Exhibit 10.8

                  SECOND AMENDED AND RESTATED PLEDGE AGREEMENT

         THIS SECOND AMENDED AND RESTATED PLEDGE  AGREEMENT,  dated as of August
29, 2003 (this  "AGREEMENT"),  is made by DIOMED,  INC., a Delaware  corporation
(the  "PLEDGOR"),  in favor of GIBRALT US, INC., a Colorado  corporation (in its
individual  capacity,   "GUS"),  as  agent  (in  such  capacity  as  agent,  the
"DESIGNATED Pledgeholder") for the Secured Parties (as defined herein).

                              W I T N E S S E T H:

         WHEREAS,  pursuant to (i) an Exchange  Agreement  dated as of April 22,
2003 (as amended,  restated,  supplemented  or otherwise  modified  from time to
time, the "EXCHANGE  AGREEMENT"),  among the Pledgor,  Diomed Holdings,  Inc., a
Delaware corporation ("HOLDINGS"), the Note Purchasers party thereto and GUS, as
agent (in such  capacity as agent,  the  "DESIGNATED  NOTE  PURCHASER")  for the
predecessors  in interest to current holders of the Class E Notes (as defined in
the Second  Exchange  Agreement dated as of May 28, 2003,  among  Holdings,  the
Pledgor, the Noteholders party thereto, and the Designated Note Purchaser), (ii)
Secured  Loan  Agreement  dated as of April  22,  2003  (as  amended,  restated,
supplemented  or  otherwise  modified  from  time to  time,  the  "SECURED  LOAN
Agreement"),  among  Holdings,  the Lenders  party thereto and GUS, as agent (in
such capacity as agent,  the  "DESIGNATED  LENDER") for such Lenders holding the
Class D Notes referred to in therein (the  Designated  Lender and the holders of
the Class D Notes being referred to herein, collectively, as the "LENDER SECURED
PARTIES") and (iii) the other Documents (as defined in the Exchange  Agreement),
the Pledgor,  the  Designated  Note  Purchaser  and the  Designated  Lender have
entered into that certain  Amended and Restated  Pledge  Agreement,  dated as of
April 22, 2003 (the "FIRST  AMENDED PLEDGE  AGREEMENT"),  by Pledgor in favor of
the Designated Note Purchaser and the Designated Lender;

         WHEREAS, pursuant to a Securities Purchase Agreement dated as of August
8, 2003 (as amended,  restated,  supplemented or otherwise modified from time to
time, the  "SECURITIES  PURCHASE  AGREEMENT"),  among Holdings and the Investors
party thereto, GUS, in its individual capacity,  has been appointed as the agent
(in such capacity as agent,  the "DESIGNATED  NOTE INVESTOR") for the holders of
the Secured Bridge Notes referred to therein (the  Designated  Note Investor and
the holders of the Secured Bridge Notes being  collectively  referred to in this
Agreement  as the  "NOTE  INVESTOR  SECURED  PARTIES";  and,  together  with the
Designated Pledgeholder and the Lender Secured Parties, the "SECURED PARTIES");

         WHEREAS,  Holding's  proposes to  immediately  contribute  the proceeds
which Holdings  receives from the issuance and sale of Holding's  Secured Bridge
Notes  pursuant  to the  Securities  Purchase  Agreement  to the  Pledgor  to be
immediately  applied by the Pledgor to the  repayment  in full of the  Pledgor's
Class E Notes;

         WHEREAS,  following the issuance and sale of the Secured  Bridge Notes,
the Pledgor's Class D Notes will remain outstanding and secured pursuant,  among
other  agreements,  the  First  Amended  Pledge  Agreement,  as the  same may be
amended, restated, supplemented or otherwise modified from time to time;


<PAGE>

         WHEREAS,  as conditions  precedent to the  consummation of the purchase
and  sale of the  Secured  Bridge  Notes  pursuant  to the  Securities  Purchase
Agreement,  (a) the Pledgor is required to guaranty the Secured Bridge Notes and
to  execute  and  deliver  this  Agreement  to secure its  guaranty  and (b) the
Designated Note Purchaser and the Designated Lender are each required to consent
to the amendment and  restatement of the First Amended  Pledge  Agreement in its
entirety as provided in this Agreement;

         WHEREAS,  the holders of the Pledgor's Class E Notes and the holders of
the  Pledgor's  Class  D  Notes  will  derive  substantial   benefits  from  the
transactions  contemplated  by the Securities  Purchase  Agreement and have duly
authorized  the  execution,  delivery and  performance  of this Agreement by the
Designated Note Purchaser and the Designated Lender, respectively; and

         WHEREAS,   the  Pledgor  will  derive  substantial  benefits  from  the
transactions  contemplated by the Securities  Purchase  Agreement,  and has duly
authorized the execution, delivery and performance of this Agreement;

         NOW  THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency  of which are hereby  acknowledged,  and in order to induce the Note
Investor  Secured  Parties to  consummate  the  purchase and sale of the Secured
Bridge Notes pursuant to the Securities Purchase Agreement, (a) the Pledgor, the
Designated Lender and the Designated Note Purchaser hereby amend and restate the
First Amended Pledge  Agreement in its entirety and (b) the Pledgor agrees,  for
the benefit of each Secured Party, in each case, as follows:

                                   ARTICLE I
                                   DEFINITIONS

         1.1 DEFINITIONS.  The following terms (whether or not underscored) when
used in this  Agreement,  including  its preamble and  recitals,  shall have the
following  meanings (such  definitions to be equally  applicable to the singular
and plural forms thereof):

         "AGREEMENT" is defined in the PREAMBLE.

         "CLASS D NOTES" is defined in the FIRST RECITAL.

         "CLASS E NOTES" is defined in the FIRST RECITAL.

         "COLLATERAL" is defined in SECTION 2.1.

         "DESIGNATED  LENDER" is defined in the FIRST  RECITAL and shall include
any  successor  agent for the  holders  of the Class D Notes  appointed  by such
holders pursuant to Section 10(g) of the Secured Loan Agreement.

         "DESIGNATED  NOTE  INVESTOR" is defined in the SECOND RECITAL and shall
include  any  successor  agent  for the  holders  of the  Secured  Bridge  Notes
appointed by such holders pursuant to Section 6.1(g) of the Security Agreement.

         "DESIGNATED NOTE PURCHASER" is defined in the FIRST RECITAL.



                                       2
<PAGE>

                  "DESIGNATED PLEDGEHOLDER" is defined in the preamble and shall
include any  successor  agent for the Secured  Parties  appointed by the Secured
Parties pursuant to SECTION 5.1(G).

                  "DISTRIBUTIONS"  shall  mean all  Equity  Interest  dividends,
other dividends,  including  liquidating  dividends,  Equity Interests resulting
from  (or  in  connection  with  the  exercise  of)  splits,  reclassifications,
warrants,  options,  non-cash  dividends  and all other  distributions  (whether
similar or dissimilar to the foregoing) on or with respect to any Pledged Equity
Interests  or other  Equity  Interests  constituting  Collateral,  but shall not
include Dividends.

                  "DIVIDENDS" means cash dividends and cash  distributions  with
respect to any Pledged Equity  Interests made in the ordinary course of business
and not as a liquidating dividend.

                  "DOCUMENT"  shall mean,  in respect of the Class D Notes,  any
Document,  as defined in the Exchange  Agreement  and, in respect of the Secured
Bridge Notes,  any Investment  Document,  as defined in the Securities  Purchase
Agreement.

                  "EQUITY  INTERESTS"  means,  with  respect to any Person,  all
shares,  interests,  participations or other equivalents  (however,  designated,
whether voting or non-voting) of such Person's capital,  whether now outstanding
or issued after the Closing Date.

                  "EVENT OF  DEFAULT"  shall mean,  with  respect to the Class D
Notes, any Event of Default as defined in the Class D Notes and, with respect to
the Secured Bridge Notes,  any Event of Default as defined in the Secured Bridge
Notes.

                  "EXCHANGE AGREEMENT" is defined in the FIRST RECITAL.

                  "EXISTING   SECURITY   AGREEMENT"   shall  mean  the  Security
Agreement as defined in the Exchange Agreement.

                  "HOLDINGS" is defined in the FIRST RECITAL.

                  "LENDER SECURED PARTIES" is defined in the FIRST RECITAL.

                  "NOTES"  shall mean the Class D Notes and the  Secured  Bridge
Notes.

                  "NOTE  INVESTOR  SECURED  PARTIES"  is  defined  in the SECOND
RECITAL.

                  "PERSON" is defined in the Securities Purchase Agreement.

                  "PLEDGED EQUITY INTERESTS" shall mean all Pledged Shares.

                  "PLEDGED SHARES" is defined in CLAUSE (B) of SECTION 2.1.

                  "PLEDGOR" is defined in the PREAMBLE.

                  "PROCEEDS" is defined in the Security Agreement.

                  "REQUIRED NOTEHOLDERS" shall mean, on any date, the holders of
more than 50% of the outstanding principal balance of the Notes on such date.



                                       3
<PAGE>

                  "SECURED  BRIDGE  NOTES" is defined in the Securities Purchase
Agreement.

                  "SECURED LOAN AGREEMENT" is defined in the FIRST RECITAL.

                  "SECURED  OBLIGATIONS"  shall mean,  in respect of the Class D
Notes, all Secured  Obligations,  as defined in the Existing Security  Agreement
and, in respect of the Secured Bridge Notes, all Secured Obligations, as defined
in the Security Agreement.

                  "SECURED PARTIES" is defined in the SECOND RECITAL.

                  "SECURITIES  PURCHASE  AGREEMENT"  is  defined  in the  SECOND
RECITAL.

                  "SECURITIES ACT" is defined in SECTION 6.2.

                  "SECURITIES  ISSUER"  shall mean Diomed PDT,  Inc., a Delaware
corporation and a wholly-owned subsidiary of the Pledgor.

                  "SECURITY  AGREEMENT"  is defined in the  Securities  Purchase
Agreement.


                  "TERMINATION  DATE"  shall  mean the later of the  Termination
Date as defined in the Existing  Security  Agreement and the Termination Date as
defined in the Security Agreement.

                  "U.C.C." is defined in the Security Agreement.

         1.2 SECURITIES PURCHASE AGREEMENT DEFINITIONS. Unless otherwise defined
herein  or the  context  otherwise  requires,  terms  used  in  this  Agreement,
including  its  preamble  and  recitals,  have  the  meanings  provided  in  the
Securities Purchase Agreement.

         1.3 U.C.C. DEFINITIONS.  Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the U.C.C. are used
in this Agreement, including its preamble and recitals, with such meanings.

         1.4  OTHER  INTERPRETIVE  PROVISIONS.  The  rules  of  construction  in
Sections 20(d) of the Securities  Purchase Agreement shall be equally applicable
to this Agreement.

                                   ARTICLE II
                                     PLEDGE

         2.1 GRANT OF SECURITY  INTEREST.  The Pledgor hereby pledges,  assigns,
charges, mortgages,  delivers, and transfers to the Designated Pledgeholder, and
hereby grants to the Designated  Pledgeholder and each of the Secured Parties, a
continuing  security interest in all of its right,  title and interest in and to
the  following  property of the Pledgor,  whether now or  hereafter  existing or
acquired (collectively, the "COLLATERAL"):

              (a) all issued  and  outstanding  shares of  capital  stock of the
Securities  Issuer as  identified  in SCHEDULE I hereto (as such Schedule may be
supplemented  from time to time pursuant to SECTION 4.1(B)) opposite the name of
the Pledgor and all  additional  shares of capital  stock of any the  Securities
Issuer  from  time  to time  acquired  by the  Pledgor  in any  manner,  and the
certificates  representing  such shares of capital stock (such shares of capital
stock being referred to herein as the "PLEDGED SHARES");



                                       4
<PAGE>

              (b) all Dividends,  Distributions,  other payments and rights with
respect to the items listed in CLAUSE (A) above; and

              (c) all Proceeds of any and all of the foregoing Collateral.

         2.2 SECURITY FOR SECURED  OBLIGATIONS.  The  Collateral  of the Pledgor
under this Agreement secures the prompt payment in full of (i) in respect of the
Class D Notes,  all  Secured  Obligations  as defined in the  Existing  Security
Agreement  and  (ii)  in  respect  of the  Secured  Bridge  Notes,  all  Secured
Obligations as defined in the New Security Agreement.

         2.3 DELIVERY OF COLLATERAL. All certificates representing or evidencing
any Collateral, including all Pledged Equity Interests shall be delivered to the
Designated  Pledgeholder  and shall be held by the  Designated  Pledgeholder  on
behalf of the  Secured  Parties  pursuant  hereto and as provided in the Secured
Loan Agreement and the Securities Purchase Agreement,  shall be in suitable form
for transfer by delivery,  and shall be accompanied by all necessary instruments
of transfer or assignment,  duly executed in blank. The Designated  Pledgeholder
hereby  acknowledges  that it has  received  delivery  of such  certificate  and
instrument from the Designated Note Purchaser and the Designated Lender.

         2.4  DIVIDENDS  ON  PLEDGED  EQUITY  INTERESTS.  In the event  that any
Dividend is to be paid on any Pledged Equity Interest at a time when no Event of
Default has occurred and is  continuing,  such  Dividend may be paid directly to
the Pledgor.  If any such Event of Default has occurred and is continuing,  then
any  such  Dividend  or  payment  shall  be  paid  directly  to  the  Designated
Pledgeholder to be held as a part of the Collateral.

         2.5 CONTINUING  SECURITY  INTEREST;  TRANSFER OF NOTES.  This Agreement
shall create a continuing  security  interest in the Collateral and shall remain
in full force and effect until the Termination Date, be binding upon the Pledgor
and its successors, transferees and assigns, and inure, together with the rights
and remedies of the  Designated  Pledgeholder  hereunder,  to the benefit of the
Designated  Pledgeholder and each Secured Party. Without limiting the generality
of the foregoing,  each Secured Party may assign or otherwise transfer (in whole
or in part) any Note held by it to any other Person, and such other Person shall
thereupon  become  vested with all the rights and  benefits  in respect  thereof
granted to such Secured Party under any Document  (including  this Agreement) or
otherwise,  subject,  however,  to any contrary provisions in such assignment or
transfer.

         2.6  SECURITY   INTEREST   ABSOLUTE.   All  rights  of  the  Designated
Pledgeholder  and  the  security   interests  granted  to  the  Secured  Parties
hereunder, and all obligations of the Pledgor hereunder,  shall be, absolute and
unconditional,  irrespective of any of the following conditions,  occurrences or
events:

              (a) any lack of validity or enforceability of any Document;

              (b) the  failure of the  Designated  Pledgeholder  or any  Secured
Party to assert  any claim or demand or to enforce  any right or remedy  against
Holdings,  the Pledgor or any



                                       5
<PAGE>

other Person under the  provisions of any Document,  or otherwise or to exercise
any right or remedy against any other guarantor of, or collateral securing,  any
Secured Obligation;

              (c) any change in the time,  manner or place of payment  of, or in
any other term of, all or any of the Secured Obligations or any other extension,
compromise or renewal of any Secured  Obligation,  including any increase in the
Secured  Obligations  resulting  from the  extension  of  additional  credit  to
Holdings, the Pledgor or otherwise;

              (d) any  reduction,  limitation,  impairment or termination of any
Secured  Obligation  for any  reason,  including  any claim of waiver,  release,
surrender,  alteration  or  compromise,  and  shall not be  subject  to (and the
Pledgor  hereby  waives  any  right  to or  claim  of) any  defense  or  setoff,
counterclaim,  recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness,  irregularity,  compromise,  unenforceability of, or
any other event or occurrence affecting, any Secured Obligation or otherwise;

              (e) any amendment to,  rescission,  waiver, or other  modification
of, or any consent to departure from, any of the terms of any Document;

              (f) any addition,  exchange,  release, surrender or non-perfection
of any collateral  (including the Collateral),  or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty,  for any of
the Secured Obligations; or

              (g) any other  circumstances  which might  otherwise  constitute a
defense  available  to, or a legal or  equitable  discharge  of,  Holdings,  the
Pledgor or otherwise.

         2.7  SUBROGATION.  Until the  Termination  Date,  the Pledgor shall not
exercise any claim or other rights which it may now or hereafter acquire against
Holdings that arises from the existence,  payment, performance or enforcement of
the  Pledgor's  obligations  under  this  Agreement,   including  any  right  of
subrogation,  reimbursement,   exoneration  or  indemnification,  any  right  to
participate in any claim or remedy against  Holdings or any collateral which the
Designated  Pledgeholder  or any Secured  Party now has or  hereafter  acquires,
whether or not such claim,  remedy or right arises in equity or under  contract,
statute or common law,  including  the right to take or receive  from  Holdings,
directly  or  indirectly,  in cash or other  property  or by  set-off  or in any
manner,  payment or  security on account of such claim or other  rights.  If any
amount shall be paid to the Pledgor in violation of the preceding sentence, such
amount shall be deemed to have been paid for the benefit of the Secured Parties,
and  shall  forthwith  be  paid  to the  Designated  Pledgeholder  to be held as
additional Collateral.  The Pledgor acknowledges that it will receive direct and
indirect benefits for the financing  arrangements  contemplated by the Documents
and  that  the  agreement  set  forth  in  this  Section  is  knowingly  made in
contemplation of such benefits.

         2.8 RELEASE; TERMINATION.

              (a) Upon any sale,  transfer or other  disposition  of any item of
Collateral of the Pledgor,  the Designated  Pledgeholder  will, at the Pledgor's
expense  and  without any  representations,  warranties  or recourse of any kind
whatsoever,  execute and deliver to the Pledgor  such  documents  as the Pledgor
shall reasonably request to evidence the release of such item of Collateral from
the pledge,  assignment and security interest granted hereby; provided,



                                       6
<PAGE>

that (i) at the time of such request and such release no Event of Default  under
either the Class D Notes or the Secured  Bridge Notes shall have occurred and be
continuing,  (ii) the Pledgor shall have delivered to the each Secured Party, at
least ten  Business  Days prior to the date of the proposed  release,  a written
request for release describing the item of Collateral and the terms of the sale,
lease,  transfer or other disposition in reasonable detail,  including,  without
limitation, the price thereof and any expenses in connection therewith, together
with a form of release  for  execution  by the  Designated  Pledgeholder  (which
release  shall  be  in  from  and  substance   satisfactory  to  the  Designated
Pledgeholder)  and  a  certificate  of  the  Pledgor  to  the  effect  that  the
transaction is in compliance  with the Documents and as to such other matters as
the Designated Pledgeholder may reasonably request and (iii) the proceeds of any
such sale,  lease,  transfer  or other  disposition  shall be used to redeem the
Notes in accordance  with SECTION 6.4 and the terms and conditions of the Notes.
Notwithstanding  the foregoing,  the Pledgor  agrees that this  Agreement  shall
continue to be  effective or be  reinstated,  as the case may be, if at any time
any payment (in whole or in part) of any of the Secured Obligations is rescinded
or must  otherwise  be  restored  by any  Secured  Party  upon  the  insolvency,
bankruptcy  or  reorganization  of the Pledgor,  Holdings or  otherwise,  all as
though such payment had not been made.(b) Upon the Termination Date, the pledge,
assignment and security  interest  granted hereby shall terminate and all rights
to the Collateral shall revert to the Pledgor.  Upon any such  termination,  the
Designated   Pledgeholder  will,  at  the  Pledgor's  expense  and  without  any
representations,  warranties  or  recourse of any kind  whatsoever,  execute and
deliver to the Pledgor such documents as the Pledgor shall reasonably request to
evidence  such  termination  and  deliver to the Pledgor  all  certificates  and
instruments   representing  or  evidencing  the  Collateral  then  held  by  the
Designated Pledgeholder.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         The Pledgor  represents and warrants unto the  Designated  Pledgeholder
and each Secured  Party,  as at the date of each pledge and  delivery  hereunder
(including each pledge and delivery of a Pledged Equity Interest) by the Pledgor
to the Designated Pledgeholder of any Collateral, as set forth in this Article.

         3.1 OWNERSHIP;  NO LIENS,  ETC. The Pledgor is the legal and beneficial
owner of, and has good and marketable title to (and has full right and authority
to pledge and assign) such Collateral,  free and clear of all Liens,  except for
this security interest granted pursuant hereto in favor of the Secured Parties.

         3.2 VALID  SECURITY  INTEREST.  The delivery of such  Collateral to the
Designated  Pledgeholder,  to hold for the  benefit of the Secured  Parties,  is
effective to create a valid,  perfected security interest in such Collateral and
all Proceeds  thereof,  subject to no other  Liens,  securing the payment of the
Secured  Obligations.  No filing or other action will be necessary to perfect or
protect such security interest.

         3.3  AS TO  PLEDGED  SHARES.  All  of  such  Pledged  Shares  are  duly
authorized and validly issued,  fully paid, and  non-assessable,  and constitute
all of the issued and outstanding voting capital stock and all of the non-voting
shares of capital stock of the  Securities  Issuer  thereof.  The Pledgor has no
Subsidiaries other than the Securities Issuer.



                                       7
<PAGE>

         3.4 AUTHORIZATION,  APPROVAL, ETC. No authorization, approval, or other
action by, and no notice to or filing with,  any  Governmental  Authority or any
other Person is required either:

              (a) for the pledge by the  Pledgor of any  Collateral  pursuant to
this Agreement or for the execution, delivery, and performance of this Agreement
by the Pledgor; or

              (b) for the  exercise by any Secured  Party of the voting or other
rights  provided  for in  this  Agreement  or the  remedies  in  respect  of the
Collateral  pursuant  to this  Agreement,  except,  with  respect to the Pledged
Equity  Interests,  as may be required in connection  with a disposition of such
Pledged  Equity  Interests by laws affecting the offering and sale of securities
generally.

         3.5 DUE  EXECUTION,  VALIDITY,  ETC.  The  Pledgor  has full  power and
authority,  and holds all  requisite  governmental  licenses,  permits and other
approvals, to enter into and perform its obligations under this Agreement.  With
the  consent of the  Designated  Note  Investor  on behalf of the holders of the
Class D Notes,  the execution,  delivery and  performance by the Pledgor of this
Agreement  does not  contravene  or  result in a  default  under  the  Pledgor's
articles of  incorporation or by-laws or contravene or result in a default under
any material  contractual  restriction,  Lien or  applicable  law binding on the
Pledgor.  This Agreement has been duly authorized by the Pledgor,  has been duly
executed and delivered on behalf of the Pledgor and constitutes the legal, valid
and binding obligation of the Pledgor  enforceable in accordance with its terms,
subject  to the  effect of any  applicable  bankruptcy,  insolvency  or  similar
applicable law affecting  creditor's right generally,  and subject to the effect
of  general  principles  of  equity  (regardless  of  whether  considered  in  a
proceeding in equity or at law).

         3.6 OTHER DOCUMENTS.  Each  representation  and warranty of the Pledgor
contained  in each  Document  to which it is a party is true and  correct in all
material  respects as of such date (unless such  representation  and warranty is
stated to relate solely to an earlier  date,  in which case such  representation
and  warranty is true and correct in all  material  respects as of such  earlier
date).

                                   ARTICLE IV
                                    COVENANTS

         The Pledgor  covenants and agrees that, until the Termination Date, the
Pledgor  will,  unless the  Designated  Pledgeholder  shall  otherwise  agree in
writing, perform the obligations set forth in this Section.

         4.1 PROTECT COLLATERAL;  FURTHER  ASSURANCES,  ETC. (a) (a) The Pledgor
will not create or suffer to exist any Lien on the Collateral  (except a Lien in
favor of the Secured Parties). The Pledgor will warrant and defend the right and
title herein granted unto the Secured  Parties in and to the Collateral (and all
right, title, and interest represented by the Collateral) against the claims and
demands of all Persons whomsoever.

              (b) The Pledgor agrees that at any time, and from time to time, at
the expense of the Pledgor,  the Pledgor will  promptly  execute and deliver all
further instruments, and take all further action, that may be necessary, or that
the  Designated  Pledgeholder  may reasonably



                                       8
<PAGE>

request,  in order to perfect  and  protect  any  security  interest  granted or
purported  to be granted  hereby or to enable  the  Designated  Pledgeholder  to
exercise  and  enforce its rights and  remedies  hereunder  with  respect to any
Collateral.

              (c) The Pledgor will not permit the Securities Issuer to issue any
Equity  Interest  unless  the same is  immediately  delivered  in  pledge to the
Designated Pledgeholder hereunder.

         4.2  POWERS,  CONTROL,  ETC.  (a) The  Pledgor  agrees that all Pledged
Equity  Interests  delivered by the Pledgor  pursuant to this  Agreement will be
accompanied  by  duly  executed  undated  blank  powers,   or  other  equivalent
instruments of transfer acceptable to the Designated Pledgeholder.

              (b) The  Pledgor  will,  from time to time upon the request of the
Designated  Pledgeholder,  promptly deliver to the Designated  Pledgeholder such
powers, instruments,  and similar documents,  satisfactory in form and substance
to the Designated Pledgeholder, with respect to the Collateral as the Designated
Pledgeholder may reasonably request and will, from time to time upon the request
of the  Designated  Pledgeholder  after the  occurrence  of any Event of Default
under the Notes, promptly transfer any Pledged Equity Interests into the name of
any nominee designated by the Designated Pledgeholder.

         4.3 CONTINUOUS PLEDGE. Subject to SECTION 2.4, the Pledgor will, at all
times, keep pledged to the Designated  Pledgeholder  pursuant hereto all Pledged
Equity Interests and all other Equity  Interests  constituting  Collateral,  all
Dividends and Distributions  with respect thereto,  and all other Collateral and
other securities,  instruments,  proceeds, and rights from time to time received
by or distributable to the Pledgor in respect of any Collateral.

         4.4 VOTING RIGHTS; DIVIDENDS, ETC. The Pledgor agrees:

              (a)  after  any  Event  of  Default  shall  have  occurred  and be
continuing, promptly upon receipt thereof by the Pledgor and without any request
therefor by the Designated  Pledgeholder,  to deliver  (properly  endorsed where
required hereby or requested by the Designated  Pledgeholder)  to the Designated
Pledgeholder all Dividends,  Distributions, other cash payments, and proceeds of
the  Collateral,  all of which shall be held by the Designated  Pledgeholder  as
additional Collateral for use in accordance with SECTION 6.4; and

              (b) after any Event of Default under the Notes shall have occurred
and be continuing and the Designated  Pledgeholder has notified the Pledgor that
it has  received a  direction  from the  Designated  Note  Investors  and/or the
Designated Lenders pursuant to SECTION 6.1 directing the Designated Pledgeholder
to exercise its voting power under this clause:

              (i) the Designated  Pledgeholder may exercise (to the exclusion of
the Pledgor) the voting power and all other incidental  rights of ownership with
respect to any  Pledged  Equity  Interests  and the  Pledgor  hereby  grants the
Designated   Pledgeholder   an  irrevocable   proxy,   exercisable   under  such
circumstances,  to vote the Pledged Equity Interests; and

              (ii)  the  Pledgor  shall  promptly   deliver  to  the  Designated
Pledgeholder such additional  proxies and other documents as may be necessary to
allow the Designated Pledgeholder to exercise such voting power.



                                       9
<PAGE>

              (c) All  Dividends,  Distributions,  cash  payments,  and proceeds
which may at any time and from time to time be held by the Pledgor but which the
Pledgor is then  obligated  to deliver to the  Designated  Pledgeholder,  shall,
until delivery to the Designated  Pledgeholder,  be held by the Pledgor separate
and apart from its other  property  in trust for the Secured  Parties.  Until an
Event of Default  shall  have  occurred  and be  continuing  and the  Designated
Pledgeholder  shall have given the notice  referred to in CLAUSE (B) above,  the
Pledgor  shall  have the  exclusive  voting  power  with  respect  to any Equity
Interests  constituting  Collateral and the Designated  Pledgeholder shall, upon
the written  request of the  Pledgor,  promptly  deliver  such proxies and other
documents,  if any, as shall be  reasonably  requested by the Pledgor  which are
necessary to allow the Pledgor to exercise voting power with respect to any such
Equity Interests constituting Collateral;  PROVIDED, HOWEVER, that no vote shall
be cast,  or consent,  waiver,  or  ratification  given,  or action taken or any
action not taken by the Pledgor that would materially impair any Collateral.

                                   ARTICLE V
                           THE DESIGNATED PLEDGEHOLDER

         5.1  APPOINTMENT OF DESIGNATED  PLEDGEHOLDER  BY DESIGNATED  LENDER AND
DESIGNATED NOTE INVESTOR.

              (a) Pursuant to Section 10(b) of the Secured Loan  Agreement,  the
Designated  Lender,  on behalf of each Lender  Secured  Party,  and  pursuant to
Section  6.1(b) of the Security  Agreement,  the Designated  Note  Investor,  on
behalf  of each  Note  Investor  Secured  Party,  hereby  irrevocably  appoints,
designates  and  authorizes  GUS as agent for such Secured  Party  hereunder and
authorizes  the  Designated  Pledgeholder  to take such action on behalf of such
Secured Party under the provisions of this Agreement and each other Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Document,  together with such powers
as are  reasonably  incidental  thereto.  Notwithstanding  any  provision to the
contrary  contained  elsewhere  herein or in any other Document,  the Designated
Pledgeholder  shall  not have  any  duties  or  responsibilities,  except  those
expressly set forth herein,  nor shall the  Designated  Pledgeholder  have or be
deemed to have any fiduciary relationship with any Secured Party, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Document or otherwise exist against the
Designated Pledgeholder.

              (b) The  Designated  Pledgeholder  may  execute  any of its duties
under this  Agreement or any other Document by or through  agents,  employees or
attorneys-in-fact  and  shall  be  entitled  to  advice  of  counsel  and  other
consultants  or experts  concerning all matters  pertaining to such duties.  The
Designated   Pledgeholder  shall  not  be  responsible  for  the  negligence  or
misconduct  of any agent or  attorney-in-fact  that it selects in the absence of
gross negligence or willful misconduct.

              (c) The  Designated  Pledgeholder  shall not (a) be liable for any
action  taken or  omitted  to be taken by it under or in  connection  with  this
Agreement or any other Document or



                                       10
<PAGE>

the  transactions  contemplated  hereby (except for its own gross  negligence or
willful misconduct in connection with its duties expressly set forth herein), or
(b) be responsible in any manner to the Designated  Lender,  the Designated Note
Investor or any Secured  Party for any  recital,  statement,  representation  or
warranty made by the Pledgor or any officer thereof,  contained herein or in any
other  Document,  or in any  certificate,  report,  statement or other  document
referred to or provided for in, or received by the Designated Pledgeholder under
or in connection  with, this Agreement or any other  Document,  or the validity,
effectiveness,  genuineness,  enforceability or sufficiency of this Agreement or
any other Document,  or for any failure of the Pledgor or any other party to any
Document to perform its obligations hereunder or thereunder.

              (d) Designated  Pledgeholder  shall be entitled to rely, and shall
be fully  protected  in relying,  upon any  writing,  communication,  signature,
resolution,  representation,  notice, consent,  certificate,  affidavit, letter,
telegram,  facsimile,  telex or  telephone  message,  electronic  mail  message,
statement  or other  document or  conversation  believed by it to be genuine and
correct and to have been signed,  sent or made by the proper  Person or Persons,
and upon  advice  and  statements  of legal  counsel  (including  counsel to the
Pledgor),  independent  accountants and other experts selected by the Designated
Pledgeholder. The Designated Pledgeholder shall be fully justified in failing or
refusing to take any action  under any  Document  unless it shall first  receive
such advice or concurrence of (i) the Designated  Lender and the Designated Note
Investor,  (ii) the Required Noteholders or (iii) all the Secured Parties, as it
deems  appropriate and, if it so requests,  it shall first be indemnified to its
satisfaction  by the Secured  Parties  against any and all liability and expense
which may be incurred by it by reason of taking or  continuing  to take any such
action.  The Designated  Pledgeholder  shall in all cases be fully  protected in
acting, or in refraining from acting, under this Agreement or any other Document
in  accordance  with a request or consent of (i) the  Designated  Lender and the
Designated Note Investor or (ii) the Required Noteholders (unless, in each case,
the consent of all the Secured  Parties is required  pursuant to SECTION 7.2(A))
and such request and any action taken or failure to act pursuant  thereto  shall
be binding upon all the Secured Parties.

              (e)  Each  Secured   Party   acknowledges   that  the   Designated
Pledgeholder has not made any  representation or warranty to it, and that no act
by the Designated  Pledgeholder  hereafter  taken,  including any consent to and
acceptance  of any  assignment  or review of the  affairs of the  Pledgor or any
Affiliate thereof,  shall be deemed to constitute any representation or warranty
by the Designated Pledgeholder to any Secured Party as to any matter,  including
whether the Designated Pledgeholder have disclosed material information in their
possession. Each Secured Party represents to the Designated Pledgeholder that it
has,  independently  and without  reliance upon the Designated  Pledgeholder and
based on such documents and information as it has deemed  appropriate,  made its
own appraisal of and  investigation  into the business,  prospects,  operations,
property,  financial and other condition and creditworthiness of the Pledgor and
its  subsidiaries,   and  all  applicable  laws  relating  to  the  transactions
contemplated hereby, and made its own decision to enter into this Agreement.

              (f)  Whether  or not  the  transactions  contemplated  hereby  are
consummated,  the Secured  Parties shall  indemnify  upon demand the  Designated
Pledgeholder  (to the extent not  reimbursed  by or on behalf of the Pledgor and
without  limiting the  obligation  of the Pledgor to do so), pro rata,  and hold
harmless the Designated  Pledgeholder  from and against any and all  Indemnified
Liabilities  incurred by it; provided,  however,  that no Secured Party shall be
liable



                                       11
<PAGE>

for  the  payment  to  the  Designated  Pledgeholder  of  any  portion  of  such
Indemnified  Liabilities  to the  extent  determined  in a final,  nonappealable
judgment  by a court  of  competent  jurisdiction  to  have  resulted  from  the
Designated Pledgeholder's own gross negligence or willful misconduct;  provided,
however,  that no action taken in accordance  with the directions of the Secured
Parties shall be deemed to constitute gross negligence or willful misconduct for
purposes of 5. Without  limitation  of the  foregoing,  each Secured Party shall
reimburse the Designated  Pledgeholder  upon demand for its ratable share of any
costs or  out-of-pocket  expenses  incurred by the  Designated  Pledgeholder  in
connection   with  the   preparation,   execution,   delivery,   administration,
modification,  amendment or enforcement  (whether  through  negotiations,  legal
proceedings  or  otherwise)  of,  or  legal  advice  in  respect  of  rights  or
responsibilities  under,  this Agreement,  any other  Document,  or any document
contemplated  by or  referred  to  herein,  to the  extent  that the  Designated
Pledgeholder is not reimbursed for such expenses by or on behalf of the Pledgor.

              (g)  The   Designated   Pledgeholder   may  resign  as  Designated
Pledgeholder  upon thirty  (30) days  notice to the  Secured  Parties and to the
Company.  If the Designated  Pledgeholder  resigns under this Agreement,  within
fifteen  (15) days after the  delivery  by the  Designated  Pledgeholder  of its
notice  of  resignation,  (i) the  Designated  Lender  and the  Designated  Note
Investor or (ii) the Required  Noteholders shall appoint a successor  Designated
Pledgeholder from any of the other Secured Parties, and shall notify the Company
of the  identity  of and  contact  information  for  such  successor  Designated
Pledgeholder  within five (5) days of such successor  Designated  Pledgeholder's
appointment.

         5.2  APPOINTMENT  AS  ATTORNEY-IN-FACT  BY PLEDGOR.  The Pledgor hereby
irrevocably constitutes and appoints the Designated Pledgeholder and any officer
or agent  thereof,  with  full  power of  substitution,  as its true and  lawful
attorney-in-fact  with full  irrevocable  power and  authority  in the place and
stead of the Pledgor and in the name of the Pledgor or in its own name,  for the
purpose  of  carrying  out the  terms  of this  Agreement,  to  take,  upon  the
occurrence  and during the  continuance of any Event of Default under the Notes,
any and all  appropriate  action  and to  execute  any  and  all  documents  and
instruments  that may be necessary or  desirable to  accomplish  the purposes of
this  Agreement.  Upon the occurrence and during the  continuance of an Event of
Default under the Notes,  the Pledgor hereby gives the  Designated  Pledgeholder
the power and right,  on behalf of the Pledgor,  without  notice to or assent by
the Pledgor, to do any or all of the following:

              (a) in the name of the Pledgor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,  acceptances or
other  instruments  for the  payment  of moneys  due under or in  respect of any
Collateral  and file any claim or take any other  action  or  proceeding  in any
court of law or equity or otherwise  deemed  appropriate by the Secured  Parties
for the purpose of collecting any and all such moneys due under or in respect of
any Collateral whenever payable; and

              (b) (i) direct any party  liable for any payment  under any of the
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Designated  Pledgeholder or as the Designated Pledgeholder shall
direct; (ii) ask or demand for, collect, and receive payment of and give receipt
for,  any and all moneys,  claims and other  amounts due or to become due at any
time in respect of or arising out of any  Collateral;  (iii)  receive,  collect,
sign and endorse any drafts or other instruments, documents and chattel paper in
connection  with any



                                       12
<PAGE>

of the Collateral; (iv) commence and prosecute any suits, actions or proceedings
at law or in  equity in any  court of  competent  jurisdiction  to  collect  the
Collateral  or any portion  thereof and to enforce any other right in respect of
any Collateral;  (v) defend any suit,  action or proceeding  brought against the
Pledgor with respect to any  Collateral;  (vi) settle,  compromise or adjust any
such  suit,  action  or  proceeding  and,  in  connection  therewith,  give such
discharges or releases as the Designated  Pledgeholder  (at the direction of the
Secured  Parties) may deem  appropriate;  and (vii) generally,  sell,  transfer,
pledge and make any agreement  with respect to or otherwise deal with any of the
Collateral as fully and  completely as though the Designated  Pledgeholder  (for
the benefit of the Secured  Parties)  were the  absolute  owner  thereof for all
purposes,  and do,  at the  option  of the  Designated  Pledgeholder  and at the
Pledgors'  expense,  at any time, or from time to time, all acts and things that
the Designated Pledgeholder deems necessary to protect, preserve or realize upon
the Collateral and the Secured Parties' security interests therein and to effect
the intent of this Agreement,  all as fully and effectively as the Pledgor might
do.

The Pledgor hereby acknowledges,  consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

         5.3  DESIGNATED  PLEDGEHOLDER  MAY  PERFORM.  If the  Pledgor  fails to
perform any agreement contained herein, the Designated Pledgeholder may perform,
or cause  performance  of, such  agreement  and the  reasonable  expenses of the
Designated Pledgeholder incurred in connection therewith shall be payable by the
Pledgor pursuant to SECTION 6.5.

         5.4 DESIGNATED  PLEDGEHOLDER  HAS NO DUTY. (a) The powers  conferred on
the  Designated  Pledgeholder  hereunder  are solely to protect its interest (on
behalf of the Secured  Parties) in the  Collateral and shall not impose any duty
on it to exercise any such powers.  Neither the Designated  Pledgeholder nor any
of its officers,  directors,  employees or agents shall be liable for failure to
demand,  collect or realize upon any of the Collateral or for any delay in doing
so or  shall  be  under  any  obligation  to sell or  otherwise  dispose  of any
Collateral  upon the request of the  Pledgor or any other  Person or to take any
other  action  whatsoever  with  regard to the  Collateral  or any part  thereof
(including  the taking of any necessary  steps to preserve  rights against prior
parties  or  any  other  rights  pertaining  to  any  Collateral).  Neither  the
Designated Pledgeholder nor any of its officers, directors,  employees or agents
shall be  responsible  to the Pledgor  for any act or failure to act  hereunder,
except for their own gross  negligence  or willful  misconduct.(b)  The  Pledgor
assumes all  responsibility  and liability  arising from or relating to the use,
sale or other disposition of the Collateral.  The Secured  Obligations shall not
be affected by any failure of the Designated  Pledgeholder  to take any steps to
perfect the pledge and  security  interest  granted  hereunder  or to collect or
realize upon the Collateral,  nor shall loss or damage to the Collateral release
the Pledgor from any Secured Obligations.

                                   ARTICLE VI
                                    REMEDIES

         6.1 CERTAIN  REMEDIES.  If any Event of Default shall have occurred and
be continuing:

              (a) Upon receipt of (i) the written direction of the Note Investor
Secured  Parties  that hold a majority in  outstanding  principal  amount of the
Secured Bridge Notes or (ii) the written direction of the Lender Secured Parties
that hold a majority in outstanding  principal



                                       13
<PAGE>

amount of the Class D Notes, the Designated Pledgeholder may exercise in respect
of the Collateral,  in addition to other rights and remedies provided for herein
or otherwise  available to it, all the rights and remedies of a secured party on
default under the U.C.C.

         (b) Upon  receipt of (i) the  written  direction  of the Note  Investor
Secured  Parties  that hold a majority in  outstanding  principal  amount of the
Secured Bridge Notes or (ii) the written direction of the Lender Secured Parties
that hold a majority in  outstanding  principal  amount of the Class D Notes the
Designated Pledgeholder may:

              (i)  transfer all or any part of the  Collateral  into the name of
the Designated  Pledgeholder  (on behalf of the Secured Parties) or its nominee,
with or  without  disclosing  that such  Collateral  is  subject to the lien and
security interest hereunder;

              (ii) notify the parties obligated on any of the Collateral to make
payment  to the  Designated  Pledgeholder  of any  amount  due or to become  due
thereunder (and notify the Pledgor as contemplated by SECTION 4.4(B));

              (iii)  enforce  collection  of any of the  Collateral  by  suit or
otherwise,  and  surrender,  release or  exchange  all or any part  thereof,  or
compromise  or extend or renew for any period  (whether  or not longer  than the
original  period)  any  obligations  of any  nature  of any party  with  respect
thereto;

              (iv)  endorse  any  checks,  drafts,  or  other  writings  in  the
Pledgor's name to allow collection of the Collateral;

              (v) take control of any proceeds of the Collateral; and

              (vi)  execute  (in the  name,  place  and  stead  of the  Pledgor)
endorsements,  assignments,  stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral.

         6.2 APPLICABLE LAWS. If the Designated  Pledgeholder shall determine to
exercise its right to sell all or any of the Collateral pursuant to SECTION 6.1,
the Pledgor  agrees  that,  upon  request of the  Designated  Pledgeholder,  the
Pledgor will, at its own expense do or cause to be done all such acts and things
as may be reasonably requested by the Designated  Pledgeholder necessary to make
such  sale of the  Collateral  or any part  thereof  valid  and  binding  and in
compliance with applicable law.

         6.3 COMPLIANCE WITH  RESTRICTIONS.  The Pledgor agrees that in any sale
of any of the Collateral whenever an Event of Default shall have occurred and be
continuing,  the Designated Pledgeholder is hereby authorized to comply with any
limitation or restriction  in connection  with such sale as it may be advised by
counsel  is  necessary  in  order to  avoid  any  violation  of  applicable  law
(including  compliance  with  such  procedures  as may  restrict  the  number of
prospective  bidders and purchasers,  require that such prospective  bidders and
purchasers have certain  qualifications,  and restrict such prospective  bidders
and  purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the  distribution or
resale of such  Collateral),  or in order to obtain any required approval of the
sale or of the  purchaser by any  governmental  authority  or official,  and the
Pledgor further



                                       14
<PAGE>

agrees that such  compliance  shall not result in such sale being  considered or
deemed not to have been made in a commercially  reasonable manner, nor shall the
Designated  Pledgeholder  be  liable  nor  accountable  to the  Pledgor  for any
discount  allowed  by  reason  of the  fact  that  such  Collateral  is  sold in
compliance with any such limitation or restriction.

         6.4  APPLICATION  OF  PROCEEDS.  All  cash  proceeds  received  by  the
Designated  Pledgeholder  in respect of any sale of,  collection  from, or other
realization  upon,  all or any part of the  Collateral  shall be applied  (after
payment  of any  amounts  payable to the  Designated  Pledgeholder  pursuant  to
SECTION 6.5 below) in whole or in part by the  Designated  Pledgeholder  for the
ratable  benefit of the Secured  Parties  against all or any part of the Secured
Obligations.  Any surplus of such cash or cash proceeds  held by the  Designated
Pledgeholder  and  remaining  after  payment in full in cash of all the  Secured
Obligations  and the termination of this Agreement as provided in SECTION 2.8(B)
hereof,  shall be paid over to the  Pledgor  or to  whomsoever  may be  lawfully
entitled to receive such surplus.

         6.5 INDEMNITY AND  EXPENSES.  The Pledgor  agrees to indemnify and hold
harmless  the  Designated  Pledgeholder  from and  against  any and all  claims,
losses, and liabilities  arising out of or resulting from this Agreement and the
other  Documents  (including   enforcement  of  this  Agreement  and  the  other
Documents),  except claims, losses, or liabilities resulting from the Designated
Pledgeholder's  gross negligence or willful  misconduct as determined by a final
judgment of a court of competent  jurisdiction.  The Pledgor will,  upon demand,
pay to  the  Designated  Pledgeholder  the  amount  of any  and  all  reasonable
expenses,  including the reasonable fees and disbursements of its counsel and of
any  experts  and  agents,  which  the  Designated  Pledgeholder  may  incur  in
connection with the following:

              (a) the administration of this Agreement and the other Documents;

              (b) the custody,  preservation,  use or operation  of, or the sale
of, collection from, or other realization upon, any of the Collateral;

              (c)  the  exercise  or  enforcement  of any of the  rights  of the
Designated Pledgeholder hereunder; or

              (d) the  failure by the  Pledgor to perform or observe  any of the
provisions hereof.

         6.6  WAIVERS.  The  Pledgor  hereby  waives  any  right,  to the extent
permitted by  applicable  law, to receive prior notice of or a judicial or other
hearing with respect to any action or  prejudgment  remedy or  proceeding by the
Designated Pledgeholder to take possession,  exercise control over or dispose of
any item of  Collateral  where such action is permitted  under the terms of this
Agreement  or any other  Document or by  applicable  laws or the time,  place or
terms of sale in connection  with the exercise of the Designated  Pledgeholder's
rights  hereunder.  The Pledgor  waives,  to the extent  permitted by applicable
laws, any bonds,  security or sureties  required by the Designated  Pledgeholder
with  respect to any of the  Collateral.  The  Pledgor  also  waives any damages
(direct,  consequential  or  otherwise)  occasioned  by the  enforcement  of the
Designated  Pledgeholder's  rights under this  Agreement or any other  Document,
including,  the taking of possession of any  Collateral,  all to the extent that
such waiver is permitted by



                                       15
<PAGE>

applicable  laws.  These  waivers  and all other  waivers  provided  for in this
Agreement and the other  Documents  have been  negotiated by the parties and the
Pledgor  acknowledges  that it has been represented by counsel of its own choice
and has consulted such counsel with respect to its rights hereunder.

                                  ARTICLE VII
                            MISCELLANEOUS PROVISIONS

         7.1 DOCUMENT. (a) This Agreement is a Document executed pursuant to (i)
the Exchange  Agreement  and (ii) the  Securities  Purchase  Agreement and shall
(unless otherwise  expressly  indicated  herein) be construed,  administered and
applied in accordance with the terms and provisions of each thereof.

              (b)  Previously,  the Pledgor  executed and delivered the Existing
Security  Agreement pursuant to which the Pledgor granted a security interest to
the  Lender  Secured  Parties in  certain  of the  properties  and assets of the
Pledgor (other than the Collateral hereunder). Concurrently herewith the Pledgor
is executing and delivering the Security Agreement pursuant to which the Pledgor
is granting a security  interest to the Note Investor Secured Parties in certain
of the  properties  and  assets  of  the  Pledgor  (other  than  the  Collateral
hereunder).  Such  security  interests  shall be  governed  by the  terms of the
Existing Security Agreement or the Security  Agreement,  as the case may be, and
not by this Agreement.

         7.2 AMENDMENTS, ETC.; SUCCESSORS AND ASSIGNS.

              (a) No amendment to or waiver of any  provision of this  Agreement
nor  consent to any  departure  by the Pledgor  herefrom,  shall in any event be
effective  unless  the same shall be in  writing  and  signed by the  Designated
Pledgeholder,  at the direction of either (a) both the Designated  Note Investor
and the Designated Lender or (b) the Required Lenders;  PROVIDED,  HOWEVER, that
the  Designated  Pledgor  shall not agree to any such  amendment or waiver which
modifies the definition of the Required  Lenders or a Secured Party hereunder or
the terms of Article VI hereof  without a written  direction  from each  Secured
Party and,  with respect to any such  amendment,  by the Pledgor,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given.

              (b) Upon  delivery  by the Pledgor of a  supplement  to SCHEDULE I
pursuant  to SECTION  4.1(B),  the  schedule  supplement  attached  to each such
certificate  shall  be  incorporated  into  and  become  part of and  supplement
SCHEDULE I hereto,  and the  Designated  Pledgeholder  may attach such  schedule
supplement to such Schedule and each  reference to such Schedule  shall mean and
be a reference to such Schedule, as supplemented pursuant hereto.

              (c) This  Agreement  shall be  binding  upon the  Pledgor  and its
successors,  transferees  and  assigns  and shall  inure to the  benefit  of the
Designated   Pledgeholder   and  each  Secured  Parties  and  their   respective
successors,  transferees and assigns;  PROVIDED, that the Pledgor may not assign
its  obligations  hereunder  without the prior written consent of the Designated
Pledgeholder.

         7.3  ADDRESSES  FOR  NOTICES.  All  notices  and  other  communications
provided for hereunder shall be in writing and mailed,  delivered or transmitted
by  facsimile  to any party



                                       16
<PAGE>

hereto  at the  address  set  forth in  Section  18 of the  Securities  Purchase
Agreement (with any notice to the Pledgor being delivered to the Pledgor in care
of Holdings and such notices to the Designated  Pledgeholder  being  delivered [
]). All such  notices  and other  communications  shall be deemed to be given or
made at the times provided in Section 18 of the Securities Purchase Agreement.

         7.4 SECTION  CAPTIONS.  Section captions used in this Agreement are for
convenience  of reference  only, and shall not affect the  construction  of this
Agreement.

         7.5  SEVERABILITY.  If any  provision  of this  Agreement is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining  provisions of this Agreement shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace
the illegal,  invalid or  unenforceable  provisions  with valid  provisions  the
economic  effect of which  comes as close as  possible  to that of the  illegal,
invalid  or  unenforceable  provisions.  The  invalidity  of  a  provision  in a
particular  jurisdiction  shall  not  invalidate  or render  unenforceable  such
provision in any other jurisdiction.

         7.6  COUNTERPARTS.  This  Agreement  may be  executed  in  one or  more
counterparts,  each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

         7.7  GOVERNING  LAW, ETC. (A) THIS  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK  APPLICABLE  TO
AGREEMENTS MADE AND PERFORMED  ENTIRELY WITHIN SUCH STATE,  EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER,  OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK OR ANY SECURED PARTY.

              (b) ANY LEGAL ACTION OR PROCEEDING  WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK  SITTING IN NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN  DISTRICT OF SUCH STATE;  PROVIDED,  THAT ANY
SUIT SEEKING  ENFORCEMENT  AGAINST ANY  COLLATERAL  OR OTHER  PROPERTY  SHALL BE
BROUGHT,  AT THE  OPTION OF THE  DESIGNATED  PLEDGEHOLDER,  IN THE COURTS OF ANY
JURISDICTION  WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BY EXECUTION
AND DELIVERY OF THIS AGREEMENT,  EACH PARTY HERETO  CONSENTS,  FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE  JURISDICTION OF THOSE COURTS. THE
PLEDGOR, THE DESIGNATED PLEDGEHOLDER IRREVOCABLY WAIVE ANY OBJECTION,  INCLUDING
ANY  OBJECTION  TO THE  LAYING  OF VENUE OR BASED ON THE  GROUNDS  OF FORUM  NON
CONVENIENS,  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH  JURISDICTION  IN RESPECT OF THIS AGREEMENT OR OTHER DOCUMENT
RELATED  THERETO.  EACH PARTY  HERETO  WAIVES  PERSONAL  SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER  PROCESS,  WHICH MAY BE MADE BY ANY OTHER MEANS  PERMITTED BY
THE LAW OF SUCH STATE.



                                       17
<PAGE>

         7.8 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES  ANY  RIGHT TO TRIAL BY JURY OF ANY  CLAIM,  DEMAND,  ACTION  OR CAUSE OF
ACTION  ARISING  UNDER ANY DOCUMENT OR IN ANY WAY  CONNECTED  WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES  HERETO OR ANY OF THEM WITH RESPECT TO
ANY DOCUMENT,  OR THE  TRANSACTIONS  RELATED  THERETO,  IN EACH CASE WHETHER NOW
EXISTING  OR  HEREAFTER  ARISING,  AND  WHETHER  FOUNDED IN  CONTRACT OR TORT OR
OTHERWISE;  AND EACH PARTY  HEREBY  AGREES  AND  CONSENTS  THAT ANY SUCH  CLAIM,
DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED BY COURT  TRIAL  WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS  SECTION  WITH ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         7.9 ENTIRE AGREEMENT.  THIS AGREEMENT AND THE OTHER DOCUMENTS REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES OR BY PRIOR
OR CONTEMPORANEOUS  WRITTEN  AGREEMENTS.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES.



                            [Signature page follows.]




                                       18
<PAGE>

         IN WITNESS  WHEREOF,  the Pledgor  has caused  this Second  Amended and
Restated  Pledge  Agreement to be duly executed and delivered by its  respective
officer thereunto duly authorized as of the date first above written.

                                             DIOMED, INC.



                                             By:
                                                 ------------------------------
                                             Name:  James A. Wylie, Jr.
                                             Title:  Chief Executive Officer


ACKNOWLEDGED AND ACCEPTED:

GIBRALT US, INC.,
         as the Designated Lender

By: __________________________
    Name: Johnny Ciampi
    Title: Authorized Officer

GIBRALT US, INC.,
         as the Designated Note Investor

By:  __________________________
      Name: Johnny Ciampi
      Title: Authorized Officer

GIBRALT US, INC.,
         as the Designated Pledgeholder

By:  __________________________
      Name:  Johnny Ciampi
      Title:   Authorized Officer

GIBRALT US, INC.,
         as the Designated Note Purchaser

By:  __________________________
      Name:  Johnny Ciampi
      Title:   Authorized Officer




                                       19
<PAGE>

                                                                      SCHEDULE I
                                                                              to
                                              Second Amended and Restated Pledge
                                                                       Agreement

                                 PLEDGED SHARES


<TABLE>
<CAPTION>
  Securities Issuer
  (Jurisdiction of                                                      % of Shares
    ORGANIZATION)            Authorized SHARES    Outstanding SHARES       PLEDGED    Certificate NO.
    -------------            -----------------    ------------------       -------    ---------------
<S>                                <C>                   <C>                 <C>             <C>
Diomed PDT, Inc. ( a               100                   100                 100             1
Delaware Corporation)
</TABLE>