JUNIOR INTELLECTUAL PROPERTY SECURITY AGREEMENT

JUNIOR INTELLECTUAL PROPERTY SECURITY AGREEMENT

                    This Junior Intellectual Property Security Agreement (as amended, supplemented or otherwise modified from time to time, this “IP Security Agreement”) is made and effective as of November 10, 2005, by SUNSET BRANDS, INC., a Nevada corporation (“Sunset”) and U.S. MILLS, INC., a Delaware corporation (“US Mills”, and collectively with Sunset, the “Grantor”), in favor of IBF FUND LIQUIDATING LLC, a Delaware limited liability company, as holder of the Convertible Debentures (defined below) (the “Debenture Holder”). Capitalized terms used in this IP Security Agreement and not otherwise defined shall have the respective meanings ascribed to such terms in the Security Agreement (defined below).

RECITALS

                     WHEREAS, pursuant to that certain Amended and Restated Acquisition Agreement and Plan of Merger dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Acquisition Agreement”) by and among Grantor, USM Acquisition Sub, Inc. and the Debenture Holder, Sunset will acquire US Mills by merger the “Acquisition”);

                     WHEREAS, pursuant to the terms of the Acquisition Agreement, Sunset shall issue to the Debenture Holder Secured Convertible Debentures dated the date hereof in the aggregate original principal amount of $5,000,000 (as such may be replaced, substituted or reissued from time to time in accordance with its terms, collectively, the “Convertible Debentures”) which are convertible into the common stock of Sunset, as payment of a portion of the consideration for the Acquisition;

                     WHEREAS, it is a condition precedent to the agreement of the Debenture Holder to accept the Convertible Debentures as a portion of the consideration for the Acquisition that Grantor shall have executed and delivered this IP Security Agreement to the Debenture Holder; and

                    WHEREAS, Grantor is party to that certain Junior Security Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), by and among Grantor and the Debenture Holder.

                     NOW, THEREFORE, in consideration of the willingness of the Debenture Holder to accept the Convertible Debentures as a portion of the consideration for the Acquisition, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

          1. Grant of Security Interest. To secure the Grantor’s prompt, punctual and faithful payment of the Obligations and the performance of all of the Grantor’s obligations under the Security Agreement, Grantor hereby grants to the Debenture Holder a continuing security interest in all of the right, title and interest of Grantor in and to any and all of the following collateral, whether now owned or hereafter acquired, but excluding any Intellectual Property for which the granting of a security interest therein would terminate, invalidate, void, cancel or abandon such Intellectual Property (the “IP Collateral”):

                    (a) The U.S and foreign copyrights, associated copyright registrations and applications for copyright registration, set forth on Schedule A attached hereto (collectively, the “Copyrights”);

                    (b) The U.S. and foreign patents and patent applications set forth on Schedule B attached hereto, including, without limitation, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same (collectively, the “Patents”);

                    (c) The U.S., state and foreign trademark and service mark registrations, trademark and service mark applications set forth on Schedule C attached hereto and all goodwill associated with the foregoing (collectively, the “Trademarks”);

                    (d) The domain names and registrations set forth on Schedule D attached hereto and all goodwill associated with the foregoing (collectively, the “Domain Names”);

                    (e) Any and all claims and causes of action for past, present or future infringement of any of the IP Collateral, with the right, but not the obligation, to sue for and collect damages for infringement of the IP Collateral;

                    (f) Any and all licenses or rights granted under any of the IP Collateral, and all license fees and royalties arising from such licenses or rights, in each case to the extent permitted by such licenses or rights;

                    (g) Any and all amendments, renewals, extensions, reissuances and replacements of any of the IP Collateral; and

                    (h) Any and all products and proceeds of any of the foregoing.

          2. Requested Recordation. Grantor authorizes and requests that the Register of Copyrights and the Commissioner of Patents and Trademarks (and any state, foreign or other authority to which this IP Security Agreement is submitted) file and record this IP Security Agreement (and any corresponding or separate forms of such jurisdiction) in order to publicly reflect the interests of the Debenture Holder in the IP Collateral.

          3. Assignment. Upon the occurrence and during the continuance of an Event of Default, Grantor shall execute and deliver to the Debenture Holder an absolute assignment transferring its entire right, title, and interest in and to the IP Collateral to the Debenture Holder.

          4. Power of Attorney. Grantor hereby irrevocably grants to the Debenture Holder, a power of attorney, to act as Grantor’s attorney-in-fact, with full authority in the name, place and stead of Grantor, from time to time in the Debenture Holder’s discretion, to take any action and to execute any instrument that the Debenture Holder may reasonably deem necessary or advisable to accomplish the purposes of this IP Security Agreement. This authority includes, without limitation, the following:

	to any registered intellectual property (or application or license therefor) acquired by Grantor after the execution hereof or to delete any reference to any IP Collateral in which Grantor no longer has or claims any right, title or interest;
	(b) To execute, file and pursue (in the sole discretion of the Debenture Holder and without first obtaining Grantor’s approval thereof or signature thereto, unless otherwise prohibited by applicable law) any application, form or other document in order to perfect, maintain, continue or otherwise protect the Debenture Holder’s interest or Grantor’s rights in the IP Collateral, including, without limitation, executing and filing (i) any financing statement, any continuation statement or any amendment thereto, and (ii) any document in any proceeding before the United States Patent and Trademark O