MASTER
SUBORDINATION AND INTERCREDITOR AGREEMENT

This
MASTER SUBORDINATION AND INTERCREDITOR
AGREEMENT (this Agreement),
dated as of November 10, 2005, is made by and among IBF FUND LIQUIDATING LLC, a Delaware limited liability company
as the holder of the Seller Notes, as defined below (Seller), IBF
FUND LIQUIDATING LLC, a Delaware limited liability company, as the
holder of the Convertible Debentures, as defined below (Debenture Holder) (collectively, Seller
and Debenture Holder are referred to individually and collectively as the Subordinated Creditor), and
CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company (the Senior Lender),
and acknowledged by SUNSET BRANDS, INC.,
a Nevada corporation (Guarantor),
its wholly-owned subsidiary and surviving corporation of the Merger, defined
below, U.S. MILLS, INC., a
Delaware corporation and successor in interest by merger to USM Acquisition
Sub, Inc. (Borrower) (Guarantor
and Borrower sometimes hereinafter are referred to individually as an Obligor and collectively as the
Obligors).

RECITALS

A.The Obligors and Senior Lender have entered into a
Revolving Credit, Term Loan and Security Agreement of even date herewith (such
Revolving Credit, Term Loan and Security Agreement, as the same hereafter may
be amended, modified, supplemented or restated from time to time, hereinafter
is referred to as the Senior Loan Agreement),
pursuant and subject to the terms and conditions of which the Senior Lender
thereunder has agreed to make loans and other financial accommodations to
Borrower. Capitalized terms used but not defined herein shall have the meanings
set forth in the Senior Loan Agreement.

B.Pursuant to the Amended and Restated Acquisition
Agreement and Plan of Merger, dated as of the date hereof (the Merger Agreement), among Seller, Borrower,
Guarantor and its wholly-owned subsidiary USM Acquisition Sub, Inc. (Merger Sub), Merger Sub will be merged
with and into Borrower and Borrower will continue as the surviving corporation
as a wholly-owned subsidiary of Sunset (the Merger).

C.Pursuant to the Merger Agreement, Obligors will be
indebted to Seller, and such indebtedness is to be evidenced by (a) a
Subordinated Note of even date herewith in the original principal amount of
$5,000,000 made by Obligors in favor of Seller (Seller Note No. 1) and (b) a Subordinated Note of even date
herewith in the original principal amount of $1,000,000 made by Obligors in
favor of Seller (Seller Note No. 2)
(collectively, the Seller Notes).
To secure the obligations of Obligors to Seller under the terms of the Seller
Notes, the Obligors have granted to Seller a security interest in all of their
assets.

D.Upon the closing of the Merger, Guarantor issued to
Seller shares of Guarantors Series B Preferred Stock (the Series B Preferred Stock) and related
warrants.

E.The proceeds of Loans under the Senior Loan Agreement
will be used, in part, by Obligors to pay the balance of the purchase price payable
pursuant to the Merger Agreement.

F.Pursuant to the terms of the Merger Agreement,
Guarantor has issued to the Debenture Holder secured convertible debentures in
the aggregate amount of $5,000,000 of (together with any reissuances, substitutions
or replacements thereof, the Convertible

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Debentures) which
are convertible into shares of the common stock of Guarantor. To secure
Guarantors obligations to the Debenture Holder, the Convertible Debentures and
related documents, the Obligors have granted to Debenture Holder a security
interest in the all of their assets.

G.One of the conditions precedent to Senior Lenders
obligations under the Senior Loan Agreement is that this Agreement shall have
been executed and delivered by the all of the parties hereto.

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| | NOW THEREFORE, the parties hereto hereby
  agree as follows:                                                                                                                           
| |                                                                                                                                                                                        
| | 1. Recitals and Definitions.                                                                                                                                                           
| |                                                                                                                                                                                        
| | 1.1.
        Recitals. The Recitals set forth above are acknowledged
        by the Subordinated Creditor to be true and correct and are incorporated
        herein by this reference.
| |                                                                                                                                                                                        
| | 1.2.
        Definitions. As used herein, the following terms shall have
        the following meanings:                                                                               
| |                                                                                                                                                                                        
| |                                                                                                                                                                                         | Bankruptcy
  Code shall mean Chapter 11 of Title 11 of the United States Code, as
  amended from time to time, any successor statute, and all rules and
  regulations promulgated thereunder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                         | Blockage
  Period shall mean the period (i) commencing on the date Senior Lender
  notifies Subordinated Creditor that a Senior Default has occurred and (ii)
  ending on the date which is the earlier to occur of (A) the date Senior
  Lender elects to terminate such period by notice to Subordinated Creditor,
  (B) the date the Senior Lender waives such Senior Default or such Senior
  Default is cured, (C) the date all of the Senior Indebtedness is paid
  indefeasibly in full, in cash, and the Commitments have been terminated, and
  (D) if, and only if, the Senior Default is a Senior Covenant Default, the
  date which is 270 days after the commencement of the Blockage Period. If the
  Senior Default that commences a Blockage Period is a Senior Payment Default,
  then the Blockage Period shall end on the earliest to occur of the
  circumstances set forth in clauses (A) through (C).
| |                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                         | Closing
  Date shall mean the date of this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                         | Commitments
  all commitments of Senior Lender under the Senior Loan Agreement to lend
  money to or for the benefit of Borrower.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                         | Guaranty
  shall mean the Guaranty, as such term is defined in the Senior Loan
  Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                         | Lien
  shall mean any mortgage, deed of trust, pledge, assignment, lien, charge,
  encumbrance or security interest of any kind, including without limitation,
  those created or arising from the Subordinated Debt Documents, or the
  interest of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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| |  | a vendor or
  lessor under any conditional sale agreement, capitalized lease or other title
  retention agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Loan
  Documents shall mean the Loan Documents, as such term is defined in
  the Senior Loan Agreement (including, without limitation, the Guaranty).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Person
  shall mean any individual, firm, corporation, limited liability company,
  business enterprise, trust, association, joint venture, partnership,
  government, governmental agency or other entity, whether acting in an
  individual, fiduciary or other capacity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Proceeding
  shall mean any insolvency, bankruptcy, receivership, custodianship,
  liquidation, reorganization, assignment for the benefit of creditors or other
  proceeding for the liquidation, dissolution or other winding up of Obligors
  (or either of them) or their properties (including, without limitation, any
  such proceeding under the Bankruptcy Code).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Senior
  Collection Action shall mean any judicial proceeding or other action
  initiated by Senior Lender against the Obligors (or either of them) to
  collect the Senior Indebtedness, to foreclose the Senior Liens or otherwise
  to enforce the rights of Senior Lender under the Senior Loan Agreement and
  the other Senior Debt Documents or applicable law with respect to the Senior
  Indebtedness.                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Senior
  Covenant Default shall mean any Default or Event of Default under the
  Senior Debt Documents or any other occurrence permitting Senior Lender to
  accelerate the payment of all or any portion of the Senior Indebtedness
  (other than a Senior Payment Default).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Senior
  Debt Documents shall mean the Senior Loan Agreement and the other Loan
  Documents, all as the same may be amended, restated, supplemented or
  otherwise modified from time to time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Senior
  Default shall mean any Senior Covenant Default or any Senior Payment
  Default.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Senior
  Indebtedness shall mean all obligations, liabilities and indebtedness of
  every nature of each Obligor and each other Person from time to time owed to
  Senior Lender under the Senior Debt Documents, including interest, principal
  and all fees, costs and expenses now and from time to time hereafter owing,
  due or payable, whether before or after the commencement of a Proceeding and
  whether or not authorized under the Bankruptcy Code to collect such interest
  from either Obligor (including any interest accruing at a default or post
  judgment rate), together with any amendments, modifications, renewals or
  extensions thereof to the extent not prohibited by the terms of this
  Agreement and any interest accruing thereon after the commencement of a
  Proceeding, whether or not allowed in such Proceeding.

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Senior
  Liens shall mean all Liens now or hereafter granted to Senior Lender to
  secure the Senior Indebtedness.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Senior
  Payment Default shall mean any failure by either Obligor to make any
  required payment of interest or principal, or any material fee or other
  monetary payment, Lender the Senior Debt Documents, including, without
  limitation, any default in payment of Senior Debt after acceleration thereof
  and/or the filing of a Proceeding, or any failure to pay the amounts
  described in this definition regardless of any requirement of notice or lapse
  of time or both before such failure to pay becomes an Event of Default under
  the Senior Debt Documents.                                                                                                                                                                                                                                                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Subordinated Collection Action shall mean (i) any acceleration of
  the Subordinated Indebtedness, (ii) to file or initiate, or to join with
  other Persons in filing or initiating, a Proceeding against either Obligor,
  (iii) any judicial proceeding or other action initiated or taken by
  Subordinated Creditor, or by Subordinated Creditor in concert with other
  Persons, against either Obligor to collect the Subordinated Indebtedness or
  otherwise to enforce the rights of Subordinated Creditor under the
  Subordinated Debt Documents or applicable law with respect to the
  Subordinated Indebtedness or (iv) any action (judicial or non-judicial) to
  exercise rights and remedies against any assets, properties, or other
  interests of either Obligor, including, without limitation, actions to
  foreclose, sell or dispose collateral, or enforce Liens, pursuant to the
  Uniform Commercial Code.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Subordinated Debt Documents shall mean the Subordinated Debenture
  Holder Debt Documents and the Subordinated Seller Debt Documents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Subordinated
  Debenture Holder Debt Documents shall mean the Convertible Debentures
  and all related documents, including all other documents, instruments and
  agreements executed and delivered by either Obligor, Debenture Holder or any
  other Person evidencing, governing the terms of repayment of or otherwise
  pertaining to Subordinated Debenture Holder Indebtedness, all as the same may
  be amended, restated, supplemented or otherwise modified from time to time.                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Subordinated
  Seller Debt Documents shall mean the Seller Notes and all other documents,
  instruments and agreements executed and delivered by any Obligor, Seller or
  any other Person evidencing, governing the terms of repayment of or otherwise
  pertaining to Subordinated Seller Indebtedness, all as the same may be
  amended, restated, supplemented or otherwise modified from time to time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Subordinated
  Debenture Holder Indebtedness shall mean all obligations, liabilities
  and indebtedness of every nature of each Obligor and each other Person from
  lime to time owed to Debenture Holder in respect of the Subordinated
  Debenture Holder Debt Documents, together with all accrued and unpaid
  interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | thereon and
  all fees, costs and expenses now and from time to time hereafter owing, due
  or payable in connection with any of the foregoing, whether before or after
  the commencement of a Proceeding or a Subordinated Collection Action.                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Subordinated
  Indebtedness shall mean all obligations, liabilities and indebtedness of
  every nature of each Obligor and each other Person from time to time owed to
  Subordinated Creditor in respect of the Subordinated Debenture Holder
  Indebtedness or the Subordinated Seller Indebtedness, together, in each case,
  with all accrued and unpaid interest thereon and all fees, costs and expenses
  now and from time to time hereafter owing, due or payable in connection with
  any of the foregoing, whether before or after the commencement of a
  Proceeding or a Subordinated Collection Action.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Subordinated
  Seller Indebtedness shall mean all obligations, liabilities and
  indebtedness of every nature of each Obligor and each other Person from time
  to time owed to Seller in respect of the Subordinated Seller Debt Documents,
  together with all accrued and unpaid interest thereon and all fees, costs and
  expenses now and from time to time hereafter owing, due or payable in
  connection with any of the foregoing, whether before or after the
  commencement of a Proceeding or a Subordinated Collection Action.                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Subordinated
  Securities shall mean any securities of any Obligor issued in connection
  with a Proceeding, the payment of which is junior or otherwise subordinated,
  at least to the extent provided in this Agreement, to the payment of all
  Senior Indebtedness and to the payment of all securities issued in exchange
  therefor to the holders of the Senior Indebtedness.                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 2. Subordination of the Subordinated Indebtedness to the
        Senior Indebtedness.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | 2.1. Payment
  Subordination. Upon the terms and conditions
  contained in this Agreement the payment of any and all of the Subordinated
  Indebtedness hereby expressly is subordinated to the prior indefeasible
  payment in full in cash of the Senior Indebtedness and the termination of the
  Commitments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 2.2. Lien
  Subordination.Subordinated Creditor hereby
  unconditionally agrees that: (i) all Liens of the Subordinated Creditor in
  any property of either Obligor shall be and hereby are subordinated to the
  Senior Liens, and (ii) other than as set forth in Section 2.7(b), the
  Subordinated Creditor shall have no right to possession of any property of
  any Obligor or to take any Subordinated Collection Action, unless and until
  all the Senior Indebtedness shall have been fully paid and satisfied and the
  Commitments have been terminated. Notwithstanding any rights or remedies
  available to Subordinated Creditor under applicable law (including, without
  limitation, under the Bankruptcy Code) or under any Subordinated Debt
  Document, Subordinated Creditor shall not, without the prior written consent
  of Senior Lender, be permitted to take any action to foreclose, repossess,
  marshal, control or exercise any remedies with respect to any property of the
  either Obligor or take any other action which would interfere with or impair
  the Senior Liens or the rights of Senior Lender against the either Obligors
  property, until the

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| | payment in
  full of the Senior Indebtedness and the termination of the Commitments.
  Notwithstanding the date, manner or order of grant, attachment or perfection
  of any Liens or any Senior Liens, and notwithstanding any provision of the
  UCC or any other applicable law or the provisions of any Subordinated Debt
  Document or any other Senior Debt Document or any other circumstance
  whatsoever, the Subordinated Creditor, hereby agrees that (a) any Senior
  Liens now or hereafter held by or for the benefit of Senior Lender shall be
  senior in right, priority, operation, effect and all other respects to any
  and all Subordinated Creditor Liens and (b) any Subordinated Creditor Lien
  now or hereafter held by or for the benefit of any Subordinated Creditor
  shall be junior and subordinate in right, priority, operation, effect and all
  other respects to any and all Senior Liens. The Senior Liens shall be and
  remain senior in right, priority, operation, effect and all other respects to
  any Subordinated Creditor Liens for all purposes, whether or not any Senior
  Liens are subordinated in any respect to any other Lien securing any other
  obligation of either Obligor, any other grantor or any other Person and
  regardless of whether the Lien purported to be granted is found to be
  improperly granted, improperly perfected, a fraudulent conveyance or legally
  or otherwise deficient in any manner. Each of the Senior Lender, and the
  Subordinated Creditor, agrees that it will not, and hereby waives any right
  to, directly or indirectly, contest or support any other Person in
  contesting, in any proceeding (including any Proceeding), the priority,
  validity or enforceability of any Senior Lien, or the validity or
  enforceability of the priorities, rights or obligations established by this
  Agreement; provided that
  nothing in this Agreement shall be construed to prevent or impair the rights
  of the Senior Lender to enforce this Agreement. Each Obligor, by its execution
  of this Agreement, hereby acknowledges and agrees to the provisions of this
  paragraph, notwithstanding anything to the contrary in any document to which
  such Obligor is a party.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 2.3. Payment
  Restrictions. Notwithstanding any provision of
  the Subordinated Debt Documents to the contrary and in addition to any other
  limitations set forth herein or therein, no payment of any principal,
  interest, fees, costs, expenses or any other amount due with respect to the
  Subordinated Indebtedness shall be made, and no Subordinated Creditor shall
  exercise any right of set-off or recoupment with respect to any Subordinated
  Indebtedness, until all of the Senior Indebtedness is indefeasibly paid in
  full in cash and the Commitments have been terminated, except that:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (A)
  after the first anniversary of the Closing Date, Obligors may make and Seller
  may receive regularly scheduled current payments of interest on the
  outstanding principal balance of Seller Note No. 1 at a rate per annum not to
  exceed that rate set forth in Seller Note No. 1 as in effect on the date
  hereof, but only if (1) no Default or Event of Default has occurred and is
  continuing under the Senior Debt Documents; and (2) the Obligors payment of
  such interest will not result in, cause, or create a Default or Event of
  Default under the Senior Debt Documents. Interest on Seller Note No. 1 shall
  accrue at the rate of no higher than 18% per annum on the principal
  outstanding from time to time on such note. All interest on Seller Note No. 1
  during the first year following the Closing Date shall accrue, but shall not
  be paid by the Obligors to Seller until all of the Senior Indebtedness is
  indefeasibly paid in full in cash and the Commitments have been terminated.
  After the first anniversary of the Closing Date, 50% of the interest on
  Seller Note No. 1 shall be payable by the Obligors (if permitted by the terms
  and conditions of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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| | this
  Agreement) and the remaining 50% of the interest shall accrue and shall not
  be payable until the later of (y) the maturity of Seller Note No. 1 or (z)
  such date as when all of the Senior Indebtedness is indefeasibly paid in full
  in cash and the Commitments have been terminated;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (B)
  after the first anniversary of the Closing Date, Obligors may make and Seller
  may receive prepayments of the principal of Seller Note No. 1, but only if
  (1) no Default or Event of Default has occurred and is continuing under the
  Senior Debt Documents; (2) the Obligors prepayments of the principal of
  Seller Note No. 1 will not result in, cause, or create a Default or Event of
  Default under the Senior Debt Documents; (3) the source of the prepayment is
  entirely from a new capital infusion into the Obligors on terms and
  conditions satisfactory to the Senior Lender which shall include, without
  limitation, a provision that the provider of new capital infusion will agree
  to subordinate its debt to Senior Lender on terms no less favorable than
  those contained herein; and (4) Obligors have provided 30 calendar days prior
  written notice to the Senior Lender of all of the foregoing prior to making
  any such prepayment; and
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (C)
  Obligors may make and Seller may receive regularly scheduled current payments
  of interest on the outstanding principal balance of Seller Note No. 2, but
  only if (1) no Default or Event of Default has occurred and is continuing
  under the Senior Debt Documents; and (2) the Obligors payment of such
  interest will not result in, cause, or create a Default or Event of Default
  under the Senior Debt Documents. Interest on Seller Note No. 2 shall accrue
  at a rate no higher than the interest rate charged on the Term Loan.                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (D)
  at any time, Obligors may make and the Debenture Holder may receive
  prepayments of the principal of the Convertible Debentures, but only if
  (1) no Default or Event of Default has occurred and is continuing under
  the Senior Debt Documents; (2) such payment will not result in, cause, or
  create a Default or Event of Default under the Senior Debt Documents;
  (3) the source of such payment is entirely from a new capital infusion
  into the Obligors on terms and conditions satisfactory to the Senior Lender
  which shall include, without limitation, a provision that the provider of new
  capital infusion will agree to subordinate its debt and any Liens in any
  property of either Obligor to Senior Lender on terms no less favorable than
  those contained herein, and (4) Obligors have provided 30 calendar days prior
  written notice to the Senior Lender of all of the foregoing prior to making
  any such prepayment.                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 2.4. Proceedings.
  In the event of any Proceeding, (a) all Senior Indebtedness first shall be
  indefeasibly paid in full in cash and the Commitments shall have been
  terminated before any payment of or with respect to the Subordinated
  Indebtedness shall be made, other than any payment consisting of Subordinated
  Securities; (b) any payment which, but for the terms hereof, otherwise would
  be payable or deliverable in respect of the Subordinated Indebtedness (other
  than Subordinated Securities) shall be paid or delivered directly to Senior
  Lender (to be held and/or applied by Senior Lender in accordance with the
  terms of the Senior Loan Agreement) until all Senior Indebtedness is
  indefeasibly paid in full in cash and the Commitments have been terminated,
  and Subordinated Creditor irrevocably authorizes, empowers and directs all
  receivers,                                                                                        

7

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | trustees,
  liquidators, custodians, conservators and others having authority in the
  premises to effect all such payments and deliveries and further irrevocably
  authorizes and empowers Senior Lender to demand, sue for, collect and receive
  every such payment or distribution; (c) Subordinated Creditor agrees to
  execute and deliver to Senior Lender or its representative all such further
  instruments requested by Senior Lender confirming the authorization referred
  to in the foregoing clause (b); (d) Subordinated Creditor agrees (i) not
  to waive, discharge, release or compromise any claim of Subordinated Creditor
  in respect of the Subordinated Indebtedness without the prior written consent
  of Senior Lender, which consent will not be unreasonably withheld, and (ii)
  to take all actions as Senior Lender reasonably may request in order to
  enable Senior Lender to enforce all claims upon or in respect of the
  Subordinated Indebtedness; (e) Subordinated Creditor expressly consents to
  the granting by the Obligors to Senior Lender of first priority Liens on the
  Obligors property and assets in connection with any financing provided by
  Senior Lender to the Obligors after the commencement of such Proceeding; (f)
  Subordinated Creditor shall not propose or support any plan, financing, or
  order which would have the effect of canceling, modifying or amending, to the
  detriment of the Senior Lender, the relative Lien priorities set forth in
  this Agreement; and (g) Subordinated Creditor agrees to execute, verify,
  deliver and file any proofs of claim in respect of the Subordinated
  Indebtedness requested by Senior Lender in connection with any such
  Proceeding and hereby irrevocably authorizes, empowers and appoints Senior
  Lender its agent and attorney-in-fact to execute, verify, deliver and file
  such proofs of claim upon the failure of Subordinated Creditor to do so at
  least ten Business Days prior to the bar date for filing such proofs of
  claim. The provisions of this Agreement shall continue in full force and
  effect notwithstanding the occurrence of a Proceeding against either Obligor
  or any of its property. To the extent of the Subordinated Creditors subordinated
  lien in any property of either Obligor, and to the extent the Subordinated
  Creditor has or acquires any rights under Section 363, Section 364 or Section
  1126 of the Bankruptcy Code with respect to such property of such Obligor,
  Subordinated Creditor hereby agrees not to assert such rights without the
  prior written consent of Senior Lender. In the event and during the
  continuation of any Proceeding, Subordinated Creditor shall not object to or
  oppose any cash collateral order or plan in each case approved by Senior
  Lender.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 2.5. Incorrect
  Payments. If before all Senior Indebtedness is
  indefeasibly paid in full in cash and all Commitments have been terminated
  (a) any payment not permitted under Section 2.3 hereof is received by a
  Subordinated Creditor on account of the Subordinated Indebtedness (other than
  Subordinated Securities), or (b) any cash payment not permitted under Section
  7.5(i) of the Senior Loan Agreement is received by a Subordinated Creditor,
  any such payment shall not be commingled with any asset of Subordinated
  Creditor, shall be held in trust by such Subordinated Creditor for the
  benefit of Senior Lender and shall be paid over to Senior Lender, or its
  designated representative, for application (in accordance with the Senior Loan
  Agreement) to the payment of the Senior Indebtedness then remaining unpaid,
  until all of the Senior Indebtedness is indefeasibly paid in full in cash and
  all Commitments of Senior Lender have been terminated; provided, such
  Subordinated Creditor shall not be responsible for making any such payment to
  Senior Lender unless Senior Lender has requested such payment from such
  Subordinated Creditor within 90 days of Senior Lender having actual knowledge
  that a payment was made to such Subordinated Creditor in violation of this
  Section 2.5;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

8

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | provided,
  further that notwithstanding the foregoing, such 90 day limitation shall not
  apply to any payments received by Subordinated Creditor that such
  Subordinated Creditor has actual knowledge that it received in violation of
  this Section 2.5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 2.6. Sale,
  Transfer. No Subordinated Creditor shall sell,
  assign, dispose of or otherwise transfer (each, a Transfer) all or any portion of the Subordinated
  Indebtedness owing to such Subordinated Creditor unless, prior to the
  consummation of any such action, (a) such Subordinated Creditor shall
  give Senior Lender at least five (5) Business Days prior written notice of
  any such Transfer, and (b) the transferee thereof executes and delivers to
  Senior Lender a written acknowledgement and joinder, in form and detail
  reasonably satisfactory to Senior Lender, that the transferee is a party to
  this Agreement as a Subordinated Creditor and shall be bound by all of the
  terms and conditions of this Agreement. Notwithstanding the failure to
  execute or deliver any such agreement, the subordination effected hereby
  shall survive any sale, assignment, disposition or other transfer of all or
  any portion of the Subordinated Indebtedness, and the terms of this Agreement
  shall be binding upon the successors and assigns of any Subordinated
  Creditor, as provided in Section 12 below.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 2.7. Restriction
  on Action by Subordinated Creditor/Right to Purchase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (a)
  Until the Senior Indebtedness is indefeasibly paid in full in cash and the
  Commitments have been terminated and notwithstanding anything contained in
  the Subordinated Debt Documents or the Senior Loan Agreement and the other
  Senior Debt Documents to the contrary, Subordinated Creditor shall not agree
  to any amendment or modification of, or supplement to, the Subordinated Debt
  Documents as in effect on the date hereof if such amendment, modification or
  supplement would be adverse to Senior Lender. Subordinated Creditor agrees to
  provide Senior Lender with a copy of any proposed amendment, modification or
  supplement to the Subordinated Debt Documents at least three (3) Business
  Days prior to their execution.                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (b)
  Until the Senior Indebtedness is indefeasibly paid in full in cash and the
  Commitments have been terminated no Subordinated Creditor shall take any
  Subordinated Collection Action, except that Subordinated Creditor may declare
  the entire Subordinated Indebtedness to be due and payable immediately if
  either (i) such acceleration of the Subordinated Indebtedness is allowed
  under terms of the Subordinated Debt Documents, (ii) the Subordinated
  Creditor has given the Senior Lender at least thirty days notice of its
  intent to accelerate the Subordinated Indebtedness, and (iii) there is no Blockage
  Period in effect, or the Senior Indebtedness has been accelerated. Following
  acceleration of the Subordinated Indebtedness, the Subordinated Creditor may
  take no further Subordinated Collection Action until the Senior Indebtedness
  is indefeasibly paid in full in cash and the Commitments have been
  terminated.                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (c)
  Following acceleration of the Senior Indebtedness, nothing contained herein
  is intended, or shall be deemed, to restrict or modify the ability of the
  Subordinated Creditor from purchasing the Senior Indebtedness from the Senior
  Lender at a cash purchase price equal to the amount of all Obligations owing
  to the Senior Lender under the Senior Debt Documents at the time of such
  acceleration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

9

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.8. Financing
  Restriction on Senior Lender. Senior Lender
  agrees that the aggregate outstanding amount of Loans made by Senior Lender
  to Obligors shall not exceed $10,000,000 at any time. Except as set forth in
  the preceding sentence, nothing contained in this Agreement shall be deemed
  to restrict or limit the right of Senior Lender to extend additional
  financing to any Obligor or any of their respective subsidiaries or
  affiliates, to increase the Senior Indebtedness or the rate of interest or
  fees payable thereon or to agree to any other amendment or modification of,
  or supplement to, the Senior Loan Agreement or the other Senior Debt
  Documents or to take any Senior Collection Action, whether prior or
  subsequent to the initiation of any Proceeding. Subordinated Creditor hereby consents
  to and waives any right of notice of any such amendment, modification or
  supplement and agrees that the subordination effective hereby shall continue
  in full force and effect notwithstanding any such amendment, modification or
  supplement.                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 2.9. Subrogation.
  Subject to the payment in full in cash of all Senior Indebtedness and the
  termination of the Commitments, Subordinated Creditor shall be subrogated to
  the rights of Senior Lender to receive payments or distributions of assets of
  the Obligors applicable to the Senior Indebtedness until the principal of,
  and interest and premium, if any, on, and all other amounts payable in
  respect of the Subordinated Indebtedness shall be paid in full. For purposes
  of such subrogation, no payment or distribution to Senior Lender under the
  provisions hereof to which Subordinated Creditor would have been entitled but
  for the provisions of this Agreement, and no payment pursuant to the
  provisions of this Agreement to Senior Lender by Subordinated Creditor, as
  between either Obligor and its creditors other than Senior Lender, shall be
  deemed to be a payment by either Obligor to or on account of the Senior
  Indebtedness. Notwithstanding the foregoing provisions of this Section 2.9,
  the holders of the Subordinated Indebtedness shall have no claim against
  Senior Lender for any impairment of any subrogation rights herein granted to
  the holders of the Subordinated Indebtedness.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 2.10. Legend.
  Until the Senior Indebtedness is indefeasibly paid in full in cash and the
  Commitments have been terminated, the Subordinated Debt Documents at all
  times shall contain in a conspicuous manner the following legend:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | The obligations evidenced hereby are subordinate in the
        manner and to the extent set forth in that certain Master Subordination
        and Intercreditor Agreement (the Subordination Agreement)
        dated as of November 10, 2005, among Sunset Brands, Inc., (Sunset),
        U.S. Mills, Inc. (Mills), IBF Fund Liquidating LLC, as Seller,
        IBF Fund Liquidating LLC, as Debenture Holder and CapitalSource Finance
        LLC, (the Senior Lender), to the obligations (including interest)
        owed by Sunset and Mills to Senior Lender from time to time. Each holder
        hereof, by its acceptance hereof, shall be bound by the provisions of
        the Subordination Agreement.

3.
Continued Effectiveness of this Agreement. The
terms of this Agreement, the subordination effected hereby, and the rights and
the obligations of Subordinated Creditor and Senior Lender arising hereunder,
shall not be affected, modified or impaired in any manner or to any extent by
(a) any amendment or modification of or supplement to the Senior Loan

10

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Agreement, the
other Senior Debt Documents or any of the Subordinated Debt Documents, and
Subordinated Creditor hereby irrevocably consents to, and waives any claim it
may have against Senior Lender or either Obligor as a result of, any amendment,
modification or supplement of the Senior Loan Agreement or the other Senior
Debt Documents; (b) the validity or enforceability of any of such documents; or
(c) any exercise or non-exercise of any right, power or remedy under or in
respect of the Senior Indebtedness or the Subordinated Indebtedness or any of
the instruments or documents referred to in clause (a) above. The Senior
Indebtedness shall continue to be treated as Senior Indebtedness and the
provisions of this Agreement shall continue to govern the relative rights and
priorities of the holders of Senior Indebtedness and Subordinated Creditor even
if all or part of the Senior Liens are subordinated, set aside, avoided or
disallowed in connection with any Proceeding (or if all or part of the Senior
Indebtedness is subordinated, set aside, avoided or disallowed in connection
with any Proceeding as a result of the fraudulent conveyance or fraudulent
transfer provisions under the Bankruptcy Code or under any state fraudulent
conveyance or fraudulent transfer statute or if any interest accruing on the
Senior Indebtedness following the commencement of such Proceeding is otherwise
disallowed) and this Agreement shall be reinstated if at any time any payment
of any of the Senior Indebtedness is rescinded or must otherwise be returned by
any holder of Senior Indebtedness or any representative of such holder.

| |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4. Representations and Warranties.
| |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                    | 4.1. Seller hereby represents and warrants to
  Senior Lender as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                    | A Binding
  Agreements. This Agreement, when executed and
  delivered, will constitute the valid and legally binding obligation of Seller
  enforceable against it in accordance with its terms, except as such
  enforceability may be limited by applicable bankruptcy, insolvency,
  reorganization, moratorium or similar laws affecting the enforcement of
  creditors rights generally and by equitable principles.                                                                                                                                                                                                                                                         
| |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                    | B No
  Conflicts. Seller is the current owner and
  holder of the Seller Notes. No provisions of any mortgage, indenture,
  contract, agreement, statute, rule, regulation, judgment, decree or order
  binding on Seller or affecting the property of Seller conflicts with, or
  requires any consent which has not already been obtained under, or would in
  any way prevent the execution, delivery or performance of the terms of this
  Agreement. No pending or, to the best of Sellers knowledge, threatened, litigation,
  arbitration or other proceedings if adversely determined would in any way
  prevent the performance by Seller of the terms of this Agreement.
| |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                    | C Copy
  of Subordinated Seller Debt Documents. There is
  attached to this Agreement a true, correct and complete copy of the
  Subordinated Seller Debt Documents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                    | 4.2. Debenture Holder hereby represents and
  warrants to Senior Lender as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

11

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A Binding
  Agreements. This Agreement, when executed and
  delivered, will constitute the valid and legally binding obligation of such
  Debenture Holder enforceable against it in accordance with its terms, except
  as such enforceability may be limited by applicable bankruptcy, insolvency,
  reorganization, moratorium or similar laws affecting the enforcement of
  creditors rights generally and by equitable principles.                                                                                                                                                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | B No
  Conflicts. The Debenture Holder are the current
  owner and holder of the Subordinated Debenture Holder Debt Documents. No
  provisions of any mortgage, indenture, contract, agreement, statute, rule,
  regulation, judgment, decree or order binding on the Debenture Holder or
  affecting the property of the Debenture Holder conflicts with, or requires
  any consent which has not already been obtained under, or would in any way
  prevent the execution, delivery or performance of the terms of this
  Agreement. No pending or, to the best knowledge of the Debenture Holder,
  threatened, litigation, arbitration or other proceedings if adversely
  determined would in any way prevent the performance by the Debenture Holder
  of the terms of this Agreement.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | C Copy
  of Subordinated Cornell Debt Documents. There is
  attached to this Agreement a true, correct and complete copy of the
  Subordinated Debenture Holder Debt Documents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

5.
Cumulative Rights, No Waivers. Each and every
right, remedy and power granted to Senior Lender hereunder shall be cumulative
and in addition to any other right, remedy or power specifically granted
herein, in the Senior Loan Agreement and the other Senior Debt Documents or in
the Subordinated Debt Documents or now or hereafter existing in equity, at law,
by virtue of statute or otherwise, and may be exercised by Senior Lender, from
time to time, concurrently or independently and as often and in such order as
Senior Lender may deem expedient. Any failure or delay on the part of Senior
Lender in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect Senior Lenders right thereafter to exercise the same, and
any single or partial exercise of any such right, remedy or power shall not
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power, and no such failure, delay, abandonment or single or
partial exercise of Senior Lenders rights hereunder shall be deemed to
establish a custom or course of dealing or performance among the parties
hereto.

6.
Provisions Define Relative Rights. This
Agreement is intended solely for the purpose of defining the relative rights of
the Senior Lender on the one hand and the Subordinated Creditor on the other,
and no other person shall have any right, benefit or other interest under this
Agreement. Except as expressly set forth in this Agreement, nothing herein
shall (a) impair, as between either Obligor and the Senior Lender and either
Obligor and the Subordinated Creditor, the obligation of such Obligor, which is
absolute and unconditional, to pay the Senior Indebtedness to the Senior
Lender, on the one hand, and the Subordinated Indebtedness to the Subordinated
Creditor, on the other hand, in each case in accordance with their respective
terms; or (b) affect the relative rights of the Senior Lender or the Subordinated
Creditor with respect to any other creditors of either Obligor.

12

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7.
Bailee For Perfection.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (a)
  The Senior Lender agrees to hold any Collateral in the possession or control
  (as such term is defined in the Uniform Commercial Code) of the Senior Lender
  (collectively, the Possessory Collateral)
  as bailee for and on behalf and for the benefit of the Subordinated Creditor
  solely for the purposes of perfecting the security interests granted in such
  Possessory Collateral pursuant to the Subordinated Debt Documents, subject to
  the terms and conditions hereof, it being agreed that the Senior Lender has
  no duties to the Subordinated Creditor in connection with such possession or
  control or such Possessory Collateral.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (b)
  Upon the indefeasible payment in full of the Senior Indebtedness and the
  Commitments have been terminated, the Senior Lender shall deliver the
  remainder of the Possessory Collateral, if any, in its possession, and to the
  extent practicable, transfer control of the remainder of the Possessory
  Collateral, if any, under its control, to the Subordinated Creditor (as their
  interest may appear in the Junior Subordination Agreement dated of even date
  herewith among the Subordinated Creditors and Obligors, except as a court of
  competent jurisdiction may otherwise direct.                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8. Modification.
  Any modification, termination or waiver of any provision of this Agreement,
  or any consent to any departure by Subordinated Creditor therefrom, shall not
  be effective in any event unless the same is in writing and signed by Senior
  Lender and Subordinated Creditor and then such modification, termination,
  waiver or consent shall be effective only in the specific instance and for
  the specific purpose given. Any notice to or demand on Subordinated Creditor
  in any event not specifically required of Senior Lender hereunder shall not
  entitle Subordinated Creditor to any other or further notice or demand in the
  same, similar or other circumstances unless specifically required hereunder.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 9. Additional Documents and Actions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (a)Subordinated Creditor at any time, and
from time to
  time, after the execution and delivery of this Agreement, upon the request of
  Senior Lender and at the expense of Subordinated Creditor, promptly will
  execute and deliver such further documents and do such further acts and
  things as Senior Lender reasonably may request in order to effect fully the
  purposes of this Agreement.                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (b)
  Senior Lender agrees to assign to Seller all rights that Senior Lender has in
  all Landlord Waiver and Consents and warehouseman waivers that Senior Lender
  has obtained in connection with its Senior Loan Agreement on the date that
  the Senior Indebtedness is indefeasibly paid in full in cash and the Commitments
  have been terminated.                                                                                                                                                                                                                                                                                                          

10.
Notices. Any notice or request under this
Agreement shall be in writing and shall be given to any party hereto at such
partys address set forth beneath its signature on the signature page hereto,
or at such other address as such party may hereafter specify in a notice given
in the manner required under this Section 10. Any such notice or request
shall be given only by, and shall be deemed to have been received upon: (a)
registered or certified mail, return

13

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receipt
requested, on the date on which such notice or request is received as indicated
in such return receipt, (b) delivery by a nationally recognized overnight
courier, one (1) Business Day after deposit with such courier, or (c) facsimile
or electronic transmission, in each case upon telephone or further electronic
communication from the recipient acknowledging receipt (whether automatic or
manual from recipient), as applicable.

11.
Severability. In the event that any provision
of this Agreement is deemed to be invalid by reason of the operation of any law
or by reason of the interpretation placed thereon by any court or governmental
authority, the validity, legality and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affected or impaired
thereby, all of which shall remain in full force and effect, and the affected
term or provision shall be modified to the minimum extent permitted by law so
as to achieve most fully the intention of this Agreement.

12.
Successors and Assigns. Subject to the terms of
Section 2.6 hereof, this Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of Senior Lender, the Obligors
and Subordinated Creditor.

13.
Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which taken together shall be one and the same instrument.

14.
Defines Rights of Creditor. The provisions of
this Agreement are solely for the purpose of defining the relative rights of
Subordinated Creditor and Senior Lender and shall not be deemed to create any
rights or priorities in favor of any other Person, including, without
limitation, the Obligors.

15.
Conflict. In the event of any conflict between
any term, covenant or condition of this Agreement and any term, covenant or
condition of any of the Subordinated Debt Documents, the Senior Loan Agreement
or the other Senior Debt Documents, the provisions of this Agreement shall
control and govern. For purposes of this Section 15, to the extent that any
provisions of any of the Subordinated Debt Documents provide rights, remedies
and benefits to Senior Lender that exceed the rights, remedies and benefits
provided to Senior Lender under this Agreement, such provisions of the
applicable Subordinated Debt Documents shall be deemed to supplement (and not
to conflict with) the provisions hereof.

16.
Headings. The paragraph headings used in this
Agreement are for convenience only and shall not affect the interpretation of
any of the provisions hereof.

17.
Termination. This Agreement shall terminate
upon the indefeasible payment in full in cash of the Senior Indebtedness and
the termination of the Commitments.

18.
Default Notices. Subordinated Creditor shall
immediately notify Lender in writing if any event of default occurs under the
Subordinated Debt Documents.

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19.
  No New Security for Subordinated Indebtedness; No Contest of Liens; Specific
  Performance:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)
  Subordinated Creditor agrees that it will not at any time require, take or
  accept any additional collateral security for all or any portion of the
  Subordinated Indebtedness, except for those Liens in existence as of the date
  hereof unless such additional collateral security shall be subject to a valid
  first priority Lien of the Senior Lender. In the event Subordinated Creditor
  takes or accepts any additional collateral security for the Subordinated Indebtedness
  in violation of the terms of this Agreement, Subordinated Creditor hereby
  appoints Senior Lender its agent and attorney-in-fact to execute, file,
  record and deliver any such UCC termination statements, releases or other
  documents necessary to release any such collateral security. Such appointment
  of Senior Lender as Subordinated Creditors agent and attorney in fact is
  coupled with an interest and is irrevocable until the Senior Indebtedness has
  been indefeasibly paid in full in cash and the Commitments have been
  terminated.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (b)
  Subordinated Creditor agrees that it will not at any time contest the
  validity, perfection, priority or enforceability of the Senior Liens. The
  provisions of this Agreement shall apply regardless of any invalidity,
  unenforceability or lack of perfection of the Senior Liens.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (c)
  Senior Lender agrees that nothing contained in this Agreement shall limit the
  Debenture Holders ability to seek injunctive relief or specific performance
  against Sunset for Sunsets failure to convert the Debenture Holders
  Convertible Debentures or exercise the Debenture Holders warrants, in each
  case to common stock of Sunset in breach of the terms of the Convertible
  Debentures or the Warrants issued thereunder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

20.
Governing Law; Jurisdiction; Construction. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Maryland. Any judicial proceeding against Subordinated
Creditor or either Obligor with respect to this Agreement may be brought in any
federal or state court of competent jurisdiction located in Montgomery County
of the state of Maryland. By execution and delivery of this Agreement,
Subordinated Creditor and each Obligor (a) accepts the non-exclusive jurisdiction
of the aforesaid courts and irrevocably agrees to be bound by any judgment
rendered thereby, (b) agrees that service of process upon it may be made
by certified or registered mail, return receipt requested, pursuant to Section
8 hereof, and (c) waives any objection to jurisdiction and venue of any
action instituted hereunder and agrees not to assert any defense based on lack
of jurisdiction, venue, convenience or forum
non conveniens. Nothing shall affect the right of Senior Lender to
serve process in any manner permitted by law or shall limit the right of Senior
Lender to bring proceedings against Subordinated Creditor or either Obligor in
the courts of any other jurisdiction having jurisdiction. Any judicial
proceedings against Senior Lender, involving, directly or indirectly, the Loan
Documents or this Agreement shall be brought only in a federal or state court
located in Montgomery County of the state of Maryland. The Subordinated
Creditor acknowledge that they participated in the negotiation and drafting of
this Agreement and that, accordingly, none of them shall move or petition a
court construing this Agreement to construe it more stringently against one
party than against any other.

15

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21.
Waiver of Right to Jury Trial. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION ARISING HEREUNDER OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THE TRANSACTIONS
CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF
THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.

22.
Senior Loan Agreement; Reliance. Subordinated
Creditor has been advised by counsel in connection with the negotiation and
execution of this Agreement and is not relying upon any oral representations or
statements inconsistent with the terms and provisions hereof. Subordinated
Creditor acknowledges that (i) it has benefited and will benefit from the
execution, delivery and performance by Senior Lender of the Senior Loan
Agreement and the other Loan Documents, (ii) the financing provided under the
Senior Loan Agreement constitutes valuable consideration to it, (iii) this
Agreement is intended to be an inducement to Senior Lender to execute, deliver
and perform the its obligations under the Senior Loan Agreement and the other
Loan Documents and to provide the financing contemplated thereunder and (iv)
Senior Lender is relying on the subordination and other provisions of this
Agreement in entering into and performing the Senior Loan Agreement and the
other Loan Documents and providing the financing contemplated thereunder.

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blank]

16

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IN
WITNESS WHEREOF, the parties hereto have caused this
Master Subordination and Intercreditor Agreement to be executed as of the date
first above written.

| |                                                 |                    | 
| | ----------------------------------------------- | ------------------ | 
| | IBF FUND LIQUIDATING LLC, as Seller            
| |                                                
| | By:                                             | /s/ A.
  Steinberg
| |                                                 |                    | 
| | Name:                                           | Arthur
  Steinberg
| | Title:                                          | Manager           
| |                                                 |                   
| | Notice
  Address:                              
| |                                                
| | IBF Fund
  Liquidating LLC                     
| | c/o Kaye
  Scholer LLP.                        
| | 425 Park
  Avenue                              
| | New York, NY
  10022                           
| | Attention:
  Arthur J. Steinberg, Esq., Manager
| |                                                
| | Telephone:
  (212) 836-8564                    
| | Telecopy:
  (212) 836-6157                     
| |                                                
| | IBF FUND LIQUIDATING LLC, as
  Debenture Holder
| |                                                
| | By:                                             | /s/ A.
  Steinberg
| |                                                 |                    | 
| | Name:                                           | Arthur
  Steinberg
| | Title:                                          | Manager           
| |                                                 |                   
| | Notice
  Address:                              
| |                                                
| | IBF Fund
  Liquidating LLC                     
| | c/o Kaye
  Scholer LLP.                        
| | 425 Park
  Avenue                              
| | New York, NY
  10022                           
| | Attention:
  Arthur J. Steinberg, Esq., Manager
| |                                                
| | Telephone:
  (212) 836-8564                    
| | Telecopy:
  (212) 836-6157                     

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| |                                        |                      | 
| | -------------------------------------- | -------------------- | 
| | CAPITALSOURCE FINANCE LLC             
| |                                       
| | By:                                    | /s/ Stephen M. Klein
| |                                        |                      | 
| | Name:                                  | /s/ Stephen M. Klein
| | Title:                                 | Managing Director   
| |                                        |                     
| | 4445 Willard
  Avenue, 12th Floor     
| | Chevy Chase,
  MD 20815               
| | Attention:
  Business Credit Services,
| | Portfolio Manager                     
| | Telephone:
  (301) 841-2700           
| | Telecopy:
  (301) 841-2313            

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