agent to the Lenders who are party to this Amendment based upon such Lenders’ Pro Rata Share of the Commitments.

15. To induce the Agent and the Lenders to enter into this Amendment, Borrowers and Guarantors hereby represent and warrant that, as of the date hereof, there exists no Default or Event of Default under the Credit Agreement.

16. Borrowers and Guarantors hereby restate, ratify, and reaffirm each and every term, condition, representation and warranty heretofore made by each of them under or in connection with the execution and delivery of the Credit Agreement, as modified hereby, and the other Loan Documents, as fully as though such representations and warranties had been made on the date hereof and with specific reference to this Amendment, except to the extent that any such representation or warranty relates solely to a prior date.

17. Except as expressly set forth herein, the Credit Agreement and the other Loan Documents shall be and remain in full force and effect as originally written, and shall constitute the legal, valid, binding and enforceable obligations of Borrowers and Guarantors to the Agent and the Lenders.

18. Borrowers agree to pay on demand all reasonable costs and expenses of the Agent in connection with the preparation, execution, delivery and enforcement of this Amendment and all other Loan Documents and any other transactions contemplated hereby, including, without limitation, the reasonable fees and out-of-pocket expenses of legal counsel to the Agent.

19. Borrowers and Guarantors agree to take such further action as the Agent shall reasonably request in connection herewith to evidence the agreements herein contained.

20. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

21. This Amendment shall be binding upon and inure to the benefit of the successors and permitted assigns, and legal representatives and heirs, of the parties hereto.

22. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Georgia.

[Signatures commence on following page.]

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IN WITNESS WHEREOF, Borrowers, Guarantors, the Agent and the Lenders have caused this Amendment to be duly executed as of the date first above written.

BORROWERS: PSS WORLD MEDICAL, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

GULF SOUTH MEDICAL SUPPLY, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

PHYSICIAN SALES & SERVICE LIMITED PARTNERSHIP
By:	PSS World Medical, Inc., Its general partner
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

GUARANTORS: PSS HOLDING, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

PSS SERVICE, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

PHYSICIAN SALES & SERVICE, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

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THRIFTYMED, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

HIGHPOINT HEALTHCARE DISTRIBUTION, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

PROCLAIM, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

ANCILLARY MANAGEMENT SOLUTIONS, INC.
By:	/s/    DAVID D. KLARNER
Name:	David D. Klarner
Title:	Vice President

LENDERS: BANK OF AMERICA, N.A.
By:	/s/    MARK HERDMAN
Name:	Mark Herdman
Title:	Vice President

GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/    STEVEN WAGNBLAS
Name:	Steven Wagnblas
Title:	Duly Authorized Signatory

FLEET CAPITAL CORPORATION
By:	/s/    W. REED PADEN
Name:	W. Reed Paden
Title:	Vice President

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WACHOVIA BANK, NATIONAL ASSOCIATION
By:	/s/    ERIC BUTLER
Name:	Eric Butler
Title:	Managing Director

THE CIT GROUP/BUSINESS CREDIT, INC.
By:	/s/    ARTHUR R. CORDWELL, JR.
Name:	Arthur R. Cordwell, Jr.
Title:	Vice President

AGENT: BANK OF AMERICA, N.A.
By:	/s/    MARK HERDMAN
Name:	Mark Herdman
Title:	Vice President

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EXHIBIT A

Third Amendment

relating to

Amended and Restated Credit Agreement dated May 20, 2003 among PSS

World Medical, Inc. and the other borrowers listed on Appendix 1

(“Borrowers”)

and

The Guarantors listed on Appendix 1

(“Guarantors”)

and

A syndicate of lenders party thereto (the “Lenders”)

and

Bank of America, N.A., as agent for the Lenders

(“Agent”)

March 1, 2004

Document

1. Third Amendment

2. Bringdown Secretary’s Certificate of PSS World Medical, Inc., including Exhibit A – Good Standing Certificate

3. Bringdown Certificate of Physician Sales and Service Limited Partnership, including Exhibit A – Good Standing Certificate

4. Bringdown Secretary’s Certificate for Gulf South Medical Supply, Inc., including Exhibit A – Good Standing Certificate

5. Opinion of Counsel

6. Affidavit regarding Out of State Delivery

7. Certificate regarding Senior Convertible Notes Indenture

Appendix 1

Borrowers

PSS World Medical, Inc.

Physician Sales & Service Limited Partnership

Gulf South Medical Supply, Inc.

Guarantors

Physician Sales & Services, Inc.

PSS Holding, Inc.

PSS Service, Inc.

ThriftyMed, Inc.

Highpoint Healthcare Distribution, Inc.

ProClaim, Inc.

Ancillary Management Solutions, Inc.

EX-99.1

Execution Copy

EXHIBIT 99.1

PSS World Medical, Inc.

2.25% Convertible Senior Notes due March 15, 2024

Purchase Agreement

March 2, 2004

Goldman, Sachs & Co.,

    As representatives of the several Purchasers

    named in Schedule I hereto (the “Representatives”),

c/o Goldman, Sachs & Co.,

85 Broad Street,

New York, New York 10004

Ladies and Gentlemen:

PSS World Medical, Inc., a Florida corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the Purchasers named in Schedule I hereto (the “Purchasers”) an aggregate of $125,000,000 principal amount of the Convertible Senior Notes due March 15, 2024, convertible into common stock, par value $0.01 (“Stock”), of the Company specified above (the “Firm Securities”) and, at the election of the Purchasers, up to an aggregate of $25,000,000 additional aggregate principal amount (the “Optional Securities”) (the Firm Securities and the Optional Securities which the Purchasers elect to purchase pursuant to Section 2 hereof are herein collectively called the “Securities”). The Securities will have the benefit of a registration rights agreement (the “Registration Rights Agreement”), to be dated as of March 8, 2004, between the Company and the Purchasers.

1. The Company represents and warrants to, and agrees with, each of the Purchasers that:

(a) A preliminary offering circular, dated March 1, 2004 (the “Preliminary Offering Circular”), and an offering circular, dated March 2, 2004 (the “Offering Circular”), have been prepared in connection with the offering of the Securities and the shares of Stock issuable upon conversion thereof. Any reference to the Preliminary Offering Circular or the Offering Circular shall be deemed to refer to and include the Company’s most recent Annual Report on Form 10-K and all subsequent documents filed with the United States Securities and Exchange Commission (the “Commission”) pursuant to Section 13(a), 13(c) or 15(d) of the

United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) on or prior to the date of the Preliminary Offering Circular or the Offering Circular, as the case may be, and any reference to the Preliminary Offering Circular or the Offering Circular, as the case may be, as amended or supplemented, as of any specified date, shall be deemed to include (i) any documents filed with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act after the date of the Preliminary Offering Circular or the Offering Circular, as the case may be, and prior to such specified date and (ii) any Additional Issuer Information (as defined in Section 5(f)) furnished by the Company prior to the completion of the distribution of the Securities; and all documents filed under the Exchange Act and so deemed to be included in the Preliminary Offering Circular or the Offering Circular, as the case may be, or any amendment or supplement thereto are hereinafter called the “Exchange Act Reports”. The Exchange Act Reports, when they were or are filed with the Commission, conformed or will conform in all material respects to the applicable requirements of the Exchange Act and the applicable rules and regulations of the Commission thereunder. The Preliminary Offering Circular or the Offering Circular and any amendments or supplements thereto and the Exchange Act Reports did not and will not, as of their respective dates, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a Purchaser through Goldman, Sachs & Co. expressly for use therein;

(b) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Offering Circular any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Offering Circular; and, since the respective dates as of which information is given in the Offering Circular, there has not been any change in the capital stock or long-term debt of the Company or any of its subsidiaries (other than stock option transactions, normal debt payments and other such transactions in the normal course of business) or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders’ equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Offering Circular;

(c) The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except (i) as set forth in the Offering Circular, or (ii) as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries;

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(d) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Florida, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Circular, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction;

(e) Each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Circular, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction;

(f) Gulf South Medical Supply, Inc. is the only subsidiary of the Company that is a significant subsidiary of the Company’s within the meaning of Section 1-02(w) of Regulation S-X under the Securities Act of 1933, as amended (the “Act”);

(g) The Company has an authorized capitalization as set forth in the Offering Circular, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; the shares of Stock initially issuable upon conversion of the Securities have been duly and validly authorized and reserved for issuance and, when issued and delivered in accordance with the provisions of the Securities and the Indenture referred to below, will be duly and validly issued, fully paid and non-assessable and will conform to the description of the Stock contained in the Offering Circular; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and (except for directors’ qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except as set forth in the Offering Circular;

(h) The Securities have been duly authorized by the Company and, when issued and delivered pursuant to this Agreement, when authenticated by the Trustee in accordance with the Indenture (as defined below), and when paid for by the Purchasers in accordance with the terms hereof, will have been duly executed, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the indenture to be dated as of March 8, 2004 (the “Indenture”) between the Company and Wachovia Bank, N.A., as Trustee (the “Trustee”), under which they are to be issued and will be convertible into Stock in accordance with their terms and the Indenture; the Securities will rank equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness; the Indenture has been duly authorized and, when executed and delivered by the Company and the Trustee, the Indenture will constitute a valid and legally binding instrument of the Company, enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equitable principles (regardless of whether such enforcement is considered in a proceeding at law or in equity); and the

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Securities and the Indenture will conform to the descriptions thereof in the Offering Circular and will be in substantially the form previously delivered to you;

(i) This Agreement has been duly authorized, executed and delivered by the Company; the Registration Rights Agreement has been duly authorized and, assuming due authorization, execution and delivery by the Purchasers, when executed and delivered by the Company, will constitute a valid and binding instrument of the Company, enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equitable principles (regardless of whether such enforcement is considered in a proceeding at law or in equity);

(j) None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Securities) will violate or result in a violation of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without limitation, Regulations T, U, and X of the Board of Governors of the Federal Reserve System;

(k) Prior to the date hereof, neither the Company nor any of its “affiliates” (as defined in Rule 144 under the Act) has taken any action that is prohibited by Section 9(a) of the Exchange Act or any applicable state securities laws;

(l) The issue and sale of the Securities and the compliance by the Company with all of the provisions of the Securities, the Indenture, the Registration Rights Agreement and this Agreement and the consummation of the transactions herein and therein contemplated (including, without limitation, the use of proceeds from the sale of the Securities) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject except for such conflicts, breaches or violations which would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole, nor will such action result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company of the transactions contemplated by this Agreement, the Registration Rights Agreement or the Indenture, except such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Purchasers and by federal and state securities laws with respect to the Company’s obligations under the Registration Rights Agreement;

(m) Neither the Company nor any of its subsidiaries is in violation of its Articles of Incorporation or By-laws or in default in the performance or observance of any material obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan

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agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound;

(n) The statements set forth in the Offering Circular under the caption “Description of Notes” and “Description of Capital Stock”, insofar as they purport to constitute a summary of the terms of the Securities and the Stock, under the caption “Material United States Federal Income Tax Consequences”, and under the caption “Underwriting”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair;

(o) Other than as set forth in the Offering Circular, there are no legal or governmental proceedings pending, nor to the knowledge of the Company, threatened, to which the Company or any of its subsidiaries is or would be a party or of which any property of the Company or any of its subsidiaries is or would be the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future financial position, shareholders’ equity or results of operations of the Company and its subsidiaries or on the power or ability of the Company to perform its obligations under this Agreement, the Indenture, the Registration Rights Agreement or the Securities or to consummate the transactions contemplated herein and therein;

(p) The Company and its subsidiaries (i) are in compliance with any and all applicable foreign federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole;

(q) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole;

(r) When the Securities are issued and delivered pursuant to this Agreement, the Securities will not be of the same class (within the meaning of Rule 144A under the Act) as securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system;

(s) The Company is subject to Section 13 or 15(d) of the Exchange Act;

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(t) The Company is not, and after giving effect to the offering and sale of the Securities, will not be an “investment company”, as such term is defined in the United States Investment Company Act of 1940, as amended (the “Investment Company Act”);

(u) Neither the Company, any of its affiliates nor any person acting on its or their behalf has offered or sold the Securities by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act;

(v) Within the preceding six months, neither the Company, any of its affiliates nor any other person acting on its or their behalf has offered or sold to any person any Securities, or any securities of the same or a similar class as the Securities, other than Securities offered or sold to the Purchasers hereunder. The Company will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Act) of any Securities or any substantially similar security issued by the Company, within six months subsequent to the date on which the distribution of the Securities has been completed (as notified to the Company by Goldman, Sachs & Co.), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Securities in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of the Act;

(w) KPMG LLP, who have certified certain financial statements of the Company and its subsidiaries, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder;

(x) It is not necessary in connection with the offer, sale and delivery of the Securities to the Purchasers in the manner contemplated by this Agreement to register the Securities under the Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended;

(y) The Company and its subsidiaries have and will maintain insurance covering their respective properties, operations, personnel and businesses, which insurance is in amounts and insures against such losses and risks, in each case as in accordance with customary industry practice for companies of similar size and operations, except where the failure to maintain such insurance would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole;

(z) The Company and each of its subsidiaries possess all licenses, certificates, approvals and permits issued by, and has made all declarations and filings with, the appropriate federal, state or foreign regulatory agencies or bodies (including without limitation, the Federal Food and Drug Administration, the Federal Drug Enforcement Administration and comparable state agencies) necessary for the ownership of the Company’s and its subsidiaries’ properties or the conduct of its and their businesses (including, without limitation, the marketing of the products that the Company and its subsidiaries currently market) as described in the Offering Circular, except where the failure to possess or make the same would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole, and none of the Company or its subsidiaries have received notification of any revocation or modification of any such license, certificate, authorization or permit or have any reason to believe that any such license, certificate, authorization or permit will not be renewed;

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(aa) The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

2. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each of the Purchasers, and each of the Purchasers agrees, severally and not jointly, to purchase from the Company, at a purchase price of 97.0% of the principal amount thereof, the principal amount of Firm Securities set forth opposite the name of such Purchaser in Schedule I hereto.

The Company hereby grants to the Purchasers the right to purchase at their election up to $25,000,000 aggregate principal amount of Optional Securities, at the purchase price for the Firm Securities set forth in the first paragraph of this Section 2. Any such election to purchase Optional Securities may be exercised in whole or from time to time in part by written notice from you to the Company, setting forth the aggregate principal amount of Optional Securities to be purchased and the date on which such Optional Securities are to be delivered, as determined by you but in no event earlier than the First Time of Delivery (as defined in Section (4) hereof) or, unless you and the Company otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.

3. Upon the authorization by you of the release of the Securities, the several Purchasers propose to offer the Securities for sale upon the terms and conditions set forth in this Agreement and the Offering Circular and each Purchaser hereby represents and warrants to, and agrees with, the Company that:

(a) It will offer and sell the Securities only to persons who it reasonably believes are “qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A under the Act in transactions meeting the requirements of Rule 144A;

(b) It is an institutional accredited investor as set forth in subsections (1), (2), (3) or (7) of Rule 501(a) under the Act; and

(c) It will not offer or sell the Securities by any form of general solicitation or general advertising, including but not limited to the methods described in Rule 502(c) under the Act.

4. (a) The Securities to be purchased by the Purchaser hereunder will be represented by one or more definitive global Securities in book-entry form which will be deposited by or on behalf of the Company with The Depository Trust Company (“DTC”) or its designated custodian. The Company will deliver the Securities to Goldman, Sachs & Co., for the account of each Purchaser, against payment by or on behalf of such Purchaser of the purchase price therefor by wire transfer to an account designated by the Company in Federal (same day) funds, by causing DTC to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The Company will cause the certificates representing the Securities to be made available for checking at least twenty-four hours prior to the

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Time of Delivery (as defined below) at the office of DTC or its designated custodian (the “Designated Office”). The time and date of such delivery and payment shall be 9:30 a.m., New York City time, on March 8, 2004 or such other time and date as Goldman, Sachs & Co. and the Company may agree upon in writing and, with respect to the Optional Securities, 9:30 a.m., New York City time, on the date specified by Goldman, Sachs & Co. in the written notice given by Goldman, Sachs & Co. of the Purchasers’ election to purchase such Optional Securities, or such other time and date as Goldman, Sachs & Co. and the Company may agree upon in writing, provided that any Subsequent Time of Delivery (as defined below), if any, shall not be more than 13 calendar days from and including the First Time of Delivery (as defined below). The time and date for delivery of the Firm Securities is herein called the “First Time of Delivery”, the time and date for delivery of any Optional Securities, if not the First Time of Delivery, is herein called the “Subsequent Time of Delivery”, and each such time and date for delivery is herein called a “Time of Delivery”.

(b) The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof, including the cross-receipt for the Securities and any additional documents requested by the Purchasers pursuant to Section 7(l) hereof, will be delivered at such time and date at the offices of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York 10006 (the “Closing Location”), and the Securities will be delivered at the Designated Office, all at the Time of Delivery. A meeting will be held at the Closing Location at 3:00 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.

5. The Company agrees with each of the Purchasers:

(a) To prepare the Offering Circular in a form approved by you; to make no amendment or any supplement to the Offering Circular to which you have not consented promptly after reasonable notice thereof; and to furnish you with copies thereof;

(b) Promptly from time to time to take such action as you may reasonably request to qualify the Securities and the shares of Stock issuable upon conversion of the Securities for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;

(c) To furnish the Purchasers with written and electronic copies of the Preliminary Offering Circular and Offering Circular and each amendment and supplement thereto in such quantities as you may from time to time reasonably request, and if, at any time prior to the expiration of nine months after the date of the Offering Circular, any event shall have occurred as a result of which the Offering Circular as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Offering Circular is delivered, not misleading, or, if for any other reason it shall be necessary or desirable during such same period to amend or supplement the Offering Circular, to notify you and upon your request to prepare and furnish without

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charge to each Purchaser and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Offering Circular or a supplement to the Offering Circular which will correct such statement or omission or effect such compliance;

(d) During the period beginning from the date hereof and continuing until the date 90 days after the date hereof, not to offer, sell contract to sell or otherwise dispose of, except as provided hereunder any securities of the Company that are substantially similar to the Securities or the Stock, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities (other than pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement), without your prior written consent;

(e) Not to be or become, at any time prior to the expiration of three years after the latest Time of Delivery, an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act;

(f) At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to time of Securities, to furnish at its expense, upon request, to holders of Securities and prospective purchasers of securities information satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act (the “Additional Issuer Information”);

(g) If requested by you, to use its best efforts to cause the Securities to be eligible for the PORTAL trading system of NASD, Inc.;

(h) To furnish to the holders of the Securities (such obligation to be satisfied by publicly-available filings with the Commission if the Company is then subject to Section 13 or 15(d) under the Exchange Act) an annual report (including a balance sheet and statements of income, shareholders’ equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the date of the Offering Circular), to make available to its shareholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail, all in accordance with the timing requirements of the Exchange Act for a company subject to Section 13 or 15(d) under the Exchange Act;

(i) During a period of five years from the date of the Offering Circular, provided that the Securities remain outstanding, to furnish to you copies of all reports or other communications (financial or other) furnished to shareholders of the Company and copies of any reports and financial statements furnished to or filed with the Commission or any securities exchange on which the Securities or any class of securities of the Company is listed (such obligations to be satisfied by publicly-available filings with the Commission if the Company is then subject to Section 13 or 15(d) under the Exchange Act); and to deliver to you such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its shareholders generally or to the Commission), except to the extent the provision of such information would be prohibited by any applicable laws or would require public disclosure thereof pursuant to Regulation FD;

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(j) During the period of two years after the latest Time of Delivery, the Company will not, and will not permit any of its affiliates to, resell any of the Securities which constitute “restricted securities” under Rule 144 that have been reacquired by any of them;

(k) To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Offering Circular under the caption “Use of Proceeds”;

(l) To reserve and keep available at all times shares of Stock on the same terms as the Company’s authorized and issued common stock, for the purpose of enabling the Company to satisfy any obligations to issue shares of its Stock upon conversion of the Securities; and

(m) To use its best efforts, subject to notice of issuance, to have the shares of Stock issuable upon conversion of the Securities quoted on The Nasdaq National Market.

6. The Company covenants and agrees with the several Purchasers that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the issue of the Securities and the shares of Stock issuable upon conversion of the Securities and all other expenses in connection with the preparation and printing of the Preliminary Offering Circular and the Offering Circular and any amendments and supplements thereto and the mailing and delivering of copies thereof to the Purchasers and dealers; (ii) the cost of printing or producing any Agreement among Purchasers, this Agreement, the Indenture, the Registration Rights Agreement, the Blue Sky and Legal Investment Memoranda, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities and the shares of Stock issuable upon conversion of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Purchasers in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (iv) any fees charged by securities rating services for rating the Securities; (v) the cost of preparing the Securities; (vi) the fees and expenses of the Trustee and any agent of the Trustee and the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities; (vii) any cost incurred in connection with the designation of the Securities for trading in PORTAL and the listing of the shares of Stock issuable upon conversion of the Securities; and (viii) all other costs and expenses of the Company incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make.

7. The obligations of the Purchasers hereunder at any Time of Delivery shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company herein are, at and as of such Time of Delivery, true and correct, the condition that the Company shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions:

(a) Cleary, Gottlieb, Steen & Hamilton, counsel for the Purchasers, shall have furnished to you such opinion or opinions, dated such Time of Delivery, with respect to the matters as you may

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reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

(b) Alston & Bird LLP, counsel for the Company, shall have furnished to you their written opinion, dated such Time of Delivery, in form and substance satisfactory to you, to the effect that:

(i) The Company is duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Florida, with power (corporate and other) to own its properties and conduct its business as described in the Offering Circular;

(ii) The Company has an authorized capitalization as set forth in the Offering Circular; and the shares of Stock initially issuable upon conversion of the Securities have been duly and validly authorized and reserved for issuance and, when issued and delivered in accordance with the provisions of the Securities, will be duly and validly issued and fully paid and non-assessable, and will conform to the description of the Stock contained in the Offering Circular;

(iii) The Company is duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each jurisdiction set forth on a schedule attached thereto;

(iv) Gulf South Medical Supply, Inc. is duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware; and all of the issued shares of capital stock of Gulf South Medial Supply, Inc. have been duly and validly authorized and issued, are fully paid and non-assessable, and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except as set forth in the Offering Circular;

(v) To the knowledge of such counsel, other than as set forth in the Offering Circular, (a) there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which seeks to restrain, enjoin, prevent the consummation of or otherwise challenge the transactions contemplated hereby or the issuance or sale of the Securities or issuance of the Stock upon conversion of the Securities and (b) there are no legal or governmental proceedings pending or proceedings contemplated by governmental authorities which would be required under the Act to be described in a prospectus that have not been described in the Offering Circular;

(vi) This Agreement has been duly authorized, executed and delivered by the Company;

(vii) The Registration Rights Agreement has been duly authorized, executed and delivered by the Company;

(viii) The Securities have been duly authorized for issuance and executed by the Company and, when authenticated by the Trustee in accordance with the provisions of the Indenture and delivered to and paid for by the Purchasers in accordance with the terms of the Purchase Agreement, will have been duly executed, issued and delivered and will constitute valid and binding obligations of the Company entitled to the benefits provided by the

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Indenture; and the Securities and the Indenture conform to the descriptions thereof in the Offering Circular;

(ix) The Indenture has been duly authorized, executed and delivered by the Company and, assuming the due authorization, execution, delivery and authentication by the Trustee, constitutes a valid and legally binding instrument of the Company, enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equitable principles (regardless of whether such enforcement is considered in a proceeding at law or in equity);

(x) The issue and sale of the Securities and the execution, delivery and performance by the Company of the Securities, the Indenture, the Registration Rights Agreement and this Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2003, or filed as an exhibit to any subsequently filed Form 10-Q or Form 8-K, nor will such actions result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties;

(xi) No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company of the transactions contemplated by this Agreement or the Indenture, except such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Purchasers;

(xii) To the knowledge of such counsel, neither the Company nor any of its subsidiaries is in violation of its Articles of Incorporation or By-laws or in default in the performance or observance of any material obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2003, or filed as an exhibit to any subsequently filed Form 10-Q or Form 8-K;

(xiii) The statements set forth in the Offering Circular under the caption “Description of Notes,” “Description of Capital Stock”, insofar as they purport to constitute a summary of the terms of the Securities and the Stock, under the caption “Material United States Federal Tax Consequences”, and under the caption “Underwriting”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair;

(xiv) The Exchange Act Reports (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act, and the rules and regulations of the Commission thereunder;

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(xv) No registration of the Securities under the Act, and no qualification of an indenture under the United States Trust Indenture Act of 1939 with respect thereto, is required for the offer, sale and initial resale of the Securities by the Purchasers in the manner contemplated by this Agreement;

(xvi) The Company is not, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Offering Circular will not be, an “investment company”, as such term is defined in the Investment Company Act; and

(xvii) The statements in the Offering Circular under the headings “Pricing and customer credit quality pressures due to reduced spending budgets by healthcare providers may affect net sales, the collectability of accounts receivable and earnings,” “Our business, marketing activities, and pricing are subject to review by federal or state agencies,” and “If we become involved in environmental claims, we could incur substantial liabilities and costs,” and related regulatory sections of the Exchange Act Reports, contain accurate statements or summaries of laws and regulations applicable to the Company and its customers.

Such counsel shall additionally state that in its capacity as counsel to the Company, it has participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company and representatives of the Purchasers at which the contents of the Offering Circular and related matters were discussed and, although it is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the information and statements contained in the Offering Circular and has not made any representations that it has made any independent check or verification thereof, on the basis of the foregoing, no facts have come to such counsel’s attention that have caused it to believe that the Offering Circular, as of its date or the Time of Delivery, or an amendment or supplement to the Offering Circular, as of its date or the Time of Delivery, contained or contains an untrue statement of a material fact or omitted or omits, as the case may be, to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (other than with respect to the financial statements and other financial data contained therein, as to which such counsel need express no opinion).

In rendering such opinion, such counsel may rely as to matters governed by the laws of the State of Florida, and as to any laws other than the General Corporation Law of the State of Delaware, the laws of the State of Georgia and the laws of the State of New York on opinions of counsel licensed to practice law in such jurisdictions in form and substance reasonably satisfactory to counsel for the Purchaser, and, as to other matters of fact, on certificates of officers of the Company and of governmental officials.

(c) On the date of the Offering Circular prior to the execution of this Agreement and also at each Time of Delivery, KPMG LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, to the effect set forth in Annex I hereto;

(d) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Offering Circular any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree,

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otherwise than as set forth or contemplated in the Offering Circular, and (ii) since the respective dates as of which information is given in the Offering Circular there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders’ equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Offering Circular, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the manner contemplated in this Agreement and in the Offering Circular;

(e) On or after the date hereof (i) no downgrading shall have occurred in the rating accorded the Company’s debt securities by any “nationally recognized statistical rating organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company’s debt securities;

(f) On or after the date hereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on The Nasdaq National Market; (ii) a suspension or material limitation in trading in the Company’s securities on The Nasdaq National Market; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v); in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the manner contemplated in this Agreement and the Offering Circular;

(g) The Securities have been designated for trading on PORTAL;

(h) The shares of Stock issuable upon conversion of the Securities shall have been duly listed, subject to notice of issuance, on The Nasdaq National Market;

(i) The Purchasers shall have received “lock-up” letters, in form and substance satisfactory to them, from executive officers and directors of the Company on or prior to the date hereof, and such letters shall be in full force and effect on such Time of Delivery;

(j) The Indenture and the Registration Rights Agreement shall be executed in a form satisfactory to the Purchasers;

(k) The third amendment to the Credit Agreement, which includes the consent of the lenders thereunder to the terms of the Securities and the transactions contemplated hereby, shall have been duly executed and delivered by the parties thereof and in full force and effect; and

(l) The Company shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company satisfactory to you as to the accuracy of the representations and warranties of the Company herein at and as of such Time of Delivery, as to the

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performance by the Company of all of its obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsection (e) of this Section and as to such other matters as you may reasonably request.

8. (a) The Company will indemnify and hold harmless each Purchaser against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Company’s Current Reports of Form 8-K furnished to the Commission on July 31, 2003, October 29, 2003 and January 28, 2004, any Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein, not misleading, and will reimburse each Purchaser for any legal or other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Circular or the Offering Circular or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Purchaser through Goldman, Sachs & Co. expressly for use therein.

(b) Each Purchaser will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Offering Circular or the Offering Circular or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Purchaser through Goldman, Sachs & Co. expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred.

(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party

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under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party.

(d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Purchasers on the other from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Purchasers. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Purchasers on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Purchasers agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities purchased by it and distributed to investors were offered to investors exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers’ obligations in this subsection (d) to contribute are several in proportion to their respective purchasing obligations and not joint.

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(e) The obligations of the Company under this Section 8 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of the Act or the Exchange Act; and the obligations of the Purchasers under this Section 8 shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act or the Exchange Act.

9. (a) If any Purchaser shall default in its obligation to purchase the Securities which it has agreed to purchase hereunder, you may in your discretion arrange for you or another party or other parties to purchase such Securities on the terms contained herein at a Time of Delivery. If within thirty-six hours after such default by any Purchaser you do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Securities on such terms. In the event that, within the respective prescribed periods, you notify the Company that you have so arranged for the purchase of such Securities, or the Company notifies you that it has so arranged for the purchase of such Securities, you or the Company shall have the right to postpone such Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Offering Circular, or in any other documents or arrangements, and the Company agrees to prepare promptly any amendments to the Offering Circular which in your opinion may thereby be made necessary. The term “Purchaser” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Securities.

(b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Purchaser or Purchasers by you and the Company as provided in subsection (a) above, the aggregate principal amount of such Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities to be purchased at such Time of Delivery, then the Company shall have the right to require each non-defaulting Purchaser to purchase the principal amount of Securities which such Purchaser agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Purchaser to purchase its pro rata share (based on the principal amount of Securities which such Purchaser agreed to purchase hereunder) of the Securities of such defaulting Purchaser or Purchasers for which such arrangements have not been made; but nothing herein shall relieve a defaulting Purchaser from liability for its default.

(c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Purchaser or Purchasers by you and the Company as provided in subsection (a) above, the aggregate principal amount of Securities which remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities to be purchased at such Time of Delivery, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Purchasers to purchase Securities of a defaulting Purchaser or Purchasers, then this Agreement (or, with respect to a Subsequent Time of Delivery, the obligation of the Purchasers to purchase and of the Company to sell the Optional Securities) shall thereupon terminate, without liability on the part of any non-defaulting Purchaser or the Company, except for the expenses to be borne by the Company and the Purchasers as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Purchaser from liability for its default.

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10. The respective indemnities, agreements, representations, warranties and other statements of the Company and the several Purchasers, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Purchaser or any controlling person of any Purchaser, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the Securities.

11. If this Agreement shall be terminated pursuant to Section 9 hereof, the Company shall not then be under any liability to any Purchaser except as provided in Sections 6 and 8 hereof; but if for any other reason the Securities are not delivered by or on behalf of the Company as provided herein (except for failure of the condition set forth in Section 7(f) hereof) the Company will reimburse the Purchasers through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Purchasers in making preparations for the offer, sale, purchase and delivery of the Securities, but the Company shall then be under no further liability to any Purchaser except as provided in Sections 6 and 8 hereof.

12. In all dealings hereunder, you shall act on behalf of each of the Purchasers, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Purchaser made or given by you jointly or by Goldman, Sachs & Co. on behalf of you as the Representatives.

All statements, requests, notices and agreements hereunder shall be in writing, and if to the Purchasers shall be delivered or sent by mail, telex or facsimile transmission to you as the Representatives, at 85 Broad Street, New York, New York 10004, Attention: Registration Department; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Offering Circular, Attention: Chief Financial Officer; provided, however, that any notice to a Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Purchaser at its address set forth in its Purchasers’ Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by you upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

13. This Agreement shall be binding upon, and inure solely to the benefit of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company and each person who controls the Company or any Purchaser, and their respective heirs, executors, administrators, successors and assigns, and except as set forth in Section 5(f), no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from any Purchaser shall be deemed a successor or assign by reason merely of such purchase.

14. Time shall be of the essence of this Agreement.

15. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

16. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.

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If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement between each of the Purchasers and the Company. It is understood that your acceptance of this letter on behalf of each of the Purchasers is pursuant to the authority set forth in a form of Agreement among Purchasers, the form of which shall be submitted to the Company for examination upon request, but without warranty on your part as to the authority of the signers thereof.

Very truly yours,
PSS WORLD MEDICAL, INC.
By:	/s/    DAVID M. BRONSON
Name:	David M. Bronson
Title:	Executive Vice President and Chief Financial Officer

Accepted as of the date hereof:

/s/    Goldman, Sachs & Co.        

(Goldman, Sachs & Co.)

On behalf of each of the Purchasers

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SCHEDULE I

Purchaser	Principal Amount of Securities to be Purchased
Goldman, Sachs & Co.	$	93,750,000.00
Banc of America Securities LLC		18,750,000.00
Lehman Brothers Inc.		12,500,000.00
Total	$	125,000,000.00

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ANNEX I

Pursuant to Section 7(c) of the Purchase Agreement, the accountants shall furnish letters to the Purchasers to the effect that:

(i) They are independent certified public accountants with respect to the Company and its subsidiaries within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”) and the applicable published rules and regulations thereunder;

(ii) In their opinion, the consolidated financial statements and financial statement schedules audited by them and included or incorporated by reference in the Offering Circular comply as to form in all material respects with the applicable requirements of the Exchange Act and the related published rules and regulations;

(iii) The selected financial information with respect to the consolidated results of operations and financial position of the Company for the five most recent fiscal years included or incorporated by reference in the Offering Circular agrees with the corresponding amounts (after restatements where applicable) in the audited consolidated financial statements for such five fiscal years;

(iv) On the basis of limited procedures not constituting an audit in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim financial statements of the Company and its subsidiaries, inspection of the minute books of the Company and its subsidiaries since the date of the latest audited financial statements included or incorporated by reference in the Offering Circular, inquiries of officials of the Company and its subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that:

(A) the unaudited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included or incorporated by reference in the Offering Circular are not in conformity with generally accepted accounting principles applied on the basis substantially consistent with the basis for the audited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included or incorporated by reference in the Offering Circular;

(B) any other unaudited income statement data and balance sheet items included or incorporated by reference in the Offering Circular do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited consolidated financial statements included or incorporated by reference in the Offering Circular;

Annex I -1

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(C) the unaudited financial statements which were not included or incorporated by reference in the Offering Circular but from which were derived any unaudited condensed financial statements referred to in clause (A) and any unaudited income statement data and balance sheet items included or incorporated by reference in the Offering Circular and referred to in clause (B) were not determined on a basis substantially consistent with the basis for the audited consolidated financial statements included or incorporated by reference in the Offering Circular;

(D) as of a specified date not more than five days prior to the date of such letter, there have been any changes in the consolidated capital stock or any increase in the consolidated long-term debt of the Company and its subsidiaries, or any decreases in consolidated cash and cash equivalents, consolidated net current assets or shareholders’ equity or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with amounts shown in the latest balance sheet included or incorporated by reference in the Offering Circular except in each case for changes, increases or decreases which the Offering Circular discloses have occurred or may occur or which are described in such letter; and

(E) for the period from the date of the latest financial statements included or incorporated by reference in the Offering Circular to the specified date referred to in clause (D) there were any decreases in consolidated net revenues or operating profit or the total or per share amounts of consolidated net income or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Representatives, except in each case for decreases or increases which the Offering Circular discloses have occurred or may occur or which are described in such letter; and

(v) In addition to the examination referred to in their report(s) included or incorporated by reference in the Offering Circular and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraphs (iii) and (iv) above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Representatives, which are derived from the general accounting records of the Company and its subsidiaries, which appear in the Offering Circular, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and its subsidiaries and have found them to be in agreement.

Annex I - 2

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