EX 10.13


    This
      Guarantor Pledge and Security Agreement 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.

     

    GUARANTOR
      PLEDGE AND SECURITY AGREEMENT

     

    GUARANTOR
      PLEDGE AND SECURITY AGREEMENT, dated as of September 28, 2007, made by Diomed,
      Inc., a Delaware corporation (“Grantor”),
      in
      favor of Iroquois Capital LP, Cranshire Capital, L.P., Portside Growth and
      Opportunity Fund and Rockmore Investment Master Fund Ltd (together, with their
      successors and assigns, 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,
      Grantor, has executed and delivered to the Holders a guaranty dated the date
      hereof (as amended, restated, supplemented or otherwise modified from time
      to
      time, the “Guaranty”)
      guaranteeing all obligations under the Debentures;

     

    WHEREAS,
      the Guaranty contemplates the execution and delivery by Grantor to the Holders
      of a security agreement providing for the grant to the Holders of a security
      interest in all assets of Grantor;

     

    NOW,
      THEREFORE, in consideration of the premises and the agreements herein and in
      order to induce the Holders to extend financial accommodations to Borrower,
      Grantor hereby agrees for the benefit of the Holders as follows:

     

    SECTION
      1.  Definitions.
      

     

    (a)  Reference
      is hereby made to the Guaranty and the Debentures for a statement of the terms
      thereof. All terms used in this Agreement which are defined in the Debentures,
      the Guaranty or in Article 9 of the Uniform Commercial Code (the “Code”)
      currently in effect in the State of New York and which are not otherwise defined
      herein shall have the same meanings herein as set forth therein.

     

    (b)  The
      following terms shall have the respective meanings provided for in the Code:
      “Accounts”, “Cash Proceeds”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit
      Account”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”,
“Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”,
“Noncash Proceeds”, “Proceeds”, “Promissory Notes”, “Record”, and “Supporting
      Obligations”.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  As
      used
      in this Agreement, the following terms shall have the respective meanings
      indicated below, such meanings to be applicable equally to both the singular
      and
      plural forms of such terms:

     

    “777
      Patent Litigation”
means
      litigation relating to the Grantor and Borrower’s patent infringement case
      against AngioDynamics, Inc, and Vascular Solutions, Inc. relating to ‘777
      patent, Civil Action No. 04-10019NMG and Civil Action No. 04-10444NMG, filed
      in
      the United States District Court for the District of Massachusetts.

     

    “Capital
      Stock”
means
      (a) with respect to any Person that is a corporation, any and all shares,
      interests, participations or other equivalents (however designated and whether
      or not voting) of corporate stock, and (b) with respect to any Person that
      is
      not a corporation, any and all partnership, membership or other equity interests
      of such Person.

     

    “Copyright
      Licenses”
means
      all licenses, contracts or other agreements, whether written or oral, naming
      Grantor as licensee or licensor and providing for the grant of any right to
      use
      or sell any works covered by any copyright.

     

    “Copyrights”
means
      all domestic and foreign copyrights, whether registered or unregistered,
      including, without limitation, all copyright rights throughout the universe
      (whether now or hereafter arising) in any and all media (whether now or
      hereafter developed), in and to all original works of authorship fixed in any
      tangible medium of expression (including computer software and internet website
      content) now owned or hereafter owned, acquired or used by Grantor, all
      applications, registrations and recordings thereof (including, without
      limitation, applications, registrations and recordings in the United States
      Copyright Office or in any similar office or agency of the United States or
      any
      other country or any political subdivision thereof), all reissues, divisions,
      continuations, continuations in part and extensions or renewals thereof, the
      right to recover for all past, present and future infringements thereof, and
      all
      other rights of any kind whatsoever accruing thereunder or pertaining
      thereto.

     

    “Intellectual
      Property”
means
      all Copyrights, Trademarks, Patents and Other Intellectual Property, including
      those described in Schedule
      I
      hereto.

     

    “Licenses”
means
      the Copyright Licenses, the Trademark Licenses and the Patent
      Licenses.

     

    “Other
      Intellectual Property”
means
      all trade secrets, ideas, inventions and improvements, concepts, methods,
      techniques, processes, proprietary information, technology, know-how, formulae,
      design detail, drawings, all Software, computer software (including object
      and
      source code, data and related documentation), rights of publicity and other
      general intangibles of like nature, now existing or hereafter acquired, owned,
      developed or used by Grantor.

     

    “Patent
      Licenses”
means
      all licenses, contracts or other agreements, whether written or oral, naming
      Grantor as licensee or licensor and providing for the grant of any right to
      manufacture, use or sell any invention covered by any Patent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Patents”
means
      all domestic and foreign letters patent, design patents, utility patents,
      industrial designs, inventions, improvements, trade secrets, ideas, concepts,
      methods, techniques, processes, proprietary information, technology, know how,
      formulae, rights of publicity and other general intangibles of like nature,
      now
      existing or hereafter acquired, all applications, registrations and recordings
      thereof (including, without limitation, applications, registrations and
      recordings in the United States Patent and Trademark Office, or in any similar
      office or agency of the United States or any other country or any political
      subdivision thereof), all reissues, divisions, continuations, continuations
      in
      part and extensions or renewals thereof, all income, royalties, damages and
      payments now or hereafter due and/or payable for past or future infringements
      thereof, the right to sue for past, present and future infringements thereof,
      and all rights corresponding thereto throughout the world.

     

    “Pledged
      Interests”
means
      the Pledged Shares and all security entitlements therein.

     

    “Pledged
      Shares”
means
      (a) the shares of Capital Stock including those described in Schedule
      II
      hereto,
      whether or not evidenced or represented by any stock certificate, certificated
      security or other Instrument, issued by the Person described in such
Schedule
      II
      (the
“Pledged
      Issuer”),
      (b)
      any other shares of Capital Stock of the Pledged Issuer at any time and from
      time to time acquired by Grantor, whether or not evidenced or represented by
      any
      stock certificate, certificated security or other Instrument, and (c) the
      certificates representing such shares of Capital Stock, all options and other
      rights, contractual or otherwise, in respect thereof and all dividends,
      distributions, cash, Instruments, Investment Property, financial assets,
      securities, Capital Stock, other equity interests, stock options and commodity
      contracts, notes, debentures, bonds, promissory notes or other evidences of
      indebtedness and all other property (including, but not limited to, any stock
      dividend and any distribution in connection with a stock split) from time to
      time received, receivable or otherwise distributed in respect of or in exchange
      for any or all of such Capital Stock.

     

    “Software”
means
      any computer programs and computer systems (including
      all databases, compilations, tool sets, compilers, higher level or proprietary
      languages, related documentation and materials, whether in source code, object
      code or human readable form)
      sold,
      marketed, distributed, licensed or maintained by each Grantor, and any computer
      programs necessary for the conduct of the business of each Grantor.

     

    “Trademark
      Licenses”
means
      all licenses, contracts or other agreements, whether written or oral, naming
      Grantor as licensor or licensee and providing for the grant of any right
      concerning any Trademark, together with any goodwill connected with and
      symbolized by any such trademark licenses, contracts or agreements and the
      right
      to prepare for sale or lease and sell or lease any and all Inventory now or
      hereafter owned by Grantor and now or hereafter covered by such
      licenses.

     

    “Trademarks”
means
      all domestic and foreign trademarks, service marks, collective marks,
      certification marks, trade names, business names, d/b/a’s, Internet domain
      names, trade styles, designs, logos and other source or business identifiers
      and
      all general intangibles of like nature, now or hereafter owned, adopted,
      acquired or used by Grantor, all applications, registrations and recordings
      thereof (including, without limitation, applications, registrations and
      recordings in the United States Patent and Trademark Office or in any similar
      office or agency of the United States, any state thereof or any other country
      or
      any political subdivision thereof), all reissues, extensions or renewals
      thereof, together with all product lines and goodwill of the business symbolized
      by such marks and all customer lists, formulae and other Records of Grantor
      relating to the distribution of products and services in connection with which
      any of such marks are used, all rights corresponding thereto throughout the
      world, the right to recover for all past, present and future infringements
      thereof, and all other rights of any kind whatsoever accruing thereunder or
      pertaining thereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      2.  Pledge
      and Grant of Security Interest.
      As
      collateral security for the payment, performance and observance of all of the
      Guaranteed Obligations, Grantor hereby pledges and collaterally assigns to
      the
      Holders, and grants to the Holders a continuing security interest in, all
      personal property and Fixtures of Grantor, wherever located and whether now
      or
      hereafter existing and whether now owned or hereafter acquired, of every kind
      and description, tangible or intangible, including, without limitation, the
      following (all being collectively referred to herein as the “Collateral”):

     

    (a)  all
      Accounts;

     

    (b)  all
      Chattel Paper (whether tangible or electronic);

     

    (c)  all
      Commercial Tort Claims;

     

    (d)  all
      Deposit Accounts, all cash, and all other property from time to time deposited
      therein or otherwise credited thereto and the monies and property in the
      possession or under the control of the Holders or any affiliate, representative,
      agent or correspondent of the Holders; 

     

    (e)  all
      Documents;

     

    (f)  all
      General Intangibles;

     

    (g)  all
      Goods, including, without limitation, all Equipment, Fixtures and
      Inventory;

     

    (h)  all
      Instruments (including, without limitation, all Promissory Notes);

     

    (i)  all
      Intellectual Property, and all Licenses;

     

    (j)  all
      Investment Property;

     

    (k)  all
      Letter-of-Credit Rights;

     

    (l)  all
      Pledged Shares;

     

    (m)  all
      Supporting Obligations;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (n)  all
      other
      tangible and intangible personal property of Grantor (whether or not subject
      to
      the Code), including, without limitation, all bank and other accounts and all
      cash and all investments therein, all proceeds, products, offspring, accessions,
      rents, profits, income, benefits, substitutions and replacements of and to
      any
      of the property of Grantor described in the preceding clauses of this
Section
      2
      (including, without limitation, any proceeds of insurance thereon and all causes
      of action, claims and warranties now or hereafter held by Grantor in respect
      of
      any of the items listed above), and all books, correspondence, files and other
      Records, including, without limitation, all tapes, disks, cards, Software,
      data,
      computer programs, and instructions for execution by a computer processor
      (including the code in such Software, computer programs, or instructions) in
      the
      possession or under the control of Grantor or any other Person from time to
      time
      acting for Grantor that at any time evidence or contain information relating
      to
      any of the property described in the preceding clauses of this Section
      2
      or are
      otherwise necessary or helpful in the collection or realization
      thereof;
      and

     

    (o)  all
      Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of
      any
      and all of the foregoing Collateral; 

     

    in
      each
      case, howsoever Grantor’s interest therein may arise or appear (whether by
      ownership, security interest, claim or otherwise).

     

    SECTION
      3.  Security
      for Guaranteed Obligations.
      The
      security interest created hereby in the Collateral constitutes continuing
      collateral security for all of the following obligations, whether now existing
      or hereafter incurred (the “Guaranteed
      Obligations”):

     

    (a)  the
      prompt payment by Grantor, as and when due and payable (on demand, by mandatory
      prepayment, by scheduled maturity or otherwise), of all amounts from time to
      time owing by it under the Guaranty, whether for principal, interest, fees
      or
      otherwise (including, without limitation, amounts that but for the operation
      of
      Section 362 of the Bankruptcy Code would become due), and all amounts from
      time
      to time owing by the Grantor in respect of the other Loan Documents, in each
      case, of every kind, nature and description, direct and indirect, secured and
      unsecured, joint and several, absolute or contingent, due or to become due,
      now
      or hereafter arising and whether now existing or hereafter arising;
      and

     

    (b)  the
      due
      performance and observance by Grantor of all of its other obligations from
      time
      to time existing in respect of the Guaranty and all other Loan Documents to
      which it is a party.

     

    Without
      limiting the generality of the foregoing, this Agreement secures the payment
      of
      all amounts that constitute part of the Guaranteed Obligations and would be
      owed
      by Grantor to the Holders
      under
      the Guaranty and the other Loan Documents but for the fact that they are
      unenforceable or not allowable due to the existence of a bankruptcy,
      reorganization or similar proceeding involving a Grantor.

     

    SECTION
      4.  Representations
      and Warranties.
      Grantor
      represents and warrants as follows:

     

    (a)  Grantor
      (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, and (ii) has all requisite power and authority to conduct its business
      as now conducted and as presently contemplated and to execute and deliver this
      Agreement and to consummate the transactions contemplated hereby.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)  There
      is
      no pending or, to the knowledge of Grantor, threatened action, suit, proceeding
      or claim before any court or other Governmental Authority or any arbitrator,
      or
      any order, judgment or award by any court or other Governmental Authority or
      arbitrator, that may adversely affect the grant by Grantor, or the perfection,
      of the security interest purported to be created hereby in the Collateral,
      or
      the exercise by Holders of any rights or remedies hereunder.

     

    (c)  Grantor
      and will be at all times the sole and exclusive owner of the Collateral free
      and
      clear of any Lien, except for (i) the security interest created by this
      Agreement, (ii) the security interests and other encumbrances permitted by
      the
      Debentures and (iii) sales of assets permitted by the terms of the Guaranty
      and
      the Debentures. No effective financing statement or other instrument similar
      in
      effect covering all or any part of the Collateral is on file in any recording
      or
      filing office, except (x) such as may have been filed in favor of the Holders
      relating to this Agreement, and (y) such as may have been filed to perfect
      or
      protect any security interest or encumbrance permitted by the
      Debentures.

     

    (d)  The
      exercise by and Holder of any of its rights and remedies hereunder will not
      contravene law or any contractual restriction binding on or otherwise affecting
      Grantor or any of its properties and will not result in or require the creation
      of any Lien, security interest or other charge or encumbrance upon or with
      respect to any of its properties.

     

    (e)  No
      authorization or approval or other action by, and no notice to or filing with,
      any Governmental Authority or any other Person, is required for (i) the grant
      by
      Grantor, or the perfection, of the security interest purported to be created
      hereby in the Collateral or (ii) the exercise by any Holder of any of its rights
      and remedies hereunder, except (A) for the filing under the Uniform Commercial
      Code as in effect in the applicable jurisdiction of the financing statements
      described in Schedule III
      hereto.

     

    SECTION
      5.  Covenants
      as to the Collateral.
      So long
      as any of the Guaranteed Obligations shall remain outstanding and the Guaranty
      and the Debentures shall not have terminated, unless each Holder shall otherwise
      consent in writing:

     

    (a)  Further
      Assurances.
      Grantor
      will at its expense, at any time and from time to time, promptly execute and
      deliver all further instruments and documents and take all further action that
      may be necessary or desirable or that the Holders may request in order (i)
      to
      perfect and protect the security interest purported to be created hereby; (ii)
      to enable the Holders to exercise and enforce their rights and remedies
      hereunder in respect of the Collateral; or (iii) otherwise to effect the
      purposes of this Agreement.

     

    (b)  Transfers
      and Other Liens.

     

    (i)  Grantor
      will not sell, assign (by operation of law or otherwise), lease, exchange or
      otherwise transfer or dispose of any of the Collateral except to the extent
      expressly permitted under the terms of the Guaranty, except that
      so long
      as no Event of Default or a Guaranty Default shall have occurred and be
      continuing, the Grantor shall be permitted (x) to sell Inventory in the ordinary
      course of business and (y) to collect upon and enforce any judgment in the
      777
      Patent Litigation so long as all proceeds of any judgment in the 777 Patent
      Litigation shall be applied as required by the Loan Documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii)  Grantor
      will not create or suffer to exist any Lien, security interest or other charge
      or encumbrance upon or with respect to any Collateral, except for (A) the Liens
      and security interest created by this Agreement and the other Loan Documents
      and
      (B) the Liens, security interests and other encumbrances permitted by the
      Guaranty and the Debentures.

     

    (c)  Inspection
      and Reporting.
      Grantor
      shall permit the Holders or any agents or representatives thereof or such
      professionals or other Persons as the Holders may designate to examine and
      inspect the books and records of Grantor and take copies and extracts
      therefrom.

     

    SECTION
      6.  Additional
      Provisions Concerning the Collateral.

     

    (a)  Grantor
      hereby authorizes the Holders to file, without the signature of Grantor where
      permitted by law, one or more financing or continuation statements, and
      amendments thereto, relating to the Collateral.

     

    (b)  Grantor
      hereby irrevocably appoints each Holder as its attorney-in-fact and proxy,
      with
      full authority in the place and stead of Grantor and in the name of Grantor
      or
      otherwise, from time to time in such Holder’s discretion upon the occurrence and
      during the continuance of any breach of or default under any Loan Document,
      to
      take any action and to execute any instrument which such Holder may deem
      necessary or advisable to accomplish the purposes of this Agreement (including,
      without limitation, (i) to ask, demand, collect, sue for, recover, compound,
      receive and give acquittance and receipts for moneys due and to become due
      under
      or in respect of any Collateral, and (ii) to file any claims or take any action
      or institute any proceedings which such Holder may deem necessary or desirable
      for the collection of any Collateral or otherwise to enforce the rights of
      such
      Holder with respect to any Collateral. This power is coupled with an interest
      and is irrevocable until all of the Guaranteed Obligations are paid in full
      and
      the Guaranty and the Debentures have been terminated.

     

    (c)  If
      Grantor fails to perform any agreement contained herein, each Holder may itself
      perform, or cause performance of, such agreement or obligation, in the name
      of
      Grantor or such Holder, and the expenses of such Holder incurred in connection
      therewith shall be payable by Grantor pursuant to Section 8 hereof and shall
      be
      secured by the Collateral.

     

    (d)  The
      powers conferred on the Holders hereunder are solely to protect their interest
      in the Collateral and shall not impose any duty upon them to exercise any such
      powers. Except for the safe custody of any Collateral in its possession and
      the
      accounting for moneys actually received by it hereunder, no Holder shall have
      any duty as to any Collateral or as to the taking of any necessary steps to
      preserve rights against prior parties or any other rights pertaining to any
      Collateral.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.  Voting
      Rights, Dividends, Etc. in Respect of the Pledged Interests.

     

    (a)  So
      long
      as no Event of Default or a Guaranty Default shall have occurred and be
      continuing:

     

    (i)  Grantor
      may exercise any and all voting and other consensual rights pertaining to any
      Pledged Interests for any purpose not inconsistent with the terms of this
      Agreement or the other Loan Documents;

     

    
      (ii)Grantor
        may receive and retain any and all dividends, interest payments or other
        distributions paid in respect of the Pledged Interests to the extent permitted
        by the Loan Documents; provided,
        however,
        that
        any and all (A) dividends and interest paid or payable other than in cash
        in
        respect of, and instruments and other property received, receivable or otherwise
        distributed in respect of or in exchange for, any Pledged Interests, (B)
        dividends and other distributions paid or payable in cash in respect of any
        Pledged Interests in connection with a partial or total liquidation or
        dissolution or in connection with a reduction of capital, capital surplus
        or
        paid-in surplus, and (C) cash paid, payable or otherwise distributed in
        redemption of, or in exchange for, any Pledged Interests, together with any
        dividend, interest payment or other distribution which at the time of such
        dividend, interest payment or other distribution was not permitted by the
        Loan
        Documents, shall be, and shall forthwith be delivered to the Holders to hold
        as,
        Pledged Interests and shall, if received by Grantor or any of its affiliates
        on
        behalf of Grantor, be received in trust for the benefit of the Holders, shall
        be
        segregated from the other property or funds of Grantor or such affiliate,
        and
        shall be forthwith delivered to the Holders in the exact form received with
        any
        necessary endorsement and/or appropriate stock powers duly executed in blank,
        to
        be held by the Holders as Pledged Interests and as further collateral security
        for the Secured Obligations; and

    

     

    (iii)  the
      Holders will execute and deliver (or cause to be executed and delivered) to
      Grantor all such proxies and other instruments as Grantor may reasonably request
      for the purpose of enabling Grantor to exercise the voting and other rights
      which it is entitled to exercise pursuant to Section 7(a)(i) hereof and to
      receive the dividends, interest and/or other distributions which it is
      authorized to receive and retain pursuant to Section 7(a)(ii)
      hereof.

     

    (b)  Upon
      the
      occurrence and during the continuance of an Event of Default or a Guaranty
      Default:

     

    (i)  all
      rights of Grantor to exercise the voting and other consensual rights which
      it
      would otherwise be entitled to exercise pursuant to Section 7(a)(i) hereof,
      and
      to receive the dividends, distributions, interest and other payments which
      it
      would otherwise be authorized to receive and retain pursuant to Section 7(a)(ii)
      hereof, shall cease, and all such rights shall thereupon become vested in the
      Holders, who shall thereupon have the sole right to exercise such voting and
      other consensual rights and to receive and hold as Pledged Interests such
      dividends and interest payments;

    
       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    (ii)  without
      limiting the generality of the foregoing, the Holders may at their option
      exercise any and all rights of conversion, exchange, subscription or any other
      rights, privileges or options pertaining to any of the Pledged Interests as
      if
      it were the absolute owner thereof, including, without limitation, the right
      to
      exchange, in its discretion, any and all of the Pledged Interests upon the
      merger, consolidation, reorganization, recapitalization or other adjustment
      of
      the Pledged Issuer, or upon the exercise by the Pledged Issuer of any right,
      privilege or option pertaining to any Pledged Interests, and, in connection
      therewith, to deposit and deliver any and all of the Pledged Interests with
      any
      committee, depository, transfer agent, registrar or other designated agent
      upon
      such terms and conditions as it may determine; and

     

    (iii)  all
      dividends, distributions, interest and other payments which are received by
      Grantor contrary to the provisions of Section 7(b)(i) hereof shall be received
      in trust for the benefit of the Holders, shall be segregated from other funds
      of
      Grantor, and shall be forthwith paid over to the Holders as Pledged Interests
      in
      the exact form received with any necessary endorsement and/or appropriate stock
      powers duly executed in blank, to be held by the Holders as Pledged Interests
      and as further collateral security for the Secured Obligations.

     

    SECTION
      8.  Remedies
      Upon Default.
      If any
      Event of Default or Guaranty Default shall have occurred and be
      continuing:

     

    (a)  The
      Holders may exercise in respect of the Collateral, in addition to other rights
      and remedies provided for herein or otherwise available to them, all of the
      rights and remedies of a secured party upon default under the Code (whether
      or
      not the Code applies to the affected Collateral), and also may (i) take absolute
      control of the Collateral, including without limitation, transfer into the
      Holders’ name or into the name of their nominee or nominees (to the extent the
      Holders have not theretofore done so) and thereafter receive, for their benefit,
      all payments made thereon, give all consents, waivers and ratifications in
      respect thereof and otherwise act with respect thereto as though they were
      the
      outright owner thereof, (ii) require Grantor to, and Grantor hereby agrees
      that
      it will at its expense and upon request of any Holder forthwith, assemble all
      or
      part of the Collateral as directed by such Holder and make it available to
      such
      Holder at a place or places to be designated by such Holder which is reasonably
      convenient to both parties, and any Holder may enter into and occupy any
      premises owned or leased by Grantor where the Collateral of any part thereof
      is
      located or assembled for a reasonable period in order to effectuate the Holders’
rights and remedies hereunder or under law, without obligation to Grantor in
      respect of such occupation, and (iii) without notice except as specified below,
      sell the Collateral or any part thereof in one or more parcels at public or
      private sale, at any Holder’s offices or elsewhere, for cash, on credit or for
      future delivery, and at such price or prices and upon such other terms as
      the Holders may deem commercially reasonable. Grantor agrees that, to the extent
      notice of sale shall be required by law, at least 10 days’ notice to Grantor of
      the time and place of any public sale or the time after which any private sale
      is to be made shall constitute reasonable notification. The Holders shall not
      be
      obligated to make any sale of Collateral regardless of notice of sale having
      been given. The Holders may adjourn any public or private sale from time to
      time
      by announcement at the time and place fixed therefor, and such sale may, without
      further notice, be made at the time and place to which it was so adjourned.
      Grantor hereby waives any claims against the Holders arising by reason of the
      fact that the price at which the Collateral may have been sold at a private
      sale
      was less than the price which might have been obtained at a public sale or
      was
      less than the aggregate amount of the Guaranteed Obligations, even if the
      Holders accept the first offer received and does not offer the Collateral to
      more than one offeree and waives all rights which Grantor may have to require
      that all or any part of the Collateral be marshalled upon any sale (public
      or
      private) thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)  Any
      cash
      held by any Holder as Collateral and all cash proceeds received by the Holders
      in respect of any sale of or collection from, or other realization upon, all
      or
      any part the Collateral may, in the discretion of the Holders, be held by the
      Holders as collateral for, and/or then or at any time thereafter applied in
      whole or in part by the Holders against, all or any part of the Guaranteed
      Obligations.

     

    SECTION
      9.  Indemnity
      and Expenses.

     

    (a)  Grantor
      agrees to indemnify and hold each Holder harmless from and against any and
      all
      claims, damages, losses, liabilities, obligations, penalties, costs or expenses
      (including, without limitation, legal fees and disbursements of each Holder’s
      counsel) to the extent that they arise out of or otherwise result from this
      Agreement (including, without limitation, enforcement of this Agreement), except
      claims, losses or liabilities resulting solely and directly from such Holder’s
      gross negligence or willful misconduct as determined by a final judgment of
      a
      court of competent jurisdiction.

     

    (b)  Grantor
      agrees that upon demand Grantor will pay to each Holder the amount of any and
      all costs and expenses, including the reasonable fees and disbursements of
      such
      Holder’s counsel and of any experts and agents, which such Holder may incur in
      connection with (i) the preparation, negotiation, execution, delivery,
      recordation, administration, amendment, waiver or other modification or
      termination of this Agreement, (ii) the custody, preservation, use or operation
      of, or the sale of, collection from, or other realization upon, any Collateral,
      (iii) the exercise or enforcement of any of the rights of any Holder hereunder,
      or (iv) the failure by Grantor to perform or observe any of the provisions
      hereof.

     

    SECTION
      10.  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 Grantor, to it in at the address set forth in the
      Guaranty, or if to any Holder, to it at its address set forth in the Debentures;
      or as to such Person at such other address as shall be designated by such Person
      in a written notice to such other Persons complying as to delivery with the
      terms of this Section 10. All such notices and other communications shall be
      effective (a) if mailed, when received or three (3) days after deposited in
      the
      mails, whichever occurs first; (b) if telecopied, when transmitted and
      confirmation is received; or (c) if delivered by hand, Federal Express or other
      reputable overnight courier, upon delivery.

     

    SECTION
      11.  Miscellaneous.

     

    (a)  No
      amendment of any provision of this Agreement shall be effective unless it is
      in
      writing and signed by Grantor and each Holder, and no waiver of any provision
      of
      this Agreement, and no consent to any departure by Grantor therefrom, shall
      be
      effective unless it is in writing and signed by each Holder, and then such
      waiver or consent shall be effective only in the specific instance and for
      the
      specific purpose for which given.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)  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 such right 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 any Holder to exercise any of its rights under any
      other Loan Document against such party or against any other Person.

     

    (c)  Any
      provision of this Agreement 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.

     

    (d)  This
      Agreement shall create a continuing security interest in the Collateral and
      shall (i) remain in full force and effect until the payment in full of the
      Guaranteed Obligations and the termination of the Guaranty and the Debentures,
      and (ii) be binding on Grantor and its successors and assigns and shall inure,
      together with all rights and remedies of the Holders hereunder, to the benefit
      of the Holders and their permitted successors, transferees and assigns. Without
      limiting the generality of clause (ii) of the immediately preceding sentence,
      each Holder may assign or otherwise transfer its rights under this Agreement,
      the Guaranty and any other Loan Document, to any other Person and such other
      Person shall thereupon become vested with all of the benefits in respect thereof
      granted to such Holder herein or otherwise. None of the rights or obligations
      of
      Grantor hereunder may be assigned or otherwise transferred without the prior
      written consent of the Holders, and any such assignment or transfer shall be
      null and void.

     

    (e)  Upon
      the
      satisfaction in full of the Guaranteed Obligations and the termination of the
      Guaranty and the Debentures, (i) this Agreement and the security interests
      created hereby shall terminate and all rights to the Collateral shall revert
      to
      Grantor, and (ii) the Holders will, upon Grantor’s request and at Grantor’s
      expense promptly, (A) return to Grantor such of the Collateral as shall not
      have
      been sold or otherwise disposed of or applied pursuant to the terms hereof,
      and
      (B) execute and deliver to Grantor such documents as Grantor shall
      reasonably request to evidence such termination, all without any representation,
      warranty or recourse whatsoever.

     

    (f)  Any
      and
      all obligations on the part any Holder under this Agreement shall constitute
      the
      several (and not joint) obligations of each Holder.

     

    (g)  This
      Agreement shall be governed by, and construed and interpreted in accordance
      with, the laws of the State of New York, except as required by mandatory
      provisions of law and except to the extent that the validity and perfection
      or
      the perfection and effect of perfection or non-perfection of the security
      interest created hereby or remedies hereunder, in respect of any particular
      Collateral are governed by the law of a jurisdiction other than the State of
      New
      York.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (h)  This
      Agreement 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 in the same
      agreement.

     

    SECTION
      12.   Submission
      to Jurisdiction; Waivers.
      Grantor
      hereby irrevocably and unconditionally:

     

    (a)  Submits
      for itself and its property in any action, suit or proceeding relating to this
      Agreement, the Guaranty or any other Loan Document to which it is a party,
      or
      for recognition and enforcement of any judgment in respect thereof, to the
      non-exclusive general jurisdiction of the courts of the State of New York,
      the
      courts of the United States of America for the Southern District of New York,
      and appellate courts thereof;

     

    (b)  Agrees
      that any such action, suit or proceeding may be brought in such courts and
      waives any objection that it may now or hereafter have to the venue of any
      such
      action, suit or proceeding in any such court or that such action, suit or
      proceeding was brought in an inconvenient court and agrees not to plead or
      claim
      the same;

     

    (c)  Irrevocably
      consents to the service of any and all process in any such action, suit or
      proceeding by the mailing of copies of such process by registered or certified
      mail (or any substantially similar form of mail), postage prepaid, to Grantor,
      at its address set forth in Section 10 hereof or at such other address of which
      the Holders shall have been notified pursuant thereto;

     

    (d)  To
      the
      extent that Grantor has or hereafter may acquire any immunity from jurisdiction
      of any court or from any legal process (whether through service or notice,
      attachment prior to judgment, attachment in aid of execution, execution or
      otherwise) with respect to itself or its property, Grantor hereby irrevocably
      waives such immunity in respect of its obligations under this Agreement;


     

    (e)  Agrees
      that nothing herein shall affect the right of the Holders to effect service
      of
      process in any other manner permitted by law or shall limit the right to sue
      in
      any other jurisdiction; and

     

    (f)  Waives
      any right it may have to claim or recover in any legal action or proceeding
      referred to in this Section any special, exemplary, punitive or consequential
      damages.

     

    SECTION
      13.  Jury
      Trial Waiver.
      THE
      GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, Grantor has caused this Agreement to be executed and delivered
      by its officer thereunto duly authorized as of the date first above
      written.

    

      
        	 	
                GRANTOR:

              
	 	 
	 	
                DIOMED,
                  INC.

              
	 	 
	 	
                By:

              	 
	 	 	Name:
	 	
                 

              	Title:
	 	 	 
	 	
                Address:

              	 
	 	 	 
	 	 	 
	 	
                Attention: 

              	 
	 	
                Telephone:

              	 
	 	
                Facsimile: 

              	 


      

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	 	
                HOLDERS:

              	 
	 	 	 
	 	
                IROQUOIS
                  CAPITAL LP

              
	 	 
	 	
                By:

              	 
	 	
                Name:
                  

              	 
	 	
                Title:
                  

              	 
	 	
                Address:

              	 
	 	 	 
	 	 	 
	 	
                Attention:
                  

              	 
	 	
                Telephone:

              	 
	 	
                Facsimile:

              	 
	 	 	 
	 	
                CRANSHIRE
                  CAPITAL, L.P.

              
	 	 
	 	
                By:

              	 
	 	
                Name:
                  

              	 
	 	
                Title:
                  

              	 
	 	
                Address:

              	 
	 	 	 
	 	 	 
	 	
                Attention:
                  

              	 
	 	
                Telephone:

              	 
	 	
                Facsimile:

              	 
	 	 	 
	 	
                PORTSIDE
                  GROWTH AND OPPORTUNITY FUND 

              
	 	 
	 	
                By:

              	 
	 	
                Name:
                  

              	 
	 	
                Title:
                  

              	 
	 	
                Address:

              	 
	 	 	 
	 	 	 
	 	
                Attention:
                  

              	 
	 	
                Telephone:

              	 
	 	
                Facsimile:

              	 


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                ROCKMORE
                  INVESTMENT MASTER FUND LTD.

              
	 	 
	 	
                By:

              	 
	 	
                Name:
                  

              	 
	 	
                Title:
                  

              	 
	 	
                Address:

              	 
	 	 	 
	 	 	 
	 	
                Attention:
                  

              	 
	 	
                Telephone:

              	 
	 	
                Facsimile:

              	 


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I 

     

    [Intellectual
      Property]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      II 

     

    
      
        
          	
                  Name
                    of Pledged Issuer

                	 	
                  Number
                    of
Shares

                	 	
                  Percentage of
Outstanding
Shares

                	 	
                  Class

                	 	
                  Certificate
Number

                	 
	
                  Diomed,
                    Inc.

                	 	 	
                  40,000,000

                  3,500,000

                	 	 	
                  100

                	
                  %

                	 	
                  Common

                  Preferred

                	 	 	
                  1

                  P-1

                	 
	
                  Diomed
                    Acquisition Corporation

                	 	 	
                  1,000

                	 	 	
                  100

                	
                  %

                	 	
                  Common

                	 	 	
                  1

                	 
	
                  Diomed
                    PDT, Inc.

                	 	 	
                  100

                	 	 	
                  100

                	
                  %

                	 	
                  Common
                    

                	 	 	
                  1

                	 


        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
      III 

    

      
        	
                GRANTOR

              	 	 	
                FILING
                  OFFICE

              	 
	
                Diomed,
                  Inc.

              	 	 	
                Delaware