EXHIBIT 10.2


                              DIOMED HOLDINGS, INC.

                           ---------------------------

                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION

                           ---------------------------

         Pursuant to Section 242 of the Delaware General Corporation Law

                           ---------------------------

      Diomed Holdings, Inc., a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:

      FIRST: The name of the Corporation  (hereinafter called the "Corporation")
is Diomed  Holdings,  Inc., a corporation  organized and now existing  under the
General Corporation Law of the State of Delaware ("DGCL").

      SECOND:  The certificate of  incorporation of the Corporation was filed at
the Office of the  Secretary of State of the State of Delaware on April 19, 2002
(the "Certificate of Incorporation").

      THIRD:  The article of the Certificate of  Incorporation  affected by this
Certificate is Article FIFTH.


      FOURTH:  This  Certificate  of Amendment  is being filed to authorize  the
Corporation  to issue from the Twenty Million  (20,000,000)  shares of preferred
stock,  par value $0.001 per share,  that are  authorized by the  Certificate of
Incorporation  (the  "Authorized  Preferred  Stock") a new series of  Authorized
Preferred Stock, which shall be in addition to the Preferred Stock created under
the Certificate of  Designations of the Corporation  filed with the Secretary of
State of the State of Delaware on September  30, 2005,  and which shall have the
voting powers (if any), designations,  preferences and relative,  participating,
option  or  other  special  rights  and  the  qualifications,   limitations  and
restrictions as set forth in the amendment to Article FIFTH set forth below.

      FIFTH:  The  Certificate  of  Incorporation  is hereby amended by deleting
Section 2 of Article FIFTH thereof in its entirety and inserting in lieu thereof
the  following  new text (all  references  below to this Article  FIFTH shall be
deemed to be references to Section 2B of this Article FIFTH):

      Section 2A. Share  Status.  All common shares will be equal to each other,
and when issued, shall be fully paid and nonassessable, and the private property
of the stockholders  shall not be liable for corporate  debts.  Preferred shares
issued  prior to  September  ___,  2006 shall have such  preferences  and voting
rights as the  Directors  assigned to them prior to  issuance.  Each holder of a
common  share of  record  shall  have one vote for each  share of  common  stock
outstanding  in his or her name on the  books of the  Corporation  and  shall be
entitled to vote said stock.  Each holder of a preferred  share of record issued
prior to  September  ___,  2006 of record  shall have one vote for each share of
preferred stock  outstanding in his or her name on the books of the Corporation,
if such voting right was assigned to such shares by the Board of Directors  upon
issuance.


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<PAGE>

      Section  2B.  2006  Preferred  Stock.   [_________________________________
(_____________)] shares of the [_____________________  (____________)] shares of
the  Authorized  Preferred  Stock of the  Corporation  which are  authorized but
unissued  shares shall hereby be designated  Series 2006  Preferred  Stock,  par
value  $0.001 per share (the "2006  Preferred  Stock"),  and shall  possess  the
voting powers (if any), designations,  preferences and relative,  participating,
option  or  other  special  rights  and  the  qualifications,   limitations  and
restrictions  set forth  below.  The face  amount (the "Face  Amount")  shall be
Eleven  Thousand  Five Hundred  Dollars  ($11,500)  per share of 2006  Preferred
Stock.

      1.  Dividends.  The holders of outstanding  shares of 2006 Preferred Stock
(each a "Holder" and collectively,  the "Holders") shall be entitled to receive,
as, when and if  declared  by the Board of  Directors  of the  Corporation  (the
"Board of  Directors"),  out of lawfully  available funds  cumulative  dividends
("Dividends")  as set forth below.  No Dividends  shall accrue or become payable
unless and until a Dividend Commencement Event shall occur. For purposes hereof,
the term  "Dividend  Commencement  Event"  shall  mean the  consummation  by the
Corporation,  from and after the  Closing  Date (as  defined  in the  Securities
Purchase Agreement, dated as of July 27, 2006, between the Corporation and those
Purchasers  signatory  thereto  (the  "Securities  Purchase  Agreement")),  of a
transaction  (other than the issuance and sale of the 2006 Preferred Stock) that
reduces the price (the  "Conversion  Price") at which  common  stock,  par value
$0.001 per share, of the Corporation (the "Common Stock"), shall become issuable
upon  conversion  of the  Debentures  (as  defined  in the  Securities  Purchase
Agreement)  pursuant to the provisions of Section 5(b) thereof;  provided,  that
such  reduction in the  Conversion  Price takes effect for  Debentures  that are
outstanding in the aggregate  principal  amount of at least One Million  Dollars
($1,000,000).  From  and  after  the  date  of a  Dividend  Commencement  Event,
Dividends shall accrue at the rate of Fifteen Percent (15%) per annum, and shall
be payable (pro rata over the applicable  period,  if less than a full quarterly
period) (i)  quarterly  in arrears as of the end of each  fiscal  quarter of the
Corporation  (payable on the first business day of the subsequent fiscal quarter
of the  Corporation),  for so  long  as  shares  of  2006  Preferred  Stock  are
outstanding,  (ii) upon the date of (1) the consummation of a Liquidating  Event
pursuant  to  Section 3 of this  Article  FIFTH or (2)  exchange  by the  Holder
pursuant to Section 4 below or by the Corporation  pursuant to Section 6 or 7 of
this Article FIFTH or (iii) upon the redemption by the  Corporation  pursuant to
Section 8 of this Article FIFTH (as  applicable,  the "Dividend  Payment Date").
Such  Dividends  shall be  cumulative  so that if  Dividends  in  respect of any
previous  or  current  quarterly  Dividend  period  shall  not have been paid or
declared and a sum sufficient for the payment  thereof has not been set aside by
the Corporation, the deficiency shall first be fully paid before any Dividend or
other distribution shall be paid or declared and set aside for the Common Stock.
Dividends shall be payable in cash only.


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<PAGE>

      2. Voting.

      (a) Except as otherwise expressly provided elsewhere in the Certificate of
Incorporation  or as  otherwise  required  by the DGCL,  (i) each  share of 2006
Preferred  Stock  shall be  entitled  to a number  votes  equal to the number of
shares of Common  Stock into which such share of 2006  Preferred  Stock,  on the
record  date  for the  determination  of  stockholders  entitled  to vote on all
matters  submitted to a vote of the  stockholders  of the  Corporation  would be
exchangeable  pursuant  to  Section  4 of this  Article  FIFTH  (subject  to the
Limitations on Ownership (as defined in Section  4(a)),  and (ii) the holders of
shares of 2006 Preferred  Stock and Common Stock shall vote together (or consent
in writing in lieu of a vote) as a single class on all matters  submitted to the
stockholders of the Corporation.

      (b) The Corporation shall provide each holder of 2006 Preferred Stock with
prior  notification  of any  meeting of the  stockholders  (and  copies of proxy
materials and other information sent to stockholders).  If the Corporation takes
a  record  of its  stockholders  for the  purpose  of  determining  stockholders
entitled (i) to receive payment of any Dividend or other distribution, any right
to subscribe  for,  purchase or otherwise  acquire  (including by way of merger,
consolidation  or  recapitalization)  any  share  of  any  class  or  any  other
securities  or  property,  or to  receive  any other  right,  or (ii) to vote in
connection with any proposed sale,  lease or conveyance of all or  substantially
all of the assets of the  Corporation,  or any proposed  merger,  consolidation,
liquidation, dissolution or winding up of the Corporation, the Corporation shall
mail a notice to each holder of 2006 Preferred  Stock, at least 15 days prior to
the record date specified  therein (or 45 days prior to the  consummation of the
transaction or event,  whichever is earlier, but in no event earlier than public
announcement of such proposed transaction), of the date on which any such record
is to be taken for the purpose of such vote,  dividend,  distribution,  right or
other event,  and a brief  statement  regarding the amount and character of such
vote, dividend,  distribution,  right or other event to the extent known at such
time.

      (c) To the extent  that under the DGCL the vote of the holders of the 2006
Preferred  Stock,  voting  separately as a class or series,  as  applicable,  is
required to authorize a given action of the Corporation, the affirmative vote or
consent of the holders of at least 65% of the shares of the 2006 Preferred Stock
at the time issued and outstanding (the "Required Holders") present in person or
by proxy at a duly held  meeting  at which a quorum  is  present  or by  written
consent of the Required  Holders  (except as otherwise may be required under the
DGCL) shall constitute the approval of such action by the class.

      3. Liquidation.

      (a) The 2006  Preferred  Stock shall be  preferred  over and senior to the
Common Stock and any class or series of capital stock of  Corporation  hereafter
created as to the assets of the  Corporation  available for  distribution to its
stockholders  upon the occurrence of any  Liquidating  Event (as defined below),
whether  voluntary or involuntary,  or from the net proceeds from a sale, lease,
exchange or other  disposition  of the assets of the  Corporation  in connection
with a Change of Control (as defined in Section 7 of this Article FIFTH) (in any
such case, the  "Proceeds").  In the case of any  Liquidating  Event (as defined
below) or Change of Control,  upon the consummation of such Liquidating Event or
Change of Control, all then-outstanding  shares of 2006 Preferred Stock shall be
extinguished  automatically  and in lieu of such shares of 2006 Preferred  Stock
the holders of the 2006  Preferred  Stock so  extinguished  shall be entitled to
receive out of the Proceeds,  and before any  distribution or payment is made to
any  holders  of any  shares  of Common  Stock or any  other  class or series of
capital stock of the Corporation  hereafter created (but following  distribution
of Proceeds to repay the Corporation's  obligations under the Debentures and the
Corporation's  Preferred Stock issued on September 30, 2005 (the "2005 Preferred
Stock"),  an amount equal to the greater of: (i) Thirteen Thousand Eight Hundred
Dollars ($13,800) per share of 2006 Preferred Stock, plus all accrued and unpaid
Dividends  thereon,  if  any,  whether  or not  earned  or  declared,  up to and
including  the date full  payment  shall be  tendered to the holders of the 2006
Preferred Stock with respect to such  Liquidating  Event (which amount per share
shall be payable in cash) and (ii) such amount per share of 2006 Preferred Stock
as would  have been  payable  had each such share  been  tendered  by the Holder
thereof for  exchange  into Common  Stock  pursuant to Section 4 of this Article
FIFTH  (without  giving  effect to the  Limitations  on Ownership (as defined in
Section 4(a) of this Article FIFTH)) immediately prior to such Liquidating Event
(which  amount  per share  shall be  payable in cash,  securities  and/or  other
property  in the same amount and  proportion  as would be paid to the holders of
Common Stock) (as applicable, the "Liquidation Preference").


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<PAGE>

      (b) If,  upon any  Liquidating  Event or Change of Control,  the  Proceeds
available for  distribution  to the holders of the 2006 Preferred Stock shall be
insufficient to permit payment to such Holders of the full preferential  amounts
as provided for above, then such Holders shall share ratably in any distribution
of available assets according to the respective amounts which would otherwise be
payable  with  respect to the shares of 2006  Preferred  Stock held by them upon
such Liquidating Event or Change of Control  distribution if all amounts payable
on or with  respect to said shares were paid in full,  based upon the  aggregate
liquidation value of all 2006 Preferred Stock  outstanding  immediately prior to
such Liquidating Event or Change of Control.

      (c) After such payment  shall have been made in full to the holders of the
2006 Preferred Stock, the remaining Proceeds shall be distributed  ratably among
the holders of the shares of Common Stock.

      (d) The amounts to be paid or set aside for  payment as provided  above in
Section  3(a) of this  Article  FIFTH  shall  be  proportionately  increased  or
decreased in inverse relation to the change in the number of outstanding  shares
resulting from any  consolidation or combination of capital stock,  stock split,
stock dividend,  subdivision of shares,  recapitalization,  reclassification  or
similar event.

      (e) Liquidating  Event. Any liquidation,  dissolution or winding up of the
Corporation,  whether voluntary or involuntary,  other than in connection with a
Change of Control  shall be considered a  "Liquidating  Event" and shall entitle
the holders of the 2005 Preferred Stock, the 2006 Preferred Stock and the Common
Stock to receive promptly after the Corporation's  realization thereof, in cash,
securities or other  property,  those amounts  specified in Section 3(a) of this
Article FIFTH in accordance with the terms thereof.


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<PAGE>

      4. Holder's Right to Exchange 2006 Preferred Stock for Common Stock.

      (a) Subject to the applicable  Limitations on Ownership (as defined below)
at any time and from time to time,  the Holder  may  tender any whole  number of
shares of 2006 Preferred Stock held by it in exchange for a number of fully paid
and non  assessable  shares of Common  Stock per share of 2006  Preferred  Stock
determined in accordance with the following formula (the "Exchange Formula"):


      Face Amount of Shares Tendered for Exchange
      -------------------------------------------
                      Exchange Rate


      Where:

      "Exchange  Rate" shall mean $1.15,  subject to  adjustment as set forth in
      Section 5 of this Article FIFTH.

      The following  provisions shall also apply:  Unless a Holder has delivered
      to the Corporation written notice prior to the Closing Date (as defined in
      the Securities  Purchase  Agreement) or at least sixty-one (61) days prior
      to the effective date of such notice that the Limitations on Ownership (as
      defined below) shall not apply to such Holder,  in no event shall a Holder
      have the right to exchange  shares of 2006 Preferred Stock into, nor shall
      the  Corporation  issue to such  Holder,  shares  of Common  Stock,  or to
      dispose of or vote any shares of 2006 Preferred  Stock, to the extent that
      such  exchange,  disposition  or voting would result in the Holder and its
      affiliates  together  beneficially  owning  more than (a) with  respect to
      those Holders  identified  on Schedule  4.17A of the  Securities  Purchase
      Agreement,  4.99% of the then  issued  and  outstanding  shares  of Common
      Stock,  or (b) with respect with respect to those  Holders  identified  on
      Schedule 4.17B of the  Securities  Purchase  Agreement,  9.99% of the then
      issued and  outstanding  shares of Common Stock (each,  a  "Limitation  on
      Ownership," and together, the "Limitations on Ownership"); provided, that,
      if and to the extent that the  Limitation  on Ownership  applicable to any
      Holder  would  otherwise  be violated by the  issuance of shares of Common
      Stock as  aforesaid,  the  Corporation  may issue to such  Holder a Common
      Stock  purchase  warrant  (a "Par  Warrant"),  in  substantially  the form
      attached as Exhibit E to the Securities  Purchase  Agreement,  exercisable
      for the purchase at $0.001 per share (or the then-current par value of the
      Common Stock,  if other than $0.001 per share) of that number of shares of
      Common Stock  constituting  the excess of the amount which would otherwise
      be  issuable  but for the  Limitations  on  Ownership  less that number of
      shares  of Common  Stock  issued to such  Holder  in  compliance  with the
      applicable Limitation on Ownership.  Notwithstanding the foregoing,  in no
      event shall SDS Capital Group SPC, Ltd. have the right to exchange  shares
      of 2006 Preferred Stock into, and in no event shall the Corporation  issue
      to SDS Capital Group SPC, Ltd.,  shares of Common Stock,  or to dispose of
      or vote  shares  of  Common  Stock,  to the  extent  that  such  exchange,
      disposition  or voting would result in SDS Capital Group SPC, Ltd. and its
      affiliates  together  beneficially  owning  more  than  9.99%  of the then
      outstanding  shares of Common  Stock.  For purposes of this Section  4.17,
      beneficial  ownership shall be determined in accordance with Section 13(d)
      of the Securities  Exchange Act of 1934, as amended,  and Regulation 13D-G
      thereunder.


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<PAGE>

Furthermore, if on the Exchange Date (as defined in Section 4(b) of this Article
FIFTH),  the Common  Stock is listed on a Trading  Market (as defined in Section
4(e) of this Article  FIFTH) and the rules of such Trading  Market  require that
any shares of Common Stock to be issued by the Corporation  must first be listed
for trading or exchange  with such Trading  Market,  then the Holder's  right to
exchange the 2006 Preferred  Stock shall be conditioned on the listing with such
Trading  Market of the shares of Common Stock sought to be issued upon  exchange
by the Holder,  and limited to the number of shares of Common  Stock then listed
on such Trading Market which are available for issuance upon the exchange of the
2006 Preferred Stock.

      (b) The Holders may exercise  their  exchange  right under Section 4(a) of
this Article FIFTH by providing  written  irrevocable  notice to the Corporation
(the "Exchange Notice"),  substantially in the form of Exhibit A hereto (and, if
the  2006  Preferred  Stock  is  in  certificated  form,   surrendering  to  the
Corporation  along with the Exchange  Notice the Holder's stock  certificate(s),
with stock power(s)  endorsed in blank,  representing  the 2006 Preferred  Stock
tendered for  exchange),  in accordance  with Section 14 of this Article  FIFTH,
which  Exchange  Notice  shall be deemed  given and  effective  on the date (the
"Exchange  Date") as  provided  under  Section 14 of this  Article  FIFTH.  Upon
receipt by the Corporation of an Exchange Notice from a Holder (the  "Exchanging
Holder"),  the Corporation shall promptly send, via facsimile, a confirmation to
such Exchanging  Holder stating that the Exchange Notice has been received,  the
date upon which the  Corporation  expects to deliver the Common  Stock  issuable
upon such exchange and the name and telephone  number of a contact person at the
Corporation regarding the exchange.

      (c) Upon  delivery of an Exchange  Notice,  the  Corporation  (itself,  or
through  its  transfer  agent)  shall,  no later  than the  second  Trading  Day
following the Exchange Date (the  "Delivery  Period"),  issue and deliver (i.e.,
deposit with a nationally  recognized overnight courier service postage prepaid)
to the  Exchanging  Holder or its nominee  that number of shares of Common Stock
issuable upon exchange of such shares of 2006 Preferred  Stock being  exchanged.
Notwithstanding   the  foregoing,   if  the  Corporation's   transfer  agent  is
participating  in  the  Depository  Trust  Corporation  ("DTC")  Fast  Automated
Securities  Transfer  program,  and so long as the certificates  therefor do not
bear a legend  and the  holder  thereof  is not then  required  to  return  such
certificate for the placement of a legend thereon,  the Corporation  shall cause
its transfer agent to promptly electronically transmit the Common Stock issuable
upon the  exchange  to the  Exchanging  Holder by  crediting  the account of the
Holder or its nominee with DTC through its Deposit  Withdrawal  Agent Commission
system ("DTC Transfer").  If the aforementioned conditions to a DTC Transfer are
not  satisfied,  and the 2006  Preferred  Stock  is in  certificated  form,  the
Corporation shall deliver as provided above to the Holder physical  certificates
representing  the Common Stock  issuable  upon  exchange.  Further,  if the 2006
Preferred Stock is in certificated  form, an Exchanging  Holder may instruct the
Corporation  to  deliver  to  the  Exchanging   Holder   physical   certificates
representing  the Common Stock  issuable upon the exchange in lieu of delivering
such shares by way of DTC Transfer.


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<PAGE>

      (d) The  Corporation  shall pay any and all taxes that may be imposed upon
it with  respect to the issuance and delivery of the shares of Common Stock upon
the exchange of the 2006 Preferred Stock hereunder.

      (e) If any exchange of 2006  Preferred  Stock would result in the issuance
of a fractional share of Common Stock  (aggregating all shares of 2006 Preferred
Stock being  exchanged  pursuant to a given Exchange  Notice),  such  fractional
share shall be payable in cash based upon the ten day VWAP (as defined below) of
the Common Stock at such time, and the number of shares of Common Stock issuable
upon exchange of the 2006  Preferred  Stock shall be the next lower whole number
of shares. For purposes of the foregoing, "VWAP" means, for any Trading Day, the
price determined by the first of the following clauses that applies:  (i) if the
Common  Stock is then  listed or quoted on a Trading  Market,  the daily  volume
weighted  average price of the Common Stock for such date on the Trading  Market
on which the Common  Stock is then  listed or quoted as  reported  by  Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m.  Eastern Time to 4:00 p.m.
Eastern  Time);  (ii) if the  Common  Stock is not then  listed  or  quoted on a
Trading  Market and if prices for the  Common  Stock are then  quoted on the OTC
Bulletin Board,  the volume weighted  average price of the Common Stock for such
date on the OTC Bulletin Board;  (iii) if the Common Stock is not then listed or
quoted on the OTC  Bulletin  Board and if prices for the  Common  Stock are then
reported  in the  "Pink  Sheets"  published  by the  National  Quotation  Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting  prices),  the most recent bid price per share of the Common  Stock so
reported; or (iv) in all other cases, the fair market value of a share of Common
Stock as determined by an  independent  appraiser  selected in good faith by the
holders  of  the  2006  Preferred   Stock  and  reasonably   acceptable  to  the
Corporation, where "Trading Day" means a day on which the Common Stock is traded
on a Trading  Market,  and  "Trading  Market"  means the  following  markets  or
exchanges  on which the Common Stock is listed or quoted for trading on the date
in question:  the Nasdaq SmallCap Market,  the American Stock Exchange,  the New
York Stock Exchange or the Nasdaq National Market.

      (f)  In  the  case  of  any  dispute  with  respect  to an  exchange,  the
Corporation  shall  promptly  issue such number of shares of Common Stock as are
not  disputed  in  accordance  with  subparagraph  (ii) above.  If such  dispute
involves the  calculation of the Exchange Rate, and such dispute is not promptly
resolved by discussion  between the Exchanging  Holder and the Corporation,  the
Corporation  shall submit the disputed  calculations  to an independent  outside
accountant  via facsimile  within three business days of receipt of the Exchange
Notice. The accountant,  at the Corporation's sole expense, shall promptly audit
the  calculations  and notify the Corporation  and the Exchanging  Holder of the
results no later than three business days from the date it receives the disputed
calculations.  The accountant's  calculation shall be deemed conclusive,  absent
manifest  error.  The  Corporation  shall then issue the  appropriate  number of
shares of Common Stock in accordance with subparagraph (ii) above.

      (g) Upon the exchange of any shares of 2006 Preferred  Stock,  all amounts
then accrued or payable on such shares hereunder (including, without limitation,
any  Dividends,  if any Dividends  have accrued and have not been paid) or under
the  Securities  Purchase  Agreement or the  Registration  Rights  Agreement (as
defined in the Stock Purchase Agreement) through and including the Exchange Date
shall be paid in cash by the Corporation.


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<PAGE>

      (h) If fewer than all shares of 2006 Preferred Stock held by an Exchanging
Holder  are  tendered  for  exchange,  then the  Corporation  shall  record  the
cancellation  of those shares which were tendered on its books and records (and,
if the 2006 Preferred Stock is in certificated  form,  shall issue in due course
one or  more  new  stock  certificates  representing  those  shares  held by the
Exchanging Holder which remain issued and outstanding).

      (i) If, at any time, (i) an Exchanging  Holder submits an Exchange  Notice
and the Corporation fails for any reason (other than because such issuance would
exceed such  Exchanging  Holder's  Limitations  on Ownership) to deliver,  on or
prior to the fifth Trading Day following the  expiration of the Delivery  Period
for such  exchange,  such number of freely  tradable  shares of Common  Stock to
which  such  Holder is  entitled  upon such  exchange,  or (ii) the  Corporation
provides written notice to any holder of 2006 Preferred Stock (or makes a public
announcement via press release) at any time of its intention not to issue freely
tradable  shares of Common Stock upon exercise by any  Exchanging  Holder of its
exchange  rights in  accordance  with the terms of this  Agreement  (other  than
because such issuance would exceed such Holder's Limitations on Ownership) (each
of (i) and (ii) being an "Exchange  Default"),  then,  subject to the Liquidated
Damages Cap (as defined in the Securities Purchase  Agreement),  the Corporation
shall pay to the Exchanging Holder  Liquidated  Damages (as defined below) until
the  earliest to occur of (i) the date of the cure of such  Exchange  Default by
the Corporation and (ii) the date when the Liquidated  Damages Cap has been met,
as the case may be. For  purposes  hereof,  "Liquidated  Damages"  shall mean an
amount in cash equal to 1% per day of the  aggregate  Issue  Amount  paid by the
initial  Purchaser of the shares of 2006  Preferred  Stock for those such shares
which are the subject of the Exchange Default,  payable on demand by the Holder,
as full liquidated  damages and not as a penalty,  provided,  that the aggregate
Liquidated  Damages  payable in respect of such shares of 2006  Preferred  Stock
shall in no event exceed the Liquidated Damages Cap.

      (j) Unless the Corporation  has notified the Exchanging  Holder in writing
prior to the delivery by such Holder of an Exchange  Notice that the Corporation
is unable to honor requests for exchanges,  if (i) (a) the Corporation  fails to
promptly  deliver  during  the  Delivery  Period  shares of  Common  Stock to an
Exchanging  Holder  upon an exchange  of shares of 2006  Preferred  Stock or (b)
there  shall  occur a  Legend  Removal  Failure  (as  defined  below)  and  (ii)
thereafter,  such Exchanging Holder purchases (in an open market  transaction or
otherwise)  shares of Common Stock to make delivery in satisfaction of a sale by
such  Exchanging  Holder of the  unlegended  shares of Common  Stock  (the "Sold
Shares") which such Exchanging Holder  anticipated  receiving upon such exchange
(a "Buy-In"),  the Corporation shall pay such Exchanging  Holder, in addition to
any other remedies  available to the Exchanging  Holder, the amount by which (x)
such Exchanging Holder's total purchase price (including brokerage  commissions,
if any) for the unlegended  shares of Common Stock so purchased  exceeds (y) the
net  proceeds  received  by such  Exchanging  Holder  from  the sale of the Sold
Shares.  For example,  if an Exchanging  Holder purchases  unlegended  shares of
Common  Stock  having a total  purchase  price of $11,000 to cover a Buy-In with
respect to shares of Common Stock it sold for $10,000,  the Corporation  will be
required to pay the Exchanging Holder $1,000. An Exchanging Holder shall provide
the Corporation written notification and supporting documentation indicating any
amounts payable to such Holder pursuant to this provision.  For purposes hereof,
a "Legend Removal  Failure" shall occur if the  Corporation  fails to remove any
restrictive  legend on any  certificate  or any shares of Common Stock issued to
the Holder of 2006 Preferred  Stock upon exchange of the 2006 Preferred Stock as
and when  required  hereunder or under the  Registration  Rights  Agreement  and
permitted by  applicable  law, and any such failure  continues  uncured for five
business days after the Corporation has been notified  thereof in writing by the
Holder.  The rights set forth in this  Section  4(j) shall be in addition to the
rights to seek payment set forth in Section 4(i) above.


                                       8
<PAGE>

      5. Adjustments to Exchange Rate.

      (a) If at any time  while  shares of 2006  Preferred  Stock are issued and
outstanding,  the  Corporation  proposes  to offer,  sell,  grant any  option to
purchase  or offer,  sell or grant  any  right to  reprice  its  securities,  or
otherwise  dispose of or issue (or announce or be deemed to have made any offer,
sale, grant or any option to purchase or other  disposition) any Common Stock or
Common Stock  Equivalents (as defined below) (i) entitling any Person to acquire
shares of Common  Stock at an  effective  price per share less than the Exchange
Rate (but  excluding (A) shares of Common Stock or options  issued to employees,
officers,  directors  or  consultants  of the  Company  pursuant to any stock or
option  plan duly  adopted by the  stockholders  of the Company in any amount or
outside  of any such plan in an amount  not to exceed  100,000  shares of Common
Stock (or the  equivalent  thereof)  in any fiscal  year of the  Company and (B)
Existing Securities Rights (as defined in the Securities Purchase Agreement)) or
(ii) which would cause a reduction  (whether by  operation  of an  anti-dilution
adjustment or otherwise)  in the effective  purchase  price at which a holder of
Common Stock Equivalents outstanding immediately prior to such issuance would be
entitled to purchase  shares of Common  Stock (at any time after such  issuance)
upon the conversion, exchange or exercise of such Common Stock Equivalents, to a
price below the Exchange Rate (in each case,  such lower price,  with respect to
each  class  of  securities  being  issued,  the  "Base  Share  Price"  of  such
securities,   and  each  such  issuance  a  "Dilutive  Issuance"),  as  adjusted
hereunder,  then upon consummation of the Dilutive Issuance,  provided, that the
holders of 2006 Preferred Stock have approved such Dilutive Issuance pursuant to
Section 4.27(j) of the Securities Purchase Agreement, the Exchange Rate shall be
adjusted to the amount determined by the following calculation:


          (Fully Diluted Shares Outstanding Before x Base Share Price)
                              + Total Consideration
 AER      =  ER  x --------------------------------------------------
                       Fully Diluted Shares Outstanding After

            Where:

            "AER" shall mean the adjusted Exchange Rate;

            "ER" shall mean the Exchange Rate in effect immediately prior to the
            consummation of the Dilutive Issuance;

            "Fully  Diluted  Shares  Outstanding  Before"  shall  mean the total
            number of shares of Common Stock  outstanding  immediately  prior to
            the consummation of such Dilutive Issuance, assuming the issuance of
            all shares of Common Stock underlying  Common Stock  Equivalents (as
            defined below) then outstanding;


                                       9
<PAGE>

            "Common  Stock   Equivalents"  shall  mean  any  securities  of  the
            Corporation  or its  Subsidiaries  which  would  entitle  the holder
            thereof to  acquire  at any time  Common  Stock,  including  without
            limitation,   any   securities  or  other   instruments   which  are
            convertible  into or  exercisable or  exchangeable  for Common Stock
            ("Convertible  Securities") or options,  warrants or other rights to
            purchase or  subscribe  for Common Stock or  Convertible  Securities
            ("Purchase Rights"),  whether or not such Convertible  Securities or
            Purchase   Rights  are  immediately   convertible,   exercisable  or
            exchangeable,  including without limitation the 2006 Preferred Stock
            and the 2005 Preferred Stock;

            "Total  Consideration"  shall  mean  the  sum of  all  consideration
            received by the  Corporation  in the Dilutive  Issuance,  calculated
            pursuant to this Section 5(b)(iv) of this Article FIFTH; and


            "Fully Diluted Shares Outstanding After" shall mean the total number
            of  shares  of  Common  Stock  outstanding   immediately  after  the
            consummation of such Dilutive Issuance, assuming the issuance of all
            shares of Common  Stock  underlying  Common Stock  Equivalents  then
            outstanding.

In each instance of an adjustment  pursuant to the  foregoing,  such  adjustment
shall be made whenever Common Stock or Common Stock  Equivalents are issued in a
Dilutive  Issuance.  The  Corporation  shall  notify each Holder that holds 2006
Preferred  Stock in writing,  no later than five (5) Trading Days  following the
consummation of a Dilutive Issuance,  indicating therein the applicable issuance
price and other pricing terms. For the avoidance of doubt, in no event shall the
Exchange Rate after giving  effect to the Dilutive  Issuance be greater than the
Exchange Rate in effect prior to such Dilutive  Issuance,  subject to adjustment
for reverse and forward stock splits,  stock dividends,  stock  combinations and
other similar transactions of the Common Stock that occur in connection with the
Dilutive Issuance.

      (b) Effect on Exchange Rate of Certain Events. For purposes of determining
the  adjusted  Exchange  Rate under  Section  5(a) of this  Article  FIFTH,  the
following will be applicable:

            (i)  Issuance of Purchase  Rights.  If,  after the Closing  Date (as
      defined in the Securities Purchase  Agreement),  the Corporation issues or
      sells any Purchase Rights, whether or not immediately exercisable, and the
      price per share for which  Common  Stock is issuable  upon the exercise of
      such  Purchase  Rights  (and the price of any  conversion  of  Convertible
      Securities, if applicable) is less than the Exchange Rate in effect on the
      date of issuance or sale of such Purchase  Rights,  then the maximum total
      number of shares of Common  Stock  issuable  upon the exercise of all such
      Purchase  Rights  (assuming  full  conversion,  exercise  or  exchange  of
      Convertible  Securities,  if  applicable)  shall,  as of the  date  of the
      issuance or sale of such Purchase Rights,  be deemed to be outstanding and
      to have been issued and sold by the  Corporation for such price per share.
      For  purposes of the  preceding  sentence,  the "price per share for which
      Common Stock is issuable upon the exercise of such Purchase  Rights" shall
      be  determined  by  dividing  (A) the total  amount,  if any,  received or
      receivable by the Corporation as consideration for the issuance or sale of
      all such Purchase Rights,  plus the minimum aggregate amount of additional
      consideration, if any, payable to the Corporation upon the exercise of all
      such Purchase Rights, plus, in the case of Convertible Securities issuable
      upon the exercise of such Purchase Rights, the minimum aggregate amount of
      additional consideration payable upon the conversion, exercise or exchange
      thereof  (determined in accordance with the  calculation  method set forth
      above) at the time such Convertible  Securities first become  convertible,
      exercisable or exchangeable,  by (B) the maximum total number of shares of
      Common  Stock  issuable  upon the  exercise  of all such  Purchase  Rights
      (assuming full conversion, exercise or exchange of Convertible Securities,
      if applicable).  No further  adjustment to the Exchange Rate shall be made
      upon the actual  issuance of such Common  Stock upon the  exercise of such
      Purchase  Rights  or  upon  the   conversion,   exercise  or  exchange  of
      Convertible Securities issuable upon exercise of such Purchase Rights.


                                       10
<PAGE>

            (ii) Issuance of Convertible  Securities.  If the Corporation issues
      or  sells  any   Convertible   Securities,   whether  or  not  immediately
      convertible,  exercisable or exchangeable (and whether in contravention of
      any restriction in this Certificate,  the Securities Purchase Agreement or
      otherwise),  and the price per share for which  Common  Stock is  issuable
      upon such conversion,  exercise or exchange is less than the Exchange Rate
      in effect on the date of issuance or sale of such Convertible  Securities,
      then the maximum total number of shares of Common Stock  issuable upon the
      conversion, exercise or exchange of all such Convertible Securities shall,
      as of the date of the issuance or sale of such Convertible Securities,  be
      deemed  to be  outstanding  and  to  have  been  issued  and  sold  by the
      Corporation  for such price per share.  If the  Convertible  Securities so
      issued or sold do not have a fluctuating  conversion or exercise  price or
      exchange  ratio,  then for the  purposes of the  preceding  sentence,  the
      "price per share for which Common Stock is issuable upon such  conversion,
      exercise  or  exchange"  shall be  determined  by  dividing  (A) the total
      amount, if any, received or receivable by the Corporation as consideration
      for the  issuance  or sale of all such  Convertible  Securities,  plus the
      minimum aggregate amount of additional  consideration,  if any, payable to
      the  Corporation  upon  the  conversion,   exercise  or  exchange  thereof
      (determined in accordance  with the  calculation  method set forth in this
      clause (i) of above) at the time such Convertible  Securities first become
      convertible,  exercisable or exchangeable, by (B) the maximum total number
      of  shares of Common  Stock  issuable  upon the  exercise,  conversion  or
      exchange of all such Convertible Securities. If the Convertible Securities
      so issued or sold  have a  fluctuating  conversion  or  exercise  price or
      exchange ratio (a "Variable Rate Convertible Security"), then for purposes
      of the next  preceding  sentence,  the "price  per share for which  Common
      Stock is issuable  upon such  conversion,  exercise or exchange"  shall be
      deemed  to be the  lowest  price  per  share  which  would  be  applicable
      (assuming  all  holding  period  and  other  conditions  to any  discounts
      contained in such Variable Rate Convertible  Security have been satisfied)
      if the conversion price of such Variable Rate Convertible  Security on the
      date of issuance or sale  thereof was  seventy-five  percent  (75%) of the
      actual  conversion  price  on such  date  (the  "Assumed  Variable  Market
      Price"),  and,  further,  if the  conversion  price of such  Variable Rate
      Convertible Security at any time or times thereafter is less than or equal
      to the Assumed  Variable  Market Price last used for making any adjustment
      under this Section 7(b) of this Article FIFTH with respect to any Variable
      Rate Convertible Security,  the Exchange Rate in effect at such time shall
      be  readjusted to equal the Exchange Rate which would have resulted if the
      Assumed Variable Market Price at the time of issuance of the Variable Rate
      Convertible  Security had been  seventy-five  percent  (75%) of the actual
      conversion  price of such Variable Rate Convertible  Security  existing at
      the  time  of  the  adjustment  required  by  this  sentence.  No  further
      adjustment to the Exchange Rate shall be made upon the actual  issuance of
      such  Common  Stock  upon   conversion,   exercise  or  exchange  of  such
      Convertible Securities.


                                       11
<PAGE>

            (iii)  Change  in Option  Price or  Conversion  Rate.  If there is a
      change at any time in (A) the amount of additional  consideration  payable
      to the  Corporation  upon the  exercise of any  Purchase  Rights;  (B) the
      amount of additional  consideration,  if any,  payable to the  Corporation
      upon the conversion,  exercise or exchange of any Convertible  Securities;
      or (C) the rate at which any Convertible  Securities are convertible  into
      or exercisable or exchangeable  for Common Stock (in each such case, other
      than  under  or by  reason  of  provisions  designed  to  protect  against
      dilution), the Exchange Rate in effect at the time of such change shall be
      readjusted  to the  Exchange  Rate which would have been in effect at such
      time had such Purchase Rights or Convertible  Securities still outstanding
      provided for such changed additional  consideration or changed conversion,
      exercise  or  exchange  rate,  as the case may be,  at the time  initially
      issued or sold.

            (iv)  Calculation of  Consideration  Received.  If any Common Stock,
      Purchase Rights or Convertible Securities are issued or sold for cash, the
      consideration  received  therefor  will  be  the  amount  received  by the
      Corporation  therefor  (in the case of an  underwritten  public  offering,
      after deduction of all underwriting discounts or allowances) in connection
      with such  issuance,  grant or sale.  In case any Common  Stock,  Purchase
      Rights or Convertible  Securities  are issued or sold for a  consideration
      part or all of which shall be other than cash,  including in the case of a
      strategic  or similar  arrangement  in which the other entity will provide
      services to the  Corporation,  purchase  services from the  Corporation or
      otherwise provide intangible consideration to the Corporation,  the amount
      of  the  consideration   other  than  cash  received  by  the  Corporation
      (including  the net  present  value of the  consideration  expected by the
      Corporation  for the  provided or  purchased  services)  shall be the fair
      market  value  of such  consideration,  except  where  such  consideration
      consists  of  securities  the  class of which is  listed  for  trading  or
      exchange on a Trading  Market,  in which case the amount of  consideration
      received by the Corporation  will be the median bid and ask prices thereof
      on  the  Trading  Market  as  of  the  date  of  receipt  thereof  by  the
      Corporation.  In case any Common  Stock,  Purchase  Rights or  Convertible
      Securities are issued in connection  with any merger or  consolidation  in
      which  the  Corporation  is  the  surviving  corporation,  the  amount  of
      consideration  therefor will be deemed to be the fair market value of such
      portion of the net assets and business of the non-surviving corporation as
      is  attributable  to such Common  Stock,  Purchase  Rights or  Convertible
      Securities,  as the case may be.  Notwithstanding  anything else herein to
      the contrary, if Common Stock,  Purchase Rights or Convertible  Securities
      are  issued or sold in  conjunction  with  each  other as part of a single
      transaction or in a series of related  transactions,  the Holder may elect
      to  determine  the amount of  consideration  deemed to be  received by the
      Corporation therefor by deducting the fair value of any type of securities
      (the  "Disregarded  Securities")  issued  or sold in such  transaction  or
      series of  transactions.  If the Holder makes an election  pursuant to the
      immediately  preceding sentence,  no adjustment to the Exchange Rate shall
      be made  pursuant to this Section 7 of this Article FIFTH for the issuance
      of the Disregarded Securities or upon any conversion, exercise or exchange
      thereof.  The  Corporation  shall  calculate,  using  standard  commercial
      valuation  methods  appropriate  for valuing such assets,  the fair market
      value  of any  consideration  other  than  cash or  securities;  provided,
      however,  that if the  Holder  does not  agree to such fair  market  value
      calculation  within three  business  days after  receipt  thereof from the
      Corporation, then such fair market value shall be determined in good faith
      by an investment banker or other appropriate expert of national reputation
      selected by the Corporation and reasonably  acceptable to the Holder, with
      the costs of such appraisal to be borne by the Corporation.


                                       12
<PAGE>

      6. Forced Exchange by Corporation.

      (a) So long as that  number of shares of Common  Stock into which the 2006
Preferred  Stock is  exchangeable  hereunder  are listed  with or eligible to be
traded on, as applicable,  a Trading  Market,  if the VWAP equals or exceeds Two
and One Half (2.5) times the Exchange  Price (the "Trigger  Price") for a period
of at least thirty (30) consecutive  Trading Days, the Corporation may force the
Holders of 2006 Preferred Stock to exchange into that number of shares of Common
Stock determined by the Exchange  Formula some or all of the outstanding  shares
of 2006  Preferred  Stock (a  "Forced  Exchange"),  provided,  that  each of the
following  conditions (the "Required  Conditions") shall have been met and shall
at all times during the period beginning on the date on which the VWAP equals or
exceeds the Trigger Price and ending as of the opening of business on the Forced
Exchange Date (as defined in Section 6(b) of this Article FIFTH): (i) the Common
Stock  underlying  the 2006  Preferred  Stock  included in such Forced  Exchange
Notice (including  without limitation the Common Stock issuable upon exercise of
any Par  Warrants) is (1) covered by a valid  Registration  Statement  which has
been declared effective by the United States Securities and Exchange  Commission
and which  remains  effective  at all times during such period and (2) is listed
with or  eligible to be traded on, as  applicable,  a Trading  Market;  (ii) the
number shares of Common Stock shares  underlying the 2006 Preferred  Stock to be
exchanged in the Forced  Exchange does not exceed the cumulative  trading volume
of the Common Stock for the thirty (30)  consecutive  Trading Days prior to such
notice; (iii) the Corporation has not issued a Forced Exchange Notice within the
sixty  (60)  days  prior to the date of the  Forced  Exchange  Notice;  (iv) the
Corporation  has not filed,  and has no plans to file, a registration  statement
with the  Securities and Exchange  Commission in connection  with a proposed new
equity  financing  in the  sixty  (60) days  prior to or  following  the  Forced
Exchange  Notice (as defined in Section  6(b) of this  Article  FIFTH);  (v) all
amounts,  if any, then accrued and payable under the  Transaction  Documents (as
defined in the Securities  Purchase  Agreement)  shall have been paid;  (vi) the
Corporation  shall  have  obtained  such  approval(s)  of the  Holders as may be
required  pursuant to Section 4.27 of the  Securities  Purchase  Agreement;  and
(vii) the  Corporation  shall at the time not otherwise be in material breach or
violation of any provision of the Transaction Documents.


                                       13
<PAGE>

      (b) Procedures for Forced  Exchange.  The  Corporation may effect a Forced
Exchange by providing  written  irrevocable  notice to the Holders in any manner
set forth in Section 14 of this Article  FIFTH (a "Forced  Exchange  Notice") in
such form as the Corporation  shall approve,  setting forth the number of shares
of 2006  Preferred  Stock subject to the Forced  Exchange (and if less than all,
the percentage of shares held by each Holder on a pro rata basis),  the Exchange
Rate then in effect,  the Trigger  Price,  the date that the Forced  Exchange is
proposed to occur (which date shall be not less than Thirty (30) days  following
the effective date of the Forced Exchange Notice (the "Forced Exchange Date"), a
certification from the Company that all of the Required Conditions have been met
and remain  satisfied as of the opening of business on the Forced Exchange Date,
and such other information as the Corporation shall in its discretion determine.
If any shares of 2006  Preferred  Stock to be redeemed are held in  certificated
form, the Forced Exchange Notice shall also include  instructions for Holders to
surrender  their  shares,  duly  endorsed  in  blank,  to  the  Corporation  for
redemption.  On the  Forced  Exchange  Date,  all  2006  Preferred  Stock  to be
exchanged in the Forced Exchange shall be exchanged for Common Stock (and/or, to
the  extent  necessary  to  satisfy  the  Holder's  applicable   Limitations  on
Ownership, a Par Warrant) in accordance with the Exchange Formula.

      7.  Exchange  upon  Change of  Control.  If there  shall occur a Change of
Control (as defined below),  all issued and outstanding shares of 2006 Preferred
Stock that are not the subject of a pending  exchange under Section 4 or Section
6 of this  Article  FIFTH  shall,  automatically  and without  any other  action
required by the Holder or the Corporation, be exchanged for the right to receive
the greater of (a) the  Liquidation  Preference  of such shares,  plus an amount
equal to accrued  but  unpaid  dividends,  and (b) such  cash,  shares of stock,
securities  and/or other property as would have been issued or payable  pursuant
to the  transaction  effecting  the  Change of Control  (the  "Change of Control
Consideration")  in exchange for the shares of Common Stock issuable pursuant to
Section 6 of this  Article  FIFTH  (assuming  that the date  that the  Change of
Control  occurs is the Exchange Date and that all Required  Conditions  had been
satisfied, and without giving effect to the applicable Limitations on Ownership)
on an as-exchanged basis, without giving effect to the Limitations on Ownership,
where the  Change  of  Control  Consideration  shall be  valued,  if all or part
thereof  consists of property other than cash, at the value ascribed  thereto by
the Board of  Directors in the Change of Control  transaction  and agreed by the
Required Holders, which agreement shall not be unreasonably withheld or delayed.
For purposes hereof,  "Change of Control" shall mean the occurrence of either of
the following  events which is not deemed a Liquidating  Event:  the Corporation
shall (i) sell, convey or dispose of all or substantially all of its assets (the
presentation of any such  transaction for stockholder  approval being conclusive
evidence that such transaction  involves the sale of all or substantially all of
the assets of the Company); or (ii) merge or consolidate with or into, or engage
in any other business combination with, any other person or entity, in any case,
in which the Corporation is not the surviving entity, or which results in either
(x) the holders of the voting securities of the Corporation immediately prior to
such  transaction  holding  or having  the right to direct  the  voting of fifty
percent  (50%)  or  less  of the  total  outstanding  voting  securities  of the
Corporation  immediately  following  such  transaction or (y) the members of the
board of directors or other governing body of the Corporation  comprising  fifty
percent  (50%)  or  less  of  the  members  of the  board  of  directors  of the
Corporation immediately following such transaction.

      8. Redemption by the Corporation.

      (a) Corporation's  Optional  Redemption  Rights.  From and after the fifth
(5th)  anniversary  of the Closing  Date,  to the extent that the Holder has not
exercised  its  exchange  rights under  Section 4(a) of this Article  FIFTH with
respect to such shares, the Corporation may redeem for cash any or all shares of
2006 Preferred Stock then outstanding (an "Optional Redemption") at a price (the
"Optional  Redemption  Price") equal to One Hundred Twenty Percent (120%) of the
Face Amount of the 2006 Preferred  Stock being  redeemed,  together with any and
all accrued and unpaid Dividends thereon. If the Corporation elects to redeem in
an  Optional  Redemption  less than all  shares  of 2006  Preferred  Stock  then
outstanding,  then the  Corporation  shall redeem shares of 2006 Preferred Stock
pro rata,  based on the total amount of shares to be redeemed and the proportion
that the number of shares held by each Holder bears to the number of shares then
held by all Holders.


                                       14
<PAGE>

      (b) Procedures for Optional Redemption by Corporation. The Corporation may
effect an Optional  Redemption by providing  written  irrevocable  notice to the
Holders  in any  manner  set forth in  Section  14 of this  Article  FIFTH  (the
"Optional  Redemption  Notice") in such form as the  Corporation  shall approve,
setting forth the number of shares of 2006 Preferred  Stock being redeemed (and,
if less than all,  the  percentage  of shares  held by each Holder on a pro rata
basis), the Optional  Redemption Price, the date that the Optional Redemption is
proposed to occur (which date shall be not less than Twenty (20) days  following
the effective date of the Optional  Redemption Notice (the "Optional  Redemption
Date") and such other  information  as the  Corporation  shall in its discretion
determine.  If any shares of 2006  Preferred  Stock to be  redeemed  are held in
certificated   form,   the  Optional   Redemption   Notice  shall  also  include
instructions  for Holders to surrender their shares,  duly endorsed in blank, to
the Corporation for redemption.  On the Optional Redemption Date, unless earlier
tendered for exchange by the Holders  pursuant to Sections 4(a) and 8(c) of this
Article FIFTH,  the Corporation  shall issue payment of the Optional  Redemption
Price to the Holders and the Corporation  shall record the cancellation of those
shares  which  were so  redeemed  on its books  and  records  (and,  if the 2006
Preferred Stock is in certificated  form,  shall issue in due course one or more
new stock certificates representing those shares held by the Holder which remain
issued and outstanding).

      (c) Holders' Right to Exchange following Corporation's Optional Redemption
Notice.  For the first Twenty (20) days  following  the  Holder's  receipt of an
Optional  Redemption  Notice and prior to the  Optional  Redemption  Date,  each
Holder shall have the right to tender for exchange  into Common Stock any or all
shares of 2006 Preferred Stock held by it (including  those that are the subject
of the Optional Redemption Notice) in the manner set forth under Section 4(a) of
this Article FIFTH.

      9. Uncertificated  Shares. The shares of the 2006 Preferred Stock shall be
uncertificated  shares;  provided,  that,  to the extent  permitted by the DGCL,
every  Holder  having   uncertificated  shares  shall  be  entitled  to  have  a
certificate  signed  by, or in the name of,  the  Corporation  representing  the
number of shares  owned of record by such  Holder in  certificated  form if such
Holder so requests.

      10.  Cancellation of 2006 Preferred Stock. If any shares of 2006 Preferred
Stock  are  exchanged  for  Common  Stock,   redeemed  or   repurchased  by  the
Corporation, the shares so exchanged, redeemed or repurchased shall be canceled,
shall return to the status of shares of  authorized,  but  unissued,  Authorized
Preferred  Stock and shall not be issuable by the  Corporation as 2006 Preferred
Stock.


                                       15
<PAGE>

      11.  Payment of Cash;  Defaults.  Whenever the  Corporation is required to
make any cash payment to a Holder under this  Certificate of  Incorporation  (as
payment of any Dividend or  otherwise),  such cash payment  shall be made to the
Holder  within  five  business  days after the  earlier of (a) the date for such
payment  provided for in this  Certificate of  Incorporation  or (b) delivery by
such  Holder of a notice  specifying  that the  Holder  elects to  receive  such
payment  in cash and the  method  (e.g.,  by  check,  wire  transfer,  including
instructions  therefor) in which such payment  should be made and any supporting
documentation  reasonably  requested  by the  Corporation  to  substantiate  the
Holder's  claim to such cash payment or the amount  thereof.  If such payment is
not delivered within such five business day period, such Holder shall thereafter
be entitled  to  interest on the unpaid  amount at a per annum rate equal to the
lower of eighteen  percent  (18%) and the highest  interest  rate  permitted  by
applicable law until such amount is paid in full to the Holder.

      12.  Remedies  Cumulative.  The remedies  provided in this  Certificate of
Incorporation  shall  be  cumulative  and  in  addition  to all  other  remedies
available  under  this  Certificate  of  Incorporation,  at  law  or  in  equity
(including a decree of specific performance and/or other injunctive relief), and
nothing  herein shall limit a Holder's  right to pursue  actual  damages for any
failure  by the  Corporation  to comply  with the terms of this  Certificate  of
Incorporation.  The  Corporation  acknowledges  that  a  breach  by  it  of  its
obligations  hereunder  will  cause  irreparable  harm  to the  holders  of 2006
Preferred  Stock  and  that  the  remedy  at law  for  any  such  breach  may be
inadequate. The Corporation therefore agrees, in the event of any such breach or
written  threatened  breach,  that the holders of 2006 Preferred  Stock shall be
entitled,  in  addition  to  all  other  available  remedies,  to an  injunction
restraining  any breach,  without the  necessity  of showing  economic  loss and
without any bond or other security being required.

      13.  Waiver.   Notwithstanding   any  provision  in  this  Certificate  of
Incorporation to the contrary,  any provision  contained herein and any right of
the holders of 2006  Preferred  Stock granted  hereunder may be waived as to all
shares of 2006  Preferred  Stock  (and the  holders  thereof)  upon the  written
consent of the  Required  Holders,  unless a higher  percentage  is  required by
applicable  law,  in which case the  written  consent of the Holders of not less
than such higher percentage of shares of 2006 Preferred Stock shall be required.

      14. Notices. Any notices required or permitted to be given under the terms
hereof shall be sent by certified or registered mail (return receipt  requested)
or  delivered  personally,  by  nationally  recognized  overnight  carrier or by
confirmed facsimile  transmission,  and shall be effective five days after being
placed in the mail,  if  mailed,  or upon  receipt or  refusal  of  receipt,  if
delivered personally or by nationally  recognized overnight carrier or confirmed
facsimile  transmission,  in each case  addressed to a party.  The addresses for
such communications are (i) if to the Corporation to Diomed Holdings,  Inc., One
Dundee Park, Andover, MA 01810, Attn: Chief Executive Officer,  Telephone: (978)
475-7771,  Facsimile:  (978)  475-8488,  with a copy to  McGuireWoods  LLP, 1345
Avenue of the Americas,  7th Floor, New York, NY 10105, Attn: William A. Newman,
Esq.,  Telephone  (212) 548-2160,  Facsimile (212) 548-2170,  and (ii) if to any
Holder  to the  address  set forth  under  such  Holder's  name on the books and
records of the Corporation.

      SIXTH:  This Amendment of the Certificate of Incorporation  was authorized
by the unanimous  vote of the directors of the  Corporation  at a meeting of the
Board of Directors  duly noticed and held,  and by the  affirmative  vote of the
holders  of a  majority  of the  capital  stock of the  Corporation  issued  and
outstanding  as of the record date for a special  meeting of  stockholders  duly
noticed and conducted on  [_____________],  2006] in accordance with the By-Laws
of the Corporation.


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<PAGE>


      Page 18 IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment   to   be   signed   by   [_______________],    its   Secretary,    on
[____________________], 2006.



                                         DIOMED HOLDINGS, INC.



                                         By:
                                            ----------------------------------
                                            Name: [____________________]
                                            Title:   Secretary



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