Document:

Exhibit
4.2

 

SECURITY AGREEMENT

1.                                       Identification.

This Security Agreement (the “Agreement”), dated as of August          ,
2006, is entered into by and between Sweet Success Enterprises, Inc., a Nevada
corporation (“Debtor”), and                          ,
as collateral agent acting in the manner and to the extent described in the
Collateral Agent Agreement defined below (the “Collateral Agent”), for the
benefit of the parties identified on Schedule A hereto (collectively, the “Lenders”).

 

2.                                       Recitals.

2.1                                 The
Lenders have made or are making loans and will make additional loans to Debtor
(the “Loans”).  It is beneficial to
Debtor that the Loans were made, are being made and will be made.

2.2                                 The Loans
are evidenced by one or more convertible promissory notes (each a “Convertible
Note”) issued by Debtor on or about the date of this Agreement, pursuant to one
or more subscription agreements (each a “Subscription Agreement”) to which
Debtor and Lenders are parties.  The
Notes are further identified on Schedule A hereto and were and will be executed
by Debtor as “Borrower” or “Debtor” for the benefit of each Lender as the “Holder”
or “Lender” thereof.

2.3                                 In
consideration of the Loans made by Lenders to Debtor and for other good and
valuable consideration, and as security for the performance by Debtor of its
obligations under the Notes and as security for the repayment of the Loans and
all other sums due from Debtor to Lenders arising under the Notes presently
outstanding or to be outstanding in the future, Subscription Agreements, and
any of the other Transaction Documents (as defined in the Subscription
Agreement) (collectively, the “Obligations”), Debtor, for good and valuable
consideration, receipt of which is acknowledged, has agreed to grant to the
Collateral Agent, for the benefit of the Lenders, a security interest in the
Collateral (as such term is hereinafter defined), on the terms and conditions
hereinafter set forth.  Obligations
include all future advances by Lenders to Debtor advanced on a pro rata basis
by all Lenders on substantially the same terms.

2.4                                 The
Lenders have appointed                               
as Collateral Agent pursuant to that certain Collateral Agent Agreement dated
at or about August      , 2006 (“Collateral Agent
Agreement”), among the Lenders and Collateral Agent.

2.5                                 The
following defined terms which are defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof are used herein as so
defined:  Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments, Inventory and Proceeds.

3.                                       Grant of
General Security Interest in Collateral.

3.1                                 As
security for the Obligations of Debtor, Debtor hereby grants the Collateral
Agent, for the benefit of the Lenders, a security interest in the Collateral.

3.2                                 “Collateral”
shall mean all of the following property of Debtor:

(A)                              All now owned and hereafter acquired right, title and interest of
Debtor in, to and in respect of all Accounts, Goods, real or personal property,
all present and future books and records relating to the foregoing and all
products and Proceeds of the foregoing, and as set forth below:

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(i)                                     Accounts:  All now owned and hereafter acquired right,
title and interest of Debtor in, to and in respect of all: Accounts, interests
in goods represented by Accounts, returned, reclaimed or repossessed goods with
respect thereto and rights as an unpaid vendor; contract rights; Chattel Paper;
investment property; General Intangibles (including but not limited to, tax and
duty claims and refunds, registered and unregistered patents, trademarks,
service marks, certificates, copyrights trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, chooses in action and other
claims, and existing and future leasehold interests in equipment, real estate
and fixtures); Documents; Instruments; letters of credit, bankers’ acceptances
or guaranties; cash moneys, deposits; securities, bank accounts, deposit
accounts, credits and other property now or hereafter owned or held in any
capacity by Debtor, as well as its affiliates, agreements or property securing
or relating to any of the items referred to above;

(ii)                                  Goods:  All now owned and hereafter acquired right,
title and interest of Debtor in, to and in respect of goods, including, but not
limited to:

(a)                                  All Inventory, wherever located, whether now
owned or hereafter acquired, of whatever kind, nature or description, including
all raw materials, work-in-process, finished goods, and materials to be used or
consumed in Debtor’ business; finished goods, timber cut or to be cut, oil,
gas, hydrocarbons, and minerals extracted or to be extracted, and all names or
marks affixed to or to be affixed thereto for purposes of selling same by the
seller, manufacturer, lessor or licensor thereof and all Inventory which may be
returned to Debtor by its customers or repossessed by Debtor and all of Debtor’
right, title and interest in and to the foregoing (including all of Debtor’
rights as a seller of goods);

(b)                                 All Equipment and fixtures, wherever located, whether now owned or
hereafter acquired, including, without limitation, all machinery, motor
vehicles, furniture and fixtures, and any and all additions, substitutions,
replacements (including spare parts), and accessions thereof and thereto
(including, but not limited to Debtor’ rights to acquire any of the foregoing,
whether by exercise of a purchase option or otherwise);

(iii)                               Property:  All now owned and hereafter acquired right,
title and interests of Debtor in, to and in respect of any real or other
personal property in or upon which Debtor has or may hereafter have a security
interest, lien or right of setoff;

(iv)                              Books and
Records:  All present and future
books and records relating to any of the above including, without limitation,
all computer programs, printed output and computer readable data in the
possession or control of the Debtor, any computer service bureau or other third
party; and

(v)                                 Products
and Proceeds:  All products and Proceeds
of the foregoing in whatever form and wherever located, including, without
limitation, all insurance proceeds and all claims against third parties for
loss or destruction of or damage to any of the foregoing.

(B)                                All now owned
and hereafter acquired right, title and interest of Debtor in, to and in
respect of the following:

(i)                                     the shares of stock, partnership interests, member interests or
other equity interests at any time and from time to time acquired by Debtor of
any and all entities now or hereafter existing, all or a portion of such stock
or other equity interests which are acquired by such entities at any time (such
entities, together with the existing issuers, being hereinafter referred to
collectively as the “Pledged Issuers” and individually as a “Pledged Issuer”),
the certificates representing such shares,

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partnership interests, member
interests or other interests all options and other rights, contractual or
otherwise, in respect thereof and all dividends, distributions, cash,
instruments, investment property and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares, partnership interests, member interests or other interests;

(ii)                                  all additional shares of stock, partnership interests, member
interests or other equity interests from time to time acquired by Debtor, of
any Pledged Issuer, the certificates representing such additional shares, all
options and other rights, contractual or otherwise, in respect thereof and all
dividends, distributions, cash, instruments, investment property and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such additional shares, interests
or equity; and

(iii)                               all security entitlements of Debtor in, and all Proceeds of any
and all of the foregoing in each case, whether now owned or hereafter acquired
by Debtor and howsoever its interest therein may arise or appear (whether by ownership,
security interest, lien, claim or otherwise).

3.3                                 The Collateral Agent is hereby specifically authorized, after the
Maturity Date (defined in the Notes) accelerated or otherwise, or after an
Event of Default (as defined herein) and the expiration of any applicable cure
period, to transfer any Collateral into the name of the Collateral Agent and to
take any and all action deemed advisable to the Collateral Agent to remove any
transfer restrictions affecting the Collateral.

4.                                       Perfection of Security Interest.

4.1                                 Debtor shall prepare, execute and
deliver to the Collateral Agent UCC-1 Financing Statements covering the
Collateral.  The Collateral Agent is
instructed to prepare and file at Debtor’s cost and expense, financing
statements in such jurisdictions deemed advisable to the Collateral Agent,
including but not limited to the State of Nevada. The Financing Statements are
deemed to have been filed for the benefit of the Collateral Agent and Lenders
identified on Schedule A hereto.

4.2                                  
All other certificates and instruments constituting Collateral from time
to time required to be pledged to Collateral Agent pursuant to the terms hereof
(the “Additional Collateral”) shall be delivered to Collateral Agent promptly
upon receipt thereof by or on behalf of Debtor. 
All such certificates and instruments shall be held by or on behalf of
Collateral Agent pursuant hereto and shall be delivered in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment or undated stock powers executed in blank, all in form
and substance satisfactory to Collateral Agent. 
If any Collateral consists of uncertificated securities, unless the
immediately following sentence is applicable thereto, Debtor shall cause Collateral
Agent (or its custodian, nominee or other designee) to become the registered
holder thereof, or cause each issuer of such securities to agree that it will
comply with instructions originated by Collateral Agent with respect to such
securities without further consent by Debtor. 
If any Collateral consists of security entitlements, Debtor shall
transfer such security entitlements to Collateral Agent (or its custodian,
nominee or other designee) or cause the applicable securities intermediary to
agree that it will comply with entitlement orders by Collateral Agent without
further consent by Debtor.

4.3                                 Within five (5) days after the
receipt by Debtor of any Additional Collateral, a Pledge Amendment, duly
executed by Debtor, in substantially the form of Annex I hereto (a “Pledge
Amendment”), shall be delivered to Collateral Agent in respect of the
Additional Collateral to be pledged pursuant to this Agreement. Debtor hereby
authorizes Collateral Agent to attach each Pledge Amendment to this Agreement
and agrees that all certificates or instruments listed on any Pledge Amendment
delivered

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to Collateral Agent shall for all purposes hereunder constitute
Collateral.

4.4                                 If Debtor shall receive, by virtue
of Debtor being or having been an owner of any Collateral, any (i) stock
certificate (including, without limitation, any certificate representing a
stock dividend or distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets, combination
of shares, stock split, spin-off or split-off), promissory note or other
instrument, (ii) option or right, whether as an addition to, substitution
for, or in exchange for, any Collateral, or otherwise, (iii) dividends payable
in cash (except such dividends permitted to be retained by Debtor pursuant to
Section 5.2 hereof) or in securities or other property or (iv) dividends
or other distributions in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, Debtor shall receive such stock certificate, promissory note,
instrument, option, right, payment or distribution in trust for the benefit of
Collateral Agent, shall segregate it from Debtor’s other property and shall
deliver it forthwith to Collateral Agent, in the exact form received, with any
necessary endorsement and/or appropriate stock powers duly executed in blank,
to be held by Collateral Agent as Collateral and as further collateral security
for the Obligations.

5.                                       Distribution
on Liquidation.

5.1                                 If any
sum is paid as a liquidating distribution on or with respect to the Collateral,
Debtor shall deliver same to the Collateral Agent to be applied to the
Obligations, then due, in accordance with the terms of the Convertible Notes.

5.2                                 So long
as no Event of Default exists, Debtor shall be entitled (i) to exercise all
voting power pertaining to any of the Collateral, provided such exercise is not
contrary to the interests of the Lenders and does not impair the Collateral and
(ii) may receive and retain any and all dividends, interest payments or other
distributions paid in respect of the Collateral.

5.3.                              Upon the
occurrence and during the continuation of an Event of Default, all rights of
Debtor, upon notice given by Collateral Agent, to exercise the voting power and
receive payments, which it would otherwise be entitled to pursuant to Section
5.2, shall cease and all such rights shall thereupon become vested in
Collateral Agent, which shall thereupon have the sole right to exercise such
voting power and receive such payments.

5.4                                 All
dividends, distributions, interest and other payments which are received by
Debtor contrary to the provisions of Section 5.3 shall be received in trust for
the benefit of Collateral Agent, shall be segregated from other funds of
Debtor, and shall be forthwith paid over to Collateral Agent as Collateral in
the exact form received with any necessary endorsement and/or appropriate stock
powers duly executed in blank, to be held by Collateral Agent as Collateral and
as further collateral security for the Obligations.

6.                                       Further
Action By Debtor; Covenants and Warranties.

6.1                                 Collateral
Agent at all times shall have a perfected security interest in the
Collateral.  Subject only to the security
interests described on Schedule 6.1 hereto, Debtor has and will continue to
have full title to the Collateral free from any liens, leases, encumbrances,
judgments or other claims.  Collateral
Agent’s security interest in the Collateral constitutes and will continue to constitute
a first, prior and indefeasible security interest in favor of Collateral
Agent.  Debtor will do all acts and
things, and will execute and file all instruments (including, but not limited
to, security agreements, financing statements, continuation statements, etc.)
reasonably requested by Collateral Agent to establish, maintain and continue
the perfected security interest of Collateral Agent in the Collateral, and will
promptly on demand, pay all costs and expenses of filing and recording, including
the costs of any searches reasonably deemed

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necessary by Collateral Agent from time to
time to establish and determine the validity and the continuing priority of the
security interest of Collateral Agent, and also pay all other claims and
charges that, in the opinion of Collateral Agent, exercised in good faith, are
reasonably likely to materially prejudice, imperil or otherwise affect the
Collateral or Collateral Agent’s or Lenders’ security interests therein.

6.2                                 Other
than in the ordinary course of business, and except for Collateral which is
substituted by assets of identical or greater value or which has become
obsolete or is of inconsequential in value, Debtor will not sell, transfer,
assign or pledge those items of Collateral (or allow any such items to be sold,
transferred, assigned or pledged), without the prior written consent of
Collateral Agent other than a transfer of the Collateral to a wholly-owned
subsidiary on prior notice to Collateral Agent, and provided the Collateral
remains subject to the security interest herein described.  Although Proceeds of Collateral are covered
by this Agreement, this shall not be construed to mean that Collateral Agent
consents to any sale of the Collateral, except as provided herein.  Sales of Collateral in the ordinary course of
business shall be free of the security interest of Lenders and Collateral Agent
and Lenders and Collateral Agent shall promptly execute such documents
(including without limitation releases and termination statements) as may be
required by Debtor to evidence or effectuate the same.

6.3                                 Debtor
will, at all reasonable times and upon reasonable notice, allow Collateral
Agent or its representatives free and complete access to the Collateral and all
of Debtor’s records which in any way relate to the Collateral, for such
inspection and examination as Collateral Agent reasonably deems necessary.

6.4                                 Debtor,
at its sole cost and expense, will protect and defend this Security Agreement,
all of the rights of Collateral Agent and Lenders hereunder, and the Collateral
against the claims and demands of all other persons.

6.5                                 Debtor
will promptly notify Collateral Agent of any levy, distraint or other seizure
by legal process or otherwise of any part of the Collateral, and of any
threatened or filed claims or proceedings that are reasonably likely to affect
or impair any of the rights of Collateral Agent under this Security Agreement
in any material respect.

6.6                                 Debtor,
at its own expense, will obtain and maintain in force insurance policies
covering losses or damage to those items of Collateral which constitute
physical personal property.  The
insurance policies to be obtained by Debtor shall be in form and amounts
reasonably acceptable to Collateral Agent. 
Debtor shall make the Collateral Agent first a loss payee thereon to the
extent of its interest in the Collateral. Collateral Agent is hereby
irrevocably (until the Obligations are paid in full) appointed Debtor’
attorney-in-fact to endorse any check or draft that may be payable to Debtor so
that Collateral Agent may collect the proceeds payable for any loss under such
insurance.  The proceeds of such
insurance (subject to the rights of senior secured parties), less any costs and
expenses incurred or paid by Collateral Agent in the collection thereof, shall
be applied either toward the cost of the repair or replacement of the items
damaged or destroyed, or on account of any sums secured hereby, whether or not
then due or payable.

6.7                                 Collateral
Agent may, at its option, and without any obligation to do so, pay, perform and
discharge any and all amounts, costs, expenses and liabilities herein agreed to
be paid or performed by Debtor.  Upon
Debtor’s failure to do so, all amounts expended by Collateral Agent in so doing
shall become part of the Obligations secured hereby, and shall be immediately
due and payable by Debtor to Collateral Agent upon demand and shall bear
interest at the lesser of 15% per annum or the highest legal amount from the
dates of such expenditures until paid.

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6.8                                 Upon the
request of Collateral Agent, Debtor will furnish to Collateral Agent within
five (5) business days thereafter, or to any proposed assignee of this Security
Agreement, a written statement in form reasonably satisfactory to Collateral
Agent, duly acknowledged, certifying the amount of the principal and interest
and any other sum then owing under the Obligations, whether to its knowledge
any claims, offsets or defenses exist against the Obligations or against this
Security Agreement, or any of the terms and provisions of any other agreement
of Debtor securing the Obligations.  In
connection with any assignment by Collateral Agent of this Security Agreement,
Debtor hereby agrees to cause the insurance policies required hereby to be carried
by Debtor, if any, to be endorsed in form satisfactory to Collateral Agent or
to such assignee, with loss payable clauses in favor of such assignee, and to
cause such endorsements to be delivered to Collateral Agent within ten (10)
calendar days after request therefor by Collateral Agent.

6.9                                 Debtor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
reasonable assurances or instruments and take further steps relating to the
Collateral and other property or rights covered by the security interest hereby
granted, as the Collateral Agent may reasonably require to perfect its security
interest hereunder.

6.10                           Debtor
represents and warrants that it is the true and lawful exclusive owner of the
Collateral, free and clear of any liens and encumbrances.

6.11                           Debtor
hereby agrees not to divest itself of any right under the Collateral except as
permitted herein absent prior written approval of the Collateral Agent, except
to a subsidiary organized and located in the United States on prior notice to
Collateral Agent provided the Collateral remains subject to the security
interest herein described.

6.12                           Debtor
shall cause each Subsidiary of Debtor not in existence on the date hereof to
execute and deliver to Collateral Agent promptly and in any event within 10
days after the formation, acquisition or change in status thereof (A) a
guaranty guaranteeing the Obligations and (B) a security and pledge agreement
substantially in the form of this Agreement together with (x) certificates
evidencing all of the capital stock of any entity owned by such Subsidiary, (y)
undated stock powers executed in blank with signature guaranteed, and (z) such
opinion of counsel and such approving certificate of such Subsidiary as
Collateral Agent may reasonably request in respect of complying with any legend
on any such certificate or any other matter relating to such shares and (E)
such other agreements, instruments, approvals, legal opinions or other
documents reasonably requested by Collateral Agent in order to create, perfect,
establish the first priority of or otherwise protect any lien purported to be
covered by any such pledge and security agreement or otherwise to effect the
intent that all property and assets of such Subsidiary shall become Collateral
for the Obligations.  For purposes of this
Agreement, “Subsidiary” means, with respect to any entity at any date,
any corporation, limited or general partnership, limited liability company,
trust, estate, association, joint venture or other business entity) of
which more than 50% of (A) the outstanding capital stock having (in the
absence of contingencies) ordinary voting power to elect a majority of the
board of directors or other managing body of such entity, (B) in the case
of a partnership or limited liability company, the interest in the capital or
profits of such partnership or limited liability company or (C) in the
case of a trust, estate, association, joint venture or other entity, the
beneficial interest in such trust, estate, association or other entity business
is, at the time of determination, owned or controlled directly or indirectly
through one or more intermediaries, by such entity.

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7.                                       Power of
Attorney.

After the occurrence and during the
uncured continuation of an Event of Default, as defined in Section 9 below,
Debtor hereby irrevocably constitutes and appoints the Collateral Agent as the
true and lawful attorney of Debtor, with full power of substitution, in the
place and stead of Debtor and in the name of Debtor or otherwise, at any time
or times, in the discretion of the Collateral Agent, to take any action and to
execute any instrument or document which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement.  This power of attorney is coupled with an
interest and is irrevocable until the Obligations are satisfied.

8.             Performance
By The Collateral Agent.

If Debtor fails to perform any material
covenant, agreement, duty or obligation of Debtor under this Agreement, the
Collateral Agent may, after any applicable cure period, at any time or times in
its discretion, take action to effect performance of such obligation.  All reasonable expenses of the Collateral
Agent incurred in connection with the foregoing authorization shall be payable
by Debtor as provided in Paragraph 12.1 hereof. 
No discretionary right, remedy or power granted to the Collateral Agent
under any part of this Agreement shall be deemed to impose any obligation
whatsoever on the Collateral Agent with respect thereto, such rights, remedies
and powers being solely for the protection of the Collateral Agent.

9.             Event
of Default.

An event of default (“Event of
Default”) shall be deemed to have occurred hereunder upon the occurrence of any
event of default as defined and described in this Agreement, in the Notes,
Subscription Agreement, and any other agreement to which Debtor and a Lender
are parties.   Upon and after any Event
of Default, after the applicable cure period, if any, any or all of the
Obligations shall become immediately due and payable at the option of the
Collateral Agent, for the benefit of the Lenders, and the Collateral Agent may
dispose of Collateral as provided below. 
A default by Debtor of any of its material obligations pursuant to this
Agreement shall be an Event of Default hereunder and an event of default as
defined in the Notes, and Subscription Agreement.

10.           Disposition
of Collateral.

Upon and after
any Event of Default which is then continuing,

10.1         The Collateral Agent may exercise its rights with respect to
each and every component of the Collateral, without regard to the existence of
any other security or source of payment for the Obligations.  In addition to other rights and remedies
provided for herein or otherwise available to it, the Collateral Agent shall
have all of the rights and remedies of a lender on default under the Uniform
Commercial Code then in effect in the State of New York.

10.2         In the event of any sale or other disposition of Collateral
is to occur, the Collateral Agent shall provide Debtor with at least five
business (5) days prior written notice (which Debtor agrees is reasonable
notice within the meaning of Section 9.612(a) of the Uniform Commercial Code)
of the time and place of any sale of Collateral which Debtor hereby agrees may
be by private sale.  The rights granted
in this Section are in addition to any and all rights available to Collateral
Agent under the Uniform Commercial Code.

10.3         The Collateral Agent is authorized, at any such sale, if the
Collateral Agent deems it advisable to do so, in order to comply with any
applicable securities laws, to restrict the prospective bidders or purchasers
to persons who will represent and agree, among other things, that they are
purchasing the Collateral for their own account for investment, and not with a
view to the distribution or resale

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thereof, or otherwise to restrict such
sale in such other manner as the Collateral Agent deems advisable to ensure
such compliance.  Sales made subject to
such restrictions shall be deemed to have been made in a commercially
reasonable manner.

10.4         All proceeds received by the Collateral Agent for the
benefit of the Lenders in respect of any sale, collection or other enforcement
or disposition of Collateral, shall be applied (after deduction of any amounts
payable to the Collateral Agent pursuant to Paragraph 12.1 hereof) against the
Obligations pro rata among the Lenders in proportion to their interests in the
Obligations.   Upon payment in full of
all Obligations, Debtor shall be entitled to the return of all Collateral,
including cash, which has not been used or applied toward the payment of
Obligations or used or applied to any and all costs or expenses of the
Collateral Agent incurred in connection with the liquidation of the Collateral
(unless another person is legally entitled thereto).  Any assignment of Collateral by the
Collateral Agent to Debtor shall be without representation or warranty of any
nature whatsoever and wholly without recourse. 
To the extent allowed by law, each Lender may purchase the Collateral
and pay for such purchase by offsetting up to such Lender’s pro rata portion of
the purchase price with sums owed to such Lender by Debtor arising under the
Obligations or any other source.

11.           Waiver
of Automatic Stay.   Debtor
acknowledges and agrees that should a proceeding under any bankruptcy or
insolvency law be commenced by or against Debtor, or if any of the Collateral
should become the subject of any bankruptcy or insolvency proceeding, then the
Collateral Agent should be entitled to, among other relief to which the
Collateral Agent or Lenders may be entitled under the Note, Subscription
Agreement and any other agreement to which the Debtor, Lenders or Collateral
Agent are parties, (collectively “Loan Documents”) and/or applicable law, an
order from the court granting immediate relief from the automatic stay pursuant
to 11 U.S.C. Section 362 to permit the Collateral Agent to exercise all of its
rights and remedies pursuant to the Loan Documents and/or applicable law.  Debtor EXPRESSLY WAIVES THE BENEFIT OF THE
AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362.  FURTHERMORE, Debtor EXPRESSLY ACKNOWLEDGES
AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE
BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11
U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY
WAY THE ABILITY OF THE COLLATERAL AGENT TO ENFORCE ANY OF ITS RIGHTS AND
REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.  Debtor hereby consents to any motion for
relief from stay which may be filed by the Collateral Agent in any bankruptcy
or insolvency proceeding initiated by or against Debtor, and further agrees not
to file any opposition to any motion for relief from stay filed by the
Collateral Agent.  Debtor represents,
acknowledges and agrees that this provision is a specific and material aspect
of this Agreement, and that the Collateral Agent would not agree to the terms
of this Agreement if this waiver were not a part of this Agreement.  Debtor further represents, acknowledges and
agrees that this waiver is knowingly, intelligently and voluntarily made, that
neither the Collateral Agent nor any person acting on behalf of the Collateral
Agent has made any representations to induce this waiver, that Debtor has been
represented (or has had the opportunity to be represented) in the signing of
this Agreement and in the making of this waiver by independent legal counsel
selected by Debtor and that Debtor has had the opportunity to discuss this
waiver with counsel.

12.           Miscellaneous.

12.1         Expenses. 
Debtor shall pay to the Collateral Agent, on demand, the amount of any
and all reasonable expenses, including, without limitation, attorneys’ fees,
legal expenses and brokers’ fees, which the Collateral Agent may incur in
connection with (a) sale, collection or other enforcement or disposition of
Collateral; (b) exercise or enforcement of any the rights, remedies or powers
of the Collateral Agent hereunder or with respect to any or all of the
Obligations upon breach or threatened breach; or (c) failure

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by Debtor to perform and observe any
agreements of Debtor contained herein which are performed by the Collateral
Agent.

12.2         Waivers, Amendment and Remedies.  No course of dealing by the Collateral Agent
and no failure by the Collateral Agent to exercise, or delay by the Collateral
Agent in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, and no single or partial exercise thereof shall preclude any
other or further exercise thereof or the exercise of any other right, remedy or
power of the Collateral Agent.  No
amendment, modification or waiver of any provision of this Agreement and no
consent to any departure by Debtor therefrom, shall, in any event, be effective
unless contained in a writing signed by the Collateral Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.  The
rights, remedies and powers of the Collateral Agent, not only hereunder, but
also under any instruments and agreements evidencing or securing the
Obligations and under applicable law are cumulative, and may be exercised by
the Collateral Agent from time to time in such order as the Collateral Agent
may elect.

12.3         Notices.  All
notices or other communications given or made hereunder shall be in writing and
shall be personally delivered or deemed delivered the first business day after being
faxed (provided that a copy is delivered by first class mail) to the party to
receive the same at its address set forth below or to such other address as
either party shall hereafter give to the other by notice duly made under this
Section:

	
  To Debtor:

  	
   

  	
  Sweet Success Enterprises, Inc.

  
	
   

  	
   

  	
  1250 NE Loop
  410, Suite 630

  
	
   

  	
   

  	
  San Antonio, TX
  78209

  
	
   

  	
   

  	
  Attn: William J.
  Gallagher, CEO

  
	
   

  	
   

  	
  Fax: (210)
  824-3398

  
	
   

  	
   

  	
   

  
	
  With a copy by
  telecopier only to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Law Office of
  Gary A. Agron

  
	
   

  	
   

  	
  5445 DTC
  Parkway, Suite 520

  
	
   

  	
   

  	
  Greenwood
  Village, CO 80111-3009

  
	
   

  	
   

  	
  Fax: (303)
  770-7257

  
	
   

  	
   

  	
   

  
	
  To Lenders:

  	
   

  	
  To the addresses and telecopier numbers set forth

  
	
   

  	
   

  	
  on Schedule A

  
	
   

  	
   

  	
   

  
	
  To the Collateral Agent:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  With an additional copy to:

  	
   

  	
  Grushko &
  Mittman, P.C.

  
	
   

  	
   

  	
  551 Fifth Avenue, Suite 1601

  
	
   

  	
   

  	
  New York, New York 10176

  
	
   

  	
   

  	
  Fax: (212) 697-3575

  

 

 9
 

 

Any party may change its address by
written notice in accordance with this paragraph.

12.4         Term; Binding Effect. 
This Agreement shall (a) remain in full force and effect until payment
and satisfaction in full of all of the Obligations; (b) be binding upon Debtor,
and its successors and permitted assigns; and (c) inure to the benefit of the
Collateral Agent, for the benefit of the Lenders and their respective
successors and assigns.  All the rights
and benefits granted by Debtor to the Collateral Agent and Lenders in the Loan
Documents and other agreements and documents delivered in connection therewith
are deemed granted to both the Collateral Agent and Lenders.

12.5         Captions.  The
captions of Paragraphs, Articles and Sections in this Agreement have been
included for convenience of reference only, and shall not define or limit the
provisions hereof and have no legal or other significance whatsoever.

12.6         Governing Law; Venue; Severability.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to conflicts of laws principles that would result in the application of the
substantive laws of another jurisdiction, except to the extent that the
perfection of the security interest granted hereby in respect of any item of
Collateral may be governed by the law of another jurisdiction.  Any legal action or proceeding against Debtor
with respect to this Agreement may be brought in the courts in the State of New
York or of the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, Debtor hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. 
Debtor hereby irrevocably waives any objection which they may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement brought in the
aforesaid courts and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.  If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid, such
invalidity shall not affect any other provisions which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable and the remaining, valid provisions shall remain of
full force and effect.

12.7         Entire Agreement. 
This Agreement contains the entire agreement of the parties and
supersedes all other agreements and understandings, oral or written, with
respect to the matters contained herein.

12.8         Counterparts/Execution.  This Agreement may be executed in any number
of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.

[THIS SPACE INTENTIONALLY LEFT
BLANK]

 10
 

 

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

	
  “DEBTOR”

  	
   

  	
  “THE COLLATERAL
  AGENT”

  
	
  SWEET SUCCESS ENTERPRISES, INC.

  	
   

  	
   

  
	
  a Nevada corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its: 

  	
   

  	
   

  	
   

  	
   

  

 

 

APPROVED BY “LENDERS”:

	
  Name of Lender (Print):

  	
   

  	
  Name of Lender (Print):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name of
  Signator:

  	
   

  	
   

  	
   

  	
  Print Name of Signator:

  	
   

  
										

 

This
Security Agreement may be signed by facsimile signature and

delivered by
confirmed facsimile transmission.

 11
 

 

SCHEDULE A TO SECURITY AGREEMENT

 

	
  LENDER

  	
   

  	
  PURCHASE PRICE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
   

  	
   

  

 

 12
 

 

ANNEX
I

TO

SECURITY
AGREEMENT

PLEDGE
AMENDMENT

This Pledge Amendment, dated             
     200 , is delivered pursuant to Section 4.3 of the
Security Agreement referred to below. 
The undersigned hereby agrees that this Pledge Amendment may be attached
to the Security Agreement, dated August       ,
2006, as it may heretofore have been or hereafter may be amended, restated,
supplemented or otherwise modified from time to time and that the shares listed
on this Pledge Amendment shall be hereby pledged and assigned to Collateral
Agent and become part of the Collateral referred to in such Security Agreement
and shall secure all of the Obligations referred to in such Security Agreement.

 

	
  Name of Issuer

  	
   

  	
  Number

  of Shares

  	
   

  	
  Class

  	
   

  	
  Certificate

  Number(s)

  	
   

  
	
        

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
     

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  

  	
   

  	
  SWEET SUCCESS
  ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  

 

 13
 

 

SCHEDULE 6.1 TO SECURITY
AGREEMENT

The Company may grant a security interest senior
to the security interest granted to Collateral Agent and Lenders, in accounts
receivable of the Company provided the Lender in connection with such accounts
receivable financing is (i) a bank licensed by the United States or a state, or
(ii) an entity regularly engaged in the business of making accounts receivable
loans; each of which has its principal office located in the United States; and
(ii) the “loan to value” ratio of such accounts receivable financing is not
less than 70%.

 14Exhibit 4.3

 

THIS NOTE AND THE COMMON
SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.  THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO SWEET SUCCESS ENTERPRISES, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.

	
  Principal Amount $           

  	
   

  	
  Issue Date: August     ,
  2006

  

 

SECURED CONVERTIBLE
NOTE

FOR VALUE RECEIVED, SWEET SUCCESS ENTERPRISES, INC., a Nevada
corporation (hereinafter called “Borrower”), hereby promises to pay to                                                             ,
                                                                                                                            
(the “Holder”) or order, without demand, the sum of                                                                     
Dollars ($                  ),
with interest accruing thereon, on August         ,
2008 (the “Maturity Date”), if not retired sooner.

This Note has been
entered into pursuant to the terms of a subscription agreement between the
Borrower and the Holder, dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such Subscription
Agreement.  Unless otherwise separately
defined herein, all capitalized terms used in this Note shall have the same
meaning as is set forth in the Subscription Agreement.  The following terms shall apply to this Note:

ARTICLE I

GENERAL PROVISIONS

1.1           Interest Rate.   Interest payable on this Note shall accrue
at the annual rate of eight percent (8%) and be payable on the Maturity Date,
accelerated or otherwise, when the principal and remaining accrued but unpaid
interest shall be due and payable, or sooner as described below.

1.2           Payment Grace Period.  The Borrower shall have a five (5) day grace
period to pay any monetary amounts due under this Note, after which grace
period a default interest rate of ten percent (10%) per annum.

1.3           Conversion Privileges.  The Conversion Privileges set forth in
Article II shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full regardless of the occurrence of an
Event of Default.  The Note shall be
payable in full on the Maturity Date, unless previously converted into Common
Stock in accordance with Article II hereof; provided, that if an Event of
Default has occurred, the Borrower may not pay this Note, without the consent
of the Holder, until one year after the later of the date the Event of Default
has been cured or one year after the Maturity Date.

 1
 

 

ARTICLE II

CONVERSION RIGHTS

The Holder shall
have the right to convert the principal and any interest due under this Note
into Shares of the Borrower’s Common Stock, $.0001 par value per share (“Common
Stock”) as set forth below.

2.1.          Conversion into the Borrower’s
Common Stock.

(a)           The Holder shall have the right from
and after the date of the issuance of this Note and then at any time until this
Note is fully paid, to convert any outstanding and unpaid principal portion of
this Note, and accrued interest, at the election of the Holder (the date of
giving of such notice of conversion being a “Conversion Date”) into fully paid
and nonassessable shares of Common Stock as such stock exists on the date of
issuance of this Note, or any shares of capital stock of Borrower into which
such Common Stock shall hereafter be changed or reclassified, at the conversion
price as defined in Section 2.1(b) hereof (the “Conversion Price”), determined
as provided herein.  Upon delivery to the
Borrower of a completed Notice of Conversion, a form of which is annexed hereto,
Borrower shall issue and deliver to the Holder within three (3) business days after
the Conversion Date (such third day being the “Delivery Date”) that number of
shares of Common Stock for the portion of the Note converted in accordance with
the foregoing.  At the election of the
Holder, the Borrower will deliver accrued but unpaid interest on the Note, if
any, through the Conversion Date directly to the Holder on or before the
Delivery Date (as defined in the Subscription Agreement).  The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing that
portion of the principal of the Note and interest, if any, to be converted, by
the Conversion Price.

(b)           Subject
to adjustment as provided in Section 2.1(c) hereof, the Conversion Price per
share shall be the lesser of (i) $5.00 (“Fixed Conversion Price”), or (ii)
seventy-five percent (75%) of the average of the closing bid prices of the
Common Stock as reported by Bloomberg L.P. for the Principal Market for the
five trading days preceding but not including the Conversion Date.

(c)            The Fixed Conversion Price and
number and kind of shares or other securities to be issued upon conversion
determined pursuant to Section 2.1(a), shall be subject to adjustment from time
to time upon the happening of certain events while this conversion right
remains outstanding, as follows:

A.            Merger, Sale of Assets, etc.  If the Borrower at any time shall consolidate
with or merge into or sell or convey all or substantially all its assets to any
other corporation, this Note, as to the unpaid principal portion thereof and
accrued interest thereon, shall thereafter be deemed to evidence the right to
purchase such number and kind of shares or other securities and property as would
have been issuable or distributable on account of such consolidation, merger,
sale or conveyance, upon or with respect to the securities subject to the
conversion or purchase right immediately prior to such consolidation, merger,
sale or conveyance.  The foregoing
provision shall similarly apply to successive transactions of a similar nature
by any such successor or purchaser. 
Without limiting the generality of the foregoing, the anti-dilution
provisions of this Section shall apply to such securities of such successor or
purchaser after any such consolidation, merger, sale or conveyance.

B.            Reclassification, etc.  If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes that may be issued or
outstanding, this Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase
an adjusted number of such

 2
 

 

securities and kind of securities
as would have been issuable as the result of such change with respect to the
Common Stock immediately prior to such reclassification or other change.

C.            Stock Splits, Combinations and
Dividends.  If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock,
the Conversion Price shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of
combination of shares, in each such case by the ratio which the total number of
shares of Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to such
event..

D.            Share Issuance.   So long as this Note is outstanding, if the
Borrower shall issue or agree to issue any shares of Common Stock except for
the Excepted Issuances (as defined in the Subscription Agreement) for a consideration
less than the Conversion Price in effect at the time of such issue, then, and
thereafter successively upon each such issue, the Conversion Price shall be
reduced to such other lower issue price. 
For purposes of this adjustment, the issuance of any security carrying
the right to convert such security into shares of Common Stock or of any
warrant, right or option to purchase Common Stock shall result in an adjustment
to the Conversion Price upon the issuance of the above-described security and
again upon the issuance of shares of Common Stock upon exercise of such
conversion or purchase rights if such issuance is at a price lower than the
then applicable Conversion Price.  The
reduction of the Conversion Price described in this paragraph is in addition to
other rights of the Holder described in this Note and the Subscription
Agreement.

(d)           Whenever the
Conversion Price is adjusted pursuant to Section 2.1(c) above, the Borrower
shall promptly mail to the Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a statement of the facts requiring such
adjustment.

(e)           During the period the conversion
right exists, Borrower will reserve from its authorized and unissued Common
Stock not less than an amount of Common Stock equal to 200% of the amount of
shares of Common Stock issuable upon the full conversion of this Note.  Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable.  Borrower agrees that its issuance of this
Note shall constitute full authority to its officers, agents, and transfer
agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.

2.2           Method of Conversion.  This Note may be converted by the Holder in
whole or in part as described in Section 2.1(a) hereof and the Subscription
Agreement.  Upon partial conversion of
this Note, a new Note containing the same date and provisions of this Note shall,
at the request of the Holder, be issued by the Borrower to the Holder for the
principal balance of this Note and interest which shall not have been converted
or paid.

2.3           Maximum Conversion.  The Holder shall not be entitled to convert
on a Conversion Date that amount of the Note in connection with that number of
shares of Common Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates on a
Conversion Date, (ii) any Common Stock issuable in connection with the
unconverted portion of the Note, and (iii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the
determination of this provision is being made on a Conversion Date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock of the Borrower on such
Conversion Date.  For the purposes of the
provision to the immediately preceding sentence, beneficial ownership shall be
determined

 3
 

 

in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 thereunder.  Subject to
the foregoing, the Holder shall not be limited to aggregate conversions of only
4.99% and aggregate conversion by the Holder may exceed 4.99%.  The Holder shall have the authority and
obligation to determine whether the restriction contained in this Section 2.3
will limit any conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of the Notes are convertible shall be the
responsibility and obligation of the Holder. 
The Holder may waive the conversion limitation described in this Section
2.3, in whole or in part, upon and effective after 61 days prior written notice
to the Borrower to increase such percentage to up to 9.99%.

ARTICLE III

EVENT OF DEFAULT

The occurrence of
any of the following events of default (“Event of Default”) shall, at the option
of the Holder hereof, make all sums of principal and interest then remaining
unpaid hereon and all other amounts payable hereunder immediately due and
payable, upon demand, without presentment, or grace period, all of which hereby
are expressly waived, except as set forth below:

3.1           Failure to Pay Principal or
Interest.  The Borrower fails to pay
any installment of principal, interest or other sum due under this Note when
due and such failure continues for a period of five (5) days after the due
date.  The five (5) day period described
in this Section 3.1 is the same five (5) day period described in Section 1.2
hereof.

3.2           Breach of Covenant.  The Borrower breaches any material covenant
or other term or condition of the Subscription Agreement or this Note in any
material respect and such breach, if subject to cure, continues for a period of
ten (10) business days after written notice to the Borrower from the Holder.

3.3           Breach of Representations and
Warranties.  Any material
representation or warranty of the Borrower made herein, in the Subscription
Agreement, or in any agreement, statement or certificate given in writing
pursuant hereto or in connection therewith shall be false or misleading in any
material respect as of the date made and the Closing Date.

3.4           Receiver or Trustee.  The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or
such a receiver or trustee shall otherwise be appointed.

3.5           Judgments.  Any money judgment, writ or similar final
process shall be entered or filed against Borrower or any of its property or
other assets for more than $50,000, and shall remain unvacated, unbonded or
unstayed for a period of forty-five (45) days.

3.6           Bankruptcy.  Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law, or the issuance of any notice in relation to such event, for the
relief of debtors shall be instituted by or against the Borrower and if
instituted against Borrower are not dismissed within 45 days of initiation.

3.7           Delisting.   Delisting of the Common Stock from any Principal
Market; failure to comply with the requirements for continued listing on a Principal
Market for a period of seven consecutive

 4
 

 

trading days; or
notification from a Principal Market that the Borrower is not in compliance
with the conditions for such continued listing on such Principal Market.

3.8           Non-Payment.   A default by the Borrower under any one or
more obligations in an aggregate monetary amount in excess of $100,000 for more
than twenty days after the due date, unless the Borrower is contesting the
validity of such obligation in good faith.

3.9           Stop Trade.  An SEC or judicial stop trade order or
Principal Market trading suspension that lasts for five or more consecutive
trading days.

3.10         Failure to Deliver Common Stock or
Replacement Note.  Borrower’s failure
to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note and Sections 7 and 11 of the Subscription Agreement, or,
if required, a replacement Note.

3.11         Non-Registration Event.  The occurrence of a Non-Registration Event as
described in Section 11.4 of the Subscription Agreement.

3.12         Reservation Default.   Failure by the Borrower to have reserved for
issuance upon conversion of the Note the amount of Common stock as set forth in
this Note and the Subscription Agreement.

3.13         Cross Default.  A default by the Borrower of a material term,
covenant, warranty or undertaking of any other agreement to which the Borrower
and Holder are parties, or the occurrence of a material event of default under
any such other agreement which is not cured after any required notice and/or
cure period.

ARTICLE
IV

SECURITY
INTEREST

4.             Security
Interest/Waiver of Automatic Stay.  
This Note is secured by a security interest granted to the Collateral
Agent for the benefit of the Holder pursuant to a Security Agreement, as
delivered by Borrower to Holder.  The
Borrower acknowledges and agrees that should a proceeding under any bankruptcy
or insolvency law be commenced by or against the Borrower, or if any of the
Collateral (as defined in the Security Agreement) should become the subject of
any bankruptcy or insolvency proceeding, then the Holder should be entitled to,
among other relief to which the Holder may be entitled under the Transaction
Documents and any other agreement to which the Borrower and Holder are parties
(collectively, “Loan Documents”) and/or applicable law, an order from the court
granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section
362 to permit the Holder to exercise all of its rights and remedies pursuant to
the Loan Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE
BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362.  FURTHERMORE, THE BORROWER EXPRESSLY
ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION
OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN
ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES
UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. 
The Borrower hereby consents to any motion for relief from stay that may
be filed by the Holder in any bankruptcy or insolvency proceeding initiated by
or against the Borrower and, further, agrees not to file any opposition to any
motion for relief from stay filed by the Holder.  The Borrower represents, acknowledges and
agrees that this provision is a specific and material aspect of the Loan
Documents, and that the Holder would not agree to the terms of the

 5
 

 

Loan Documents if this waiver were not a part of this Note. The
Borrower further represents, acknowledges and agrees that this waiver is
knowingly, intelligently and voluntarily made, that neither the Holder nor any
person acting on behalf of the Holder has made any representations to induce
this waiver, that the Borrower has been represented (or has had the opportunity
to he represented) in the signing of this Note and the Loan Documents and in
the making of this waiver by independent legal counsel selected by the Borrower
and that the Borrower has discussed this waiver with counsel.

ARTICLE V

MISCELLANEOUS

5.1           Failure or Indulgence Not Waiver.  No failure or delay on the part of Holder
hereof in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege.  All
rights and remedies existing hereunder are cumulative to, and not exclusive of,
any rights or remedies otherwise available.

5.2           Notices.  All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. 
Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile,
with accurate confirmation generated by the transmitting facsimile machine, at
the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following
the date of mailing by express courier service, fully prepaid, addressed to
such address, or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such
communications shall be: (i) if to the Borrower to: Sweet Success Enterprises,
Inc., 1250 NE Loop 410, Suite 630, San Antonio, TX 78209, Attn: William J.
Gallagher, CEO, telecopier: (210) 824-3398, with a copy by telecopier only to:
Law Office of Gary A. Agron, 5445 DTC Parkway, Suite 520, Greenwood Village, CO
80111-3009, telecopier: (303) 770-7257, and (ii) if to the Holder, to the name,
address and telecopy number set forth on the front page of this Note, with a
copy by telecopier only to Grushko & Mittman, P.C., 551 Fifth Avenue, Suite
1601, New York, New York 10176, telecopier number: (212) 697-3575.

5.3           Amendment Provision.  The term “Note” and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.

5.4           Assignability.  This Note shall be binding upon the Borrower
and its successors and assigns, and shall inure to the benefit of the Holder
and its successors and assigns.

5.5           Cost of Collection.  If default is made in the payment of this
Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys’ fees.

54.6         Governing Law.  This Note shall be governed by and construed
in accordance with the laws of the State of New York.  Any action brought by either party against
the other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or

 6
 

 

in the federal courts
located in the state of New York.  Both
parties and the individual signing this Agreement on behalf of the Borrower
agree to submit to the jurisdiction of such courts.  The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs.

5.7           Maximum Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

5.8           Shareholder Status.  The Holder shall not have rights as a
shareholder of the Borrower with respect to unconverted portions of this
Note.  However, the Holder will have all
the rights of a shareholder of the Borrower with respect to the shares of
Common Stock to be received by Holder after delivery by the Holder of a
Conversion Notice to the Borrower.

[THIS
SPACE INTENTIONALLY LEFT BLANK]

 7
 

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed
in its name by an authorized officer as of the         
day of August, 2006.

	
  

  	
  SWEET SUCCESS ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

 8
 

 

NOTICE OF CONVERSION

(To be executed by the
Registered Holder in order to convert the Note)

The undersigned
hereby elects to convert $                  
of the principal and $                  
of the interest due on the Note issued by Sweet Success Enterprises, Inc. on August
      , 2006 into Shares of Common Stock of Sweet
Success Enterprises, Inc. (the “Borrower”) according to the conditions set
forth in such Note, as of the date written below.

	
  Date of Conversion:

  	
   

  	
   

  
	
   

  	
   

  
	
  Conversion Price:

  	
   

  	
   

  
	
   

  	
   

  
	
  Shares To Be Delivered:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
								

 

 

 9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]