EXHIBIT 4.5




THIS SECURED DEBENTURE, AND THE SECURITIES INTO WHICH IT IS
CONVERTIBLE (COLLECTIVELY, THE "SECURITIES"), HAVE NOT BEEN REGISTERED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE. THE SECURITIES ARE BEING OFFERED PURSUANT TO A SAFE
HARBOR FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE "RESTRICTED"
AND MAY NOT BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE
ACT, PURSUANT TO REGULATION D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH
OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.

THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE
MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN MASTER SUBORDINATION AND
INTERCREDITOR AGREEMENT (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE
MODIFIED FROM TIME TO TIME, THE "MASTER SUBORDINATION AGREEMENT"), DATED
AS OF NOVEMBER ___, 2005, BY AND AMONG SUNSET BRANDS, INC.,
U.S MILLS, INC., IBF FUND LIQUIDATING LLC,
AS SELLER, IBF FUND LIQUIDATING LLC, AS DEBENTURE
HOLDER,
AND CAPITALSOURCE FINANCE LLC. EACH HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF,
SHALL BE BOUND BY THE PROVISIONS OF THE MASTER SUBORDINATION AGREEMENT.

THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE
MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN JUNIOR SUBORDINATION AND
INTERCREDITOR AGREEMENT (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE
MODIFIED FROM TIME TO TIME, THE "JUNIOR SUBORDINATION AGREEMENT"), DATED
AS OF NOVEMBER ___, 2005, BY AND AMONG SUNSET
BRANDS, INC., U.S MILLS, INC., IBF FUND LIQUIDATING LLC,
AS SENIOR CREDITOR, AND IBF FUND LIQUIDATING LLC,
AS SUBORDINATED CREDITOR.
EACH HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS
OF THE JUNIOR SUBORDINATION AGREEMENT.


SECURED DEBENTURE


SUNSET BRANDS, INC.


12% Secured Convertible Debenture


November __, 2008


	 	US$5,000,000



This Secured Debenture (collectively
with any reissue, substitution or replacement thereof,
the "Debenture") is issued on November
__, 2005 (the "Closing Date") by Sunset Brands, Inc., a Nevada
corporation (the "Company"), to IBF Fund Liquidating LLC (together with
its permitted successors and assigns, the "Holder") pursuant to
exemptions from registration under the Securities Act of 1933, as amended
(the "Securities Act")


ARTICLE I.


Section 1.01     Principal and
Interest. For value received, the Company hereby promises to pay to the
order of the Holder on November __, 2008 in lawful money
of the United States of America and in immediately available funds the principal
sum of Five Million Dollars ($5,000,000.00), together with interest on the
unpaid principal of this Debenture at the rate of twelve percent (12%) per year
(computed on the basis of a 365-day year and the actual days elapsed) from the
Closing Date until paid. The entire principal amount and
all accrued interest shall be paid to the Holder on the third (3rd)
anniversary of the Closing 
Date. Notwithstanding anything to the contrary contained
herein, the Holder shall not be entitled to convert this Debenture for a number
of shares of Common Stock in excess of that number of shares of Common Stock
which, upon giving effect to such conversion, would cause the aggregate number
of shares of Common Stock beneficially owned by the Holder and its affiliates to
exceed 4.99% of the outstanding shares of the Common Stock following such
conversion (which provision may be waived by the Holder by written notice from
the Holder to the Company, which notice shall be effective 61 days after the
date of such notice).

Section 1.02     Optional
Conversion. The Holder is entitled, at its option, to convert, and sell
on the same day, at any time and from time to time, until payment in full of
this Debenture, all or any part of the principal amount of the Debenture, plus
accrued interest, into shares (the "Conversion Shares") of the Company's
common stock, par value $0.001 per share ("Common Stock"), at the price
per share (subject to adjustment pursuant to Section 5.02(h), the "Conversion
Price") equal to $0.37. No fraction of shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share. To convert this Debenture,
the Holder hereof shall deliver written notice thereof, substantially in the
form of Exhibit "A" to this Debenture, with appropriate insertions (the "Conversion
Notice"), to the Company at its address as set forth herein. The date upon
which the conversion shall be effective (the "Conversion Date") shall be
deemed to be the date set forth in the Conversion Notice.

Section 1.03     Reservation of
Common Stock. The Company shall reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of this Debenture, such number of shares of Common
Stock as shall from time to time be sufficient to effect such conversion, based
upon the Conversion Price. If at any time the Company does not have a sufficient
number of Conversion Shares authorized and available, then the Company shall
call and hold a special meeting of its stockholders within thirty (30) days of
that time for the sole purpose of increasing the number of authorized shares of
Common Stock.

2



Section 1.04    
Right of
Redemption. The Company at its option shall have the right to redeem,
with three (3) business days advance written notice (the "Redemption Notice"),
a portion or all outstanding convertible debenture. The redemption price shall
be one hundred twenty percent (120%) of the amount redeemed plus accrued
interest. The Holder shall have the right to convert all or any
part of this Debenture at its discretion, even after
receipt of a Redemption Notice.

Section 1.05    
Registration
Rights. The Company is obligated to register the resale of the
Conversion Shares under the Securities Act pursuant to the terms of a
Registration Rights Agreement between the Company and the Holder of even date
herewith (the "Registration Rights Agreement").

Section 1.06    
Interest
Payments. The interest so payable will be paid at the time of maturity
or conversion to the person in whose name this Debenture is registered. At the
time such interest is payable, the Company, in its sole discretion, may elect to
pay the interest in cash (via wire transfer or certified funds) or in the form
of Common Stock. If paid in the form of Common Stock, the amount of stock to be
issued will be calculated as follows: the value of the stock shall be the
closing bid price of the Company's Common Stock on: (i) the date the interest
payment is due; or (ii) if the interest payment is not made when due, the date
the interest payment is made. A number of shares of Common Stock with a value
equal to the amount of interest due shall be issued. No fractional shares will
be issued; therefore, in the event that the value of the Common Stock per share
does not equal the total interest due, the Company will pay the balance in cash.

Section 1.07    
Paying Agent and
Registrar. Initially, the Company will act as paying agent and
registrar. The Company may change any paying agent, registrar, or
Company-registrar by giving the Holder not less than ten (10) business days'
written notice of its election to do so, specifying the name, address, telephone
number and facsimile number of the paying agent or registrar. The Company may
act in any such capacity.

Section 1.08    
Secured Nature
of Debenture. This Debenture is secured by all of the assets and
property of the Company and U.S. Mills, Inc. as set
forth in the Junior Security
Agreement dated as of the date hereof
among the Company, U.S. Mills, Inc. and the Holder (the "Security
Agreement"), the Junior Pledge Agreement, dated as of the date hereof, by and
between the Company and the Holder (the "Pledge
Agreement"), and the Junior Intellectual Property 
Security Agreement, dated as of the 
date hereof by and among the Company, the Holder and U.S.
Mills, Inc. (the "IP Security Agreement"). As set forth in
the Security Agreement, the Holder's security interest shall terminate upon the
indefeasible payment in full of 
all Obligations (as defined in the
Security Agreement) and the termination of the Security Agreement.

Section 1.09    
Transaction
Documents. "Transaction Documents" means the 
Security Agreement, the 
IP Security Agreement, the
Pledge Agreement, the Irrevocable Transfer Agent Instructions and the
Registration Rights Agreement.

3




ARTICLE II.


Section 2.01     Amendments and
Waiver of Default. The Debenture may not be amended. Notwithstanding the
above, without the consent of the Holder, the Debenture may be amended to cure
any ambiguity, defect or inconsistency, or to provide for assumption of the
Company obligations to the Holder.


ARTICLE III.


Section 3.01     Events of Default.



(a)     An "Event of Default,"
wherever used herein, means any one of the following events (whatever the reason
and whether it shall be voluntary or involuntary or effected by operation of law
or pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body) (an Event of Default
shall only be deemed to have occurred only after the Holder delivers written
notice to the Company of such event (the "Notice of Default") and
provides the Company with ten (10) days to cure such event (the "Cure Period"));
provided, however, that no Cure Period shall apply to the Events of Default
described in Sections 3.01(a)(3), (4) or (11):

(1)     Any default in the payment of the
principal of, interest on or other charges in respect of this Debenture, free of
any claim of subordination, as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise);

(2)     The Company shall fail to observe
or perform any other covenant, agreement or warranty contained in, or otherwise
commit any breach or default of any provision of this Debenture or any
Transaction Document (as defined herein) which is not cured with in the time
prescribed;

(3)     The Company or any subsidiary of
the Company (with the exception of Low Carb Creations, Inc.) shall commence, or
there shall be commenced against the Company or any subsidiary of the Company
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any successor thereto, or the Company or any subsidiary of the Company
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the
Company or any subsidiary of the Company or there is commenced against the
Company or any subsidiary of the Company any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of 61 days; or the
Company or any subsidiary of the Company is adjudicated insolvent or bankrupt;
or any order of relief or other order approving any such case or proceeding is
entered; or the Company or any subsidiary of the Company suffers any appointment
of any custodian, private or court appointed receiver or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of sixty one (61) days; or the Company or any subsidiary of the Company
makes a general assignment for the benefit of creditors; or the Company or any
subsidiary of the Company shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Company or any subsidiary of the Company shall call 

4


a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its
debts; or the Company or any subsidiary of the Company shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate or other action is taken by the Company
or any subsidiary of the Company for the purpose of effecting any of the
foregoing;

(4)     The Company or any subsidiary of
the Company (with the exception of Low Carb Creations, Inc.) shall default in
any of its obligations under any other debenture or any mortgage, credit
agreement, security agreement, promissory notes
or other facility, indenture agreement, factoring agreement or other instrument
under which there may be issued, or by which there may be secured or evidenced
any indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Company or any subsidiary of the Company in an
amount exceeding $100,000, whether such indebtedness now exists or shall
hereafter be created and such default shall result in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise
become due and payable, including, without limitation, under the financing
or other documents between the
Company and CapitalSource Finance, LLC and between the Company and IBF Fund
Liquidating LLC;

(5)     The Common Stock shall cease to be
quoted for trading or listed for trading on either The
National Association of Securities Dealers Inc.'s Over-The-Counter
Bulletin Board ("OTCBB"), Nasdaq
SmallCap Market, New York Stock Exchange, American Stock Exchange or the Nasdaq
National Market (each, a "Subsequent Market") and shall not again be
quoted or listed for trading thereon within five (5)
trading days of such delisting;

(6)     The Company or any subsidiary of
the Company (with the exception of Low Carb Creations, Inc.) shall be a party to
any Change of Control Transaction unless the proceeds of such transaction are
used to pay this Debenture in full as of the closing date thereof. For purposes
of this Section "Change of Control Transaction" means the occurrence of (a) an
acquisition after the date hereof by an individual or legal entity or "group"
(as described in Rule 13d-5(b)(1) promulgated under the 
Securities Exchange Act of
1934, as amended (the "Exchange Act")) of effective
control (whether through legal or beneficial ownership of capital stock of the
Company, by contract or otherwise) of in excess of fifty percent (50%) of the
voting securities of the Company (except that the acquisition of voting
securities by the Holder shall not constitute a Change of Control Transaction
for purposes hereof), (b) a replacement at one time or over time of more than
one-half of the members of the board of directors of the Company which is not
approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), (c) the merger, consolidation or sale of fifty
percent (50%) or more of the assets of the Company or any subsidiary of the
Company in one or a series of related transactions with or into another entity,
or (d) the execution by the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the events set forth above
in (a), (b) or (c);

(7)     The Company shall fail to file the
Registration Statement (as such term is defined in
Registration Rights Agreement of even date herewith) with the SEC, or the Registrable Securities (as such term is defined in the
Registration Rights Agreement) shall not 

5


have been declared effective by the
SEC, in each case within the time periods set forth in the Registration Rights Agreement of even date herewith between
the Company and the Holder;

(8)     If the effectiveness of the
Registration Statement lapses for any reason or the Holder shall not be
permitted to resell the shares of Common Stock underlying this Debenture under
the Registration Statement, in either case, for more than five (5) consecutive
trading days or an aggregate of eight (8) trading days (which need not be
consecutive trading days);

(9)     The Company shall fail for any
reason to deliver Common Stock certificates to a Holder prior to the fifth (5th)
trading day after a Conversion Date or the Company shall provide notice to the
Holder, including by way of public announcement, at any time, of its intention
not to comply with requests for conversions of this Debenture in accordance with
the terms hereof;

(10)     The Company shall fail to complete
its merger with U.S. Mills, Inc. for any reason;

(11)     An event of default under the
financing or other documents between
the Company and CapitalSource Finance, LLC and between the Company and IBF Fund
Liquidating LLC, which is not cured with in the time prescribed thereto or is
not waived, shall be deemed an Event of Default herein;

(b)     During the time that any portion of
this Debenture is outstanding, if any Event of Default has occurred and remains
uncured with in the time prescribed or is not waived, the full principal amount
of this Debenture, together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become, at the Holder's election,
immediately due and payable in cash, provided however, the Holder may
request (but shall have no obligation to request) payment of such amounts in
Common Stock of the Company. 

Section 3.02     Failure to Issue
Unrestricted Common Stock. As indicated in Article III Section 3.01, a
breach by the Company of its obligations under the
Registration Rights Agreement shall be deemed an Event of Default, which if not
cured within ten (10) days, shall entitle the Holder to accelerate full
repayment of all debentures outstanding and accrued interest thereon or,
notwithstanding any limitations contained in this Debenture and/or the
Securities Purchase Agreement, to convert all debentures outstanding and accrued
interest thereon into shares of Common Stock pursuant to Section 1.02 herein.
The Company acknowledges that failure to honor a Notice of Conversion shall
cause irreparable harm to the Holder. 


ARTICLE IV.


Section 4.01     Rights and Terms of
Conversion. This Debenture, in whole or in part, may be converted at any
time following the Closing Date, into shares of Common Stock at a price equal to
the Conversion Price as described in Section 1.02 above.

Section 4.02     Re-issuance of
Debenture. When the Holder elects to convert, sell,
assign or otherwise transfer a part of the Debenture,
the Company shall, within three days of
the 

6


Holder's request, reissue a new Debenture
or Debentures, as applicable in the
same form as this Debenture to reflect the new principal amount(s).


ARTICLE V.


Section 5.01     Anti-dilution.
In the event that the Company shall at any time subdivide the outstanding
shares of Common Stock, or shall issue a stock dividend on the outstanding
Common Stock, the Conversion Price in effect immediately prior to such
subdivision or the issuance of such dividend shall be proportionately decreased,
and in the event that the Company shall at any time combine the outstanding
shares of Common Stock, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased, effective at the close of
business on the date of such subdivision, dividend or combination as the case
may be.

Section 5.02     Covenants.


(a)     Consent of Holder to Sell
Capital Stock or Grant Security Interests. Except for the capital stock to be
issued under this Debenture or any issuances of capital stock or other
securities to IBF Fund Liquidating LLC pursuant to the Amended and Restated
Merger Agreement, dated as of November __, 2005, among IBF Fund Liquidating LLC,
the Company, U.S. Mills, Inc. and USM Acquisition Sub, Inc. and the other
agreements contemplated thereby, so long as any of the principal of or interest
on this Debenture remains unpaid and unconverted, the Company shall not, without
the prior consent of the Holder (i) issue or sell any Common Stock or preferred
stock with or without consideration, (ii) issue or sell any preferred stock,
warrant, option, right, contract, call, or other security or instrument granting
the holder thereof the right to acquire Common Stock or preferred stock with or
without consideration, or (iii) enter into any security instrument granting a
security interest in any of the assets of the Company other than the Revolving
Credit, Term Loan and Security Agreement dated as of the date hereof by and
among the Company, U.S. Mills, Inc. and Capitalsource Finance LLC and related
documents (as such may be amended, restated, supplemented or otherwise modified
from time to time in accordance with their terms) and the Security Agreement and
related documents (as such may be amended, restated, supplemented or otherwise
modified from time to time in accordance with their terms). Notwithstanding the
foregoing, the above restriction shall not apply to: (a) options to purchase
shares of Common Stock, provided (I) such options are issued on or after the
date hereof to employees of the Company, (II) the exercise price of such options
is not less than the higher of (i) the closing bid price of the Common Stock, as
quoted by Bloomberg, LP, on the date of issuance of such option or (ii) $0.37
per share, and (III) such issuance is limited to no more than 20% of the
Company's outstanding shares of Common Stock on a fully diluted basis; (b) the
issuance or sale of securities of the Company where the proceeds of such
issuance or sale pay the outstanding principal and accrued interest of this
Debenture in full as of the closing date thereof or (c) shares of Common Stock
for consideration per share equal to or greater than the Conversion Price, and
(ii) any rights, warrants or options to subscribe for or purchase Common Stock
or securities convertible into or exercisable for shares of Common Stock, in
each case, where the lowest price per share for which one share of Common Stock
is issuable upon the conversion or exchange thereof is equal to or greater than
the Conversion Price.

7



(b)    
Form D. The Company agrees
to file a Form D with respect to the Conversion Shares as required under
Regulation D and to provide a copy thereof to the Holder promptly after such
filing. The Company represents and warrants that it has taken
such action as it has determined is
necessary to qualify the Conversion Shares, or obtained
an exemption for the sale of the Conversion Shares
to the Holder,
under applicable securities or "Blue Sky" laws of the states of the United
States, and has 
provided evidence of any such
action so taken to the Holder.

(c)    
Reporting Status. Until the earlier of (i) the date as of which the
Holder may sell all of the
Conversion Shares without restriction pursuant to Rule 144(k) promulgated under
the Securities Act (or any successor thereto), and (ii) the
date on which (A) the Holder shall
have sold all the Conversion Shares and (B) this Debenture is
no longer outstanding, the
Company shall file in a timely manner all reports required to be filed with the
Securities and Exchange Commission (the "SEC")
pursuant to the Exchange Act and the regulations of the SEC thereunder, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.

(d)    
Reservation of Shares. The Company shall take all action reasonably
necessary to at all times have authorized, and reserved for the purpose of
issuance, such number of shares of Common Stock as shall be necessary to effect
the issuance of the Conversion Shares. If at any time the Company does not have
available such shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all of the Conversion Shares, the Company shall call
and hold a special meeting of the shareholders within thirty (30) days of such
occurrence, for the sole purpose of increasing the number of shares authorized.
The Company's management shall recommend to the shareholders to vote in favor of
increasing the number of shares of Common Stock authorized. Management shall
also vote all of its shares in favor of increasing the number of authorized
shares of Common Stock.

(e)     Listing or Quotation. The Company
shall promptly secure the listing or quotation of the Conversion Shares upon
each national securities exchange, automated quotation system or the OTCBB or
other market, if any, upon which shares of Common Stock are then listed or
quoted (subject to official notice of issuance) and shall use its best efforts
to maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all Conversion Shares from time to time issuable under the terms
of this Debenture. The Company shall maintain the Common Stock's authorization
for quotation on the OTCBB or any applicable Subsequent Market.

(f)    
Transactions With Affiliates. So long as this Debenture
is outstanding, the Company shall not, and shall
cause each of its subsidiaries not to, enter into, amend, modify or supplement,
or permit any subsidiary to enter into, amend, modify or supplement any
agreement, transaction, commitment, or arrangement with any of its or any
subsidiary's officers, directors, persons
who were officers or directors at any time during the previous two (2) years,
stockholders who beneficially own five percent (5%) or more of the Common Stock,
or Affiliates (as defined below) or with any individual related by blood,
marriage, or adoption to any such individual or with any entity in which any
such entity or individual owns a five percent (5%) or more beneficial interest
(each a "Related Party"), except for (a) customary employment
arrangements and benefit programs on reasonable terms, (b) any investment in an
Affiliate of the 

8


Company, (c) any agreement, transaction, commitment, or
arrangement on an arms-length basis on terms no less favorable than terms which
would have been obtainable from a person other than such Related Party
and (d) any agreement, transaction, commitment,
or arrangement which is approved by a majority of the disinterested directors of
the Company; for purposes hereof, any director who is also an officer of the
Company or any subsidiary of the Company shall not be a disinterested director
with respect to any such agreement, transaction, commitment, or arrangement. "Affiliate"
for purposes hereof means, with respect to any person or entity, another person
or entity that, directly or indirectly, (i) has a ten percent (10%) or more
equity interest in that person or entity, (ii) has ten percent (10%) or more
common ownership with that person or entity, (iii) controls that person or
entity, or (iv) shares common control with that person or entity. "Control"
or "controls" for purposes hereof means that a person or entity has the
power, direct or indirect, to conduct or govern the policies of another person
or entity.

(g)    
Transfer Agent. The Company covenants and agrees that, in the event that
the Company's agency relationship with the transfer agent should be terminated
for any reason prior to a date which is two (2) years after the Closing Date,
the Company shall immediately appoint a new transfer agent and shall require
that the new transfer agent execute and agree to be bound by the terms of the
Irrevocable Transfer Agent Instructions (as defined herein).

(h)     Corporate Existence. If the
Company at any time after the date of issuance of this Debenture subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced and the number of shares of Common Stock
issuable upon conversion of this Debenture will be proportionately increased. If
the Company at any time after the date of issuance of this Debenture combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination will be
proportionately increased and the number of Conversion Shares issuable upon
conversion of this Debenture will be proportionately decreased. Any adjustment
under this Section 5.02(h) shall become effective at the close of business on
the date the subdivision or combination becomes effective.

(i)     Transfer Agent Instructions.
Simultaneously with the execution and deliver of this Debenture, the Company
shall execute and deliver Irrevocable Transfer Agent Instructions, substantially
in the form attached hereto as Exhibit B (the "Irrevocable Transfer Agent
Instructions"), to its transfer agent irrevocably appointing Western States
Transfer and Registrar, Inc. as the Company's agent for purpose of having
certificates issued, registered in the name of the Holder or its nominee(s), for
the Conversion Shares representing such amounts of this Debenture as specified
from time to time by the Holder to the Company upon conversion of this
Debenture, for interest owed pursuant to this Debenture, and for any and all
Liquidated Damages (as defined in the Registration Rights Agreement). Western
States Transfer and Registrar, Inc. shall be paid a cash fee of Fifty Dollars
($50) for every occasion it acts pursuant to the Irrevocable Transfer Agent
Instructions. The Company shall not change its transfer agent without the
express written consent of the Holder, which may be withheld by the Holder in
its sole discretion; provided, however, that Company shall be permitted to
change its transfer agent to Continental Stock Transfer & Trust Company. The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions will be given by the Company to its 

9


transfer agent and that the
Conversion Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section 5.02(i) shall affect in
any way the Holder's obligations and agreement to comply with all applicable
securities laws upon resale of Conversion Shares. If the Holder provides the
Company with an opinion of counsel, in form, scope and substance customary for
opinions of counsel in comparable transactions to the effect that registration
of a resale by the Holder of any of the Conversion Shares is not required under
the Securities Act, the Company shall within two (2) business days instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by the Holder. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Holder by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5.02(i) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 5.02(i), that the Holder shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.

(j)     Transfer of Debenture. The
Holder shall be permitted to sell, assign, transfer or otherwise dispose of (a
"Disposition") all or any portion of this Debenture from time to time; 
provided, that the Holder shall provide the Company with 30 days' prior
written notice of any such Disposition if the consummation of such Disposition
is proposed to occur prior to the date that is 360 days following the date
hereof.


ARTICLE VI.


Section 6.01     Notice. 
Notices regarding this Debenture shall be sent to the parties at the following
addresses, unless a party notifies the other parties, in writing, of a change of
address:

	If to the Company, to:	Sunset Brands, Inc.
	 	10990 Wilshire Blvd - Suite 1220
	 	Los Angeles, CA 90024
	 	Attention: Todd Sanders
	 	Telephone: (310) 478-4600
	 	Facsimile: (310) 478-4601 
	 	 
	With a copy to:	Hodgson Russ LLP
	 	60 East 42nd Street - 37th
		Floor
	 	New York, NY 10165
	 	Attention: Jeffrey A. Rinde, Esq.
	 	Telephone: (212) 661-3535
	 	Facsimile: (212) 972-1677


10


	 	 
	If to the Holder:	IBF Fund Liquidating LLC
	 	c/o Kaye Scholer LLP
	 	425 Park Avenue
	 	New York, New York 10022
	 	Attention: Arthur J. Steinberg, Esq.
		

		Manager

		
	 	Telephone: (212)
		836-8564
	 	Facsimile: (212) 836- 6157
	 	 
	With a copy to:	Kaye Scholer LLP 
	 	425 Park Avenue 
	 	New York, NY 10022
	 	Attention: Emanuel S. Cherney, Esq.
	 	
		Telephone: (212) 836-7061
	 	Facsimile:
		(212) 836-7152
	 	 



Section 6.02     Governing Law.
This Debenture shall be deemed to be made under and shall be construed in
accordance with the laws of the State of New York without giving effect to the
principals of conflict of laws thereof. Each of the parties consents to the
jurisdiction of the U.S. District Court sitting in the District of the State of
New York or the state courts of the State of New York sitting in New York
County, New York in connection with any dispute arising under this Debenture and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens to the bringing
of any such proceeding in such jurisdictions.

Section 6.03     Severability.
The invalidity of any of the provisions of this Debenture shall not
invalidate or otherwise affect any of the other provisions of this Debenture,
which shall remain in full force and effect.

Section 6.04     Entire Agreement
and Amendments. This Debenture represents the entire agreement between
the parties hereto with respect to the subject matter hereof and there are no
representations, warranties or commitments, except as set forth herein. This
Debenture may be amended only by an instrument in writing executed by the
parties hereto.

Section 6.05     Counterparts.
This Debenture may be executed in multiple counterparts, each of which shall
be an original, but all of which shall be deemed to constitute on instrument.

11




IN WITNESS WHEREOF, with the
intent to be legally bound hereby, the Company as executed this Debenture as of
the date first written above.

	 	SUNSET BRANDS, INC.
	 	 
	 	By: 	
		 

	 	Name: Todd Sanders
	 	Title: President & CEO


 

12



 


EXHIBIT "A"

NOTICE OF CONVERSION


(To be executed by the Holder in order
to Convert the Debenture)





	TO:	 






The undersigned hereby irrevocably
elects to convert US$ of the principal amount of the above Debenture into
Shares of Common Stock of Sunset Brands, Inc., according to the conditions
stated therein, as of the Conversion Date written below.

	
		Conversion Date:
	
		 

	
		Applicable Conversion
		Price:
	
		 

	
		Signature:
	
		 

	
		Name:
	
		 

	
		Address:
	
		 

	
		Amount to be converted:
	
		US$ 

	
		Amount of Debenture
		unconverted:
	
		US$ 

	
		Conversion Price per
		share: 
	
		US$ 

	
		Number of shares of
		Common Stock to be issued:
	
		 

	
		Please issue the shares
		of Common Stock in the following name and to the following address:
	
		 

	
		Issue to:
	
		 

	
		Authorized Signature:
	
		 

	
		Name:
	
		 

	
		Title:
	
		 

	
		Phone Number:
	
		 

	
		Broker DTC Participant
		Code:
	
		 

	
		Account Number: