CARESIDE INC
INTELLECTUAL PROPERTY SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>dex103.txt
<DESCRIPTION>INTELLECTUAL PROPERTY SECURITY AGREEMENT
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.3

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

DATE:         February 28, 2001
PARTIES:      Debtor:                         CARESIDE, INC.

              Debtor's Address:               6100 Bristol Parkway,
                                              Culver City, California 90230
                                              Attention:  W. Vickery Stoughton

              Secured Party:                  CRESTVIEW CAPITAL FUND, L.P.

              Secured Party Address:          95 Revere Drive, Suite F
                                              Northbrook, IL 60062
                                              Attention: Richard Levy

                                    RECITALS

          A. Secured Party and Debtor are parties to a Convertible Secured Note
of even date herewith (as such may be amended, modified, extended, and renewed
from time to time, the "Note"), pursuant to which Secured Party is making a loan
to Debtor in the original principal amount of Three Hundred Fifty Thousand
Dollars ($350,000) and other good and valuable consideration.

          B. It is a condition precedent to finalizing the Note that Debtor
shall have entered into this Intellectual Property Security Agreement ("IP
Agreement") granting Secured Party a security interest in the collateral
described in this Agreement as security for payment of the Note.

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and intending to be legally bound,
as collateral security for the prompt and complete payment when due of Debtor's
Obligations (as defined below) to Secured Party, Debtor hereby represents,
warrants, covenants and agrees as follows:

          1. Grant of Security Interest. As collateral security for the prompt
             --------------------------
and complete payment and performance of all of Debtor's Obligations, Debtor
hereby grants a security interest in all of Debtor's right, title and interest
in, to and under the Computer Hardware and Software Collateral, the Copyright
Collateral, the Patent Collateral, the Trademark Collateral and the Trade
Secrets Collateral, now or hereafter existing, created, acquired or held, if any
(all of which shall collectively be called the "Intellectual Property
Collateral"). As used herein

          "Computer Hardware and Software Collateral" means:

                    a. all of Debtor's: computer and other electronic data
          processing hardware, integrated computer systems, central processing
          units, memory units, display terminals, printers, features, computer
          elements, card readers, tape drives, hard and soft disk drives,
          cables, electrical supply hardware, generators, power


<PAGE>


          equalizers, accessories and all peripheral devices and other related
          computer hardware;

                    b. all software programs (including both source code, object
          code and all related applications and data files), whether now owned,
          licensed or leased or hereafter developed, designed or acquired by
          Debtor;

                    c. all firmware associated with the property described in
          clauses (a) and (b) of this definition;

                    d. all documentation (including flow charts, logic diagrams,
          manuals, guides and specifications) with respect to such hardware,
          software and firmware described in the preceding clauses (a) through
          (c); and

                    e. all rights with respect to all of the foregoing,
          including without limitation, any and all copyrights, licenses,
          options, warranties, service contracts, program services, test rights,
          maintenance rights, support rights, improvement rights, renewal rights
          and indemnifications and any substitutions, replacements, additions or
          model conversions of any of the foregoing.

          "Copyright Collateral" means all copyrights of Debtor in addition to
          the Computer Hardware and Software Collateral, and all semi-conductor
          chip product mask works of Debtor, whether statutory or common law,
          registered or unregistered, now or hereafter in force throughout the
          world, including, without limitation, all of Debtor's right, title and
          interest in and to all copyrights and mask works registered in the
          United States Copyright Office or anywhere else in the world, and all
          applications for registration thereof, whether pending or in
          preparation, all copyright and mask work licenses, the right to sue
          for past, present and future infringements of any thereof, all rights
          corresponding thereto throughout the world, all extensions and
          renewals of any thereof and all proceeds of the foregoing, including,
          without limitation, licenses, royalties, income, payments, claims,
          damages and proceeds of suit.

          "Patent Collateral" means:

                    a. all of Debtor's letters patent and applications for
          letters patent throughout the world, including all patent applications
          in preparation for filing anywhere in the world, whether now existing
          or hereafter acquired (current patents are listed on Exhibit A);
                                                               ---------

                    b. all patent licenses of Debtor (whether as licensee or
          licensor);

                    c. all reissues, divisions, continuations,
          continuations-in-part, extensions, renewals and reexaminations of any
          of the items described in clauses (a) and (b) of this definition; and

                    d. all proceeds of, and rights associated with, the
          foregoing (including license royalties and proceeds of infringement
          suits), the right to sue third parties



                                       -2-

<PAGE>

          for past, present or future infringements of any patent or patent
          application, including any patent or patent application referred to
          herein, and for breach or enforcement of any patent license, including
          any patent license referred to herein, and all rights corresponding
          thereto throughout the world.

          "Trade Secrets Collateral" means all common law and statutory trade
          secrets and all other confidential or proprietary or useful
          information of Debtor and all know-how obtained by or used in or
          contemplated at any time for use in the business of Debtor (all of the
          foregoing being collectively called a "Trade Secret"), whether or not
          such Trade Secret has been reduced to a writing or other tangible
          form, including all documents and things embodying, incorporating or
          referring in any way to such Trade Secret, all Trade Secret licenses
          of Debtor (whether as licensee or licensor), including each Trade
          Secret license referred to herein, and including the right to sue for
          and to enjoin and to collect damages for the actual or threatened
          misappropriation of any Trade Secret and for the breach or enforcement
          of any such Trade Secret license.

          "Trademark Collateral" means:

                    a. all of Debtor's: trademarks, trade names, corporate
          names, company names, business names, fictitious business names, trade
          styles, service marks, certification marks, collective marks, logos,
          other source of business identifiers, prints and labels on which any
          of the foregoing have appeared or appear, designs and general
          intangibles of a like nature (all of the foregoing items in this
          clause (a) being collectively called a "Trademark"), now existing
          anywhere in the world or hereafter adopted or acquired, whether
          currently in use or not, all registrations and recordings thereof and
          all applications in connection therewith, whether pending or in
          preparation for filing, including registrations, recordings and
          applications in the United States Patent and Trademark Office or in
          any office or agency of the United States of America or any State
          thereof or any foreign country (current trademarks are listed on
          Exhibit B);
          ---------

                    b. all Trademark licenses (whether as licensee or licensor);

                    c. all reissues, extensions or renewals of any of the items
          described in clauses (a) and (b) of this definition;

                    d. all of the goodwill of the business connected with the
          use of, and symbolized by the items described in, clauses (a) and (b);
          and

                    e. all proceeds of, and rights associated with, the
          foregoing, including any claim by Debtor against third parties for
          past, present or future infringement or dilution of any Trademark,
          Trademark registration or Trademark license, including any Trademark,
          Trademark registration or Trademark license referred to herein, or for
          any injury to the goodwill associated with the use of any such
          Trademark or for breach or enforcement of any Trademark license.



                                       -3-

<PAGE>

          2. Obligations Secured. The foregoing assignment and security interest
             -------------------
is made for the purpose of securing (in such order as Secured Party may elect)
the complete and timely payment of all indebtedness under the Note
(collectively, the "Obligations").

          3. Authorization and Request. Debtor authorizes and requests that the
             -------------------------
Commissioner of Patents and Trademarks record this IP Agreement.

          4. Covenants and Warranties. Debtor represents, warrants, covenants
             ------------------------
and agrees as follows:

                    a. Debtor is the sole and exclusive owner of the entire and
          unencumbered right, title and interest in the Intellectual Property
          Collateral, free and clear of any liens, charges and encumbrances
          except for those created hereunder and except for nonexclusive
          licenses granted by Debtor to its customers in the ordinary course of
          business;

                    b. Performance of this IP Agreement does not conflict with
          or result in a breach of any other agreement to which Debtor is bound,
          except to the extent that certain agreements may prohibit the transfer
          or assignment of the rights thereunder to a third party without the
          licensor's or other party's consent, and this IP Agreement constitutes
          the grant of a security interest;

                    c. During the term of this IP Agreement, Debtor will not
          transfer, assign, sell, hypothecate, or otherwise encumber any
          interest in the Intellectual Property Collateral, except for
          nonexclusive licenses granted by Debtor in the ordinary course of
          business or as set forth in this IP Agreement and except for security
          interests in such Intellectual Property Collateral existing as of the
          date hereof;

                    d. Debtor agrees that simultaneously with execution of this
          IP Agreement, and upon any amendment of Exhibit A or B, Debtor shall
          execute the form of Notice appended hereto as Schedule 1 (each, a
          "Notice") with respect to each Patent or Trademark Collateral now
          owned or hereafter acquired, and shall deliver it to Secured Party for
          recording in the Patent and Trademark Office so as to record formally
          this IP Agreement.

                    e. Debtor shall promptly advise Secured Party of any
          material adverse change in the composition of the Intellectual
          Property Collateral, including but not limited to any ownership right
          of the Debtor in or to any Trademark, Patent, Copyright, or other
          Intellectual Property Collateral specified in this IP Agreement and
          any abandonment, forfeiture or dedication to the public of the
          Computer Hardware and Software, Trademarks, Patents, Copyrights and
          other Intellectual Property Collateral specified in this IP Agreement;

                    f. Debtor shall (i) protect, defend and maintain the
          validity and enforceability of the Trademarks, Patents, Copyrights and
          other Intellectual Property Collateral, (ii) apply for registration of
          non-registered Hardware and Software, Patent, Trademark and Copyright
          Collateral as they are created,



                                       -4-

<PAGE>

          adopted or used and shall reasonably diligently prosecute such
          applications, (iii) use its best efforts to detect infringements of
          the Trademarks, Patents, Copyrights and other Intellectual Property
          Collateral and promptly advise Secured Party in writing of material
          infringements detected, (iv) not forego any right to protect and
          enforce rights to Trademarks, Patents, Copyrights or other
          Intellectual Property Collateral, and (v) not allow any Trademarks,
          Patents, Copyrights, or other Intellectual Property Collateral to be
          abandoned, forfeited or dedicated to the public without the written
          consent of Secured Party, which shall not be unreasonably withheld,
          unless Debtor determines that reasonable business practices suggest
          that abandonment is appropriate;

                    g. Debtor shall promptly notify Secured Party of all
          after-acquired intellectual property, whether owned, developed or
          acquired by Debtor and shall notify Secured Party of any filed
          applications to register or patents issued after the execution hereof.
          Any expenses incurred in connection with such applications shall be
          borne by the Debtor.

                    h. Debtor shall take such actions as Secured Party may
          reasonably request from time to time to perfect or continue the
          perfection of Secured Party's interest in the Intellectual Property
          Collateral;

                    i. This IP Agreement creates, and in the case of after
          acquired Intellectual Property Collateral, this IP Agreement will
          create at the time Debtor first has rights in such after acquired
          Intellectual Property Collateral, in favor of Secured Party a valid
          and perfected first priority security interest in the Intellectual
          Property Collateral in the United States securing the payment and
          performance of the obligations evidenced by the Note upon making the
          filings referred to in clause (j) below;

                    j. To its knowledge, except for, and upon, the filing with
          the United States Patent and Trademark Office with respect to the
          Patents and Trademarks necessary to perfect the security interests
          created hereunder and except as has been already made or obtained, no
          authorization, approval or other action by, and no notice to or filing
          with, any U.S. governmental authority of U.S. regulatory body is
          required either (i) for the grant by Debtor of the security interest
          granted hereby or for the execution, delivery or performance of this
          IP Agreement by Debtor in the United States or (ii) for the perfection
          in the United States or the exercise by Secured Party of its rights
          and remedies thereunder;

                    k. All information heretofore, herein or hereafter supplied
          to Secured Party by or on behalf of Debtor with respect to the
          Intellectual Property Collateral is accurate and complete in all
          material respects;

                    l. Debtor shall not enter into any agreement that would
          materially impair or conflict with Debtor's obligations hereunder
          without Secured Party's prior written consent, which consent shall not
          be unreasonably withheld. Debtor shall not permit the inclusion in any
          material contract to which it becomes a party



                                       -5-

<PAGE>


          of any provisions that could or might in any way prevent the creation
          of a security interest in Debtor's rights and interest in any property
          included within the definition of the Intellectual Property Collateral
          acquired under such contracts, except that certain contracts may
          contain anti-assignment provisions that could in effect prohibit the
          creation of a security interest in such contracts;

                    m. Debtor shall not take any action, nor enter into any
          license, royalty, assignment or other agreement which is inconsistent
          with Debtor's obligations under this IP Agreement, or which has the
          effect of reducing the value of the IP Collateral and shall give the
          Secured Party thirty (30) days' prior written notice of any proposed
          license, royalty, assignment or other agreement, except non-exclusive
          licenses granted by Debtor to its customers in the ordinary course of
          business; and

                    n. Upon any executive officer of Debtor obtaining actual
          knowledge thereof, Debtor will promptly notify Secured Party in
          writing of any event that materially adversely affects the value of
          any material Intellectual Property Collateral, the ability of Debtor
          to dispose of any material Intellectual Property Collateral, and the
          rights and remedies of Secured Party in relation thereto, including
          the levy of any legal process against any of the Intellectual Property
          Collateral.

          5. Secured Party's Rights. Secured Party shall have the right, but not
             ----------------------
the obligation, to take, at Debtor's sole expense, any actions that Debtor is
required under this IP Agreement to take but which Debtor fails to take, after
ten (10) days' notice to Debtor. Debtor shall reimburse and indemnify Secured
Party for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this Section 5.

          6. Responsibility of Debtor. In furtherance and not limitation of the
             ------------------------
other provisions of this Section 6, Secured Party shall have no duty or
responsibility with respect to the Intellectual Property Collateral or its
preservation. Debtor acknowledges and agrees that it has reviewed the terms of
this IP Agreement with counsel of its choosing and that Debtor has determined
that neither execution, delivery nor performance of this Agreement by Debtor or
Secured Party will in any way impair the Intellectual Property Collateral or
Debtor's right, title and interest therein, subject to the purpose of this IP
Agreement which is to impose a lien thereon in favor of Secured Party.

          7. Conduct of Business; Inspection Rights. In order to preserve and
             --------------------------------------
protect the goodwill associated with the Intellectual Property Collateral, the
Debtor covenants that it shall maintain the quality of the products and services
sold under or in connection with the Intellectual Property Collateral and shall
not at any time permit any impairment of the quality of said products and
services, and will provide the Secured Party from time to time with a
certificate to such effect signed by an officer of the Debtor upon request. The
Debtor hereby grants to the Secured Party and its employees and agents the right
to visit the Debtor's (or its affiliates') plants and facilities that
manufacture, provide, inspect or store products or services sold under any of
the Trademark Collateral, and to inspect the products and quality control
records relating thereto, at reasonable times during regular business hours. The
Debtor shall do



                                       -6-

<PAGE>

any and all acts reasonably required by the Secured Party to ensure the Debtor's
compliance with this Section. Debtor hereby grants to Secured Party and its
employees, representatives and agents the right to visit Debtor, during
reasonable hours upon prior reasonable written notice to Debtor, and any of
Debtor's plants and facilities that manufacture, install or store products (or
that have done so during the prior six-month period) that are sold utilizing any
of the Intellectual Property Collateral, and to inspect the products and quality
control records relating thereto upon reasonable written notice to Debtor and as
often as may be reasonably requested; provided, however, nothing herein shall
entitle Secured Party access to Debtor's trade secrets and other proprietary
information. The foregoing provisions of this Section 7 shall become applicable
to Debtor at such time as Debtor has developed products and services capable of
being sold to the public.

          8. Further Assurances; Attorney in Fact.

                    a. On a continuing basis, and at Debtor's sole expense,
          Debtor shall, subject to any prior licenses, encumbrances and
          restrictions and prospective licenses, make, execute, acknowledge and
          deliver, and file and record in the proper filing and recording places
          in the United States, all such instruments, including appropriate
          financing and continuation statements and collateral agreements and
          filings with the United States Patent and Trademark Office, and take
          all such action as may reasonably be deemed necessary or advisable, or
          as requested by Secured Party, to create, preserve, continue, charge,
          validate or perfect Secured Party's security interest in all Computer
          Hardware and Software, Copyrights, Patents, Trademarks, and other
          Intellectual Property Collateral and otherwise to carry out the intent
          and purposes of this IP Agreement, or for assuring and confirming to
          Secured Party the grant or perfection of a security interest in all
          Intellectual Property Collateral.

                    b. Debtor hereby irrevocably appoints Secured Party as
          Debtor's attorney-in-fact, with full authority in the place and stead
          of Debtor and in the name of Debtor, Secured Party or otherwise, from
          time to time in Secured Party's discretion, upon Debtor's failure or
          inability to do so, to take any action and to execute any instrument
          which Secured Party may deem necessary or advisable to accomplish the
          purposes of this IP Agreement, including:

                                (1) To modify, in its sole discretion, this IP
                Agreement without first obtaining Debtor's approval of or
                signature to such modification by amending any Exhibit hereof,
                as appropriate, to include reference to any right, title or
                interest in any Copyrights, Patents, Trademarks, and other
                Intellectual Property Collateral acquired by Debtor after the
                execution hereof or to delete any reference to any right, title
                or interest in any Copyrights, Patents, Trademarks, and other
                Intellectual Property Collateral in which Debtor no longer has
                or claims any right, title or interest, provided that secured
                Party shall deliver to Debtor written notice of such
                modification within a reasonable time after such modification;



                                       -7-

<PAGE>

                                (2) To file, in its sole discretion, one or more
                financing or continuation statements and amendments thereto,
                relative to any of the Intellectual Property Collateral without
                the signature of Debtor where permitted by law; and

                                (3) Upon the occurrence of an Event of Default
                as defined in Section 8, to endorse such Debtor's name on all
                applications, documents, papers and instruments necessary for
                the Secured Party to use the Intellectual Property Collateral,
                or to grant or issue any exclusive or non-exclusive license
                under the Intellectual Property Collateral to any third person,
                or necessary for the Secured Party to assign, pledge, convey or
                otherwise transfer title in or dispose of the Intellectual
                Property Collateral, including the goodwill and equipment
                associated therewith, to Secured Party or any third person.

                    c. Debtor hereby ratifies all that such attorney shall
          lawfully do or cause to be done by virtue hereof. This power of
          attorney, being coupled with an interest, shall be irrevocable for the
          life of this IP Agreement.

          9. Events of Default. The occurrence of any of the following shall
             -----------------
constitute an Event of Default under this IP Agreement:

                    a. an Event of Default occurs under the Note; or

                    b. Debtor breaches any representation or warranty in this IP
          Agreement; or

                    c. Debtor creates, permits, or suffers the creation of any
          liens, security interests, or any other encumbrances on any of its
          property, real or personal, except (A) those in favor of Secured Party
          as security for the Obligations, and (B) other valid and perfected
          security interests existing as of the date hereof, provided that
          Debtor shall have ten (10) days to remove, or purge or satisfy any
          such lien, security interest or encumbrance that is both
          non-consensual and not in favor of any government entity; or

                    d. Debtor breaches any other covenant or agreement made by
          Debtor in this IP Agreement, and such breach shall continue after the
          expiration of thirty (30) days following the earlier of (i) notice
          from Secured Party to Debtor of such failure, or (ii) the date on
          which the Debtor knew or should have known of such failure.

          10. Remedies.
              --------

                    a. Upon the occurrence and continuance of an Event of
          Default, Debtor's rights to use the Intellectual Property Collateral
          shall terminate forthwith and Secured Party shall have the right to
          exercise all the remedies of a secured party under the Uniform
          Commercial Code and any applicable federal law, including without
          limitation the right to require Debtor to assemble the



                                       -8-

<PAGE>


          Intellectual Property Collateral and any tangible property in which
          Secured Party has a security interest and to make it available to
          Secured Party at a place designated by Secured Party. Secured Party
          shall have a nonexclusive, royalty free license to use the Copyrights,
          Patents, Trademarks, and other Intellectual Property Collateral to the
          extent reasonably necessary to permit Secured Party to exercise its
          rights and remedies upon the occurrence of an Event of Default. Debtor
          will pay any expenses (including reasonable attorneys' fees) incurred
          by Secured Party in connection with the exercise of any of Secured
          Party's rights hereunder, including without limitation any expense
          incurred in disposing of the Intellectual Property Collateral. All of
          Secured Party's rights and remedies with respect to the Intellectual
          Property Collateral shall be cumulative.

                    b. Upon the occurrence and continuance of an Event of
          Default, without limiting the generality of the foregoing, the Secured
          Party may immediately, without demand of performance and without
          advertisement, require Debtor to assign of record the Intellectual
          Property Collateral to Secured Party (or its assignees), and
          beneficially, sell at public or private sale or otherwise realize
          upon, the whole or from time to time any part of the Intellectual
          Property Collateral and the goodwill associated therewith, or any
          interest which the Debtor has therein, and after deducting from the
          proceeds of said sale or other disposition of the Intellectual
          Property Collateral all expenses (including all reasonable expenses
          for brokers' fees and legal services), shall apply the residue of such
          proceeds toward the payment of the obligations as set forth in the
          Note and under applicable law. Any remainder of the proceeds after
          payment in full of the Note shall be paid over to the Debtor. Prior
          notice of any sale or other disposition of the Intellectual Property
          Collateral need not be given to Debtor unless otherwise required by
          law (and if notice is required by law, it shall be given ten (10) days
          before the time of any intended public or private sale or other
          disposition of the Intellectual Property Collateral is to be made,
          which the Debtor hereby agrees shall be reasonable notice of such sale
          or other disposition). At any such sale or other disposition, any
          holder of the Note (including renewals and substitutions therefor) or
          the Secured Party may, to the extent permissible under applicable law,
          purchase the whole or any part of or interest in the Intellectual
          Property Collateral sold, free from any right of redemption on the
          part of the Debtor, which right is hereby waived and released.

          11. Conduct of Business After Default. The parties understand and
              ---------------------------------
agree that the collateral assignment with respect to the Intellectual Property
Collateral as provided for in this Agreement will and is intended to permit the
Secured Party and its successors and assigns, upon the occurrence and
continuance of an Event of Default as provided herein, to take title to and make
use of all rights to the Intellectual Property Collateral and to carry on the
business of the Debtor.

          12. Deficiency. If proceeds referred to in Section 10(b) above are
              ----------
insufficient to pay the Note in full. Debtor shall continue to be liable for the
entire deficiency.

          13. Indemnity.
              ---------


                                       -9-

<PAGE>

                    a. Debtor agrees to defend, indemnify and hold harmless
          Secured Party and its directors, officers, employees, and agents from
          and against: (a) all obligations, demands, claims, and liabilities
          claimed or asserted by any other party in connection with the
          transactions contemplated by this IP Agreement, including, without
          limitation, the assignment of the Intellectual Property Collateral,
          the use of the Intellectual Property Collateral, the alleged
          infringement by the Secured Party of the intellectual property rights
          of others, any infringement action or other claim relating to the
          Intellectual Property Collateral, or enforcement of the terms hereof
          (all of which shall collectively be called the "Transactions") and (b)
          all losses or expenses in any way suffered, incurred, or paid by
          Secured Party as a result of or in any way arising out of, following
          or consequential to the Transactions under this IP Agreement or
          otherwise under the transactions contemplated by this IP Agreement or
          the Note (including without limitation, reasonable attorneys' fees and
          reasonable expenses), except for losses arising from or out of Secured
          Party's gross negligence or willful misconduct.

                    b. Debtor also agrees to defend, indemnify and hold harmless
          Secured Party and each of its directors, officers, employees and
          agents, on demand, from and against any and all losses, claims,
          obligations, damages, fees, costs, liabilities, expenses or
          disbursements of any kind and nature whatsoever (including but not
          limited to reasonable fees and disbursements of counsel, interest,
          penalties, and amounts paid in settlement) incurred by the Secured
          Party in connection with the payment or discharge of any taxes,
          counsel fees, maintenance fees, encumbrances or otherwise protecting,
          maintaining, preserving the Intellectual Property Collateral, or in
          defending or prosecuting any actions or proceedings arising out of or
          related to the Intellectual Property Collateral.

          14. Reassignment.
              ------------

                    a. At such time as Debtor shall completely and finally
          satisfy all of the obligations secured hereunder, and there shall
          exist no continuing liability of Debtor with respect to the
          obligations secured hereunder, Secured Party shall execute and deliver
          to Debtor all deed, assignments, and other instruments as may be
          necessary or proper to reinvest in Debtor full title to the property
          assigned hereunder, subject to any disposition thereof which may have
          been made by Secured Party pursuant hereto.

                    b. Notwithstanding subsection (a), if a claim is made upon
          Secured Party for repayment or recovery of any amount or amounts
          received which had the effect of reducing the liability of Debtor or
          impairing the liens granted hereunder, and such party repays all or
          part of such amount or amounts, then and in such event, Debtor agrees
          that any such repayment shall be binding upon Debtor, whether or not
          this IP Agreement otherwise shall have been terminated or canceled,
          and Debtor shall be and continue to remain liable hereunder to the
          same extent as if such amount had never originally been received by
          such party, and the liens granted hereby shall remain in full force
          and effect without interruption, lapse, reduction or other impairment.



                                       -10-

<PAGE>


          15. Course of Dealing. No course of dealing, nor any failure to
              -----------------
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.

          16. Attorneys' Fees. If any action relating to this IP Agreement is
              ---------------
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys fees, costs and disbursements.

          17. Assigns. This Agreement shall be binding upon Debtor and its
              -------
successors and permitted assigns, but shall not be assignable by Debtor, and
shall inure to the benefit of Secured Party.

          18. Amendments. This IP Agreement may be amended only by a written
              ----------
instrument signed by both parties hereto, except as specifically provided under
Section 9.

          19. Counterparts. This IP Agreement may be executed in two or more
              ------------
counterparts, each party may sign on a separate counterpart, each of which shall
be deemed an original but all of which together shall constitute the same
instrument.

          20. Law and Jurisdiction. This IP Agreement shall be governed by and
              --------------------
construed in accordance with the laws of the State of Utah, without regard for
choice of law provisions.

          21. Confidentiality. In handling any confidential information, Secured
              ---------------
Party shall exercise the same degree of care that it exercises with respect to
its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this IP Agreement except that the disclosure of this information may
be made (a) as required by law, regulation, rule or order, subpoena, judicial
order or similar order and (b) provided that the recipient has entered into a
comparable confidentiality agreement in favor of Debtor and has delivered a copy
to Debtor, (i) to the affiliates of the Secured Party, (ii) to prospective
transferee or purchasers of an interest in the obligations secured hereby, and
(iii) as may be required in connection with the examination, audit or similar
investigation of Secured Party.

          22. Severability. The provisions of this IP Agreement are severable,
              ------------
and if any clause or provision shall be held invalid and unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause of provision in any other
jurisdiction, or any other clause or provision of this IP Agreement in any
jurisdiction.

          23. Termination. This IP Agreement and all rights and obligations of
              -----------
the parties hereunder shall terminate immediately upon Debtor's payment in full
of the Note.

          IN WITNESS WHEREOF, the parties hereto have executed this IP Agreement
as of the day and year first above written.


                                       -11-

<PAGE>


                                   Debtor:

                                     CARESIDE, INC.,
                                     a Delaware corporation

                                     By:
                                         ---------------------------------------
                                         W. Vickery Stoughton,
                                         Chief Executive Officer


                                   Secured Party:

                                     CRESTVIEW CAPITAL FUND, L.P.

                                     By:
                                         ---------------------------------------




                                       -12-

<PAGE>



STATE/COMMONWEALTH OF ____________________
                                     : ss.

COUNTY OF ______________________

          The foregoing instrument was acknowledged before me this 28th day of
February, 2002, by W. Vickery Stoughton, President and Chief Executive Officer
of CARESIDE, INC., a Delaware corporation, on behalf of the corporation.

                                          ______________________________________
[seal]                                    NOTARY PUBLIC


STATE/COMMONWEALTH OF _____________________
                                      : ss.

COUNTY OF _____________

          The foregoing instrument was acknowledged before me this 28th day of
February, 2002, by _________________, the Senior Vice President of CRESTVIEW
CAPITAL FUND, L.P., a __________ corporation, on behalf of the corporation.

                                          ______________________________________
[seal]                                    NOTARY PUBLIC



<PAGE>


Exhibit "A" attached to that certain Intellectual Property Security Agreement
dated February 28, 2002.

                                EXHIBIT "A"

                                  PATENTS


 PATENT NUMBER                  DESCRIPTION                   FILE DATE
 -------------                  -----------                   ---------
   09/248737              Analytical Instrument -              2/11/99
                          Sample/Reagent Transport

    00/03367              Analytical Instrument -              2/09/00
                          Sample/Reagent Transport

   09/248614              Analytical Instrument -              2/11/99
                             Lock/Eject System

   09/248607          Analytical Instrument - Optical          2/11/99
                              Detector System

    5919711                 Analytical Cartridge                7/6/99

    5916522              Electrochemical Cartridge             6/29/99

    6002475             Spectrophotometric Cartridge           12/14/99

    6033914              Electrochemical Divisional             3/7/00

     424956           Design Patent -Instrument Design         5/16/00




<PAGE>

Exhibit "B" attached to that certain Intellectual Property Security Agreement
dated February 28, 2002.

                                   EXHIBIT "B"

                                   TRADEMARKS

Mark:             CARESIDE
Reg. No.:         2,427,362
Reg. Date:        2/6/01

Mark:             CARESIDE ANALYZER
Reg. No.:         2,375,634
Reg. Date:        8/8/00





<PAGE>

                                   SCHEDULE 1

               NOTICE OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

          NOTICE dated as of the 28th day of February, 2002, by CARESIDE, INC.,
a Delaware corporation ("Debtor"), having an address at, to and in favor of
CRESTVIEW CAPITAL FUND, L.P., having offices at 95 Revere Drive, Suite F,
Northbrook Illinois 60062 ("Secured Party") under a certain Convertible Secured
Note of even date herewith among Debtor and Secured Party (the "Note").

          WHEREAS, Debtor is the owner of certain Intellectual Property
Collateral as listed in Exhibits A and B hereto; and

          WHEREAS, Secured Party has agreed to extend certain credit to Debtor
under the Note on condition that the Secured Party pledge and grant to Secured
Party as collateral for the obligations under the Note a security interest and
lien in and to such Intellectual Property Collateral and application therefor
described above, including the registrations thereof, the goodwill associated
therewith and all other related claims and rights as more fully described in a
certain Intellectual Property Security Agreement in favor of Secured Party (the
"IP");

          NOW THEREFORE, for good and valuable consideration, as security for
the due and timely payment and performance of the obligations, Debtor hereby
pledges and grants and collaterally assigns to Secured Party a security interest
and lien in and to all rights, title and interest in and to


<PAGE>


the aforesaid IP, and gives notice of such security interest and the existence
of such Intellectual Property Security Agreement providing therefor.

          Executed as of the date first above written.


ATTEST:                                       CARESIDE, INC.


By:                                           By:
    ----------------------------------            ------------------------------
    Name: ______________________                  Name: ________________________
    Title:______________________                  Title:________________________



<PAGE>

STATE/COMMONWEALTH OF _________________ :
                                        :        SS.
COUNTY OF _____________                          :


          Before me, the undersigned, a Notary Public in and for the state and
county aforesaid, on this 28th day of February, 2002, personally appeared W.
Vickery Stoughton to me known personally, and who, being first by me duly sworn,
depose and say that he is the President and Chief Executive Officer of Careside,
Inc., a Delaware corporation, and that the seal affixed to the foregoing
instrument is the corporate seal of said corporation, and that said instrument
was signed and sealed on behalf of said corporation by authority of its Board of
Directors, and that he acknowledged said instrument to be the free act and deed
of said corporation.

                                          ______________________________________
                                          Notary Public

                                          My commission expires:________________
(Notarial Seal)




</TEXT>
</DOCUMENT>
