REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of
November 10, 2005, by and among SUNSET BRANDS, INC., a Nevada corporation (the
“Company”), and IBF Fund Liquidating LLC, a Delaware limited liability company
(“IBF”).

          WHEREAS:

          A. Pursuant to the terms of an Amended and Restated Acquisition
Agreement and Plan of Merger, dated as of the date hereof, among the Company,
USM Acquisition Sub, Inc., IBF and U.S. Mills, Inc., the Company has issued to
IBF a 12% Secured Convertible Debenture in an original principal amount of
$5,000,000 (the “Convertible Debenture”) which is convertible into that number
of shares of the Company’s common stock, par value $0.001 per share (the “Common
Stock”), pursuant to the terms thereof (the “Conversion Shares”) and a warrant
to purchase 2,173,913 shares of Common Stock (the “Warrant”), subject to
adjustment as set forth in the Warrant (the “Warrant Shares”).

          B. To induce IBF to execute and deliver the Merger Agreement and
accept the Convertible Debenture and Warrant, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations there under, or any similar successor
statute (collectively, the “Securities Act”), and applicable state securities
laws.

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and IBF
hereby agrees as follows:

          1. DEFINITIONS.

          As used in this Agreement, the following terms shall have the
following meanings:

                    (a) “Person” means a corporation, a limited liability
company, an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a governmental
agency.

                    (b) “Register,” “registered” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the Securities Act and pursuant
to Rule 415 under the Securities Act or any successor rule providing for
offering securities on a continuous or delayed basis (“Rule 415”), and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the United States Securities and Exchange Commission (the “SEC”).

                    (c) “Registrable Securities” means (i) the Conversion
Shares, (ii) the Warrant Shares, and (iii) any shares of Common Stock issued or
issuable with respect to the Conversion Shares or Warrant Shares upon any stock
split, stock dividend,

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recapitalization or similar event.

                    (d) “Registration Statement” means a registration statement
under the Securities Act which covers the Registrable Securities.

          2. REGISTRATION.

                    (a) Subject to the terms and conditions of this Agreement,
the Company shall prepare and file, no later than forty five (45) days from the
date hereof (the “Scheduled Filing Deadline”), with the SEC a registration
statement on Form S-1 or SB-2 (or, if the Company is then eligible, on Form S-3)
under the Securities Act (the “Initial Registration Statement”) for the resale
by the IBF of the Registrable Securities, which includes at least 13,513,514
shares of Common Stock to be issued upon conversion of the Convertible Debenture
and 2,173,913 shares of Common Stock to be issued upon conversion of the
Warrants. The Company shall cause the Registration Statement to remain effective
until all of the Registrable Securities have been sold. Prior to the filing of
the Registration Statement with the SEC, the Company shall furnish a copy of the
Initial Registration Statement to IBF for its review and comment. IBF shall
furnish comments on the Initial Registration Statement to the Company within
twenty-four (24) hours of the receipt thereof from the Company.

                    (b) Effectiveness of the Initial Registration Statement. The
Company shall use its best efforts (i) to have the Initial Registration
Statement declared effective by the SEC no later one hundred twenty (120) days
after the date hereof (the “Scheduled Effective Deadline”) and (ii) to insure
that the Initial Registration Statement and any subsequent Registration
Statement remains in effect until all of the Registrable Securities have been
sold, subject to the terms and conditions of this Agreement. It shall be an
event of default hereunder if the Initial Registration Statement is not filed by
the Scheduled Filing Deadline or declared effective by the Scheduled Effective
Deadline.

                    (c) Failure to File or Obtain Effectiveness of the
Registration Statement. In the event the Registration Statement is not filed by
the Scheduled Filing Deadline or is not declared effective by the SEC on or
before the Scheduled Effective Date, or if after the Registration Statement has
been declared effective by the SEC, sales cannot be made pursuant to the
Registration Statement (whether because of a failure to keep the Registration
Statement effective, failure to disclose such information as is necessary for
sales to be made pursuant to the Registration Statement, failure to register
sufficient shares of Common Stock or otherwise then as partial relief for the
damages to any holder of Registrable Securities by reason of any such delay in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies at law or in equity), the
Company will pay as liquidated damages (the “Liquidated Damages”) to the holder,
at the holder’s option, either a cash amount or shares of the Company’s Common
Stock within three (3) business days, after demand therefore, equal to one and
one half percent (1.5%) of the liquidated value of the Convertible Debenture
outstanding as Liquidated Damages for each thirty (30) day period after the
Scheduled Filing Deadline or the Scheduled Effective Date as the case may be.

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                    (d) Liquidated Damages. The Company and the IBF acknowledge
and agree that the sums payable under subsection 2(c) above shall constitute
liquidated damages and not penalties and are in addition to all other rights of
IBF, including the right to call a default. The parties further acknowledge that
(i) the amount of loss or damages likely to be incurred is incapable or is
difficult to precisely estimate, (ii) the amounts specified in such subsections
bear a reasonable relationship to, and are not plainly or grossly
disproportionate to, the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of a
Registration Statement, (iii) one of the reasons for the Company and IBF
reaching an agreement as to such amounts was the uncertainty and cost of
litigation regarding the question of actual damages, and (iv) the Company and
IBF are sophisticated business parties and have been represented by
sophisticated and able legal counsel and negotiated this Agreement at arm’s
length.

          3. RELATED OBLIGATIONS.

                    (a) The Company shall keep the Registration Statement
effective pursuant to Rule 415 at all times until the date on which IBF shall
have sold all the Registrable Securities covered by such Registration Statement
(the “Registration Period”), which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.

                    (b) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and, during such period, comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in such
Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company’s filing a
report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company
shall incorporate such report by reference into the Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the Exchange Act report is filed which created the requirement
for the Company to amend or supplement the Registration Statement.

                    (c) The Company shall furnish to IBF, without charge, (i) at
least one (1) copy of such Registration Statement as declared effective by the
SEC and any amendment(s) thereto, including financial statements and schedules,
all documents

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incorporated therein by reference, all exhibits and each preliminary prospectus,
(ii) ten (10) copies of the final prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as IBF may reasonably request) and (iii) such other documents as IBF may
reasonably request from time to time in order to facilitate the disposition of
the Registrable Securities owned by IBF.

                    (d) The Company shall use its best efforts to (i) register
and qualify the Registrable Securities covered by a Registration Statement under
such other securities or “blue sky” laws of such jurisdictions in the United
States as IBF reasonably requests, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its articles of incorporation or by-laws, (x) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify IBF of the receipt by the
Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the
securities or “blue sky” laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose.

                    (e) As promptly as practicable after becoming aware of such
event or development, the Company shall notify IBF in writing of the happening
of any event as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to IBF. The Company
shall also promptly notify IBF in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to IBF by facsimile on
the same day of such effectiveness), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.

                    (f) The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the

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suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction within the United States of America and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify IBF who holds Registrable Securities
being sold of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose.

                    (g) At the reasonable request of IBF, the Company shall
furnish to IBF, on the date of the effectiveness of the Registration Statement
and thereafter from time to time on such dates as IBF may reasonably request (i)
a letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to IBF.

                    (h) The Company shall make available for inspection by (i)
IBF and (ii) one (1) firm of accountants or other agents retained by IBF
(collectively, the “Inspectors”) all pertinent financial and other records, and
pertinent corporate documents and properties of the Company (collectively, the
“Records”), as shall be reasonably deemed necessary by each Inspector, and cause
the Company’s officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each Inspector
shall agree, and IBF hereby agrees, to hold in strict confidence and shall not
make any disclosure (except to IBF) or use any Record or other information which
the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the Securities Act, (b)
the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent jurisdiction, or
(c) the information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other agreement of
which the Inspector and IBF has knowledge. IBF agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.

                    (i) The Company shall hold in confidence and not make any
disclosure of information concerning IBF provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any

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other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning IBF is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to IBF and allow IBF, at IBF’s expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such information.

                    (j) The Company shall use its best efforts either to cause
all the Registrable Securities covered by a Registration Statement (i) to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or
(ii) the inclusion for quotation on the National Association of Securities
Dealers, Inc. OTC Bulletin Board for such Registrable Securities. The Company
shall pay all fees and expenses in connection with satisfying its obligation
under this Section 3(j).

                    (k) The Company shall cooperate with IBF and, to the extent
applicable, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities to
be offered pursuant to a Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as IBF may reasonably
request and registered in such names as IBF may request.

                    (l) The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.

                    (m) The Company shall make generally available to its
security holders as soon as practical, but not later than ninety (90) days after
the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 under the Securities Act) covering a
twelve (12) month period beginning not later than the first day of the Company’s
fiscal quarter next following the effective date of the Registration Statement.

                    (n) The Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.

                    (o) Within two (2) business days after a Registration
Statement which covers Registrable Securities is declared effective by the SEC,
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
IBF) confirmation that such Registration Statement has been declared effective
by the SEC in the form attached hereto as Exhibit A.

                    (p) The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by IBF of Registrable
Securities pursuant to a Registration Statement.

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          4. OBLIGATIONS OF IBF.

          IBF agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), IBF will immediately discontinue disposition of Registrable
Securities pursuant to any Registration Statement(s) covering such Registrable
Securities until IBF’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(e) or receipt of notice that no supplement
or amendment is required. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended certificates for shares of
Common Stock to a transferee of IBF in connection with any sale of Registrable
Securities with respect to which IBF has entered into a contract for sale prior
to IBF’s receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(f) or the first sentence of 3(e) and for which
IBF has not yet settled.

          5. EXPENSES OF REGISTRATION.

          All expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers, legal and accounting
fees shall be paid by the Company.

          6. INDEMNIFICATION.

          With respect to Registrable Securities which are included in a
Registration Statement under this Agreement:

                    (a) To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend IBF, the directors,
officers, members, partners, employees, agents, representatives of, and each
Person, if any, who controls IBF within the meaning of the Securities Act or the
Exchange Act (each, an “Indemnified Person”), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable
attorneys’ fees, amounts paid in settlement or expenses, joint or several
(collectively, “Claims”) incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened, whether or
not an indemnified party is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) any untrue
statement or alleged untrue statement of a material fact contained in any

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final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation there under
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, “Violations”). The Company shall reimburse IBF and each
such Indemnified Person promptly as such expenses are incurred and are due and
payable, for any legal fees or disbursements or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (x) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (y) shall not be available to the extent such Claim is based
on a failure of IBF to deliver or to cause to be delivered the prospectus made
available by the Company, if such prospectus was timely made available by the
Company pursuant to Section 3(c); and (z) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by IBF pursuant to Section 9 hereof.

                    (b) In connection with a Registration Statement, IBF agrees
to hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers,
employees, representatives, or agents and each Person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act (each an
“Indemnified Party”), against any Claim or Indemnified Damages to which any of
them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or is based
upon (i) any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or any post-effective amendment thereto, or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; or (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under with the statements therein were
made, not misleading; in each case to the extent, and only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission occurs in reliance upon and in conformity with written information
furnished to the Company by IBF expressly for use in connection with such
Registration Statement (and such information is contained therein); and, subject
to Section 6(d), IBF will reimburse any legal or other expenses reasonably
incurred by them in connection with

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investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of IBF, which consent shall not be unreasonably withheld; provided,
further, however, that IBF shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
IBF as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by IBF pursuant to
Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the prospectus was corrected
and such new prospectus was delivered to IBF prior to IBF’s use of the
prospectus to which the Claim relates.

                    (c) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section
6, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one (1) counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following

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indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

                    (d) The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.

                    (e) The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

          7. CONTRIBUTION.

          To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

          8. REPORTS UNDER THE EXHANGE ACT.

          With a view to making available to IBF the benefits of Rule 144
promulgated under the Securities Act or any similar rule or regulation of the
SEC that may at any time permit IBF to sell securities of the Company to the
public without registration (“Rule 144”) the Company agrees to:

                    (a) make and keep public information available, as those
terms are understood and defined in Rule 144;

                    (b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act so long as the Company remains subject to such requirements and the
filing of such reports and other documents as are required by the applicable
provisions of Rule 144; and

                    (c) furnish to IBF so long as IBF owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with

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the reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit IBF to sell such securities
pursuant to Rule 144 without registration.

          9. AMENDMENT OF REGISTRATION RIGHTS.

          Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and IBF. Any amendment or waiver effected in accordance with this Section 9
shall be binding upon IBF and the Company. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement.

          10. MISCELLANEOUS.

                    (a) A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two (2) or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

                    (b) Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) business day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

 

 

 

If to the Company, to:

 

Sunset Brands, Inc.

 

 

10990 Wilshire Blvd – Suite 1220

 

 

Los Angeles, CA 90024

 

 

Attention:     Todd Sanders

 

 

Telephone:   (310) 478-4600

 

 

Facsimile:     (310) 478-4601

 

 

 

With Copy to:

 

Hodgson Russ LLP

 

 

60 East 42nd Street – 37th Floor

 

 

New York, NY 10165

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Attention:      Jeffrey A. Rinde, Esq.

 

 

Telephone:    (212) 661-3535

 

 

Facsimile:      (212) 972-1677

 

 

 

If to IBF, to:

 

IBF Fund Liquidating LLC

 

 

c/o Kaye Scholer LLP

 

 

425 Park Avenue

 

 

New York, New York 10022

 

 

Attention:   Arthur Steinberg, Esq. and Emanuel S. Cherney, Esq.

 

 

Facsimile:   (212) 836-8689

 

 

 

With a copy to:

 

Kaye Scholer LLP

 

 

425 Park Avenue

 

 

New York, New York 10022

 

 

Attention:   Emanuel S. Cherney, Esq.

 

 

Facsimile:   (212) 836-8689

Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.

                    (c) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.

                    (d) The laws of the State of New York shall govern all
issues concerning the relative rights of the Company and IBF as its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the Superior Courts of the State of
New York, sitting in New York County, New York and federal courts for the
District of New York sitting in New York, New York, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such

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suit, action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

                    (e) This Agreement and related documents including the
Convertible Debenture and the Warrant constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement and related documents
including the Convertible Debenture and the Warrant supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.

                    (f) This Agreement shall inure to the benefit of and be
binding upon the permitted successors and assigns of each of the parties hereto.

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

                    (h) This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.

                    (i) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent and no rules of strict construction
will be applied against any party.

                    (j) This Agreement is intended for the benefit of the
parties hereto and

--------------------------------------------------------------------------------

their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

          IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

 

 

 

 

COMPANY:

 

SUNSET BRANDS, INC.

 

 

 

 

By: /s/ Todd Sanders

 

 

--------------------------------------------------------------------------------

 

Name: Todd Sanders

 

Title: President & CEO

 

 

 

 

IBF FUND LIQUIDATING LLC

 

 

 

By: /s/ Arthur Steinberg

 

 

--------------------------------------------------------------------------------

 

Name: Arthur Steinberg

 

Title: Manager

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EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

Attention:

          Re:      SUNSET BRANDS, INC.

Ladies and Gentlemen:

          We are counsel to Sunset Brands, Inc., a Nevada corporation (the
“Company”), and have represented the Company in connection with that certain
Registration Rights Agreement (the “Registration Rights Agreement”), dated as of
November __, 2005, by and between the Company and IBF Fund Liquidating LLC
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the “Securities Act”). In connection
with the Company’s obligations under the Registration Rights Agreement, on
____________ ____, the Company filed a Registration Statement on Form ________
(File No. 333-_____________) (the “Registration Statement”) with the Securities
and Exchange SEC (the “SEC”) relating to the Registrable Securities which names
IBF (or its successors or assigns) as a selling stockholder there under.

          In connection with the foregoing, we advise you that a member of the
SEC’s staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the Securities Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.

 

 

 

 

Very truly yours,

 

 

 

 

[Law Firm]

 

 

 

 

By:

 

 

 

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