SECOND AMENDED AND RESTATED 7 3/4% CONVERTIBLE SECURED NOTE

Exhibit 4.28

SECOND AMENDED AND RESTATED
7 3/4% CONVERTIBLE SECURED NOTE

THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW WITH RESPECT THERETO, (II) PURSUANT TO RULE 144 OF THE SECURITIES ACT OR (III) UPON THE ADVICE OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN CONNECTION WITH SUCH TRANSFER.

THIS PROMISSORY NOTE IS SUBORDINATED TO CERTAIN SENIOR INDEBTEDNESS OF THE ISSUERS IN THE MANNER AND TO THE EXTENT SET FORTH IN THE INTERCREDITOR AGREEMENT (AS DEFINED BELOW) AND ALL RIGHTS, REMEDIES AND OBLIGATIONS UNDER THIS NOTE AND THE OTHER NOTES DOCUMENTS ARE SUBJECT TO THE TERMS OF THE INTERCREDITOR AGREEMENT.

     FOR VALUE RECEIVED, NATIONSHEALTH, INC., a Delaware corporation (the “ Company ”), NATIONSHEALTH HOLDINGS, L.L.C., a Florida limited liability company and a wholly-owned subsidiary of the Company (“ NH LLC ”), UNITED STATES PHARMACEUTICAL GROUP, L.L.C., a Delaware limited liability company and an indirect wholly-owned subsidiary of the Company (“ USPG ”), DIABETES CARE & EDUCATION, INC., a South Carolina corporation (“ Diabetes ”) and NATIONAL PHARMACEUTICALS AND MEDICAL PRODUCTS (USA), LLC, a Florida limited liability company (“ National ” and jointly and severally with the Company, NH LLC, USPG and Diabetes, the “ Issuers ”), hereby promise to pay to the order of [                      ] (the “ Holder ”), at c/o MHR Fund Management LLC, 40 West 57th Street, 24th Floor, New York, New York 10019, the principal amount of [                      ] Dollars ($[            ]) in lawful money of the United States of America, on the terms set forth in Section 2 hereof. This Second Amended and Restated Promissory Note (this “ Note ”) amends and restates that certain First Amended and Restated Promissory Note, dated as of April 30, 2009 (the “ First Amended Notes Issue Date ”), issued by the Company, NH LLC, USPG, Diabetes and National to the Holder in the aggregate principal amount of $[                      ] (the “ First Amended Note ,” and collectively with such other convertible notes issued concurrently therewith, the “ First Amended Notes ”) which amended and restated that certain Promissory Note, dated as of February 28, 2005, issued by the Company, NH LLC and USPG

(the “ Initial Issuers ”) to the Holder in the aggregate principal amount of $[                      ] (the “ Original Note ,” and collectively with such other convertible notes issued pursuant to the Purchase Agreement (defined herein), the “ Original Notes ”) and is being issued by the Issuers along with substantially identical convertible notes also designated as Second Amended and Restated 7 3/4% Convertible Secured Notes (the “ Other Notes ,” and together with this Note, the “ Notes ”) in an original aggregate principal amount of $15,000,000. The Notes are being issued pursuant to that certain Consent and Waiver to the Convertible Notes, dated April 30, 2009 among the Issuers and the holders thereto (together with the Holder, the “ Holders ”), pursuant to which the Holders have agreed to amend and restate the Original Notes and waive certain provisions of the Original Notes and the Notes, subject to the terms and conditions therein. Pursuant to the Original Notes, the Initial Issuers granted a security interest to the Collateral Agent (defined herein) for the benefit of the Holders pursuant to Section 4 of the Original Notes, and pursuant to the First Amended Notes, Diabetes and National granted a security interest to the Collateral Agent for the benefit of the Holders pursuant to Section 4 of the First Amended Notes and each of the Issuers acknowledges, confirms and reaffirms the perfected security interest of the Collateral Agent, as amended and restated hereby. The Obligations are secured by a security interest in the assets of the Issuers pursuant to Section 4 of the Notes and will also be secured by a security interest in the assets of any future Subsidiaries pursuant to Section 6(l) of the Notes for the benefit of the Holders.

      1.  Definitions . The following terms shall have the meanings ascribed to them below:

     “ Acquisition ” shall mean the acquisition by the Company of obligations or stock or securities of, or any other interest in, or all or substantially all of the assets of, any Person or any joint venture.

     “ Active Diabetes Customer ” shall mean, as of the end of any calendar month, a Diabetes Customer of the Issuers who has purchased diabetes medicines or supplies within the 180 day period ending on the last day of such calendar month.

     “ Additional Shares of Common Stock ” shall have the meaning specified in Section 3(d)(iv).

     “ Affiliate ” shall mean, as to any Person, any other Person (a) that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person, (b) who is a director or officer (i) of such Person, (ii) of any Subsidiary of such Person, or (iii) of any Person described in clause (a) above with respect to such Person, or (c) which, directly or indirectly through one or more intermediaries, is the beneficial or record owner (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, as the same is in effect on the date hereof) of ten percent (10%) or more of any class of the outstanding voting stock, securities or other equity or ownership interests of such Person. For purposes of this definition, the term “control” (and the correlative terms, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, whether through ownership of securities or other interests, by Contract or otherwise. “Affiliate” shall include any Subsidiary.

     “ Bridge Loan Agreement ” shall mean that certain Bridge Loan Agreement by and between Parent, the Company, USPG, NH LLC, Diabetes and National dated as of April 30, 2009, as amended or modified in effect from time to time in accordance with the ComVest Subordination Agreement and the ComVest Senior Subordination Agreement.

     “ Bridge Loan Documents ” shall mean the Bridge Loan Documents as defined in the Bridge Loan Agreement.

     “ Bridge Loans ” shall mean the loans made by Parent under the Bridge Loan Agreement.

     “ Business Day ” shall mean any day, other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by Law, regulation or executive order to close.

     “ Capital Lease ” shall mean, as to any Person, a lease of any interest in any kind of property or asset by that Person as lessee that is, should be or should have been recorded as a “capital lease” in accordance with GAAP.

     “ Capital Stock ” shall mean the capital stock of or other equity interests in a Person.

     “ Change of Control Redemption Price ” shall have the meaning specified in Section 5(b).

     “ Closing Date ” shall mean the date of the closing of the Merger.

     “ Collateral ” shall mean, collectively, all of the real, personal and mixed property in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations.

     “ Collateral Agent ” means MHR Capital Partners (500) LP.

     “ Collateral Documents ” means the Notes, the Subsidiary Security Agreements and all other instruments or documents delivered by any of the Issuers or their Subsidiaries pursuant to the Notes or any of the other Notes Documents in order to grant to the Collateral Agent, on behalf of the Holders, a Lien on any real, personal or mixed property of such Person as security for the Obligations.

     “ ComVest ” shall mean ComVest Investment Partners III, L.P.

     “ ComVest Cure ” shall have the meaning specified in Section 6(e).

     “ ComVest Senior Subordination Agreement ” shall mean, that certain Senior Subordination Agreement dated as of April 30, 2009 by and between Parent and CapitalSource Finance LLC, as amended or modified and in effect from time to time.

     “ ComVest Subordination Agreement ” shall mean, that certain Subordination Agreement dated as of April 30, 2009 among Parent, the Holders, the Collateral Agent and the Issuers, as amended or modified and in effect from time to time.

     “ Consolidated Senior Leverage Ratio ” means, as of the last day of any Fiscal Quarter, the ratio of (i) Senior Indebtedness as at such day to (ii) EBITDA for the consecutive four Fiscal Quarters ending on such day.

     “ Contract ” means any contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, license, commitment or other arrangement, understanding or undertaking, commitment or obligation, whether written or oral.

     “ Conversion Amount ” shall mean the portion of the principal amount of this Note being converted plus any accrued and unpaid interest thereon through the Conversion Date each as specified in the notice of conversion in the form attached as Exhibit A hereto (the “ Notice of Conversion ”).

     “ Conversion Date ” shall mean, for any conversion, the date specified in the Notice of Conversion so long as the copy of the Notice of Conversion is faxed (or delivered by other means resulting in notice) to the Company at or before 11:59 p.m., New York City time, on the Conversion Date indicated in the Notice of Conversion; provided , however , that if the Notice of Conversion is not so faxed or otherwise delivered before such time, then the Conversion Date shall be the date the Holder faxes or otherwise delivers the Notice of Conversion to the Company.

     “ Conversion Price ” shall mean $3.40 per share of common stock, par value $.0001 per share of the Company (“ Common Stock ”).

     “ Conversion Shares ” shall have the meaning specified in Section 3(a).

     “ Convertible Securities ” shall mean any Capital Stock or security convertible into or exchangeable for Common Stock.

     “ Customer Acquisition and Related Costs ” shall mean costs incurred by the Company in the development of its customer base related to marketing activities, which costs include, without limitation, advertising, promotion, call center and data collection expenses.

     “ Credit Agreement ” shall mean the Fourth Amended and Restated Revolving Credit and Security Agreement, dated as of April 30, 2009 among the Issuers and CapitalSource Finance LLC, as it may be amended, modified, replaced or refinanced from time to time in accordance with the Intercreditor Agreement.

     “ Daily Market Price ” shall mean, as of any date of determination, the closing sale price for the Common Stock (or such other applicable subject security), for the Trading Day of such date of determination (subject to equitable adjustment for any stock splits, stock dividends, reclassifications or similar events during such Trading Day and further subject to adjustment as provided herein) on the principal United States securities exchange or trading market where the Common Stock (or such other applicable subject security) is listed or traded as reported by Bloomberg, or if the foregoing does not apply, the closing sale price for the Common Stock (or

such other applicable subject security) in the OTC Bulletin Board for such security as reported by Bloomberg, or, if no sale price is reported for such security by Bloomberg, the closing sale price as reported in the “pink sheets” by the Pink Sheets LLC, in each case for such date or, if such date was not a Trading Day for such security, on the next preceding date which was a Trading Day. If the Daily Market Price cannot be calculated for such security as of either of such dates on any of the foregoing bases, the Daily Market Price of such security on such date shall be the fair market value as reasonably determined by an investment banking firm selected by the Holders of a majority of the principal amount and interest of the Notes outstanding and reasonably acceptable to the Company, with the costs of such appraisal to be borne by the Company.

     “ Default ” shall mean any event, fact, circumstance or condition that, with the giving of applicable notice or passage of time or both, would constitute or be or result in an Event of Default.

     “ Deferred Purchase Price Obligations ” means any and all obligations of the Company incurred as permitted under the Notes for amounts deferred, financed or withheld in respect of the purchase price for any Diabetes Business Acquisition, including Indebtedness which consists of purchase money financing by the seller and amounts withheld or escrowed as potential set-offs against customer terminations, purchase price adjustments or otherwise.

     “ Delivery Period ” shall have the meaning specified in Section 3(c).

     “ Diabetes Business Acquisition ” shall mean the acquisition by the Company of Diabetes Customer lists.

     “ Diabetes Customers ” shall mean any and all customers and patients of the Company for the purchase of diabetes medicines, supplies and other products, whether now existing or hereinafter acquired or arising.

     “ Distribution ” shall mean any fee, payment, bonus or other remuneration of any kind, and any repayment of or debt service on loans or other Indebtedness.

     “ Dollars ” and the sign “ $ ” mean the lawful money of the United States of America.

     “ DTC ” shall have the meaning specified in Section 3(c).

     “ DTC Transfer ” shall have the meaning specified in Section 3(c).

     “ EBITDA ” shall mean, the sum for any period, without duplication, of the following for the Issuers and each Subsidiary, on a consolidated basis: Net Income, (I) plus (a) Interest Expense, (b) taxes on income, whether paid, payable or accrued, (c) depreciation expense, (d) amortization expense, (e) all other non-cash, non-recurring charges and expenses, excluding accruals for cash expenses made in the ordinary course of business, (f) loss from any sale of assets, other than sales in the ordinary course of business, (g) one-time, non-recurring charges and expenses incurred by the Company in connection with the Transactions (“Merger Expenses”), provided that such non-recurring charges and expenses shall not exceed $1,500,000

during the term of this Note, and (h) severance expenses incurred by the Company in an amount not to exceed $1,000,000 for any twelve month period and an aggregate of $2,000,000 during the term of this Note, and in the case of (a) through (h) above, all of the foregoing determined without duplication and in accordance with GAAP (II) minus (a) gains from any sale of assets, other than sales in the ordinary course of business, (b) other extraordinary or non-recurring gains and (c) non-cash items added in the calculation of Net Income.

     “ Equity Contribution ” shall mean, in connection with the consummation of the Merger, the contribution by the Senior Management and MHR, directly or indirectly, of rollover equity to or of the Company on the Closing Date pursuant to the Rollover Documents (assuming the conversion into Common Stock of all Options and Convertible Securities outstanding on the Closing Date other than convertible debt instruments) and the purchase or contribution by ComVest and its Affiliates, directly or indirectly, of cash equity and the Bridge Loan to the Company pursuant to the Merger Agreement, the Bridge Note and the Series A Preferred Stock Purchase Agreement, by and between Parent and the Company, dated as of the April 30, 2009 (assuming the conversion into Common Stock of all Options and Convertible Securities outstanding on the Closing Date other than convertible debt instruments).

     “ Event of Default ” shall have the meaning specified in Section 2(d).

     “ Extraordinary Event ” shall have the meaning specified in Section 3(d)(iii).

     “ Fiscal Quarter ” shall mean a fiscal quarter of any fiscal year.

     “ First Priority Lien Indebtedness ” shall mean Senior Indebtedness of the Issuers and their Subsidiaries secured by a first priority Lien on any assets or property of the Issuers or any such Subsidiaries, including the Indebtedness of the Issuers under the Credit Agreement permitted to be incurred by the Company under Section 6(c).

     “ GAAP ” shall mean generally accepted accounting principles in the United States of America in effect from time to time as applied by nationally recognized accounting firms.

     “ Governmental Authority ” shall mean any federal, state, municipal, national, local or other governmental department, court, commission, board, bureau, agency or instrumentality or political subdivision thereof, or any entity or officer exercising executive, legislative, or judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case, whether of the United States or a state, territory or possession thereof, a foreign sovereign entity or country or jurisdiction or the District of Columbia.

     “ Hedge Agreement ” means any and all transactions, agreements or documents now existing or hereafter entered into by the Company or its Subsidiaries, which provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices.

     “ Indebtedness ” of any Person shall mean, without duplication, (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes or other similar instruments and all reimbursement or other obligations in respect of letter of credit, bankers acceptances, interest rate swaps, hedges, derivatives or other financial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (other than Deferred Purchase Price Obligations not to exceed $250,000 outstanding at any time), (f) all obligations owing under Hedge Agreements, (g) all notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money, and (h) all obligations or liabilities of others which such Person has directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), discounted or sold with recourse or agreed (contingently or otherwise) to purchase or repurchase or otherwise acquire, or in respect of which such Person has agreed to supply or advance funds (whether by way of loan, stock, equity or other ownership interest purchase, capital contribution or otherwise) or otherwise to become directly or indirectly liable. For the avoidance of any doubt, Indebtedness does not include trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices and any obligations as a lessee under leases that are not Capital Leases.

     “ Intercreditor Agreement ” shall have the meaning specified in Section 4(f).

     “ Interest Expense ” shall mean, for any period, total interest expense and fees (including attributable to Capital Leases in accordance with GAAP and capitalized interest) of the Issuers and their Subsidiaries on a consolidated basis with, with respect to all outstanding Indebtedness but excluding all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Interest Rate Agreements.

     “ Interest Rate Agreement ” shall mean any interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to hedge the position with respect to interest rates.

     “ Inventory ” shall mean all “inventory” (as defined in the UCC) of the Issuers and the Subsidiaries (or, if referring to another Person, of such other Person), now owned or hereafter acquired, and all documents of title or other documents representing any of the foregoing, and all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.

     “ Investment Option Preferred Stock ” shall mean the Preferred Stock issued by the Company to Parent during the period commencing on the execution date of the Merger Agreement and ending on the first anniversary of the Closing Date pursuant to an investment by Parent of up to $2 million at the same price and on the same terms and conditions as the Investment Preferred Stock.

     “ Investment Preferred Stock ” shall mean the Preferred Stock issued by the Company to Parent on the Closing Date pursuant to the Merger Agreement in respect of the obligations of Parent thereunder.

     “ Investor Rights Agreement ” shall mean the Investor Rights Agreement dated as of April 30, 2009 by and among Parent, Mark Lama, RGGPLS, LLC, MHR and the Senior Management.

     “ Landlord Waiver and Consent ” shall mean a waiver/consent in form and substance satisfactory to the Holders from the owner/lessor of any premises not owned by the Issuers or their Subsidiaries at which any of the Collateral is now or hereafter located for the purpose of providing the Collateral Agent (for the benefit of the Holders) access to such Collateral, in each case as such may be modified, amended or supplemented from time to time.

     “ Law ” means any foreign, federal, state or local law (including common law), statute, code, ordinance, rule, regulation, Order or other similar requirement.

     “ Leasehold Property ” means any leasehold interest of any of the Company or its Subsidiaries as lessee under any lease of real property, other than any such leasehold interest designated from time to time by the Collateral Agent in its sole discretion as not being required to be included in the Collateral.

     “ Lien ” shall mean any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, irrespective of whether (a) such interest is based on the common law, civil law, statute, or Contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term “Lien” includes the lien, hypothecation or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment from security purposes and also includes reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting property.

     “ Maturity Date ” shall have the meaning specified in Section 2(b).

     “ Merger Agreement ” shall mean the Agreement and Plan of Merger, dated as of April 30, 2009, by and among Parent, Merger Sub and the Company as amended or supplemented pursuant to which Merger Sub will merge with and into the Company (the “ Merger ”), with the Company surviving, and upon the closing of which Merger, Parent, the members of Senior Management and MHR shall own shares of the Company Capital Stock.

     “ Merger Documents ” shall mean the collective reference to the Merger Agreement, all material exhibits and schedules thereto and all agreements expressly contemplated thereby.

     “ Merger Sub ” shall mean NationsHealth Acquisition Corp., a Delaware corporation.

     “ MHR ” shall have the meaning specified in Section 6(e).

     “ MHR Warrants ” shall mean the warrants to purchase Common Stock issued to MHR on the Closing Date pursuant to the Transactions.

     “ Mortgage ” means a security instrument (whether designated as a deed of trust or a mortgage or by any similar title) executed and delivered by the Company or any Subsidiary pursuant to Section 4(i), in such form as may be approved by the Collateral Agent in its sole discretion, in each case with such changes thereto as may be recommended by the Collateral Agent’s local counsel based on local laws or customary local mortgage or deed of trust practices.

     “ Net Income ” shall mean, for any period, the net income (or loss) of the Issuers and their Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP (and, with respect to expensing of Customer Acquisition and Related Costs, as currently applied by the Company consistent with past practice), provided that there shall be excluded (i) the income (or loss) of any Person (other than a Subsidiary of the Issuers) in which any other Person (other than the Issuers or any of their Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to an Issuer by such Person, (ii) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of an Issuer or is merged into or consolidated with an Issuer or any of its Subsidiaries or that Person’s assets are acquired by an Issuer or any of its Subsidiaries, (iii) the income of any Subsidiary of the Issuers to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, Order, statute, rule or governmental regulation applicable to that Subsidiary, (iv) compensation expense resulting from the issuance of Capital Stock, stock options or stock appreciation rights issued to former or current employees, including officers, of an Issuer or any Subsidiary, or the exercise of such options or rights, in each case to the extent the obligation (if any) associated therewith is not expected to be settled by the payment of cash by an Issuer or such Subsidiary or any Affiliate thereof, and (v) compensation expense resulting from the repurchase of Capital Stock, options and rights described in clause (iv) of this definition of Net Income.

     “ Notes Documents ” shall mean the Notes, the Transaction Documents as defined in the Purchase Agreement, the Consent and Waiver, dated as of April 30, 2009, the MHR Warrants, the Subsidiary Security Agreements, the Subsidiary Guaranties, and the other Collateral Documents.

     “ Obligations ” shall mean all obligations of every nature of the Issuers and Subsidiaries from time to time owed to the Holders, the Collateral Agent or any of them, in each case, under the Notes Documents, whether for principal, interest, fees, expenses, indemnification or otherwise (including, without limitation, interest and other amounts that, but for the filing of a petition in bankruptcy with respect to any Issuer or any Subsidiary, would accrue on such obligations, whether or not a claim is allowed against such Issuer or Subsidiary for such amounts in the related bankruptcy proceeding), including to the extent all or any part of such payment is avoided or recovered directly or indirectly from any Holder or the Collateral Agent as a preference, fraudulent transfer or otherwise.

     “ Officer’s Certificate ” as applied to any Person that is a corporation, partnership, trust or limited liability company, means a certificate executed on behalf of such Person by one or more Officers of such Person or one or more Officers of a general partner or a managing member if such general partner or managing member is a corporation, partnership, trust or limited liability company.

     “ Options ” shall mean warrants or other rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or security convertible into or exchangeable for Common Stock.

     “ Order ” means any order, injunction, judgment, doctrine, decree, ruling, writ, assessment or arbitration award of a Governmental Authority.

     “ Original Issue Date ” shall mean February 28, 2005.

     “ Par Redemption Price ” shall have the meaning specified in Section 5(a)(ii).

     “ Parent ” shall mean ComVest NationsHealth Holdings, LLC.

     “ Permits ” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Authority.

     “ Permitted Liens ” means the following: (i) Liens with respect to the Notes and the other Obligations, (ii) Liens with respect to Senior Indebtedness allowed to be incurred under Section 6(c), (iii) Liens imposed by Law for taxes (other than payroll taxes), assessments or charges of any Governmental Authority for claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained by such Person in accordance with GAAP to the satisfaction of the Holders of a majority of the principal and interest of the Notes outstanding, in their sole discretion, (iv) (A) statutory Liens of landlords ( provided that any such landlord has executed a Landlord Waiver and Consent in form and substance satisfactory to the Holders of a majority of the principal and interest of the Notes outstanding) and of carriers, warehousemen ( provided that any such warehousemen have executed a Warehouse Waiver and Consent in form and substance satisfactory to the Holders of a majority of the principal and interest of the Notes outstanding), mechanics, materialmen, and (B) other Liens imposed by Law or that arise by operation of Law in the ordinary course of business from the date of creation thereof, in each case only for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained by such Person in accordance with GAAP to the satisfaction of the Holders of a majority of the principal and interest of the Notes outstanding, in their sole discretion, (v) Liens (A) incurred or deposits made in the ordinary course of business (including, without limitation, surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, Contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations, or (B) arising as a result of progress payments under government contracts, (vi) purchase money Liens, including, without limitation, UCC-1 notice filings by equipment lessors and the like, in connection with the purchase by such Person of equipment in the normal

course of business, (vii) Liens securing Subordinated Indebtedness allowed to be incurred under Section 6(c) junior to the Lien under the Notes and (viii) Liens described on Schedule I to this Note.

     “ Person ” shall mean an individual, a partnership, a corporation, a limited liability company, a business trust, a joint stock company, a trust, an unincorporated association, a joint venture, or any other entity of whatever nature.

     “ Preferred Stock ” shall mean with respect to any Person, any and all preferred or preference stock or other preferred equity interests (however designated) of such Person whether no outstanding or issued after the date hereof.

     “ Premium Redemption Price ” shall have the meaning specified in Section 5(a)(ii).

     “ Purchase Agreement ” shall mean that certain Investment Unit Purchase Agreement, dated February 28, 2005, among the Issuers and the Holders.

     “ Redemption Warrant ” shall have the meaning specified in Section 5(a)(ii).

     “ Right of First Refusal and Tag and Co-Sale Agreement ” shall mean the Right of First Refusal and Tag and Co-Sale Agreement dated as of April 30, 2009 by and among Parent, Mark Lama, RGGPLS, LLC, MHR and the Senior Management.

     “ Rollover Documents ” shall mean the Exchange and Rollover Agreement dated as of April 30, 2009 by and among the Company, MHR and the Senior Management.

     “ Senior Indebtedness ” means, as of any date of determination, the aggregate stated balance sheet amount of all Indebtedness of the Issuers and their Subsidiaries, other than (i) the Notes and (ii) Subordinated Indebtedness, determined on a consolidated basis in accordance with GAAP and incurred in compliance with Section 6(c) hereof, which Senior Indebtedness shall (x) include (A) Indebtedness under the Credit Agreement (including extensions, modifications, refinancings, renewals and refundings thereof in accordance with the Intercreditor Agreement) and (B) the Bridge Loans but not any refinancings or replacements thereof (other than refinancings or replacements thereof with Senior Indebtedness due to CapitalSource Finance LLC under the Credit Agreement and which, when aggregated with all other Indebtedness outstanding under the Credit Agreement, does not exceed the principal amount permitted under Section 6(c)(iii)) and (y) otherwise be in the form of credit extensions or other obligations on terms and conditions customarily provided at such time by senior secured lenders, unless the instrument under which such Indebtedness is incurred expressly provides that it is subordinated in right of payment to the Obligations. For the avoidance of doubt, Senior Indebtedness (other then the Bridge Loans but not any refinancings or replacement thereof) shall not include any financing arrangements in the form of convertible debt or that would customarily be considered “mezzanine”, “sub debt” or similar financing arrangements.

     “ Senior Management ” shall mean Glenn Parker, Lewis Stone, Timothy Fairbanks and such other executives party to the Rollover Documents.

     “ Subordinated Indebtedness ” means Indebtedness (secured or unsecured) incurred by the Company and/or its Subsidiaries that is made expressly subordinated in right to payment to the Obligations, as reflected in a written subordination agreement acceptable to the Holders and approved by the Holders in writing; provided that no such Indebtedness shall provide at any time for (1) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (2) total cash interest at a rate in excess of the prevailing market rate for subordinated debt at the time of issuance, except to the extent permitted by the terms of such written subordination agreement.

     “ Subsidiary ” shall mean, (i) as to the Issuers, any Person in which more than 50% of all equity, membership, partnership or other ownership interests is owned directly or indirectly by an Issuer or one or more of its Subsidiaries, and (ii) as to any other Person, any Person in which more than 50% of all equity, membership, partnership or other ownership interests is owned directly or indirectly by such Person or by one or more of such Person’s Subsidiaries.

     “ Subsidiary Guaranty ” means a guaranty agreement executed by a Subsidiary pursuant to Section 6(l), in form and substance satisfactory to the Holders, the Company and such Subsidiary, guaranteeing payment of the Obligations and providing, without limitation, that such Subsidiary shall be bound by the covenants set forth in this Note, and shall make such representations and warranties as the Holders may reasonably require.

     “ Subsidiary Security Agreement ” means a pledge and security agreement executed by a Subsidiary pursuant to Section 6(l), containing provisions substantially similar to the grant of security in Section 4 hereof, and in form and substance satisfactory to the Holders, the Company and such Subsidiary, securing payment of the Obligations.

     “ Tax Put Right ” shall have the meaning specified in Section 5(f).

     “ Trading Day ” shall mean any day on which the principal United States securities exchange or trading market where the Common Stock (or such other applicable subject security) is then listed or traded, is open for trading.

     “ Transaction Documents ” shall mean the Merger Documents, the Bridge Loan Documents, the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement), the Notes Documents, the Rollover Documents, the Investor Rights Agreement, the Right of First Refusal and Tag and Co-Sale Agreement, the Voting Agreement and all documents executed and delivered in connection herewith and therewith.

     “ Transactions ” shall mean, collectively, the transactions to occur pursuant to or in connection with the Transaction Documents, including (a) the consummation of the Merger; (b) the Equity Contribution; (c) the execution and delivery of the Bridge Loan Documents and the borrowings thereunder; (d) the execution and delivery and issuance of the Notes and execution and delivery of the Notes Documents; (e) the issuance of the MHR Warrants, (f) the refinancing of the Credit Agreement, and (g) the payment of all fees and expenses to be paid in connection with the foregoing.

     “ UCC ” means the Uniform Commercial Code, as it exists on the date of this Note or as it may hereafter be amended, in the State of New York.

     “ Voting Agreement ” means the Voting Agreement dated as of April 30, 2009, by and among the Company, Parent, Mark Lama, RGGPLS, LLC, MHR and Senior Management.

     “ Warehouse Waiver and Consent ” shall mean a waiver/consent in form and substance satisfactory to the Holders from any warehouseman, fulfillment house or other person owning a facility not owned by the Issuers at which any inventory is now or hereafter located for the purpose of providing the Collateral Agent (for the benefit of the Holders) access to such inventory, in each case as such may be modified, amended or supplemented from time to time.

      2.  Payments of Interest and Principal . Subject to the provisions of Section 3 below, payments of principal plus interest on the unpaid principal balance of this Note outstanding from time to time shall be payable in accordance with the following:

          (a)  Interest . During the period commencing on the Original Issue Date and terminating on the Maturity Date, interest on the unpaid principal amount of this Note shall accrue at a rate equal to 7 3/4% per annum, compounded monthly, computed on the basis of actual days elapsed over a 360-day year, and shall be payable monthly (commencing on February 28, 2005 and thereafter on the 28th of each month) in cash up to and including the Maturity Date, subject to a ten (10) day grace period; provided that if a required interest payment is not paid within such ten (10) day grace period, interest shall be compounded from the date that such interest was due and payable without regard to such grace period.

          (b)  Principal . The principal balance outstanding on this Note, and any accrued and unpaid interest thereon, shall be due and payable to the Holder on February 28, 2012 (the “ Maturity Date ”). Contemporaneously with the repayment of this Note, the Holder shall surrender this Note, duly endorsed, at the office of the Company.

          (c)  Payments . All payments of principal, interest, fees and other amounts due hereunder shall be made by the Issuers in lawful money of the United States of America by wire transfer or by any other method approved in advance by the Holder to the account of the Holder at the address of the Holder set forth in Section 10 hereof or at such other place designated by the Holder in writing to the Company.

          (d)  Acceleration of the Maturity Date . Notwithstanding anything to the contrary contained herein, this Note and all other Obligations shall become due and payable together with all accrued interest due on the outstanding principal amount hereunder, at the option of the Holders of at least 25% of the principal amount and interest outstanding exercised, by written notice to the Company, in the case of clauses (i) to (viii) below and without notice or any other action by such Holders in the case of clauses (ix) or (x) below, in the event (each an “ Event of Default ”) that (i) the Issuers fail to pay the principal of or interest on this Note as and when due, subject to a ten (10) day grace period; (ii) any of the Issuers or their Subsidiaries shall default in the performance of or otherwise breach any of its representations and warranties, covenants or other obligations set forth in this Note, the Purchase Agreement or any of the Notes Documents, and if such default is capable of cure, such default remains uncured beyond any

applicable cure period; provided that with respect to any breach or default of the covenants in Section 6, there shall be a fifteen (15) calendar day cure period (to the extent such breach or default is capable of cure) commencing from the earlier of (i) receipt by the Company of written notice of such breach or default from the Holder and (ii) the time at which an authorized officer of the Company or any Subsidiary knew or became aware of such breach or default; provided further that with respect to the covenant set forth in Section 6(a), there shall be no cure period with respect to any breach or default that adversely affects the Holder; (iii) the Collateral Agent (on behalf of the Holders) shall not have the right to enforce its remedies under Section 4 of this Note or under any Subsidiary Security Agreement; (iv) the Holder shall not have a perfected security interest in the Collateral pursuant to the terms set forth herein or in any Subsidiary Security Agreement other than Holder’s action or inaction; (v) the Company fails when required to remove any restrictive legend of any certificate relating to Conversion Shares, Redemption Warrants, MHR Warrants or any other securities issuable in accordance with the terms of the Notes or the exercise or conversion of the Redemption Warrants, MHR Warrants or any other convertible securities issuable in accordance with the terms of the Notes, issued to the Holders, and any such failure continues uncured for ten (10) Business Days after the Company has been notified of such failure in writing by the Holder; (vi) the Issuers or any of their Subsidiaries fail to pay, when due, or within any applicable grace period, any payment with respect to any Indebtedness of the Issuers or their Subsidiaries having an outstanding principal amount in excess of $250,000 (including, without limitation, any of the Other Notes), or otherwise is in breach or violation of any agreement for Indebtedness in an amount in excess of $250,000 which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder and which breach or violation is not waived or otherwise cured hereunder or under the documents evidencing such Indebtedness, including, without limitation, by exercise of the ComVest Cure pursuant to Section 6(e); (vii) the entry of a final judgment against any of the Issuers or their Subsidiaries not covered by insurance of a financially sound and reputable insurer that has not declined coverage, which is not subject to appeal by the Issuers or their Subsidiaries and is not satisfied, stayed, vacated or discharged of record within thirty (30) calendar days of being entered, in an amount in excess of $250,000, or the attachment or seizure of or levy upon any property of the Issuers or their Subsidiaries valued in excess of $250,000 to satisfy an obligation of the Issuers or their Subsidiaries; (viii) the Company provides notice to any Holder of the Notes, including by way of public announcement, at any time, of its intention not to issue, or otherwise refuses to issue, Conversion Shares to any Holder of the Note upon conversion in accordance with the terms of the Notes or shares of Common Stock upon exercise of the MHR Warrants; (ix) any of the Issuers or their Subsidiaries shall file a petition under bankruptcy, insolvency or debtor’s relief Law or make an assignment for the benefit of its creditors or (x) proceedings shall be instituted against any of the Issuers or their Subsidiaries before a court of competent jurisdiction under any federal or state bankruptcy Law that (X) is for relief against the Issuers or their Subsidiaries in an involuntary case brought with respect to the Issuers or their Subsidiaries in such court, (Y) seeks to appoint a custodian, receiver or other similar official for all or substantially all the Issuers’ property or of their Subsidiaries or (Z) seeks to liquidate the Issuers of their Subsidiaries, and such proceedings remain unstayed and in effect for sixty (60) days. In the event that the Obligations hereunder are accelerated pursuant to this Section 2(d), interest shall continue to accrue at 10 3/4% per annum as of the date of such acceleration until such date as the Holder is paid in full under this Note.

      3.  Conversion .

          (a)  Conversion at the Option of the Holder . The Holder may, at any time and from time to time on or after the Original Issue Date, convert all or any part of the outstanding principal amount of this Note, plus all accrued interest thereon through the Conversion Date, into a number of fully paid and nonassessable shares of Common Stock (“ Conversion Shares ”) upon surrender of the Note. The number of shares of Common Stock issuable upon surrender of the Note shall be determined in accordance with the following formula:

Conversion Amount
Conversion Price

          (b)  Mechanics of Conversion . In order to effect a conversion pursuant to this Section 3, the Holder shall: (a) fax (or otherwise deliver) a copy of the fully executed Notice of Conversion to the Company and (b) surrender or cause to be surrendered this Note, duly endorsed, along with a copy of the Notice of Conversion as soon as practicable thereafter to the Company. Upon receipt by the Company of a facsimile copy of a Notice of Conversion from a Holder, the Company shall within two (2) business days send, via facsimile, a confirmation to such Holder stating that the Notice of Conversion has been received, advising the Holder of any additional documentation required by the transfer agent for the Common Stock to issue the Conversion Shares in the manner provided in the Notice of Conversion (the “ Additional Documentation ”) and the name and telephone number of a contact person at the Company regarding the conversion. The Company shall not be obligated to issue Conversion Shares upon a conversion unless either this Note is delivered to the Company as provided above, or the Holder notifies the Company that such certificates have been lost, stolen or destroyed and delivers the documentation to the Company required by Section 13. Such conversion shall be deemed to have been made effective as of the Conversion Date and the rights of the Holder of the Notes being converted shall cease as of the Conversion Date except for the rights to receive Conversion Shares, and the Person entitled to receive the Conversion Shares shall be treated for all purposes as having become the record holder of such Conversion Shares at such time and shall have all the rights and privileges of a holder of Common Stock with respect to such Conversion Shares.

          (c)  Delivery of Conversion Shares Upon Conversion. Upon the surrender of this Note accompanied by a Notice of Conversion and any Additional Documentation, the Company shall, no later than the later of (a) the second Business Day following the Conversion Date and (b) the third Business Day following the date of such surrender (or, in the case of lost, stolen or destroyed certificates, after provision of indemnity pursuant to Section 13) (the “ Delivery Period ”), issue and deliver to the Holder or its nominee (x) that number of Conversion Shares issuable upon conversion of the portion of this Note being converted and (y) a new Note in the form hereof representing the balance of the principal amount hereof not being converted, if any. If the Company’s transfer agent is participating in the Depositary Trust Company (“ DTC ”) Fast Automated Securities Transfer program, and so long as the certificates therefor do not bear a legend and the Holder thereof is not then required to return such certificate for the placement of a legend thereon, the Company shall cause its transfer agent to electronically transmit the Conversion Shares to the Holder by crediting the account of the

Holder or its nominee with DTC, as specified in the Notice of Conversion, through its DTC Deposit Withdrawal Agent Commission System (“ DTC Transfer ”). If the aforementioned conditions to a DTC Transfer are not satisfied, the Company shall deliver to the Holder physical certificates representing the Conversion Shares. Further, the Holder may instruct the Company to deliver to the Holder physical certificates representing the Conversion Shares in lieu of delivering such shares by way of DTC Transfer.

          (d)  Adjustment to Conversion Price . The Conversion Price in effect at any time shall be subject to adjustment from time to time upon the happening of certain events, as follows:

               (i)  Common Stock Dividends; Common Stock Splits; Reverse Common Stock Splits . If the Company, at any time while this Note is outstanding, (A) shall pay a stock dividend on its Common Stock, (B) subdivide outstanding shares of Common Stock into a larger number of shares, or (C) combine outstanding shares of Common Stock into a smaller number of shares, the Conversion Price shall be multiplied by a fraction the numerator of which shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section 3(d)(i) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

               (ii)  Subscription Rights . If the Company, at any time while this Note is outstanding, shall fix a record date for the distribution to all of the holders of Common Stock evidence of its indebtedness or assets or rights, options, warrants or other securities entitling them to subscribe for, purchase, convert to, exchange for or to otherwise acquire any security (excluding those referred to in Section 3(d)(i) above), then in each such case the Conversion Price at which this Note shall thereafter be exercisable shall be determined by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination of shareholders entitled to receive such distribution by a fraction, the denominator of which shall be the average Daily Market Price of the Common Stock for the ten (10) Trading Days prior to the record date mentioned above, and the numerator of which shall be such average Daily Market Price of the Common Stock for the ten (10) Trading Days prior to such record date less the then fair market value at such record date of the portion of such evidence of indebtedness or assets or rights, options, warrants or other securities so distributed applicable to one outstanding share of Common Stock as determined by the Board of Directors in good faith; provided , however , that in the event of a distribution exceeding twenty percent (20%) of the net assets of the Issuers, such fair market value shall be determined by an appraiser selected by the Holders of a majority of the principal amount and interest of the Notes outstanding and reasonably acceptable to the Company. The Company shall pay for all such appraisals. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

               (iii)  Other Events . In case of (A) any reclassification of the Common Stock into other securities of the Company, (B) any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property or (C)

any merger or consolidation with or into any persons, or any sale or other disposition of all or substantially all of the assets of the Issuers to any person (each of (A), (B) or (C), an “ Extraordinary Event ”), the Holder shall have the right thereafter to convert this Note into shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such Extraordinary Event, that the Holder would have been entitled to r