Document:

<PAGE>

                                                                    EXHIBIT 10.2

                        THIRD LOAN MODIFICATION AGREEMENT

      THIS THIRD LOAN MODIFICATION AGREEMENT ("Modification Agreement") is made
as of July 10, 2002, between ADVANCED MARKETING SERVICES, INC., a Delaware
corporation ("Borrower"), and CALIFORNIA BANK & TRUST, a California banking
corporation ("Bank"), with reference to the following:

                                 R E C I T A L S

      A. Bank and Borrower are parties to that certain Revolving Credit
Agreement dated as of January 11, 2002 ("Loan Agreement"), pursuant to which
Borrower delivered to Bank a promissory note dated the same as the Loan
Agreement made by Borrower as maker to Bank, in the original principal amount of
$13,000,000 ("Note"), and a Security Agreement also dated the same as the Loan
Agreement made by Borrower in favor of Bank ("Security Agreement"). The Loan
Agreement, Note, Security Agreement and related documents are referred to
collectively as the "Loan Documents". The Loan Documents were previously
modified by those certain Loan Modification Agreements dated as of January 31,
2002 ("First Modification Agreement") and as of March 6, 2002 ("Second
Modification Agreement"). Initially capitalized terms not otherwise defined
herein have the same meanings as in the Loan Agreement, as previously modified.

      B. The parties wish to revise the Loan Documents again, to make permanent
what the previous modification agreements described as a temporary increase in
the Loan amount from $13,000,000 to $23,000,000. The parties also wish to extend
the Loan's Maturity Date and to make certain changes to Borrower's financial
covenants.

      THE PARTIES AGREE AS FOLLOWS:

      1. MODIFICATION OF LOAN DOCUMENTS. Subject to the conditions precedent of
Paragraph 2 below, the Loan Documents are modified in the following respects:

            1.1 The Maturity Date is extended from August 31, 2002 to March 31,
2003 ("Extended Maturity Date").

            1.2 The maximum Loan amount shall remain at $23,000,000 through the
Extended Maturity Date, and the $10,000,000 reduction in the Loan amount
required by the First and Second Modification Agreements is deleted from the
Loan Documents. Within the $23,000,000 maximum Loan amount, and subject to the
other terms and conditions of the Loan Documents as previously modified,
Borrower may borrow, repay and reborrow at any time or from time to time, until
the Extended Maturity Date.

            1.3 The financial covenant of clause (iv) of Paragraph 4.9(a) of the
Loan Agreement is modified so that the required Current Ratio shall be 1.00:1
instead of 1.10:1. The financial covenant of Paragraph 4.9(b) of the Loan
Agreement is modified to make the required maximum Leverage Ratio 3.50:1 for the
first, second and fourth quarters and 4.00:1 for the third quarter. As modified,
Paragraph 4.9 of the Loan Agreement shall read in its entirety as follows:

            "4.9 Financial Covenants.

                  "(a) No later than forty-five (45) days after the end of each
      fiscal quarter and one hundred twenty (120) days after the end of each
      fiscal year, Borrower shall demonstrate to Bank's reasonable satisfaction
      that (i) Borrower's Tangible Net Worth is not less than Seventy Million
      Dollars ($70,000,000), (ii) the ratio of Senior Debt to EBITDA for the
      Computation Period just ended is not more than 1.85:1, (iii) the value of
      Eligible Accounts Receivable is more than the Loan; and (iv) Borrower's
      Current Ratio is not less than 1.00:1.

                                       1
<PAGE>

                  "(b) Borrower shall, no later than forty-five (45) days after
      the end of each quarter, demonstrate to Bank's reasonable satisfaction a
      Leverage Ratio that is no more than 3.50:1 for the quarters ending March
      31, June 30 and December 31, and 4.00:1 for the quarter ending September
      30."

      2. CONDITIONS PRECEDENT. This Modification Agreement, and the temporary
increase of the Loan amount as set forth herein, shall be effective only upon
the date on which by which all of the following conditions precedent set forth
below have been satisfied or waived: (i) Borrower shall have paid Bank an
extension fee in the amount of $23,000 (0.1% of the Loan Amount); (ii) Borrower
shall have paid Bank the Unused Loan Fee required by Paragraph 2.2 of the Loan
Agreement for the quarter ending June 30, 2002, in the amount of $9,000 (0.25%
of the Average Amount of the Unused Loan during the previous quarter); and (iii)
Borrower shall have paid Bank all costs and expenses incurred by Bank in
connection with this Modification Agreement, including without limitation Bank's
legal fees. The foregoing conditions precedent are solely for the benefit of
Bank, and may be waived in writing unilaterally by Bank.

      3. OTHER MATTERS OF AGREEMENT.

            3.1 Except as expressly set forth herein, this Modification
Agreement shall not affect or impair any other covenants or conditions set forth
in the Loan Documents.

            3.2 This document may be executed in two or more counterparts, each
of which will be considered an original but all of which together shall
constitute one agreement.

            3.3 Except as modified hereby, all provisions of the Loan Documents
as previously modified shall remain in full force and effect.

BANK:                                   CALIFORNIA BANK & TRUST, a California
                                        banking corporation

                                        By
                                          --------------------------------------
                                        Name
                                            ------------------------------------
                                        Title
                                             -----------------------------------

                                        By
                                          --------------------------------------
                                        Name
                                            ------------------------------------
                                        Title
                                             -----------------------------------

BORROWER:                               ADVANCED MARKETING SERVICES, INC., a
                                        Delaware corporation

                                        By
                                          --------------------------------------
                                           Michael M. Nicita, President and CEO

                                        By
                                          --------------------------------------
                                           Edward J. Leonard, Exec. Vice Pres.
                                                        and CFO

                                       2<PAGE>
                                                                   EXHIBIT 10.59

                               SUPPLEMENT NO. 1 TO
                               SECURITY AGREEMENT

        SUPPLEMENT NO. 1 dated as of April 4, 2002 to the Security Agreement
dated as of June 30, 1999, among DJ ORTHOPEDICS, LLC, a Delaware limited
liability company (the "Borrower"), DJ ORTHOPEDICS, INC., a Delaware corporation
(successor to Donjoy, LLC) ("New Holdings"), each subsidiary of the Borrower
listed on Schedule I thereto (each such subsidiary individually a "Subsidiary
Guarantor" and collectively, the "Subsidiary Guarantors"; the Subsidiary
Guarantors, New Holdings and the Borrower are referred to collectively herein as
the "Grantors") and WACHOVIA BANK, NATIONAL ASSOCIATION ("Wachovia"), as
collateral agent (in such capacity, the "Collateral Agent") for the Secured
Parties (as defined herein).

        A. Reference is made to (a) the Credit Agreement dated as of June 30,
1999 (as amended by Amendment No. 1 dated as of May 25, 2000 and Agreement dated
as of July 13, 2000 and as further amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower, New Holdings,
the lenders from time to time party thereto (the "Lenders"), Wachovia, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent") and as Collateral Agent, and JP Morgan Chase Bank f/k/a The Chase
Manhattan Bank, as Syndication Agent and as issuing bank (in such capacity, the
"Issuing Bank") and (b) the Parent Guarantee Agreement dated as of June 30, 1999
(as amended, supplemented or otherwise modified from time to time, the "Parent
Guarantee Agreement"), between New Holdings and the Collateral Agent and (c) the
Subsidiary Guarantee Agreement dated as of June 30, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Subsidiary Guarantee
Agreement"), among the Subsidiary Guarantors and the Collateral Agent.

        B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.

        C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, the Borrower is
required to cause each Subsidiary that was not in existence or not a Subsidiary
on the date of the Credit Agreement to enter into the Security Agreement as a
Grantor upon becoming a Subsidiary that is a Subsidiary Loan Party. Section 7.15
of Security Agreement provides that additional Subsidiaries of the Borrower may
become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Subsidiary (the "New
Grantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Grantor under the Security Agreement in order
to induce the Lenders to make additional Loans and the Issuing Bank to issue
additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.

        Accordingly, the Collateral Agent and the New Grantor agree as follows:

<PAGE>

        SECTION 1. In accordance with Section 7.15 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations, does hereby create and grant to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, their successors and assigns, a security interest in and lien on all of
the New Grantor's right, title and interest in and to the Collateral of the New
Grantor. Each reference to a "Grantor" in the Security Agreement shall be deemed
to include the New Grantor. The Security Agreement is hereby incorporated herein
by reference.

        SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.

        SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.

        SECTION 4. The New Grantor hereby represents and warrants that set forth
on Schedule I attached hereto is a true and correct schedule of the location of
any and all Collateral of the New Grantor and set forth under its signature
hereto, is the true and correct location of the chief executive office of the
New Grantor.

        SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.

        SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

        SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

                                        2
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        SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.

        SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.

                                        3
<PAGE>

        IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.

                                     DJ ORTHOPEDICS DEVELOPMENT CORPORATION, a
                                     Delaware corporation

                                     By:  /s/ LESLIE H. CROSS
                                          -------------------------------
                                          Name:  Leslie H. Cross
                                          Title: President and CEO
                                          Address: c/o dj Orthopedics, LLC
                                                   2985 Scott Street
                                                   Vista, CA 92083

                                     WACHOVIA BANK, NATIONAL ASSOCIATION, as
                                     Collateral Agent

                                     By:  /s/ HARRY E. ELLIS
                                          ------------------------------------
                                          Name:  Harry E. Ellis
                                          Title: Managing Director, Corporate &
                                                 Investment Banking

<PAGE>

                                   SCHEDULE I

dj ORTHOPEDICS DEVELOPMENT CORPORATION

Location of Collateral
Chief Executive Office
2985 Scott Street
Vista, CA 92083

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