Document:

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                                                                    Exhibit 10.3

                             STOCK PLEDGE AGREEMENT
                             ----------------------

          This STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of October 7,
2003, is entered into by and among HUDSON RESPIRATORY CARE INC., a California
corporation ("Borrower"), IH HOLDING LLC, a Delaware limited liability company
("Guarantor", together with the Borrower, collectively the "Pledgor"), and WELLS
FARGO FOOTHILL, INC., a California corporation, as the arranger and
administrative agent for the Lenders (in such capacity, together with its
successors, if any, in such capacity, "Agent"), with reference to the following:

          WHEREAS, Borrower, the Lenders (such Lenders, together with Agent,
individually and collectively, the "Lender Group"), and Agent have entered into
that certain Loan and Security Agreement, dated as of even date herewith (as
amended, restated, modified, supplemented, refinanced, renewed, or extended from
time to time, the "Loan Agreement"), pursuant to which the Lender Group has
agreed to make certain financial accommodations to Pledgor;

          WHEREAS, contemporaneously herewith, Guarantor has executed and
delivered that certain General Continuing Guaranty (the "Guaranty") and that
certain Security Agreement (Guarantors) (the "Security Agreement") in favor of
Agent respecting certain obligations of the Borrower to the Lender Group in
connection with the Loan Agreement

          WHEREAS, Pledgor beneficially owns the specified Equity Interests
identified as Pledged Interests in the Persons identified as Issuers listed
under the name of Pledgor on Schedule A attached hereto (or any addendum
thereto); and

          WHEREAS, to induce the Lender Group to make the financial
accommodations provided to the Pledgor pursuant to the Loan Agreement, Pledgor
desires to pledge, grant, transfer, and assign to Agent, for the benefit of the
Lender Group, a security interest in the Pledged Collateral (as hereinafter
defined) to secure the Secured Obligations (as hereinafter defined), as provided
herein.

          NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations, and warranties set forth herein and for other good and valuable
consideration, the parties hereto agree as follows:

          1.   Definitions And Construction.

          (a)  Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
The following terms, as used in this Agreement, shall have the following
meanings:

               "Agent" shall have the meaning set forth in the preamble to this
     Agreement, together with its successors or assigns.

               "Agreement" has the meaning set forth in the preamble to this
     Agreement.

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               "Chief Executive Office" shall mean the Chief Executive Office
     listed on Schedule B.

               "Equity Interests" shall mean all shares, units, options,
     warrants, interests, participations, or other equivalents (regardless of
     how designated) of or in a corporation, partnership, limited liability
     company, or equivalent entity, whether voting or nonvoting, including
     general partner partnership interests, limited partner partnership
     interests, common stock, preferred stock, or any other "equity security"
     (as such term is defined in Rule 3a11-1 of the General Rules and
     Regulations promulgated by the SEC under the Exchange Act).

               "Exchange Act" shall mean the Securities Exchange Act of 1934, as
     amended, and any successor statute.

               "Excluded Collateral" shall have the meaning ascribed to such
     term in the Loan Agreement.

               "Future Rights" shall mean, with respect to each Issuer, (i) all
     Equity Interests (other than Pledged Interests) of such Issuer, and all
     securities convertible or exchangeable into, and all warrants, options, or
     other rights to purchase, Equity Interests of such Issuer; (ii) to the
     extent of Pledgor's interest therein, all shares of, all securities
     convertible or exchangeable into, and all warrants, options, or other
     rights to purchase Equity Interests of any Person in which Pledgor, after
     the date of this Agreement, acquires a direct equity interest, irrespective
     of whether such Person is or becomes a Subsidiary of Pledgor; and (iii) the
     certificates or instruments representing such additional Equity Interests,
     convertible or exchangeable securities, warrants, and other rights and all
     dividends, cash, options, warrants, rights, instruments, and other property
     or proceeds from time to time received, receivable, or otherwise
     distributed in respect of or in exchange for any or all of such Equity
     Interests.

               "Guarantor" shall have the meaning set forth in the preamble to
     this Agreement.

               "Guaranty" shall have the meaning set forth in the recitals to
     this Agreement.

               "Holder" and "Holders" shall have the meanings set forth in
     Section 3 of this Agreement.

               "HRC Certificates" means the certificates evidencing the capital
     stock of HRC Holding Inc., a Delaware corporation.

               "Issuers" shall mean each of the Persons identified as an Issuer
     on Schedule A attached hereto (or any addendum thereto), and any successors
     thereto, whether by merger or otherwise.

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               "Lender Group" shall have the meaning set forth in the recitals
     to this Agreement.

               "Lenders" means, individually and collectively, each of the
     financial institutions identified on the signature pages of the Loan
     Agreement, and any other person made a party thereto in accordance with the
     provisions of Section 14 thereof (together with their respective successors
     and assigns).

               "Loan Agreement" shall have the meaning set forth in the recitals
     to this Agreement.

               "Pledged Collateral" shall mean the Pledged Interests, the Future
     Rights, and the Proceeds, collectively but excluding the Excluded
     Collateral.

               "Pledged Interests" shall mean with respect to each Issuer, all
     of the Equity Interests identified as Pledged Interests of such Issuer on
     Schedule A attached hereto (or any addendum thereto).

               "Pledgor" has the meaning set forth in the preamble to this
     Agreement.

               "Proceeds" shall mean all proceeds (including proceeds of
     proceeds) of the Pledged Interests and Future Rights including all: (a)
     rights, benefits, distributions, premiums, profits, dividends, interest,
     cash, instruments, documents of title, accounts, contract rights,
     inventory, equipment, general intangibles, deposit accounts, chattel paper,
     and other property from time to time received, receivable, or otherwise
     distributed in respect of or in exchange for, or as a replacement of or a
     substitution for, any of the Pledged Interests, Future Rights, or proceeds
     thereof (including any cash, Equity Interests, or other securities or
     instruments issued after any recapitalization, readjustment,
     reclassification, merger or consolidation with respect to any Issuer and
     any security entitlements, as defined in the Code, with respect thereto);
     (b) "proceeds," as such term is defined in the Code; (c) proceeds of any
     insurance, indemnity, warranty, or guaranty (including guaranties of
     delivery) payable from time to time with respect to any of the Pledged
     Interests, Future Rights, or proceeds thereof; (d) payments (in any form
     whatsoever) made or due and payable to Pledgor from time to time in
     connection with any requisition, confiscation, condemnation, seizure or
     forfeiture of all or any part of the Pledged Interests, Future Rights, or
     proceeds thereof; and (e) other amounts from time to time paid or payable
     under or in connection with any of the Pledged Interests, Future Rights, or
     proceeds thereof.

               "SEC" shall mean the United States Securities and Exchange
     Commission and any successor thereto.

               "Secured Obligations" shall mean, with respect to Pledgor, all
     liabilities, obligations, or undertakings owing by Pledgor to the Lender
     Group of any kind or description arising out of or outstanding under,
     advanced or issued pursuant to, or evidenced by the Loan Agreement, the
     Guaranty, the Security Agreement, this Agreement, or any of the other Loan
     Documents, irrespective of whether for the payment

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     of money, whether direct or indirect, absolute or contingent, due or to
     become due, voluntary or involuntary, whether now existing or hereafter
     arising, and including all interest (including interest that accrues after
     the filing of a case under the Bankruptcy Code) and any and all costs, fees
     (including attorneys fees), and expenses which Pledgor is required to pay
     pursuant to any of the foregoing, by law, or otherwise.

               "Securities Act" shall have the meaning set forth in Section 9(c)
     of this Agreement.

               "Security Agreement" shall have the meaning set forth in the
     recitals to this Agreement.

          (b)  Construction.

                    (i)   Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and to the singular
include the plural, the term "including" is not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and other
similar terms in this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement. Article, section,
subsection, exhibit, and schedule references are to this Agreement unless
otherwise specified. All of the exhibits or schedules attached to this Agreement
shall be deemed incorporated herein by reference. Any reference to any of the
following documents includes any and all alterations, amendments, restatements,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable: this Agreement, the Loan Agreement, or any of the other Loan
Documents.

                    (ii)  Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Agent or Pledgor,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by each of the parties signatory hereto and their
respective counsel and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of the parties hereto.

                    (iii) In the event of any direct conflict between the
express terms and provisions of this Agreement and of the Loan Agreement or the
Security Agreement, the terms and provisions of the Loan Agreement or the
Security Agreement, as applicable, shall control.

          2.   Pledge. Pledgor hereby pledges, grants, transfers, and assigns to
Agent, for the benefit of the Lender Group, a security interest in all of
Pledgor's right, title, and interest in and to the Pledged Collateral in order
to secure prompt repayment of any and all of the Secured Obligations in
accordance with the terms and conditions of the Loan Documents to which Pledgor
is a party, and in order to secure prompt performance by Pledgor of its
covenants and duties under each Loan Document to which it is a party. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions,

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Pledgor has no authority, express or implied, to dispose of any item or portion
of the Pledged Collateral.

          3.   Delivery and Registration of Pledged Collateral.

          (a)  All certificates or instruments representing or evidencing the
Pledged Collateral shall be promptly delivered by Pledgor to Agent or Agent's
designee pursuant hereto at a location designated by Agent and shall be held by
or on behalf of Agent pursuant hereto, and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably
satisfactory to Agent.

          (b)  Upon the occurrence and during the continuance of an Event of
Default, Agent shall have the right, at any time in its discretion and without
notice to Pledgor, to transfer to or to register on the books of the Issuers (or
of any other Person maintaining records with respect to the Pledged Collateral)
in the name of Agent or any of its nominees any or all of the Pledged
Collateral. In addition, Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.

          (c)  If, at any time and from time to time, any Pledged Collateral
(including any certificate or instrument representing or evidencing any Pledged
Collateral) is in the possession of a Person other than Agent (or an agent of
Agent) or Pledgor (a "Holder"), then Pledgor shall promptly, at Agent's option,
either cause such Pledged Collateral to be delivered into Agent's possession, or
execute and deliver to such Holder a written notification/instruction, and take
all other steps necessary to perfect the security interest of Agent in such
Pledged Collateral, including obtaining from such Holder a written
acknowledgment that such Holder holds such Pledged Collateral for Agent, all
pursuant to the Code or other applicable law governing the perfection of Agent's
security interest in the Pledged Collateral in the possession of such Holder.
Each such notification/instruction and acknowledgment shall be in form and
substance reasonably satisfactory to Agent.

          (d)  Any and all Pledged Collateral (including dividends, interest,
and other cash distributions) at any time received or held by Pledgor shall be
so received or held in trust for Agent, shall be segregated from other funds and
property of Pledgor and shall be forthwith delivered to Agent in the same form
as so received or held, with any necessary endorsements; provided that cash
dividends or distributions received by Pledgor, if and to the extent they are
not prohibited by the Loan Agreement, may be retained by Pledgor in accordance
with Section 4 and used in the ordinary course of Pledgor's business, or as
otherwise expressly permitted under the Loan Documents.

          (e)  If at any time and from time to time any Pledged Collateral
consists of an uncertificated security or a security in book entry form, then
Pledgor shall promptly cause such Pledged Collateral to be registered or
entered, as the case may be, in the name of Agent, for the benefit of the Lender
Group, or otherwise cause the security interest held by Agent, for the benefit
of the Lender Group, to be perfected in accordance with applicable law.

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          (f)  Agent acknowledges that the exercise of the powers or rights
granted in this Section 3 may at some times be subject to the provisions of the
Intercreditor Agreement.

          4.   Voting Rights and Dividends.

          (a)  So long as no Event of Default shall have occurred and be
continuing, Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of the Loan Documents.

          (b)  Upon the occurrence and during the continuance of an Event of
Default, at the election of Agent in its Permitted Discretion, upon the receipt
by Pledgor of written notice of such election by Agent, all rights of Pledgor to
exercise the voting and other consensual rights or receive and retain cash
dividends or distributions that it would otherwise be entitled to exercise or
receive and retain, as applicable pursuant to Section 4(a), shall cease, and all
such rights shall thereupon become vested in Agent, who shall thereupon have the
sole right to exercise such voting or other consensual rights and to receive and
retain such cash dividends and distributions. Upon the receipt of such written
notice, Pledgor shall execute and deliver (or cause to be executed and
delivered) to Agent all such proxies and other instruments as Agent may
reasonably request for the purpose of enabling Agent to exercise the voting and
other rights which it is entitled to exercise and to receive the dividends and
distributions that it is entitled to receive and retain pursuant to the
preceding sentence.

          (c)  Agent acknowledges that the exercise of the powers granted in
this Section 4 may at some times be subject to the provisions of the
Intercreditor Agreement.

          5.   Representations and Warranties. Pledgor represents, warrants, and
covenants as follows:

          (a)  Pledgor has taken all steps it deems necessary or appropriate to
be informed on a continuing basis of changes or potential changes affecting the
Pledged Collateral (including rights of conversion and exchange, rights to
subscribe, payment of dividends, reorganizations or recapitalization, tender
offers and voting rights), and Pledgor agrees that no member of the Lender Group
shall have any responsibility or liability for informing Pledgor of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereto;

          (b)  All information herein or contained in or delivered pursuant to
the Loan Documents supplied to Agent or any other member of the Lender Group by
and prepared by Pledgor or any Subsidiary of Pledgor in writing with respect to
the Pledged Collateral is, or in the case of information hereafter supplied will
be, accurate and complete in all material respects;

          (c)  Pledgor is and will be the sole legal and beneficial owner of the
Pledged Collateral (including the Pledged Interests and all other Pledged
Collateral acquired by Pledgor after the date hereof) free and clear of any
adverse claim, Lien, or other right, title, or interest of any party, other than
the Liens held by Agent for the benefit of the Lender Group and Permitted Liens;

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          (d)  This Agreement, and the delivery to Agent of certificates, if
any, representing Pledged Collateral (or the delivery to all Holders of such
certificates, if any, representing Pledged Collateral of the
notification/instruction referred to in Section 3 of this Agreement and the
acknowledgement of such Holders referred to in Section 3), creates a valid,
perfected, and first priority security interest (except that the security
interest in the HRC Certificates shall be a second priority security interest)
in one hundred percent (100%) of the Pledged Interests which are in certificated
form in favor of Agent securing payment of the Secured Obligations, and all
actions necessary to achieve such perfection have been duly taken;

          (e)  Schedule A to this Agreement is true and correct and complete in
all material respects as of the date hereof; without limiting the generality of
the foregoing, as of the date hereof: (i) except as set forth in Schedule A, all
the Pledged Interests are in certificated form, and, except to the extent
registered in the name of Agent or its nominee pursuant to the provisions of
this Agreement, are registered in the name of Pledgor; and (ii) the Pledged
Interests as to each of the Issuers constitute at least the percentage of all
the fully diluted issued and outstanding Equity Interests of such Issuer as set
forth in Schedule A to this Agreement;

          (f)  the Pledged Interests that are interests in general partnerships,
limited partnerships or limited liability companies (i) are not dealt in or
traded on securities exchanges or in securities markets, (ii) do not have terms
expressly providing that they are securities governed by Article 8 of the Code,
and (iii) are not investment company securities, and are not, therefore,
"securities" governed by Article 8 of the Code;

          (g)  There are no presently existing Future Rights owned by Pledgor as
of the date hereof;

          (h)  The Pledged Interests have been duly authorized and validly
issued and, with respect to the HRC Certificates, are fully paid and
nonassessable; and

          (i)  Neither the pledge of the Pledged Collateral pursuant to this
Agreement nor the extensions of credit represented by the Secured Obligations
violates Regulation T, U or X of the Board of Governors of the Federal Reserve
System.

          6.   Further Assurances.

          (a)  Pledgor agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and take all
further action that may be necessary or reasonably desirable, or that Agent, on
behalf of the Lender Group, may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Agent,
on behalf of the Lender Group, to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, Pledgor will: (i) at the request of Agent, mark
conspicuously each of its records pertaining to the Pledged Collateral with a
legend, in form and substance reasonably satisfactory to Agent, indicating that
such Pledged Collateral is subject to the security interest granted hereby; (ii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
reasonably desirable, or as Agent

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may reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby; (iii) allow inspection of the Pledged
Collateral by Agent or Persons designated by Agent; and (iv) appear in and
defend any action or proceeding that may affect Pledgor's title to or Agent's
security interest in the Pledged Collateral.

          (b)  Pledgor hereby authorizes Agent, on behalf of the Lender
Group, to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Pledged Collateral without Pledgor's
signature where permitted by law. A carbon, photographic, or other reproduction
of this Agreement or any financing statement covering the Pledged Collateral or
any part thereof shall be sufficient as a financing statement where permitted by
law.

          (c)  Pledgor will furnish to Agent, upon the request of Agent: (i) a
certificate executed by an authorized officer of Pledgor, and dated as of the
date of delivery to Agent, itemizing in such detail as Agent may request, the
Pledged Collateral which, as of the date of such certificate, has been delivered
to Agent by Pledgor pursuant to the provisions of this Agreement; and (ii) such
statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
Agent may request.

          7.   Covenants of Pledgor. Pledgor shall:

          (a)  Perform each and every covenant in the Loan Documents applicable
to Pledgor;

          (b)  At all times keep at least one complete set of its records
concerning substantially all of the Pledged Collateral at its Chief Executive
Office as set forth in Schedule B hereto, and not change the location of its
Chief Executive Office or such records without giving Agent at least thirty (30)
days prior written notice thereof;

          (c)  To the extent it may lawfully do so, use its best efforts to
prevent the Issuers from issuing Future Rights or Proceeds, except for cash
dividends and other distributions, if any, that are not prohibited by the terms
of the Loan Agreement to be paid by any Issuer to Pledgor;

          (d)  Upon receipt by Pledgor of any material notice, report, or other
communication from any of the Issuers or any Holder relating to all or any part
of the Pledged Collateral, deliver such notice, report or other communication to
Agent promptly, but in no event later than five (5) days following the receipt
thereof by Pledgor; and

          (e)  Not permit any of the Issuers to: (i) authorize the amendment of
or amend the Governing Documents of such Issuer that is a general partnership,
limited partnership or limited liability company to provide that the Equity
Interests of such Issuer is governed by Article 8 of the Code, or (ii) authorize
the issuance of or issue certificates evidencing the Equity Interests of such
Issuer that is a general partnership, limited partnership or limited liability
company.

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          8.   Agent as Pledgor's Attorney-in-Fact.

          (a)  Pledgor hereby irrevocably appoints Agent, on behalf of the
Lender Group, as Pledgor's attorney-in-fact, with full authority in the place
and stead of Pledgor and in the name of Pledgor, Agent or otherwise, from time
to time at Agent's discretion, to take any action and to execute any instrument
that Agent, on behalf of the Lender Group, may reasonably deem necessary or
advisable to accomplish the purposes of this Agreement, including: (i) upon the
occurrence and during the continuance of an Event of Default, to receive,
endorse, and collect all instruments made payable to Pledgor representing any
dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof to the extent permitted hereunder and to give
full discharge for the same and to execute and file governmental notifications
and reporting forms; (ii) to issue any notifications/instructions Agent deems
necessary pursuant to Section 3 of this Agreement; or (iii) to arrange for the
transfer of the Pledged Collateral on the books of any of the Issuers or any
other Person to the name of Agent or to the name of Agent's nominee.

          (b)  In addition to the designation of Agent as Pledgor's
attorney-in-fact in subsection (a), Pledgor hereby irrevocably appoints Agent,
on behalf of the Lender Group, as Pledgor's agent and attorney-in-fact to make,
execute and deliver any and all documents and writings which may be necessary or
appropriate for approval of, or be required by, any regulatory authority located
in any city, county, state or country where Pledgor or any of the Issuers engage
in business, in order to transfer or to more effectively transfer any of the
Pledged Interests or otherwise enforce the rights granted hereunder to the
Lender Group.

          9.   Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to the terms of the Intercreditor
Agreement:

          (a)  Agent, on behalf of the Lender Group, may exercise in respect of
the Pledged Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party on default under the Code (irrespective of whether the Code applies to the
affected items of Pledged Collateral), and Agent, on behalf of the Lender Group,
may also without notice (except as specified below) sell the Pledged Collateral
or any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of Agent's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or prices
and upon such other terms as Agent may deem commercially reasonable,
irrespective of the impact of any such sales on the market price of the Pledged
Collateral. To the maximum extent permitted by applicable law, Agent may be the
purchaser of any or all of the Pledged Collateral at any such sale and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply all or any part of the Secured Obligations as a
credit on account of the purchase price of any Pledged Collateral payable at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by law) all rights of redemption, stay,
or appraisal that it now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted. Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten (10)
calendar

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days notice to Pledgor of the time and place of any public sale or the time
after which a private sale is to be made shall constitute reasonable
notification. Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Subject to subsection (b), to the
maximum extent permitted by law, Pledgor hereby waives any claims against Agent
arising because the price at which any Pledged Collateral may have been sold at
such a private sale was less than the price that might have been obtained at a
public sale, even if Agent accepts the first offer received and does not offer
such Pledged Collateral to more than one offeree.

          (b)  Pledgor hereby agrees that any sale or other disposition of the
Pledged Collateral conducted in conformity with reasonable commercial practices
of banks, insurance companies, or other financial institutions in the City of
Los Angeles, State of California in disposing of property similar to the Pledged
Collateral shall be deemed to be commercially reasonable.

          (c)  Pledgor hereby acknowledges that the sale by Agent of any Pledged
Collateral pursuant to the terms hereof in compliance with the Securities Act of
1933 as now in effect or as hereafter amended, or any similar statute hereafter
adopted with similar purpose or effect (the "Securities Act"), as well as
applicable "Blue Sky" or other state securities laws may require strict
limitations as to the manner in which Agent or any subsequent transferee of the
Pledged Collateral may dispose thereof. In light of this, Pledgor acknowledges
and agrees that in order to protect Agent's interest it may be necessary to sell
the Pledged Collateral at a price less than the maximum price attainable if a
sale were delayed or were made in another manner, such as a public offering
under the Securities Act. Pledgor has no objection to sale in such a manner and
agrees that Agent shall have no obligation to obtain the maximum possible price
for the Pledged Collateral as long as any sale is made in a commercially
reasonable manner. Without limiting the generality of the foregoing, Pledgor
agrees that, upon the occurrence and during the continuation of an Event of
Default, Agent may, subject to applicable law, from time to time attempt to sell
all or any part of the Pledged Collateral by a private placement, restricting
the bidders and prospective purchasers to those who will represent and agree
that they are purchasing for investment only and not for distribution. In so
doing, Agent may solicit offers to buy the Pledged Collateral or any part
thereof for cash, from a limited number of investors deemed by Agent, in its
reasonable judgment, to be institutional investors or other responsible parties
who might be interested in purchasing the Pledged Collateral. If Agent shall
solicit such offers, then Pledgor acknowledges that the acceptance by Agent of
one of the offers shall not be deemed per se to not be a commercially reasonable
method of disposition of the Pledged Collateral.

          (d)  If Agent shall determine to exercise its right to sell all or any
portion of the Pledged Collateral pursuant to this Section, Pledgor agrees that,
upon request of Agent, Pledgor will, at no expense to any member of the Lender
Group:

                    (i)   execute and deliver, and, use commercially reasonably
efforts to, cause the Issuers and the directors and officers thereof to execute
and deliver, all such

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instruments and documents, and to do or use commercially reasonably efforts to
cause to be done all such other acts and things, as may be necessary or, in the
opinion of Agent, advisable to register such Collateral under the provisions of
the Securities Act, and use commercially reasonable efforts to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to the related
prospectuses which, in the opinion of Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto;

                    (ii)  use commercially reasonable efforts to qualify the
Collateral under the state securities laws or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Collateral, as requested by
Agent;

                    (iii) use commercially reasonably efforts to cause the
Issuers to make available to their respective security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of Section
11(a) of the Securities Act;

                    (iv)  execute and deliver, or use commercially reasonably
efforts to cause the officers and directors of the Issuers to execute and
deliver, to any person, entity or governmental authority as Agent may choose,
any and all documents and writings which, in Agent's reasonable judgment, may be
necessary or appropriate for approval, or be required by, any regulatory
authority located in any city, county, state or country where Pledgor or the
Issuers engage in business, in order to transfer or to more effectively transfer
the Pledged Interests or otherwise enforce Agent's rights hereunder; and

                    (v)   do or cause to be done all such other acts and
things as may be commercially reasonable to make such sale of the Collateral or
any part thereof valid and binding and in compliance with applicable law.

Pledgor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.

          (e)  PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW:
(i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME
AGENT DISPOSES OF ALL OR ANY PART OF THE PLEDGED COLLATERAL AS PROVIDED IN THIS
SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR
MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING
OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS
SECTION, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.

          10.  Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any cash held by Agent as Pledged Collateral
and all cash proceeds

                                      -11-

<PAGE>

received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral pursuant to the
exercise by Agent of its remedies as a secured creditor as provided in Section 9
shall be applied from time to time by Agent as provided in the Loan Agreement.

          11.  Duties of Agent. The powers conferred on Agent hereunder are
solely to protect its interests in the Pledged Collateral and shall not impose
on it any duty to exercise such powers. Except as provided in Section 9207 of
the Code, Agent shall have no duty with respect to the Pledged Collateral or any
responsibility for taking any necessary steps to preserve rights against any
Persons with respect to any Pledged Collateral.

          12.  Choice of Law and Venue. THE VALIDITY OF THIS AGREEMENT, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF AGENT, IN ANY OTHER COURT
IN WHICH AGENT SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS
SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. PLEDGOR AND AGENT
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12.

          13.  Amendments; Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Pledgor herefrom shall in any event be
effective unless the same shall be in writing and signed by Agent and Pledgor,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No failure on the part of Agent to
exercise, and no delay in exercising any right under this Agreement, any other
Loan Document, or otherwise with respect to any of the Secured Obligations,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right under this Agreement, any other Loan Document, or otherwise with
respect to any of the Secured Obligations preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided for in this
Agreement or otherwise with respect to any of the Secured Obligations are
cumulative and not exclusive of any remedies provided by law. Notwithstanding
the foregoing, Pledgor may amend Schedule A to include Subsidiaries formed or
acquired as permitted by Section 6.15 of the Loan Agreement by providing a copy
thereof to Agent along with a notice complying with the applicable provisions
herein with respect thereto.

          14.  Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and shall be delivered in the manner set forth in the Loan Agreement.

                                      -12-

<PAGE>

          15.  Continuing Security Interest. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall: (i) remain in
full force and effect until the indefeasible payment in full of the Secured
Obligations, including the cash collateralization, expiration, or cancellation
of all Secured Obligations, if any, consisting of letters of credit, and the
full and final termination of any commitment to extend any financial
accommodations under the Loan Agreement; (ii) be binding upon Pledgor and its
successors and assigns; and (iii) inure to the benefit of Agent and its
successors, transferees, and assigns. Upon the indefeasible payment in full of
the Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, the security interests
granted herein shall automatically terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination, Agent will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination. Such documents shall be
prepared by Pledgor.

          16.  Security Interest Absolute. To the maximum extent permitted by
law, all rights of Agent, all security interests hereunder, and all obligations
of Pledgor hereunder, shall be absolute and unconditional irrespective of:

          (a)  any lack of validity or enforceability of any of the Secured
Obligations or any other agreement or instrument relating thereto, including any
of the Loan Documents;

          (b)  any change in the time, manner, or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from any of the Loan Documents, or any
other agreement or instrument relating thereto;

          (c)  any exchange, release, or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty for all or any of the Secured Obligations; or

          (d)  any other circumstances that might otherwise constitute a defense
available to, or a discharge of, Pledgor.

To the maximum extent permitted by law, Pledgor hereby waives any right to
require Agent to: (A) proceed against or exhaust any security held by Pledgor;
or (B) pursue any other remedy in Agent's power whatsoever.

          17.  Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.

          18.  Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

                                      -13-

<PAGE>

          19.  Counterparts; Telefacsimile Execution. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same Agreement. Delivery
of an executed counterpart of this Agreement by telefacsimile shall be equally
as effective as delivery of an original executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telefacsimile
also shall deliver an original executed counterpart of this Agreement but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, or binding effect hereof.

          20.  Waiver of Marshaling. Pledgor and Agent acknowledge and agree
that in exercising any rights under or with respect to the Pledged Collateral:
(i) Agent is under no obligation to marshal any Pledged Collateral; (ii) may, in
its absolute discretion, realize upon the Pledged Collateral in any order and in
any manner it so elects; and (iii) may, in its absolute discretion, apply the
proceeds of any or all of the Pledged Collateral to the Secured Obligations in
any order and in any manner it so elects. Pledgor and Agent waive any right to
require the marshaling of any of the Pledged Collateral.

          21.  Waiver of Jury Trial. PLEDGOR AND AGENT HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. PLEDGOR AND AGENT REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

                           [Signature page to follow.]

                                      -14-

<PAGE>

          IN WITNESS WHEREOF, Pledgor and Agent have caused this Agreement to be
duly executed and delivered as of the date first written above.

                                        HUDSON RESPIRATORY CARE INC.,
                                        a California corporation

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

                                        IH HOLDING LLC,
                                        a Delaware limited liability company

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

                                        WELLS FARGO FOOTHILL, INC.
                                        a California corporation, as Agent

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

                                      S-1

<PAGE>

                                   SCHEDULE A
                                   ----------
                                       TO
                             STOCK PLEDGE AGREEMENT
                             ----------------------

<TABLE>
<CAPTION>
                                               Pledgor: Hudson Respiratory Care Inc.

                                                         Pledged Interests
                                                         -----------------

                                                                         Pledgor's
                                  Number of                Certificate   Percentage   Percentage   Jurisdiction of   Certificated /
           Issuer                   Shares      Class       Number(s)    Ownership      Pledged     Organization     Uncertificated
-------------------------------   ---------   ----------   -----------   ----------   ----------   ---------------   --------------
<S>                               <C>         <C>          <C>           <C>          <C>          <C>               <C>
HRC Holding Inc.                     100        Common          1            100%        100%          Delaware       Certificated
                                              membership
IH Holding LLC                       n/a      interests         --           100%          0           Delaware      Uncertificated
Industrias Hudson, S.A. de C.V.      990        Common        16, 17          99%       66-2/3%         Mexico        Certificated
Hudson Respiratory Care                       membership
Tecate, S.de R.L. de C.V.            n/a       interests         1           99.9%       66-2/3%         Mexico        Certificated
</TABLE>

<TABLE>
<CAPTION>

                                                      Pledgor: IH Holding LLC

                                                         Pledged Interests
                                                         -----------------

                                                                         Pledgor's
                                  Number of                Certificate   Percentage   Percentage   Jurisdiction of   Certificated /
           Issuer                   Shares      Class       Number(s)    Ownership      Pledged     Organization     Uncertificated
-------------------------------   ---------   ----------   -----------   ----------   ----------   ---------------   --------------
<S>                               <C>         <C>          <C>           <C>          <C>          <C>               <C>
Industrias Hudson, S.A. de C.V.       10        Common          18             1%          0            Mexico        Certificated
Hudson Respiratory Care                       membership
Tecate, S. de R.L. de C.V.           n/a       interests         2           0.1%          0            Mexico        Certificated
</TABLE>

                                      A-1

<PAGE>

                                   SCHEDULE B
                                   ----------
                                       TO
                             STOCK PLEDGE AGREEMENT
                             ----------------------

                      Pledgor:    Hudson Respiratory Care Inc.

                      Address of Chief Executive Office:

                      27711 Diaz Road
                      Temecula, California 92590

                                      B-1<PAGE>

                                                                    Exhibit 10.4

                               SECURITY AGREEMENT
                                  (GUARANTORS)

          This SECURITY AGREEMENT (this "Agreement"), is entered into as of
October 7, 2003, is executed and delivered by and among each of the undersigned
Affiliates of HUDSON RESPIRATORY CARE INC., a California corporation
("Borrower") (each such Affiliate individually a "Guarantor", and individually
and collectively, jointly and severally, the "Guarantors") and WELLS FARGO
FOOTHILL, INC., a California corporation, as the arranger and administrative
agent for the Lenders (in such capacity, together with its successors and
assigns, if any, in such capacity, "Agent"), in light of the following:

          WHEREAS, Borrower, the Lenders (such Lenders, together with Agent,
individually and collectively, jointly and severally, the "Lender Group"), and
Agent are entering into that certain Loan and Security Agreement of even date
herewith (as amended, restated, modified, renewed or extended from time to time,
the "Loan Agreement");

          WHEREAS, each Guarantor has executed that certain General Continuing
Guaranty, of even date herewith, in favor of Agent (the "Guaranty"), respecting
the Obligations of Borrower owing to the Lender Group under the Loan Agreement;

          WHEREAS, each Guarantor desires to secure its obligations under the
Loan Documents to which it is party (including the Guaranty) by granting to
Agent, for the benefit of the Lender Group, security interests in the Collateral
as set forth herein; and

          WHEREAS, each Guarantor is an Affiliate of Borrower, and will benefit
by virtue of the financial accommodations from the Lender Group to Borrower.

          NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and each intending
to be bound hereby, Agent and each Guarantor agree as follows:

          1.   DEFINITIONS AND CONSTRUCTION.

               1.1.  Definitions. All capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Loan
Agreement. As used in this Agreement, the following terms shall have the
following definitions:

          "Account" means any "account" (as that term is defined in the Code),
and any and all supporting obligations in respect thereof.

          "Additional Documents" has the meaning set forth in Section 2.4(c) of
this Agreement.

          "Agent" has the meaning set forth in the preamble to this Agreement.

<PAGE>

          "Agent's Liens" means the Liens granted by a Guarantor to Agent under
this Agreement or the other Loan Documents to which such Guarantor is a party.

          "Agreement" means this Security Agreement and any extensions, riders,
supplements, notes, amendments, or modifications to or in connection with this
Security Agreement.

          "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
Section 101, et seq.), as amended, and any successor statute.

          "Borrower" has the meaning set forth in the preamble to this
Agreement.

          "Code" means the California Uniform Commercial Code as in effect from
time to time.

          "Collateral" means, with respect to each Guarantor, all of such
Guarantor's now owned or hereafter acquired right, title, and interest in and to
each of the following: all of its Accounts; all of its Commercial Tort Claims;
all of its Books; all of its Deposit Accounts; Real Property; all of its
Equipment; all of its General Intangibles; all of its Inventory; all of its
Investment Property (including all securities and Securities Accounts); all of
its Negotiable Collateral; any money or other assets of such Guarantor which now
or hereafter come into the possession, custody, or control of Agent; and the
proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance covering any or all of the Collateral, and any
and all Accounts, Commercial Tort Claims, Books, Deposit Accounts, Real
Property, Equipment, General Intangibles, Inventory, Investment Property,
Negotiable Collateral, money, or other tangible or intangible property resulting
from the sale, exchange, collection, or other disposition of any of the
foregoing, or any portion thereof or interest therein, and the proceeds thereof,
but excluding the Excluded Collateral.

          "Commercial Tort Claim Assignment" has the meaning set forth in
Section 2.4(b) of this Agreement.

          "Commercial Tort Claims" means a commercial tort claim (as that term
is defined in the Code).

          "Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrower or a Guarantor, Agent,
and the applicable securities intermediary (with respect to a Securities
Account) or bank (with respect to a Deposit Account) in form and substance
satisfactory to Agent.

          "Equipment" means "equipment" (as that term is defined in the Code),
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), tools, parts, and goods (other than
consumer goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.

          "Excluded Collateral" shall have the meaning ascribed to such term in
the Loan Agreement.

                                      -2-

<PAGE>

          "Guarantor" and "Guarantors" have the meanings ascribed to such terms
in the preamble to this Agreement.

          "Guarantor's Books" means the applicable Guarantor's now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).

          "General Intangibles" means "general intangibles" (as that term is
defined in the Code).

          "Guaranty" has the meaning set forth in the recitals to this
Agreement.

          "Inventory" means "inventory" (as that term is defined in the Code).

          "Investment Property" means "investment property" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.

          "Lender Group" has the meaning set forth in the recitals to this
Agreement.

          "Lenders" means, individually and collectively, each of the lenders
identified on the signature pages of the Loan Agreement, and any other person
made a party thereto in accordance with the provisions of Section 14 thereof
(together with their respective successors and assigns).

          "Loan Agreement" has the meaning set forth in the recitals to this
Agreement.

          "Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.

          "Secured Obligations" means the Guarantied Obligations, as defined in
the Guaranty.

          "Voidable Transfer" has the meaning set forth in Section 11.8 to this
Agreement.

               1.2.  Code. Any terms used in this Agreement that are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.

                                      -3-

<PAGE>

               1.3.  Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, clause, schedule, and exhibit references are to this Agreement
unless otherwise specified. Any reference in this Agreement or in any of the
other Loan Documents to this Agreement or any of the other Loan Documents shall
include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, and supplements, thereto and thereof, as
applicable. In the event of a direct conflict between the terms and provisions
of this Agreement and the Loan Agreement, it is the intention of the parties
hereto that both such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of the Loan Agreement shall control and govern; provided,
however, that the inclusion herein of additional obligations on the part of each
Guarantor and supplemental rights and remedies in favor of Agent, in each case
in respect of the Collateral, shall not be deemed a conflict with the Loan
Agreement.

               1.4.  Schedules and Exhibits. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.

          2.   CREATION OF SECURITY INTEREST.

               2.1.  Grant of Security Interest. Each Guarantor hereby grants to
Agent, for the benefit of the Lender Group, a continuing security interest in
all of its right, title, and interest in all currently existing and hereafter
acquired or arising Collateral to secure prompt repayment of any and all of the
Secured Obligations in accordance with the terms and conditions of the Loan
Documents and to secure prompt performance by each Guarantor of each such
Guarantor's covenants and duties under the Loan Documents. Agent's Liens in and
to the Collateral shall attach to all Collateral without further act on the part
of Agent or any Guarantor. Anything contained in this Agreement or any other
Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, no Guarantor has any authority, express or implied, to dispose of
any item or portion of the Collateral.

               2.2.  Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Agent determines that perfection or priority of Agent's
security interest is dependent on or enhanced by possession, the applicable
Guarantor, promptly upon the request of Agent, shall endorse and deliver
physical possession of such Negotiable Collateral to Agent.

               2.3.  Collection of Accounts, General Intangibles, Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
any Guarantor that such Guarantor's Accounts, chattel paper, or General
Intangibles have been assigned to Agent or that

                                      -4-

<PAGE>

Agent has a security interest therein, or (b) collect such Guarantor's Accounts,
chattel paper, or General Intangibles directly and charge the collection costs
and expenses to the Loan Account. Each Guarantor agrees that it will hold in
trust for Agent, as Agent's trustee, any Collections that it receives and
promptly will deliver such Collections to Agent or a Cash Management Bank in
their original form as received by the applicable Guarantor.

               2.4.  Filing of Financing Statements; Commercial Tort Claims;
Delivery of Additional Documentation Required.

          (a)  Each Guarantor authorizes Agent to file any financing statement
necessary or desirable to effectuate the transactions contemplated herein and by
the other Loan Documents, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the signature of such
Guarantor where permitted by applicable law. Each Guarantor hereby ratifies the
filing of any financing statement filed without the signature of such Guarantor
prior to the date hereof.

          (b)  If any Guarantor acquires any Commercial Tort Claim after the
date hereof, such Guarantor shall promptly (but in any event within 10 days
after a financial officer of Guarantor having knowledge thereof) deliver to
Agent a written description of such Commercial Tort Claim and shall, upon
request of Agent, promptly deliver a written agreement, in form and substance
satisfactory to Agent, pursuant to which such Guarantor to the extent not
prohibited by law, grants a security interest in such Commercial Tort Claim to
Agent, as security for the Obligations (a "Commercial Tort Claim Assignment").

          (c)  At any time upon the request of Agent each Guarantor shall
execute and deliver to Agent, any and all financing statements, original
financing statements in lieu of continuation statements, fixture filings,
security agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the "Additional Documents") that Agent may request in its Permitted Discretion,
in form and substance satisfactory to Agent, to create, perfect, and continue
perfected or to better perfect the Agent's Liens in the assets of such Guarantor
(whether now owned or hereafter arising or acquired, tangible or intangible,
real or personal), to create and perfect Liens in favor of Agent in any owned
Real Property acquired by any Guarantor after the Closing Date, and in order to
fully consummate all of the transactions contemplated hereby and under the other
Loan Documents. To the maximum extent permitted by applicable law, if any
Guarantor has not executed any Additional Document Agent is entitled to obtain
hereunder after Agent has made an appropriate request therefor, each Guarantor
authorizes Agent to execute any such Additional Documents in such Guarantor's
name and authorizes Agent to file such executed Additional Documents in any
appropriate filing office. In addition, on such periodic basis as Agent shall
require, each Guarantor shall (i) provide Agent with a report of all new
patents, trademarks, or copyrights (or applications therefor) acquired or
generated by such Guarantor during the prior period, (ii) cause all material
patents, copyrights and trademarks acquired or generated by such Guarantor that
are not already the subject of a registration with the appropriate filing office
(or an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of such Guarantor's ownership thereof, and (iii) cause to be prepared, executed,
and delivered to Agent supplemental schedules to the

                                       -5-

<PAGE>

applicable Loan Documents to identify such patents, copyrights, and trademarks
as being subject to the security interests created thereunder.

               2.5.  Power of Attorney. Each Guarantor hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Guarantor's true and lawful attorney, with
power to: (a) if such Guarantor refuses to, or fails timely to execute and
deliver any of the documents described in Section 2.4, sign the name of such
Guarantor on any of the documents described in Section 2.4; (b) at any time that
an Event of Default has occurred and is continuing, sign such Guarantor's name
on any invoice or bill of lading relating to the Collateral, drafts against
Account Debtors, or notices to Account Debtors; (c) send requests for
verification of such Guarantor's Accounts; (d) endorse such Guarantor's name on
any of its payment items (including all of its Collections) that may come into
Agent's possession; (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under such Guarantor's policies
of insurance and make all determinations and decisions with respect to such
policies of insurance; and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting such
Guarantor's Accounts, chattel paper, or General Intangibles directly with
Account Debtors, for amounts and upon terms that Agent determines to be
reasonable, and Agent may cause to be executed and delivered any documents and
releases that Agent determines to be necessary. The appointment of Agent as each
Guarantor's attorney, and each and every one of Agent's rights and powers, being
coupled with an interest, is irrevocable until all of the Secured Obligations
have been fully and finally repaid and performed and the Lender Group's
obligation to extend credit under the Loan Agreement is terminated.

               2.6.  Right to Inspect. Agent and each Lender (through any of
their respective officers, employees, or agents) shall have the right, from time
to time hereafter to inspect the Books and make copies or abstracts thereof and
to check, test, and appraise the Collateral, or any portion thereof, in order to
verify Guarantor's financial condition or the amount, quality, value, condition
of, or any other matter relating to, the Collateral; provided that so long as no
Triggering Event has occurred, (a) Guarantor shall not be required to pay for
more than 2 inspections/audits of the Collateral per year and (b) appraisals of
the Collateral shall be conducted no more frequently than once per year.

               2.7.  Control Agreements.Each Guarantor agrees that it will not,
and will not permit its Subsidiaries, if any, to, transfer assets out of any of
their Deposit Accounts or Securities Accounts; provided, however, that so long
as no Event of Default has occurred that is continuing or would result
therefrom, each Guarantor and its respective Subsidiaries, if any, may use such
assets (and the proceeds thereof) to the extent not prohibited by this Agreement
or the other Loan Documents and, if the transfer is to another bank or
securities intermediary, so long as such Guarantor (or its Subsidiary, as
applicable), Agent, and the substitute bank or securities intermediary have
entered into a Control Agreement if required by Section 7.12 of the Loan
Agreement. Each Guarantor agrees that it will and will cause its Subsidiaries,
if any, to take any or all reasonable steps that Agent requests to obtain
control in accordance with Sections 9-104, 9-105, 9-106, and 9-107 of the Code
with respect to any of its or their Securities Accounts, Deposit Accounts,
electronic chattel paper, Investment Property, and letter-of-credit rights. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property shall be modified by any
Guarantor without the prior

                                       -6-

<PAGE>

written consent of Agent. Upon the occurrence and during the continuance of an
Event of Default, Agent may notify any bank or securities intermediary to
liquidate the applicable Deposit Account or Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account.

          3.   REPRESENTATIONS AND WARRANTIES.

          Each Guarantor makes the representations and warranties which are set
forth in Section 5 of the Loan Agreement as if such Guarantor were a party
thereto and to the extent the same are applicable to such Guarantor.

          4.   AFFIRMATIVE COVENANTS.

          Each Guarantor shall comply with each of the affirmative covenants
which are set forth in Section 6 of the Loan Agreement as if such Guarantor were
a party thereto and to the extent the same are applicable to such Guarantor.

          5.   NEGATIVE COVENANTS.

          Each Guarantor shall comply with each of the negative covenants which
are set forth in Section 7 of the Loan Agreement as if such Guarantor were a
party thereto and to the extent the same are applicable to such Guarantor.

          6.   AGENT'S RIGHTS AND REMEDIES.

               6.1.  Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, the security hereby constituted shall become
enforceable and, in addition to all other rights and remedies available to Agent
as provided hereafter, Agent may, without notice of its election and without
demand, do any one or more of the following, subject to the terms of the
Intercreditor Agreement, all of which are authorized by each Guarantor:

          (a)  Proceed directly and at once, without notice, against any
Guarantor to collect and recover the full amount or any portion of the Secured
Obligations, without first proceeding against Borrower, or against any security
or collateral for the Secured Obligations;

          (b)  Without notice to any Guarantor and regardless of the acceptance
of any security or collateral for the payment hereof, appropriate and apply
toward the payment of the Secured Obligations (i) any indebtedness due or to
become due from Agent to any Guarantor and (ii) any moneys, credits or other
property belonging to a Guarantor at any time held by or coming into the
possession of Agent;

          (c)  Exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein and in the Guaranty or otherwise
available to it, all the rights and remedies available to it at law (including
those of a secured party under the Code) or in equity;

          (d)  Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms that Agent considers advisable, and in such
cases, Agent will credit the

                                       -7-

<PAGE>

Loan Account with only the net amounts received by Agent in payment of such
disputed Accounts after deducting all Lender Group Expenses incurred or expended
in connection therewith;

          (e)  Cause each Guarantor to hold all returned Inventory in trust for
Agent, segregate all returned Inventory from all other property of such
Guarantor or in such Guarantor's possession and conspicuously label said
returned Inventory as the property of Agent for the benefit thereof;

          (f)  Without notice or demand upon any Guarantor, make such payments
and do such acts as Agent considers necessary or reasonable to protect its
security interest in the Collateral. Each Guarantor agrees to assemble the
Collateral if Agent so requires, and to make the Collateral available to Agent
as Agent may designate. Each Guarantor authorizes Agent to enter the premises
where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Agent's determination appears to conflict
with the Agent's Liens in and to the Collateral and to pay all expenses incurred
in connection therewith. With respect to any of the Guarantors' owned premises,
each Guarantor hereby grants Agent a license to enter into possession of such
premises and to occupy the same, without charge, for up to one hundred twenty
(120) days to exercise any of Agent's rights or remedies provided herein, at
law, in equity, or otherwise;

          (g)  Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Agent is hereby granted a license or other right to use, without
charge, each Guarantor's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Collateral, in
completing production of advertising for sale and selling any Collateral, and
each Guarantor's rights under all licenses and all franchise agreements shall
inure to Agent's benefit;

          (h)  Sell all or any part of the Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including a Guarantor's
premises) as Agent determines is commercially reasonable. It is not necessary
that the Collateral be present at any such sale;

          (i)  Agent shall give notice of the disposition of the Collateral as
follows:

                     (i)   Agent shall give the applicable Guarantor a notice in
               writing of the time and place of public sale, or, if the sale is
               a private sale or some other disposition other than a public sale
               is to be made of the Collateral, then the time on or after which
               the private sale or other disposition is to be made; and

                     (ii)  The notice shall be personally delivered or mailed,
               postage prepaid, to the applicable Guarantor as provided in
               Section 9, at least ten (10) days before the earliest time of
               disposition set forth in the notice; no notice needs to be given
               prior to the disposition of any portion of the

                                       -8-

<PAGE>

               Collateral that is perishable or threatens to decline speedily in
               value or that is of a type customarily sold on a recognized
               market;

          (j)  Agent, on behalf of the Lender Group, may credit bid and purchase
at any public sale;

          (k)  Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
or keeper without the requirement of prior notice or a hearing;

          (l)  Agent, on behalf of the Lender Group, shall have all other rights
and remedies available at law or in equity or pursuant to any other Loan
Document; and

          (m)  Any deficiency that exists after disposition of the Collateral as
provided above will be paid immediately by the Guarantors. Any excess will be
returned, without interest and subject to the rights of third Persons, by Agent
to the applicable Guarantor.

               6.2.  Remedies Cumulative. Agent's rights and remedies under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Agent shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Agent
of one right or remedy shall be deemed an election, and no waiver by any member
of the Lender Group of any Event of Default on a Guarantor's part shall be
deemed a continuing waiver. No delay by any member of the Lender Group shall
constitute a waiver, election, or acquiescence by it.

          7.   TAXES AND EXPENSES REGARDING THE COLLATERAL. If any Guarantor
fails to pay any monies (whether taxes, rents, assessments, insurance premiums,
or, in the case of leased properties or assets, rents or other amounts payable
under such leases) due to third Persons, or fails to make any deposits or
furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Agent, in its sole discretion and without prior
notice to any Guarantor, may do any or all of the following: (a) make payment of
the same or any part thereof; (b) set up such reserves in the Loan Account as
Agent deems necessary to protect the Lender Group from the exposure created by
such failure; or (c) in the case of the failure to comply with Section 6.8 of
the Loan Agreement, obtain and maintain insurance policies insuring each
Guarantor's ownership and use of the Collateral, and take any action with
respect to such policies as Agent deems prudent. Any amounts paid or deposited
by Agent shall constitute Lender Group Expenses, shall immediately become
additional Secured Obligations, shall bear interest at the applicable rate
described in the Loan Agreement, and shall be secured by the Collateral. Any
payments made by Agent shall not constitute an agreement by Agent, or any member
of the Lender Group, to make similar payments in the future or a waiver by the
Lender Group, or Agent on behalf thereof, of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, security interest, encumbrance, or lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing. Agent shall use its best efforts to provide
notice to the applicable Guarantor of any action taken by it under this Section
7.

                                       -9-

<PAGE>

          8.   WAIVERS; INDEMNIFICATION.

               8.1.  Demand; Protest; Etc. Except as otherwise specifically and
explicitly set forth in this Agreement, the Loan Agreement, or the other Loan
Documents, and to the extent permitted by law, each Guarantor waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees at any time held by the Lender Group, or Agent on behalf
thereof, on which such Guarantor may in any way be liable.

               8.2.  Lender Group's Liability for Collateral. So long as the
Lender Group complies with its obligations, if any, under the Code and no
willful misconduct or gross negligence occurs, Agent shall not in any way or
manner be liable or responsible for: (a) the safekeeping of the Collateral; (b)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause; (c) any diminution in the value thereof; or (d) any act or default of
any carrier, warehouseman, bailee, forwarding agency, or other Person. All risk
of loss, damage, or destruction of the Collateral shall be borne by the
Guarantors.

               8.3.  Indemnification. Each Guarantor agrees to defend,
indemnify, save, and hold the Agent-Related Persons, the Lender-Related Persons
with respect to each Lender, and each Participant (each an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them: (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
(including any restructuring or workout with respect hereto) of this Agreement,
any of the other Loan Documents, or the transactions contemplated hereby or
thereby or the monitoring of each Guarantor's compliance with the terms of the
Loan Documents, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all of the foregoing, collectively,
the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
no Guarantor shall have any obligation to any Indemnified Person under this
Section 8.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Secured Obligations. If
any Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which any Guarantor was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by such
Guarantor with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY
SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES
WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR
OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON (OTHER THAN TO THE
EXTENT IT IS FINALLY DETERMINED TO

                                      -10-

<PAGE>

HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED
PERSON).

          9.   NOTICES. All notices and other communications hereunder to Agent
shall be in writing and shall be mailed, sent or delivered in accordance with
the Loan Agreement and all notices and other communications hereunder to a
Guarantor shall be in writing and shall be mailed, sent or delivered in care of
Borrower in accordance with the Loan Agreement.

          10.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF THIS
AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF
THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.

          THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE CALIFORNIA STATE COURTS AND FEDERAL COURTS LOCATED IN THE
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH
GUARANTOR AND AGENT WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT SUCH PARTY MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 10.

          EACH GUARANTOR AND AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH GUARANTOR AND AGENT REPRESENT THAT EACH SUCH PARTY HAS
REVIEWED THIS WAIVER AND EACH SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

          11.  GENERAL PROVISIONS.

               11.1. Effectiveness. This Agreement shall be binding and deemed
effective when executed by each Guarantor and accepted and executed by Agent.

                                      -11-

<PAGE>

               11.2. Successors and Assigns. This Agreement shall be binding
upon each Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of each member of the Lender Group;
provided, however, no Guarantor shall assign this Agreement or delegate any of
its duties hereunder without Agent's prior written consent and any assignment by
a Guarantor without Agent's consent shall be absolutely void. In the event of
any assignment or other transfer of rights by any member of the Lender Group,
the rights and benefits herein conferred upon each member of the Lender Group
shall automatically extend to and be vested in such assignee or other
transferee. Subject to the provisions of the Loan Agreement, Agent may assign
this Agreement and its rights and duties hereunder and no consent or approval by
any Guarantor is required in connection with any such assignment

               11.3. Section Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement or be given any substantive effect.

               11.4. Interpretation. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any member of the
Lender Group or any Guarantor, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all parties
hereto.

               11.5. Severability of Provisions. Any provision of this
Agreement that is prohibited or unenforceable under applicable law shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.

               11.6. Amendments in Writing. This Agreement can only be amended
by a writing signed by Agent and each Guarantor.

               11.7. Counterparts; Telefacsimile Execution. This Agreement may
be executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.

               11.8. Revival and Reinstatement of Obligations. If the incurrence
or payment of the Secured Obligations by a Guarantor or the transfer by a
Guarantor to Agent of any property of a Guarantor should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, and other voidable or
recoverable payments of money or transfers of property (collectively, a
"Voidable Transfer"), and if Agent is required to repay or restore, in whole or
in part, any such Voidable Transfer, or elects to do so upon the advice of its
counsel, then, as to any such Voidable Transfer, or the

                                      -12-

<PAGE>

amount thereof that Agent is required or elects to repay or restore, and as to
all reasonable costs, expenses, and attorneys' fees of Agent related thereto,
the liability of each of the Guarantors automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.

               11.9. Termination. Upon the indefeasible final payment in full
of the Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, this Agreement shall
terminate, and Agent shall execute and deliver such documents and instruments
and take such further action reasonably requested by Guarantors, at Guarantors'
expense, as shall be necessary to evidence termination of the security interests
granted by Guarantors to Agent for the benefit of the Lender Group.

                            [Signature page follows]

                                      -13-

<PAGE>

          IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Agreement as of the date first above written.

                                        RIVER HOLDING CORP.,
                                        a Delaware corporation

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

                                        IH HOLDINGS LLC,
                                        a Delaware limited liability company

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

                                        WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent

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

                [Signature Page to Guarantor Security Agreement]

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