EX 10.12


    This
      Guaranty and the rights, remedies, representations and obligations of the
      parties hereto are subject to the terms and conditions of that certain
      Intercreditor Agreement between Hercules Technology Growth Capital, Inc. and
      each of Iroquois
      Capital LP, Cranshire Capital, L.P., Portside Growth and Opportunity Fund and
      Rockmore Investment Master Fund Ltd.
      dated as of September 28, 2007.

     

    GUARANTY

     

    THIS
      GUARANTY, dated as of September 28, 2007 (this “Guaranty”),
      made
      by Diomed, Inc., a Delaware corporation (the “Guarantor”),
      in
      favor of the holders (the “Holders”)
      of the
      Amended and Restated Variable Rate Secured Subordinated Convertible Debentures
      due October 2008 (the “Debentures”)
      issued
      by Diomed Holdings, Inc., a Delaware corporation (“Borrower”).

     

    WITNESSETH:

     

    WHEREAS,
      Grantor is a subsidiary of Borrower and, as such, will benefit by virtue of
      the
      financial accommodations extended to Borrower by the Holders; and;

     

    WHEREAS,
      in order to induce the Holders to enter into the Debentures and any other
      instruments, documents or agreements, as amended from time to time, now or
      hereafter securing Borrower’s indebtedness to the Holders arising under the
      Debentures (collectively, the “Security
      Instruments”)
      and
      the other Loan Documents (defined below) and to extend the financial
      accommodations to the Borrower pursuant to the Debentures, and in consideration
      thereof, the Guarantor has agreed to a guaranty of the Guaranteed Obligations
      (defined below) as set forth herein. This Guaranty, the Guarantor Pledge and
      Security Agreement, the Security Instruments, together with the Debenture and
      any and all amendments and modifications thereof, are individually referred
      to
      as a “Loan
      Document”
and
      collectively referred to as the “Loan
      Documents.”

     

    NOW,
      THEREFORE, in consideration of the foregoing, the Guarantor hereby agrees as
      follows:

     

    SECTION
      1. Definitions.
      Reference is hereby made to the Debentures for a statement of the terms thereof.
      All terms used in this Guaranty which are defined in the Debentures and not
      otherwise defined herein shall have the same meanings herein as set forth
      therein. In addition, the following terms shall have the meanings specified
      below, such meanings to be applicable equally to both the singular and the
      plural forms of such terms:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Bankruptcy
      Code”
means
      the United States Bankruptcy Code, as in effect from time to time.

     

    “Collateral”
shall
      have the meaning assigned to the term “Collateral” in Guarantor Pledge and
      Security Agreement.

     

    “Guarantor
      Pledge and Security Agreement”
means
      the Pledge and Security Agreement made by Guarantor in favor of the Holders,
      substantially in the form of Exhibit A, securing the Guaranteed Obligations
      and
      delivered to the Holders.

     

    “Insolvency
      Proceeding”
means
      any proceeding commenced by or against any Person under any provision of the
      Bankruptcy Code or under any other bankruptcy or insolvency law, assignments
      for
      the benefit of creditors, formal or informal moratoria, compositions, extensions
      generally with creditors, or proceedings seeking reorganization, arrangement,
      or
      other similar relief.

     

    “Lien”
means
      any mortgage, deed of trust, pledge, hypothecation, assignment for security,
      security interest, encumbrance, lien or charge of any kind, whether voluntarily
      incurred or arising by operation of law or otherwise, against any property,
      any
      conditional sale or other title retention agreement, and any lease in the nature
      of a security interest.

     

    “Person”
means
      any individual, sole proprietorship, partnership, joint venture, trust,
      unincorporated organization, association, corporation, limited liability
      company, institution, other entity or government.

     

    SECTION
      2. Guaranty.
      The
      Guarantor hereby (a) unconditionally and irrevocably guarantees the punctual
      payment, as and when due and payable, by stated maturity or otherwise, of all
      obligations of Borrower now or hereafter existing under any Loan Document,
      whether for principal, interest (including, without limitation, all interest
      that accrues after the commencement of any Insolvency Proceeding, whether or
      not
      a claim for post-filing interest is allowed in such proceeding), fees, premiums,
      commissions, reimbursements of expenses, indemnifications or otherwise (such
      obligations, to the extent not paid by the Borrower, being hereinafter referred
      to as the “Guaranteed
      Obligations”),
      and
      (b) agrees to pay any and all expenses (including reasonable counsel fees and
      expenses) incurred by the Holders in enforcing any rights under this Guaranty
      (the “Guaranty
      Expenses”).
      Without limiting the generality of the foregoing, the Guarantor’s liability
      shall extend to all amounts that constitute part of the Guaranteed Obligations
      and would be owed by the Borrower to the Holders under any Loan Document but
      for
      the fact that they are unenforceable or not allowable due to the existence
      of a
      bankruptcy, reorganization or similar proceeding involving the
      Borrower.

     

    
      
        
        

      

      
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    SECTION
      3. Guaranty
      Absolute; Continuing Guaranty; Assignments.

     

    (a) The
      Guarantor guarantees that the Guaranteed Obligations will be paid strictly
      in
      accordance with the terms of the Loan Documents, regardless of any law,
      regulation or order now or hereafter in effect in any jurisdiction affecting
      any
      of such terms or the rights of the Holders with respect thereto. The obligations
      of the Guarantor under this Guaranty are independent of the Guaranteed
      Obligations, and a separate action or actions may be brought and prosecuted
      against the Guarantor to enforce such obligations, irrespective of whether
      any
      action is brought against the Borrower or whether the Borrower is joined in
      any
      such action or actions. The liability of the Guarantor under this Guaranty
      shall
      be irrevocable, absolute and unconditional irrespective of, and the Guarantor
      hereby irrevocably waives, to the fullest extent permitted by applicable law,
      any defenses it may now or hereafter have in any way relating to, any or all
      of
      the following:

     

    (i) any
      lack
      of validity or enforceability of any Loan Document or any agreement or
      instrument relating thereto;

     

    (ii) any
      change in the time, manner or place of payment of, or in any other term of,
      all
      or any of the Guaranteed Obligations, or any other amendment or waiver of or
      any
      consent to departure from any Loan Document, including, without limitation,
      any
      increase in the Guaranteed Obligations resulting from the extension of
      additional credit to the Borrower or otherwise;

     

    (iii) any
      taking, exchange, release or non-perfection of any Collateral, or any taking,
      release or amendment or waiver of or consent to departure from any other
      guaranty, for all or any of the Guaranteed Obligations;

     

    (iv) any
      change, restructuring or termination of the corporate, limited liability company
      or partnership structure or existence of the Borrower; or

     

    (v) any
      other
      circumstance (including any statute of limitations) or any existence of or
      reliance on any representation by any Holder that might otherwise constitute
      a
      defense available to, or a discharge of, the Borrower or any other guarantor
      or
      surety, other than payment in full of the Guaranteed Obligations.

     

    
      
        
        

      

      
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    This
      Guaranty shall continue to be effective or be reinstated, as the case may be,
      if
      at any time any payment of any of the Guaranteed Obligations is rescinded or
      must otherwise be returned by any Holder or any other Person upon the
      insolvency, bankruptcy or reorganization of the Borrower or otherwise, all
      as
      though such payment had not been made.

     

    (b) This
      Guaranty is a continuing guaranty and shall remain in full force and effect
      until the later of (i) the payment in full of the Guaranteed Obligations and
      all
      Guaranty Expenses and (ii) the Maturity Date.

     

    SECTION
      4. Demand
      on the Guarantor.
      If (a)
      the Borrower fails to make any payment under the Loan Documents when due, or
      (b)
      an Event of Default or a Guaranty Default has occurred, the Holders may make
      written demand on the Guarantor under this Guaranty for payment of the
      Guaranteed Obligations, which shall be paid by the Guarantor, in a single
      payment calculated as of the date of actual payment thereof, to the Holders
      within 5 days after receipt of such written demand therefor.

     

    SECTION
      5. Waivers.
      The
      Guarantor hereby
      waives promptness, diligence, notice of acceptance and any other notice (except
      as provided by Section 4 hereof) with respect to any of the Guaranteed
      Obligations and this Guaranty and any requirement that the Holders exhaust
      any
      right or take any action against the Borrower or any other Person or any
      Collateral. The Guarantor waives all set-offs and counterclaims and presentment,
      protest, notice, filing of claims with a court in the event of any Insolvency
      Proceeding with respect to the Borrower or any other Person, demand or action
      on
      delinquency in respect of the Guaranteed Obligations or any part thereof. The
      Guarantor acknowledges that it will receive direct and indirect benefits from
      the financing arrangements contemplated herein and that the waiver set forth
      in
      this Section 5 is knowingly made in contemplation of such benefits. The
      Guarantor hereby waives any right to revoke this Guaranty, and acknowledges
      that
      this Guaranty is continuing in nature and applies to all Guaranteed Obligations,
      whether existing now or in the future.

     

    SECTION
      6. Subrogation.
      The
      Guarantor will not exercise any rights that it may now or hereafter acquire
      against the Borrower or any other guarantor that arise from the existence,
      payment, performance or enforcement of the Guarantor’s obligations under this
      Guaranty, including, without limitation, any right of subrogation,
      reimbursement, exoneration, contribution or indemnification and any right to
      participate in any claim or remedy of the Holders against the Borrower or any
      other guarantor or any Collateral, whether or not such claim, remedy or right
      arises in equity or under contract, statute or common law, including, without
      limitation, the right to take or receive from the Borrower or any other
      guarantor, directly or indirectly, in cash or other property or by set-off
      or in
      any other manner, payment or security solely on account of such claim, remedy
      or
      right, unless and until all of the Guaranteed Obligations and all other amounts
      payable under this Guaranty shall have been paid
      in
      full and
      the
      Debentures shall have been terminated. If any amount shall be paid to the
      Guarantor in violation of the immediately preceding sentence at any time prior
      to the later of the date on which all of the Guaranteed Obligations and all
      other amounts payable under this Guaranty shall have been paid
      in
      full and
      the
      Debentures shall have been terminated, such amount shall be held in trust for
      the benefit of the Holders and shall forthwith be paid to the Holders, to be
      credited and applied to the Guaranteed Obligations and all other amounts payable
      under this Guaranty, whether matured or unmatured, in accordance with the terms
      of this Guaranty and the Debentures, or to be held as Collateral for any
      Guaranteed Obligations or other amounts payable under this Guaranty thereafter
      arising.

     

    
      
        
        

      

      
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    SECTION
      7. Representations
      and Warranties; No Event of Default.
      The
      following statements shall be true and correct: (i) the representations and
      warranties of the Guarantor herein and in each certificate or other writing
      delivered by the Guarantor to the
      Holders
      pursuant
      hereto are true and correct and (ii) no Event of Default shall have
      occurred and be continuing or would result from this Guaranty becoming effective
      in accordance with its terms.

     

    SECTION
      8. Delivery
      of Documents.
      The
      Holders shall have received the following, each in form and substance
      satisfactory to the Holders:

     

    (i) a
      counterpart to this Guaranty that bears the signature of the
      Guarantor;

     

    (ii) a
      copy of
      the resolutions of the Guarantor, certified as of the date hereof, authorizing
      the execution, delivery and performance by the Guarantor of this
      Guaranty;

     

    (iii) a
      certificate of an authorized officer of the Guarantor, certifying the names
      and
      true signatures of the representatives of the Guarantor authorized to sign
      this
      Guaranty together with evidence of the incumbency of such authorized
      officers;

     

    (iv) a
      certificate of the appropriate official(s) of the jurisdiction of organization
      and each jurisdiction of foreign qualification, if any, of the Guarantor
      certifying as to the subsistence in good standing of, and the payment of taxes
      by, the Guarantor in such jurisdiction; and

     

    
      
        
        

      

      
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    (v) a
      true
      and complete copy of the charter documents of the Guarantor certified as of
      a
      recent date not more than 30 days prior to the date hereof by an appropriate
      official of the jurisdiction of organization of the Guarantor which shall set
      forth the same complete name of the Guarantor as is set forth herein and the
      organizational number of the Guarantor, if an organizational number is issued
      in
      such jurisdiction.

     

    SECTION
      9. Representations
      and Warranties.
      The
Guarantor
      hereby
      represents and warrants as follows:

     

    (a) The
      Guarantor
      (i) is a
      corporation, duly organized, validly existing and in good standing under the
      laws of the jurisdiction of its incorporation as set forth on the first page
      hereof, (ii) has all requisite power and authority to conduct its business
      as
      now conducted and as presently contemplated and to execute and deliver this
      Guaranty and to consummate the transactions contemplated hereby and (iii) is
      duly qualified to do business and is in good standing in each jurisdiction
      in
      which the character of the properties owned or leased by it or in which the
      transaction of its business makes such qualification necessary.

     

    (b) The
      execution, delivery and performance by the Guarantor
      of this
      Guaranty (i) have been duly authorized by all necessary action, (ii) do not
      and
      will not contravene its certificate of incorporation or by-laws, or any
      applicable law or any material contractual restriction binding on or otherwise
      affecting it or its properties, (iii) do not and will not result in or require
      the creation of any Lien (other than pursuant to any Loan Document) upon or
      with
      respect to any of its properties, and (iv) do not and will not result in
      any default, noncompliance, suspension, revocation, impairment, forfeiture
      or
      nonrenewal of any permit, license, authorization or approval which is necessary
      to the conduct of its business.

     

    (c) No
      authorization or approval or other action by, and no notice to or filing with,
      any governmental authority is required in connection with the due execution,
      delivery and performance by the Guarantor
      of this
      Guaranty.

     

    (d) This
      Guaranty is a legal, valid and binding obligation of the Guarantor,
      enforceable against it in accordance with its terms, except as may be limited
      by
      applicable bankruptcy, insolvency, reorganization, moratorium or other similar
      laws and general principles affecting the enforcement of creditor’s rights
      generally.

     

    
      
        
        

      

      
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    (e) There
      is
      no pending or, to the knowledge of the Guarantor,
      threatened, in writing, action, suit or proceeding affecting it or to which
      any
      of its properties is subject, before any court or other governmental authority
      or any arbitrator that (i) if adversely determined, which could reasonably
      be expected to result in a material adverse effect or (ii) relates to this
      Guaranty or any transaction contemplated hereby.

     

    (f) The
      Guarantor
      (i) has read and understands the terms and conditions of the Debentures and
      the other Loan Documents, and (ii) now has independent means of obtaining
      information concerning the affairs, financial condition and business of the
      Borrower, and has no need of, or right to obtain from the Holders, any credit
      or
      other information concerning the affairs, financial condition or business of
      the
      Borrower that may come under the control of the Holders.

     

    (g) 
      The
      Guarantor hereby acknowledges and agrees that the Holders have extended credit
      to the Borrower in reliance upon (i) the obligations of the Guarantor
      hereunder.

     

    SECTION
      10. Covenants.
      The
Guarantor
      hereby
      covenants and agrees as follows:

     

    (a) The
      Guarantor shall (i) maintain and preserve in full force and effect its existence
      and (ii) comply in all respects with all requirements of law applicable in
      respect of the conduct of its business and the ownership and operation of its
      properties, except to the extent that the failure to so comply could not
      reasonably be expected to result in a material adverse effect.

     

    (b) The
      Guarantor shall not enter into any agreement or any amendment or modification
      of
      any organizational document or any other agreement, instrument (i) that
      restricts the ability of the Guarantor to use its assets to pay its obligations
      hereunder or (ii) that would otherwise adversely affect the rights of the
      Holders hereunder.

     

    SECTION
      11. Guaranty
      Defaults.
      Each of
      the following events shall constitute a “Guaranty
      Default”
      hereunder:

     

    (a) If
      the
      Guarantor fails to
      perform, keep, or observe any term, provision, condition, covenant, or agreement
      contained in this Guaranty or the Guarantor Pledge and Security
      Agreement;

     

    (b) There
      shall be a period of 5 days after any material portion of the Guarantor’s assets
      is attached, seized, subjected to a writ or distress warrant, levied upon,
      or
      comes into the possession of any third Person;

     

    (c) If
      an
      Insolvency Proceeding is commenced by the Guarantor;

     

    
      
        
        

      

      
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    (d) If
      an
      Insolvency Proceeding is commenced against the Guarantor, and any of the
      following events occur: (i) the Guarantor consents to the institution of the
      Insolvency Proceeding against it, (ii) the petition commencing the Insolvency
      Proceeding is not timely controverted, (iii) the petition commencing the
      Insolvency Proceeding is not dismissed within 60 calendar days of the date
      of
      the filing thereof; provided,
      however,
      that,
      during the pendency of such period, the Holders (including any agent, successor
      or assign) shall be relieved of their obligation to extend credit under the
      Debentures, (iv) an interim trustee is appointed to take possession of all
      or
      any substantial portion of the properties or assets of, or to operate all or
      any
      substantial portion of the business of, the Guarantor, or (e) an order for
      relief shall have been entered therein;

     

    (e) If
      the
      Guarantor is enjoined, restrained, or in any way prevented by court order from
      continuing to conduct all or any material part of its business
      affairs;

     

    (f) If
      a
      notice of Lien, levy, or assessment is filed of record with respect to the
      Guarantor’s assets by the United States or any department, agency, or
      instrumentality thereof, or by any state, county, municipal, or governmental
      agency, or if any taxes or debts owing at any time hereafter to any one or
      more
      of such entities becomes a Lien, whether choate or otherwise, upon the
      Guarantor’s assets to secure an aggregate amount in excess of $250,000 and the
      same is not paid on or before the payment date thereof;

     

    (g) If
      a
      judgment or other claim for an amount in excess of $250,000 becomes a Lien
      or
      encumbrance upon any material portion of the Guarantor’s properties or
      assets;

     

    (h) If
      any
      material misstatement or misrepresentation exists now or hereafter in any
      warranty, representation, statement, or record made to the Holders by the
      Guarantor, or any officer, employee, agent, or director of the
      Guarantor;

     

    (i) If
      there
      is a loss, suspension or revocation of, or failure to renew, any license or
      permit now held or hereafter acquired by the Guarantor and such loss,
      suspension, revocation or failure to renew could reasonably be expected result
      in a material impairment in the guarantor’s ability to perform their obligations
      under this Guaranty;

     

    (j) If
      the
      obligation of the Guarantor under this Guaranty is limited or terminated by
      operation of law or by the Guarantor hereunder;
      or

     

    
      
        
        

      

      
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    (k) If
      any
      material provision of this Guaranty shall at any time for any reason be declared
      to be null and void, or the validity or enforceability thereof shall be
      contested by the Guarantor or any other Person, or a proceeding shall be
      commenced by the Guarantor or any other Person, or by any governmental authority
      having jurisdiction over the Guarantor, seeking to establish the invalidity
      or
      unenforceability hereof, or the Guarantor shall deny that it has any liability
      or obligation purported to be created hereunder;

     

    then,
      and
      in such event, the Holders shall have the rights and remedies set forth in
      Section 4 of this Guaranty and the other Loan Documents.

     

    SECTION
      12. Right
      of Set-off.
      Upon
      the occurrence and during the continuance of any Event of Default or any
      Guaranty Default, the Holders may, and are hereby authorized to, at any time
      and
      from time to time, without notice to the Guarantor
      (any
      such notice being expressly waived by the Guarantor)
      and to
      the fullest extent permitted by law, set-off and apply any indebtedness at
      any
      time owing by the Holders to or for the credit or the account of the
Guarantor
      against
      any and all obligations of the Guarantor
      now or
      hereafter existing under this Guaranty or any other Loan Document, irrespective
      of whether or not the Holders shall have made any demand under this Guaranty
      or
      any other Loan Document and although such obligations may be contingent or
      unmatured. The Holders agree to provide prompt written notice to the
Guarantor
      after
      any such set-off and application made by such Holder, provided that the failure
      to give such notice shall not affect the validity of such set-off and
      application. The rights of the Holders under this Section 12 are in addition
      to
      other rights and remedies (including, without limitation, other rights of
      set-off) which the Holders may have under this Guaranty or any other Loan
      Document, at law or otherwise.

     

    SECTION
      13. Notices,
      Etc.
      All
      notices and other communications provided for hereunder shall be in writing
      and
      shall be mailed (by certified mail, postage prepaid and return receipt
      requested), telecopied or delivered by hand, Federal Express or other reputable
      overnight courier, if to the Guarantor,
      to it
      at its address set forth on the signature page hereto, and if to the Holders,
      to
      them at their address set forth in the Debentures; or as to any such Person,
      at
      such other address as shall be designated by such Person in a written notice
      to
      such other Person complying as to delivery with the terms of this Section 13.
      All such notices and other communications shall be effective, (a) if mailed
      (certified mail, postage prepaid and return receipt requested), when received
      or
      3 days after deposited in the mails, whichever occurs first, (b) if telecopied,
      when transmitted and confirmation received, or (c) if delivered by hand,
      Federal Express or other reputable overnight courier, upon
      delivery.

     

    
      
        
        

      

      
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    SECTION
      14. CONSENT
      TO JURISDICTION; SERVICE OF PROCESS AND VENUE .
      ANY
      LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN
      THE
      COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED
      STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION
      AND DELIVERY OF THIS AGREEMENT, THE GUARANTOR HEREBY IRREVOCABLY ACCEPTS IN
      RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
      THE
      AFORESAID COURTS.
      THE
      GUARANTOR HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF
      NEW
      YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR
      PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
      ANY
      OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
      OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT
      ITS
      ADDRESS FOR NOTICES AS SET FORTH ON THE SIGNATURE PAGE HERETO OR TO THE
      SECRETARY OF STATE OF THE STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE
      10 DAYS AFTER SUCH MAILING. THE GUARANTOR AGREES THAT A FINAL JUDGMENT IN
      ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
      JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
      NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE HOLDERS TO SERVICE OF PROCESS
      IN
      ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
      PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. THE GUARANTOR HEREBY
      EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
      OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING
      OF
      VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
      ANY
      CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
      THE
      EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE
      JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE
      OR
      NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
      OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE GUARANTOR HEREBY
      IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
      GUARANTY.

     

    
      
        
        

      

      
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    SECTION
      15. WAIVER
      OF JURY TRIAL, ETC .
      THE
GUARANTOR
      HEREBY
      IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION,
      PROCEEDING OR COUNTERCLAIM CONCERNING THIS PLEDGE AGREEMENT, ANY LOAN DOCUMENT
      OR ANY AMENDMENT, MODIFICATION OR OTHER DOCUMENT NOW OR HEREAFTER DELIVERED
      IN
      CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION,
      PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
      THE HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
      COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS GUARANTY AND AGREES THAT ANY
      SUCH
      ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
      A JURY.

     

    SECTION
      16. Taxes.

     

    (a) All
      payments made by the Guarantor
      hereunder shall be made without set-off, counterclaim, deduction or other
      defense. All such payments shall be made free and clear of and without deduction
      for any present or future taxes. If the Guarantor
      shall be
      required to deduct or to withhold any taxes from or in respect of any amount
      payable hereunder,

     

    (i) the
      amount so payable shall be increased to the extent necessary so that after
      making all required deductions and withholdings (including taxes on amounts
      payable to the Holders pursuant to this sentence) the Holders receive an amount
      equal to the sum they would have received had no such deduction or withholding
      been made, 

     

    (ii) the
      Guarantor
      shall
      make such deduction or withholding,

     

    (iii) the
      Guarantor
      shall
      pay the full amount deducted or withheld to the relevant taxation authority
      in
      accordance with applicable law, and 

     

    (iv) as
      promptly as possible thereafter, the Guarantor
      shall
      send the Holders an official receipt (or, if an official receipt is not
      available, such other documentation as shall be satisfactory to the Holders)
      showing payment. In addition, the Guarantor
      agrees
      to pay any present or future taxes, charges or similar levies which arise from
      any payment made hereunder or from the execution, delivery, performance,
      recordation or filing of, or otherwise with respect to, this
      Guaranty.

     

    (b) The
      Guarantor
      hereby
      indemnifies and agrees to hold the Holders harmless from and against taxes
      (including, without limitation, any taxes imposed by any jurisdiction on amounts
      payable under this Section 16) paid by the Holders and any liability (including
      penalties, interest and expenses for nonpayment, late payment or otherwise)
      arising therefrom or with respect thereto, whether or not such taxes were
      correctly or legally asserted. This indemnification shall be paid within 30
      days
      from the date on which any Holder makes written demand therefor, which demand
      shall identify the nature and amount of taxes.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (c) If
      the
Guarantor
      fails to
      perform any of its obligations under this Section 16, the Guarantor
      shall
      indemnify the Holders for any taxes, interest or penalties that may become
      payable as a result of any such failure. The obligations of the Guarantor
      under
      this Section 16 shall survive the termination of this Guaranty and the
      payment of the Guaranteed Obligations and all other amounts payable
      hereunder.

     

    SECTION
      17. Miscellaneous.

     

    (a) The
      Guarantor
      will
      make each payment hereunder in lawful money of the United States of America
      and
      in immediately available funds to the Holders, for the benefit of the Holders,
      at such address specified by the Holders from time to time by notice to the
      Guarantor.

     

    (b) No
      amendment or waiver of any provision of this Guaranty and no consent to any
      departure by the Guarantor
      therefrom shall in any event be effective unless the same shall be in writing
      and signed by the Guarantor
      and the
      Holders, and then such waiver or consent shall be effective only in the specific
      instance and for the specific purpose for which given.

     

    (c) No
      failure on the part of the Holders to exercise, and no delay in exercising,
      any
      right hereunder or under any other Loan Document shall operate as a waiver
      thereof, nor shall any single or partial exercise of any right hereunder or
      under any Loan Document preclude any other or further exercise thereof or the
      exercise of any other right. The rights and remedies of the Holders provided
      herein and in the other Loan Documents are cumulative and are in addition to,
      and not exclusive of, any rights or remedies provided by law. The rights of
      the
      Holders under any Loan Document against any party thereto are not conditional
      or
      contingent on any attempt by the Holders to exercise any of their rights under
      any other Loan Document against such party or against any other
      Person.

     

    (d) Any
      provision of this Guaranty which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining portions
      hereof or thereof or affecting the validity or enforceability of such provision
      in any other jurisdiction.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (e) This
      Guaranty shall (i) be binding on the Guarantor
      and the
      Holders and their respective successors and assigns, and (ii) inure, together
      with all rights and remedies of the Holders hereunder, to the benefit of and
      be
      enforceable by the Holders, and their respective successors, transferees and
      assigns. Without limiting the generality of clause (ii) of the immediately
      preceding sentence, any Holder may assign or otherwise transfer its rights
      and
      obligations under the Debentures or any other Loan Document to any other Person
      in accordance with the terms of the Debentures, and such other Person shall
      thereupon become vested with all of the benefits in respect thereof granted
      to
      the Holders herein or otherwise. The Guarantor
      agrees
      that each participant shall be entitled to the benefits of Section 16 with
      respect to its participation in any portion of the Guaranteed Obligations as
      if
      it was a Holder. None of the rights or obligations of the Guarantor
      hereunder may be assigned or otherwise transferred without the prior written
      consent of the Holders.

     

    (f) This
      Guaranty and the other Loan Documents represent the entire agreement of the
      Guarantor and the Holders with respect to the subject matter hereof, and there
      are no promises, undertakings, representations or warranties by the Holders
      relative to the subject matter thereof not expressly set forth or referred
      to
      herein or in the other Loan Documents.

     

    (g) This
      Guaranty may be executed in any number of counterparts and by different parties
      hereto in separate counterparts, each of which shall be deemed to be an
      original, but all of which taken together shall constitute one and the same
      agreement. Delivery of an executed counterpart of this Guaranty by telecopier
      or
      electronic transmission shall be equally as effective as delivery of an original
      executed counterpart of this Guaranty.

     

    (h) Section
      headings herein are included for convenience of reference only and shall not
      constitute a part of this Guaranty for any other purpose.

     

    (i) THIS
      GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
      STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN
      WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

     

    IN
      WITNESS WHEREOF, the Guarantor
      has
      caused this Guaranty to be executed by an officer thereunto duly authorized,
      as
      of the date first above written.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	
              GUARANTOR:

            
	 
	
              DIOMED,
                INC.

            
	 
	 	 
	
              By:

            	 
	
              Name:

            	
              David
                B. Swank

            
	
              Title:

            	
              Chief
                Financial Officer

            


    

    


    
      	
              Address:

            	
              One
                Dundee Park

            
	 	
              Andover,
                MA 01810

            
	
              Attention:

            	
              David
                B. Swank, Chief Financial Officer

            
	
              Telephone:

            	
              978-824-1823

            
	
              Facsimile:

            	
              978-475-8488

            


    

    


    
      	
              HOLDERS:

            
	 
	
              IROQUOIS
                CAPITAL LP

            
	 
	 	 
	
              By:

            	 
	
              Name:

            	 
	
              Title:

            	 


    

    


    
      	
              Address:

            	 
	 	 
	 	 
	
              Attention:

            	 
	
              Telephone:

            	 
	
              Facsimile:

            	 


    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
              CRANSHIRE
                CAPITAL, L.P.

            
	 
	 	 
	
              By:

            	 
	
              Name:

            	 
	
              Title:

            	 


    

    


    
      	
              Address:

            	 
	 	 
	 	 
	
              Attention:

            	 
	
              Telephone:

            	 
	
              Facsimile:

            	 


    

    


    
      	
              PORTSIDE
                GROWTH AND OPPORTUNITY 

              FUND

            
	 
	 	 
	
              By:

            	 
	
              Name:

            	 
	
              Title:

            	 


    

    


    
      	
              Address:

            	 
	 	 
	 	 
	
              Attention:

            	 
	
              Telephone:

            	 
	
              Facsimile:

            	 


    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	
              ROCKMORE
                INVESTMENT MASTER FUND

              LTD.

            
	 	 
	
              By:

            	 
	
              Name:

            	 
	
              Title:

            	 


    

    


    
      	
              Address:

            	 
	 	 
	 	 
	
              Attention:

            	 
	
              Telephone:

            	 
	
              Facsimile:

            	 


    

    


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    


    Guarantor
      Pledge and Security Agreement