Execution Version
 
STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT (“Pledge Agreement”) is made this 28th day of
September, 2007 by DIOMED HOLDINGS, INC. and DIOMED, INC., each a Delaware
corporation (each a “Pledgor” and together, the “Pledgors”), in favor of
HERCULES TECHNOLOGY GROWTH CAPITAL, INC. (“Pledgee”).
 
WHEREAS, each Pledgor has concurrently herewith entered into that certain Loan
and Security Agreement dated as of September 28th, 2007 (as amended and in
effect from time to time, the “Loan Agreement”) with Pledgee pursuant to which
Pledgee has agreed to make certain advances of money and to extend certain
financial accommodations to Pledgor (collectively, the “Loan”), subject to the
terms and conditions set forth therein;
 
WHEREAS, each Pledgor owns the percentage of the outstanding stock set forth
beside the entities listed on Exhibit A attached hereto (which may be amended,
updated, or otherwise modified from time to time);
 
WHEREAS, Pledgee is willing to make the Loan to Pledgor, but only upon the
condition, among others, that each Pledgor shall have executed and delivered to
Pledgee this Pledge Agreement and the Pledged Collateral (as defined below);
 
NOW, THEREFORE, in consideration of the foregoing recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, each Pledgor hereby agrees as
follows:
 
1. All capitalized terms used but not otherwise defined herein shall have the
meanings given them in the Loan Agreement.
 
2. As security for the full, prompt and complete payment and performance when
due (whether by stated maturity, by acceleration or otherwise) of all the
Secured Obligations, together with, without limitation, the prompt payment of
all expenses, including, without limitation, reasonable attorneys’ fees and
legal expenses, incidental to the collection of the foregoing and the
enforcement or protection of Pledgee’s lien in and to the collateral pledged
hereunder (all such indebtedness being the “Liabilities”), each Pledgor hereby
pledges to Pledgee, and grants to Pledgee, a first priority security interest in
all of the following (collectively, the “Pledged Collateral”):
 
(a) the shares of capital stock or other equity securities of the entities
listed on Exhibit A attached hereto now owned or hereafter acquired (whether in
connection with any recapitalization, reclassification, or reorganization of the
capital of such entities or any successors in interest thereto) by Pledgor
(collectively, the “Pledged Shares”), and all dividends, cash, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares;
 
(b) all voting trust certificates held by Pledgor evidencing the right to vote
any Pledged Shares subject to any voting trust; and
 
(c) all additional shares and voting trust certificates of the entities listed
on Exhibit A from time to time acquired by Pledgor in any manner (which
additional shares shall be deemed to be part of the Pledged Shares), and the
certificates representing such additional shares, and all dividends, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Pledged Shares;
 
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provided, however, that notwithstanding the foregoing clauses (a) through (c),
in no event and at no time shall the Pledged Collateral include or be comprised
of the issued and outstanding capital stock or other equity securities
(calculated on an as-converted or as-exercised basis) of any Subsidiary of
Pledgor organized under the laws of any jurisdiction other than the United
States of America, or a subdivision thereof (a “Foreign Subsidiary”) which
exceeds 65% of all such issued and outstanding capital stock or other equity
securities (calculated on an as-converted or as-exercised basis) of such Foreign
Subsidiary, and, in each case, the corresponding proportion of dividends,
distributions, interest and other payments and rights with respect thereto.
 
3. Each Pledgor hereby represents and warrants to Pledgee as follows:
 
(a) Pledgor is, at the time of delivery of the Pledged Shares to Pledgee
hereunder, the sole holder of record and the sole beneficial owner of its
Pledged Collateral, free and clear of any lien thereon or affecting title
thereto, except for the lien created by this Pledge Agreement and Permitted
Liens.
 
(b) None of the Pledged Shares have been transferred in violation of applicable
federal or state securities laws to which such transfer may be subject.
 
(c) All of the Pledged Shares have been duly authorized, validly issued, and
fully paid, and are non-assessable and constitute the percentage of the issued
and outstanding capital stock owned by Pledgor set forth on Exhibit A.
 
(d) No consent, approval, authorization or other order of any person and no
consent or authorization of any governmental authority or regulatory body is
required to be made or obtained by Pledgor either (i) for the pledge by Pledgor
of its Pledged Collateral pursuant to this Pledge Agreement or for the
execution, delivery, or performance of this Pledge Agreement by Pledgor; or (ii)
for the exercise by Pledgee of the voting or other rights provided for in this
Pledge Agreement or the remedies with respect to the Pledged Collateral pursuant
to this Pledge Agreement, except as may be required in connection with such
disposition by laws affecting the offer and sale of securities generally.
 
(e) The pledge, grant of a security interest in, and delivery of the Pledged
Collateral pursuant to this Pledge Agreement, will create a valid first priority
lien on and in the Pledged Collateral, and the proceeds thereof, securing the
payment of the Liabilities.
 
(f) This Pledge Agreement has been duly executed and delivered by Pledgor and
constitutes a legal, valid, and binding obligation of Pledgor enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, or other similar laws affecting the rights of creditors
generally or by the application of general equity principles.
 
Each Pledgor warrants and represents to Pledgee that all representations and
warranties contained in this Pledge Agreement shall be true in all material
respects at the time of Pledgor’s execution of this Pledge Agreement and with
each Advance made to the Borrowers under the Loan Agreement.
 
4. So long as no Event of Default exists and Pledgee has not given either
Pledgor notice it will enforce its security interest in the Pledged Collateral:
 
(a) Voting Rights. Each Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to its Pledged Collateral, provided that
no vote shall be cast or consent, waiver or ratification given by such Pledgor
if the effect thereof would in the reasonable judgment of the Lender materially
impair any of the Pledged Collateral or be inconsistent with or result in any
violation of any of the provisions of the Loan Agreement, the Notes or any of
the other Loan Documents; and
 
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(b) Dividend and Distribution Rights. Each Pledgor shall be entitled to receive
and to retain and use any and all dividends or distributions paid in respect of
its Pledged Collateral; provided, however, that any and all:
 
(i) non-cash dividends or distributions in the form of capital stock,
instruments or other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral, and
 
(ii) dividends and other distributions paid or payable in cash in respect of any
Pledged Collateral in connection with total liquidation or dissolution,
 
shall forthwith be delivered to Pledgee, to be held as Pledged Collateral and
shall, if received by a Pledgor, be received in trust for the benefit of
Pledgee, be segregated from the other property of such Pledgor, and forthwith be
delivered to Pledgee as Pledged Collateral in the same form as so received (with
any necessary endorsement).
 
5. Each Pledgor agrees to pay prior to delinquency all taxes, charges, liens and
assessments against the Pledged Collateral, except those with respect to which
the amount or validity is being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of such Pledgor and upon the failure of such Pledgor to do
so, Pledgee at its option may pay any of them and shall be the sole judge of the
legality or validity thereof and the amount necessary to discharge the same.
 
6. So long as Pledgee has any commitment to make Advances to any Pledgor under
the Loan Agreement or any Pledgor has any Secured Obligations (other than
inchoate indemnity obligations) outstanding under the Loan Agreement, each
Pledgor agrees that such Pledgor:
 
(a) will not (i) sell, transfer or otherwise dispose of, or grant any option or
warrant with respect to, any of the Pledged Collateral (or any part thereof or
interest therein) except with the prior written consent of Pledgee, or (ii)
create or permit to exist any lien or encumbrance upon or with respect to any of
the Pledged Collateral, except for Permitted Liens. If any Pledged Collateral,
or any part thereof, is sold, transferred or otherwise disposed of in violation
of this Section 6, the security interest of Pledgee shall continue in the
Pledged Collateral notwithstanding such sale, transfer or other disposition, and
Pledgor will deliver any proceeds thereof to Pledgee to be held as Pledged
Collateral hereunder;
 
(b) shall, at Pledgor’s own expense, promptly execute, acknowledge, and deliver
all such instruments and take all such actions as Pledgee from time to time may
reasonably request in order to ensure to Pledgee the benefits of the lien in and
to the Pledged Collateral intended to be created by this Pledge Agreement;
 
(c) shall maintain, preserve and defend the title to the Pledged Collateral and
the lien of Pledgee thereon against the claim of any other person;
 
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(d) upon obtaining any shares of capital stock or other equity securities that
should be pledged pursuant to Section 2 of this Pledge Agreement, shall
immediately (i) deliver to Pledgee a duly executed Pledge Agreement Supplement
in substantially the form of Schedule 1 attached hereto (a “Pledge Agreement
Supplement”) identifying such additional shares of capital stock or other equity
securities, and (ii) deliver or otherwise cause the transfer of such additional
shares of capital stock or other equity securities to the Pledgee, provided, in
each case so as to cause at all times the Pledged Collateral to constitute, but
in no event and at no time to exceed, 65% of the issued and outstanding capital
stock or other equity securities (calculated on an as-converted or as-exercised
basis) of any Foreign Subsidiary. Pledgor hereby authorizes Pledgee to attach
each Pledge Agreement Supplement to this Pledge Agreement and agrees that all
shares of capital stock or other equity securities listed thereon shall for all
purposes hereunder constitute Pledged Collateral.
 
7. In the event that during the term of this Pledge Agreement, any
reclassification, readjustment, new issuance or other change is declared or made
in the capital structure of the issuer of the Pledged Shares, all new
substituted and additional shares, options, or other securities, issued or
issuable to any Pledgor by reason of any such issuance, change or exercise shall
be delivered to and held by Pledgee under the terms of this Pledge Agreement in
the same manner as the Pledged Collateral originally pledged hereunder.
 
8. All advances, charges, costs and expenses, including reasonable attorneys’
fees, incurred or paid by Pledgee in exercising any right, power or remedy
conferred upon Pledgee by this Pledge Agreement, or in the enforcement thereof,
shall become a part of the Liabilities secured hereunder and shall be paid to
Pledgee on demand.
 
9. During the existence of an Event of Default, Pledgee may, to the extent
permitted by applicable law, at its election, apply, set off, collect or sell in
one or more sales, or take such steps as may be necessary to liquidate and
reduce to cash in the hands of Pledgee in whole or in part, with or without any
previous demands or demand of performance or notice or advertisement, the whole
or any part of the Pledged Collateral in such order as Pledgee may elect, and
any such sale may be made either at public or private sale at its place of
business or elsewhere, or at any broker’s board or securities exchange, either
for cash or upon credit or for future delivery; provided, however, that if such
disposition is at private sale, then the purchase price of the Pledged
Collateral shall be equal to the public market price then in effect, or, if at
the time of sale no public market for the Pledged Collateral exists, then, in
recognition of the fact that the sale of the Pledged Collateral would have to be
registered under the Securities Act of 1933, as amended (the “Act”), and that
the expenses of such registration are commercially unreasonable for the type and
amount of collateral pledged hereunder, Pledgee and each Pledgor hereby agree
that such private sale shall be at a purchase price mutually agreed to by
Pledgee and the Pledgors or, if the parties cannot agree upon a purchase price,
then at a purchase price established by Pledgee in the exercise of its
reasonable discretion. Pledgee shall be under no obligation to delay the sale of
any of the Pledged Shares for the period of time necessary to permit a Pledgor
to register such securities for public sale under the Act, or under applicable
state securities laws, even if such Pledgor would agree to do so. Pledgee may be
the purchaser of any or all Pledged Collateral so sold and hold the same
thereafter in its own right free from any claim of any Pledgor or right of
redemption. To the extend permitted by law, demands of performance, notices of
sale, advertisements and presence of property at sale are hereby waived. Any
sale hereunder may be conducted by any officer or agent of Pledgee.
 
10. The proceeds of the sale of any of the Pledged Collateral and all sums
received or collected by Pledgee from or on account of such Pledged Collateral
shall be applied by Pledgee to the payment of reasonable expenses incurred or
paid by Pledgee in connection with any sale, transfer or delivery of the Pledged
Collateral, to the payment of any other costs, charges, attorneys’ fees or
expenses mentioned herein, and to the payment of the Secured Obligations or any
part hereof, all in such order and manner as Pledgee in its discretion may
determine. Pledgee shall then pay any remaining balance of the Secured
Obligations to the Pledgor.
 
11. Upon the transfer of all or any part of Secured Obligations pursuant to the
terms of the Loan Agreement, Pledgee may transfer all or any part of the Pledged
Collateral to the transferee of the Secured Obligations and shall be fully
discharged thereafter from all liability and responsibility with respect to such
Pledged Collateral so transferred, and the transferee shall be vested with all
the rights and powers of Pledgee hereunder with respect to such Pledged
Collateral so transferred; but with respect to any Pledged Collateral not so
transferred, Pledgee shall retain all rights and powers hereby given.
 
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12. Until all Secured Obligations shall have been paid in full in cash, the
power of sale and all other rights, powers and remedies granted to Pledgee
hereunder shall continue to exist and may be exercised by Pledgee at any time
and from time to time pursuant to the terms hereof.
 
13. Pledgee may at any time deliver the Pledged Collateral or any part thereof
to a Pledgor and the receipt thereof by such Pledgor shall be a complete and
full acquittance for the Pledged Collateral so delivered, and Pledgee shall
thereafter be discharged from any liability or responsibility therefore, except
for such as is directly caused by Pledgee’s gross negligence or willful
misconduct.
 
14. The rights, powers and remedies given to Pledgee by this Pledge Agreement
shall be in addition to all rights, powers and remedies given to Pledgee by
virtue of any statute or rule of law. Any forbearance, failure or delay by
Pledgee in exercising any right, power or remedy hereunder shall not be deemed
to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy hereunder shall not preclude the further
exercise thereof and every right, power and remedy of Pledgee shall continue in
full force and effect until such right, power or remedy is specifically waived
by an instrument in writing executed by Pledgee.
 
15. If any provision of this Pledge Agreement is held to be unenforceable for
any reason, all other provisions of this Pledge Agreement shall be deemed valid
and enforceable to the full extent possible.
 
16. This Pledge Agreement shall be governed by, and construed in accordance
with, the laws of the State of California.
 
17. Upon the payment in full in cash of all Secured Obligations (other than
inchoate indemnity obligations) and the cancellation or termination of any
commitment to extend credit or make Advances under the Loan Agreement, the
security interest granted herein shall terminate and all rights to the Pledged
Collateral shall revert to the Pledgors, and Pledgee shall immediately return
all Pledged Collateral to the applicable Pledgor. Upon such termination, Pledgee
shall, at Pledgors’ cost and expense, execute and deliver to any Pledgor any
additional documents or instruments as such Pledgor reasonably request to
evidence such termination.
 
[Signature Page Follows]
 
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IN WITNESS WHEREOF, each Pledgor has executed this Pledge Agreement as of the
date first set forth above.
 
DIOMED HOLDINGS, INC.
   
By:
 
Name:
 
Title:
     
DIOMED, INC.
   
By:
 
Name:
 
Title:
 

 
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Exhibit A
 
Pledgor: Diomed Holdings, Inc.

Name of
Pledged
Share
Issuer
 
Jurisdiction
of
Organization
 
Number of
Shares
Authorized
 
Number of
Shares
Issued
 
Number of
Shares
Outstanding
 
Number of
Shares
Owned by
Pledgor
 
% of
Outstanding
Shares
Pledged
 
Certificate
Number
Diomed, Inc.
 
Delaware
 
3,500,000
Preferred
 
3,500,000 Preferred
 
3,500,000 Preferred
 
3,500,000
Preferred
 
100%
 
P-1
Diomed, Inc.
 
Delaware
 
40,000,000
Common
 
40,000,000
Common
 
40,000,000
Common
 
40,000,000
Common
 
100%
 
1

 
Pledgor: Diomed, Inc.

Name of
Pledged
Share
Issuer
 
Jurisdiction
of
Organization
 
Number of
Shares
Authorized
 
Number of
Shares
Issued
 
Number of
Shares
Outstanding
 
Number of
Shares
Owned by
Pledgor
 
% of
Outstanding
Shares
Pledged
 
Certificate
Number
Diomed PDT, Inc.
 
Delaware
 
100
Common
 
100
Common
 
100
Common
 
100
Common
 
100%
 
1
Diomed Acquisition Corp.
 
Delaware
 
1,000
Common
 
1,000
Common
 
1,000
Common
 
1,000
Common
 
100%
 
1

 
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Schedule 1

Pledge Agreement Supplement

This Pledge Agreement Supplement, dated as of _____________, 20__, is delivered
pursuant to Section 6(d) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Agreement Supplement may be attached
to the Pledge Agreement, dated as of September 28, 2007 (as amended, restated,
modified, renewed, supplemented or extended from time to time, the “Pledge
Agreement”; the terms defined therein and not otherwise defined herein being
used as therein defined), made by the undersigned, as Pledgor in favor of
Hercules Technology Growth Capital, Inc., as Pledgee, and that the shares of
capital stock or other equity securities listed on this Pledge Agreement
Supplement shall be and become part of the Pledged Collateral pledged by the
undersigned and referred to in the Pledge Agreement and shall secure all Secured
Obligations.

The undersigned agree that the shares of capital stock and other equity
securities listed below shall for all purposes constitute Pledged Collateral
pledged by the undersigned and shall be subject to the security interest created
by the Pledge Agreement.

The undersigned hereby certify that the representation and warranties set forth
in Section 3 of the Pledge Agreement are true and complete in all material
respects with respect to the Pledged Shares listed below on and as of the date
hereof.
 
[PLEDGOR]
   
By:
 
Name:
 
Title:
 

 
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Name of
Pledged
Share
Issuer
 
Jurisdiction
of
Organization
 
Number of
Shares
Authorized
 
Number of
Shares
Issued
 
Number of
Shares
Outstanding
 
Number of
Shares
Owned by
Pledgor
 
% of
Outstanding
Shares
Pledged
 
Certificate
Number
                                                           

 
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