Form of Warrant Issued to Western States Investment Corporation for Lease Guaranty

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.

No.  3

ISSUED:  October 31, 2002

MEDLYTE, INC.

SHARE PURCHASE WARRANT

This Share Purchase Warrant (this “ Warrant ”) certifies that Johnson & Johnson Development Corporation, A New Jersey corporation, or its assigns (the “ Registered Holder ”), for value received, is entitled to purchase from Medlyte Diagnostics, Inc., a Delaware corporation (the “ Company ”), the number and character of fully paid and nonassessable shares of the Company’s capital stock (the “ Warrant Shares ”) as determined in Section 2 below.  The number and character of the Warrant Shares issuable upon exercise hereof and the purchase price therefor are subject to adjustment as provided herein.  This Warrant is being issued pursuant to that certain Note and Warrant Purchase Agreement, dated as October 31, 2002, by and among the Company, the Donald R. Swortwood Trust Dated July 7, 1995; the Letitia H. Swortwood Revocable Trust #1 Dated September 16, 1992; and the Registered Holder (as the same may be amended, supplemented or otherwise modified from time to time, the “ Purchase Agreement ”).  Capitalized terms not otherwise defined herein shall have the respective meanings set forth in Section 1 hereof.

1.     Definitions .  As used in this Warrant, the following terms have the respective meanings set forth below:

“ Equity Financing ” shall mean a cash investment in the Company of at least $2,000,000 in exchange for a series of Company preferred stock having a liquidation preference senior to the Company’s existing series of preferred stock.

“ Equity Financing Securities ” shall mean those shares of the series of preferred stock issued pursuant to an Equity Financing.

 “ Liquidity Event ” shall mean (i) a merger, consolidation, recapitalization, reorganization share exchange or any similar event in which the holders of the voting stock of the Company immediately prior to such event will not own 50% or more of the voting stock of the continuing or surviving corporation or other entity, or the parent company of such corporation or other entity, immediately after such event, (ii) the sale,

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assignment, conveyance, transfer, lease or other disposition (other than the grant of a security interest) of more than 50% of the Company’s assets to any person or group, (iii) any sale or other disposition of the voting stock of the Company representing 50% or more of the total voting power of the Company’s outstanding capital stock in a single transaction or series of related transactions, (iv) any voluntary or involuntary liquidation, winding up of, dissolution or bankruptcy filing of or by the Company, or (v) an underwritten public offering of the Company’s common stock pursuant to a registration statement declared effective under the Securities Act of 1933, as amended.

2.     Warrant Shares .

(a)   Number of Warrant Shares .  This Warrant shall evidence the right of the Registered Holder to purchase up to a number of Warrant Shares determined by the following formula:

where:

W = The number of Warrant Shares issuable upon exercise of this Warrant;

P = a percentage equal to:

(i)    20%, if an Equity Financing or Liquidity Event occurs between the date hereof and December 31, 2002;

(ii)   40%, if an Equity Financing or Liquidity Event occurs after December 31, 2002.

C =  the balance of the Principal Amount and interest accrued under the Convertible Secured Promissory Note issued in conjunction herewith at the date of its conversion

M = the per share price of the Equity Financing Securities, in the event this Warrant is exercised for Equity Financing Securities.

(b)   Exercise Price .  The per Warrant Share exercise price (the “ Exercise Price ”) shall be an amount equal to 10% of the per share price of the Equity Financing Securities.

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3.     Exercise Period .

(a)   This Warrant may be exercised by the Registered Holder at any time or from time to time between the date hereof and the tenth anniversary of the date hereof by surrendering this Warrant at the principal office of the Company (or at such other office or agency as the Company may designate by notice in writing to the Registered Holder pursuant to Section 15 hereto) with the Form of Subscription attached hereto as Exhibit A duly executed by such Registered Holder, accompanied by payment in full by cash, check or wire transfer in the amount equal to (i) the number of Warrant Shares for which this Warrant is being exercised multiplied by (ii) the applicable Exercise Price (the “ Purchase Price ”).  This Warrant may be exercised for less than the full number of Warrant Shares at the time called for hereby, except that the number of shares receivable upon the exercise of this Warrant as a whole, and the sum payable upon the exercise of this Warrant as a whole, shall be proportionately reduced.  Upon a partial exercise of this Warrant in accordance with the terms hereof, this Warrant shall be surrendered, and a new Warrant of the same tenor and for the purchase of the number of such shares not purchased upon such exercise shall be issued by the Company to the Registered Holder without any charge therefor.

(b)   The exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Section 3(a) above.  At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in Section 3(d) below shall be deemed to have become the Registered Holder or Registered Holders of record of the Warrant Shares represented by such certificates.

(c)   Issuance of Certificates .  The Company agrees that the Warrant Shares purchased under this Warrant shall be and are deemed to be issued to the Registered Holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares.  Certificates for the Warrant Shares so purchased, together with any other securities or property to which the Registered Holder hereof is entitled upon such exercise, shall be delivered to the Registered Holder hereof by the Company at the Company’s expense within a reasonable time after the rights represented by this Warrant have been so exercised.  In case of a purchase of less than all the Warrant Shares, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the Warrant Shares purchasable under the Warrant surrendered upon such purchase to the Registered Holder hereof within a reasonable time, not exceeding fifteen (15) days after the date of such surrender.  Each stock certificate so delivered shall be in such denominations as may be requested by the Registered Holder hereof and shall be registered in the name of such Registered Holder or such other name as shall be designated by such Registered Holder.

4.     Shares to be Fully Paid; Reservation of Shares .   The Company covenants and agrees that all Warrant Shares which may be issued upon the exercise or conversion

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of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassess