EX 10.6


    Execution
      Version 

     

    STOCK
      PLEDGE AGREEMENT

    


    THIS
      STOCK PLEDGE AGREEMENT (“Pledge
      Agreement”)
      is
      made this 28th day of September, 2007 by DIOMED
      HOLDINGS, INC. and
      DIOMED,
      INC.,
      each a
      Delaware corporation (each a “Pledgor”
and
      together, the “Pledgors”),
      in
      favor of HERCULES
      TECHNOLOGY GROWTH CAPITAL, INC.
      (“Pledgee”).

     

    WHEREAS,
      each
      Pledgor has concurrently herewith entered into that certain Loan and Security
      Agreement dated as of September 28th, 2007 (as amended and in effect from time
      to time, the “Loan
      Agreement”)
      with
      Pledgee pursuant to which Pledgee has agreed to make certain advances of money
      and to extend certain financial accommodations to Pledgor (collectively, the
      “Loan”),
      subject to the terms and conditions set forth therein; 

     

    WHEREAS,
      each Pledgor
      owns the percentage of the outstanding stock set forth beside the entities
      listed on Exhibit
      A
      attached
      hereto (which may be amended, updated, or otherwise modified from time to
      time);

     

    WHEREAS,
      Pledgee
      is willing to make the Loan to Pledgor, but only upon the condition, among
      others, that each Pledgor shall have executed and delivered to Pledgee this
      Pledge Agreement and the Pledged Collateral (as defined below);

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing recitals and for other good and valuable
      consideration, the receipt and adequacy of which are hereby acknowledged, and
      intending to be legally bound, each Pledgor hereby agrees as
      follows:

     

    1. All
      capitalized terms used but not otherwise defined herein shall have the meanings
      given them in the Loan Agreement.

     

    2. As
      security for the full, prompt and complete payment and performance when due
      (whether by stated maturity, by acceleration or otherwise) of all the Secured
      Obligations, together with, without limitation, the prompt payment of all
      expenses, including, without limitation, reasonable attorneys’ fees and legal
      expenses, incidental to the collection of the foregoing and the enforcement
      or
      protection of Pledgee’s lien in and to the collateral pledged hereunder (all
      such indebtedness being the “Liabilities”),
      each
      Pledgor hereby pledges to Pledgee, and grants to Pledgee, a first priority
      security interest in all of the following (collectively, the “Pledged
      Collateral”):

     

    (a) the
      shares of capital stock or other equity securities of the entities listed on
      Exhibit
      A
      attached
      hereto now owned or hereafter acquired (whether in connection with any
      recapitalization, reclassification, or reorganization of the capital of such
      entities or any successors in interest thereto) by Pledgor (collectively, the
      “Pledged
      Shares”),
      and
      all dividends, cash, instruments and other property or proceeds from time to
      time received, receivable or otherwise distributed in respect of or in exchange
      for any or all of the Pledged Shares;

     

    (b) all
      voting trust certificates held by Pledgor evidencing the right to vote any
      Pledged Shares subject to any voting trust; and 

     

    (c) all
      additional shares and voting trust certificates of the entities listed on
Exhibit
      A
      from
      time to time acquired by Pledgor in any manner (which additional shares shall
      be
      deemed to be part of the Pledged Shares), and the certificates representing
      such
      additional shares, and all dividends, cash, instruments and other property
      or
      proceeds from time to time received, receivable or otherwise distributed in
      respect of or in exchange for any or all of such Pledged Shares;

     

    
      
        
        

      

      
        1.

        
          

        

      

      
        
        

      

    

     

    provided,
      however,
      that
      notwithstanding the foregoing clauses
      (a)
      through
(c),
      in no
      event and at no time shall the Pledged Collateral include or be comprised of
      the
      issued and outstanding capital stock or other equity securities (calculated
      on
      an as-converted or as-exercised basis) of any Subsidiary of Pledgor organized
      under the laws of any jurisdiction other than the United States of America,
      or a
      subdivision thereof (a “Foreign
      Subsidiary”)
      which
      exceeds 65% of all such issued and outstanding capital stock or other equity
      securities (calculated on an as-converted or as-exercised basis) of such Foreign
      Subsidiary, and, in each case, the corresponding proportion of dividends,
      distributions, interest and other payments and rights with respect
      thereto.

     

    3. Each
      Pledgor hereby represents and warrants to Pledgee as follows:

     

    (a) Pledgor
      is, at the time of delivery of the Pledged Shares to Pledgee hereunder, the
      sole
      holder of record and the sole beneficial owner of its Pledged Collateral, free
      and clear of any lien thereon or affecting title thereto, except for the lien
      created by this Pledge Agreement and Permitted Liens.

     

    (b) None
      of
      the Pledged Shares have been transferred in violation of applicable federal
      or
      state securities laws to which such transfer may be subject.

     

    (c) All
      of
      the Pledged Shares have been duly authorized, validly issued, and fully paid,
      and are non-assessable and constitute the percentage of the issued and
      outstanding capital stock owned by Pledgor set forth on Exhibit
      A.

     

    (d) No
      consent, approval, authorization or other order of any person and no consent
      or
      authorization of any governmental authority or regulatory body is required
      to be
      made or obtained by Pledgor either (i) for the pledge by Pledgor of its Pledged
      Collateral pursuant to this Pledge Agreement or for the execution, delivery,
      or
      performance of this Pledge Agreement by Pledgor; or (ii) for the exercise by
      Pledgee of the voting or other rights provided for in this Pledge Agreement
      or
      the remedies with respect to the Pledged Collateral pursuant to this Pledge
      Agreement, except as may be required in connection with such disposition by
      laws
      affecting the offer and sale of securities generally.

     

    (e) The
      pledge, grant of a security interest in, and delivery of the Pledged Collateral
      pursuant to this Pledge Agreement, will create a valid first priority lien
      on
      and in the Pledged Collateral, and the proceeds thereof, securing the payment
      of
      the Liabilities.

     

    (f) This
      Pledge Agreement has been duly executed and delivered by Pledgor and constitutes
      a legal, valid, and binding obligation of Pledgor enforceable in accordance
      with
      its terms, except as enforceability may be limited by bankruptcy, insolvency,
      or
      other similar laws affecting the rights of creditors generally or by the
      application of general equity principles.

     

    Each
      Pledgor warrants and represents to Pledgee that all representations and
      warranties contained in this Pledge Agreement shall be true in all material
      respects at the time of Pledgor’s execution of this Pledge Agreement and with
      each Advance made to the Borrowers under the Loan Agreement.

     

    4. So
      long
      as no Event of Default exists and Pledgee has not given either Pledgor notice
      it
      will enforce its security interest in the Pledged Collateral:

     

    (a) Voting
      Rights.
      Each
      Pledgor shall be entitled to exercise any and all voting and other consensual
      rights pertaining to its Pledged Collateral, provided that no vote shall be
      cast
      or consent, waiver or ratification given by such Pledgor if the effect thereof
      would in the reasonable judgment of the Lender materially impair any of the
      Pledged Collateral or be inconsistent with or result in any violation of any
      of
      the provisions of the Loan Agreement, the Notes or any of the other Loan
      Documents; and

     

    
      
        
        

      

      
        2.

        
          

        

      

      
        
        

      

    

     

    (b) Dividend
      and Distribution Rights.
      Each
      Pledgor shall be entitled to receive and to retain and use any and all dividends
      or distributions paid in respect of its Pledged Collateral; provided, however,
      that any
      and all:

     

    (i) non-cash
      dividends or distributions in the form of capital stock, instruments or other
      property received, receivable or otherwise distributed in respect of, or in
      exchange for, any Pledged Collateral, and

     

    (ii) dividends
      and other distributions paid or payable in cash in respect of any Pledged
      Collateral in connection with total liquidation or dissolution, 

     

    shall
      forthwith be delivered to Pledgee, to be held as Pledged Collateral and shall,
      if received by a Pledgor, be received in trust for the benefit of Pledgee,
      be
      segregated from the other property of such Pledgor, and forthwith be delivered
      to Pledgee as Pledged Collateral in the same form as so received (with any
      necessary endorsement).

     

    5. Each
      Pledgor agrees to pay prior to delinquency all taxes, charges, liens and
      assessments against the Pledged Collateral, except those with respect to which
      the amount or validity is being contested in good faith by appropriate
      proceedings and with respect to which reserves in conformity with GAAP have
      been
      provided on the books of such Pledgor and upon the failure of such Pledgor
      to do
      so, Pledgee at its option may pay any of them and shall be the sole judge of
      the
      legality or validity thereof and the amount necessary to discharge the
      same.

     

    6. So
      long
      as Pledgee has any commitment to make Advances to any Pledgor under the Loan
      Agreement or any Pledgor has any Secured Obligations (other than inchoate
      indemnity obligations) outstanding under the Loan Agreement, each Pledgor agrees
      that such Pledgor:

     

    (a) will
      not
      (i) sell, transfer or otherwise dispose of, or grant any option or warrant
      with
      respect to, any of the Pledged Collateral (or any part thereof or interest
      therein) except with the prior written consent of Pledgee, or (ii) create or
      permit to exist any lien or encumbrance upon or with respect to any of the
      Pledged Collateral, except for Permitted Liens. If any Pledged Collateral,
      or
      any part thereof, is sold, transferred or otherwise disposed of in violation
      of
      this Section
      6,
      the
      security interest of Pledgee shall continue in the Pledged Collateral
      notwithstanding such sale, transfer or other disposition, and Pledgor will
      deliver any proceeds thereof to Pledgee to be held as Pledged Collateral
      hereunder;

     

    (b) shall,
      at
      Pledgor’s own expense, promptly execute, acknowledge, and deliver all such
      instruments and take all such actions as Pledgee from time to time may
      reasonably request in order to ensure to Pledgee the benefits of the lien in
      and
      to the Pledged Collateral intended to be created by this Pledge
      Agreement;

     

    (c) shall
      maintain, preserve and defend the title to the Pledged Collateral and the lien
      of Pledgee thereon against the claim of any other person; 

     

    
      
        
        

      

      
        3.

        
          

        

      

      
        
        

      

    

     

    (d) upon
      obtaining any shares of capital stock or other equity securities that should
      be
      pledged pursuant to Section
      2
      of this
      Pledge Agreement, shall immediately (i) deliver to Pledgee a duly executed
      Pledge Agreement Supplement in substantially the form of Schedule
      1
      attached
      hereto (a “Pledge
      Agreement Supplement”)
      identifying such additional shares of capital stock or other equity securities,
      and (ii) deliver or otherwise cause the transfer of such additional shares
      of capital stock or other equity securities to the Pledgee, provided,
      in
      each
      case so as to cause at all times the Pledged Collateral to constitute, but
      in no
      event and at no time to exceed, 65% of the issued and outstanding capital stock
      or other equity securities (calculated on an as-converted or as-exercised basis)
      of any Foreign Subsidiary. Pledgor hereby authorizes Pledgee to attach each
      Pledge Agreement Supplement to this Pledge Agreement and agrees that all shares
      of capital stock or other equity securities listed thereon shall for all
      purposes hereunder constitute Pledged Collateral.

     

    7. In
      the
      event that during the term of this Pledge Agreement, any reclassification,
      readjustment, new issuance or other change is declared or made in the capital
      structure of the issuer of the Pledged Shares, all new substituted and
      additional shares, options, or other securities, issued or issuable to any
      Pledgor by reason of any such issuance, change or exercise shall be delivered
      to
      and held by Pledgee under the terms of this Pledge Agreement in the same manner
      as the Pledged Collateral originally pledged hereunder.

     

    8. All
      advances, charges, costs and expenses, including reasonable attorneys’ fees,
      incurred or paid by Pledgee in exercising any right, power or remedy conferred
      upon Pledgee by this Pledge Agreement, or in the enforcement thereof, shall
      become a part of the Liabilities secured hereunder and shall be paid to Pledgee
      on demand.

     

    9. During
      the existence of an Event of Default, Pledgee may, to the extent permitted
      by
      applicable law, at its election, apply, set off, collect or sell in one or
      more
      sales, or take such steps as may be necessary to liquidate and reduce to cash
      in
      the hands of Pledgee in whole or in part, with or without any previous demands
      or demand of performance or notice or advertisement, the whole or any part
      of
      the Pledged Collateral in such order as Pledgee may elect, and any such sale
      may
      be made either at public or private sale at its place of business or elsewhere,
      or at any broker’s board or securities exchange, either for cash or upon credit
      or for future delivery; provided,
      however,
      that if
      such disposition is at private sale, then the purchase price of the Pledged
      Collateral shall be equal to the public market price then in effect, or, if
      at
      the time of sale no public market for the Pledged Collateral exists, then,
      in
      recognition of the fact that the sale of the Pledged Collateral would have
      to be
      registered under the Securities Act of 1933, as amended (the “Act”),
      and
      that the expenses of such registration are commercially unreasonable for the
      type and amount of collateral pledged hereunder, Pledgee and each Pledgor hereby
      agree that such private sale shall be at a purchase price mutually agreed to
      by
      Pledgee and the Pledgors or, if the parties cannot agree upon a purchase price,
      then at a purchase price established by Pledgee in the exercise of its
      reasonable discretion. Pledgee shall be under no obligation to delay the sale
      of
      any of the Pledged Shares for the period of time necessary to permit a Pledgor
      to register such securities for public sale under the Act, or under applicable
      state securities laws, even if such Pledgor would agree to do so. Pledgee may
      be
      the purchaser of any or all Pledged Collateral so sold and hold the same
      thereafter in its own right free from any claim of any Pledgor or right of
      redemption. To the extend permitted by law, demands of performance, notices
      of
      sale, advertisements and presence of property at sale are hereby waived. Any
      sale hereunder may be conducted by any officer or agent of Pledgee.

     

    10. The
      proceeds of the sale of any of the Pledged Collateral and all sums received
      or
      collected by Pledgee from or on account of such Pledged Collateral shall be
      applied by Pledgee to the payment of reasonable expenses incurred or paid by
      Pledgee in connection with any sale, transfer or delivery of the Pledged
      Collateral, to the payment of any other costs, charges, attorneys’ fees or
      expenses mentioned herein, and to the payment of the Secured Obligations or
      any
      part hereof, all in such order and manner as Pledgee in its discretion may
      determine. Pledgee shall then pay any remaining balance of the Secured
      Obligations to the Pledgor.

     

    11. Upon
      the
      transfer of all or any part of Secured Obligations pursuant to the terms of
      the
      Loan Agreement, Pledgee may transfer all or any part of the Pledged Collateral
      to the transferee of the Secured Obligations and shall be fully discharged
      thereafter from all liability and responsibility with respect to such Pledged
      Collateral so transferred, and the transferee shall be vested with all the
      rights and powers of Pledgee hereunder with respect to such Pledged Collateral
      so transferred; but with respect to any Pledged Collateral not so transferred,
      Pledgee shall retain all rights and powers hereby given.

     

    
      
        
        

      

      
        4.

        
          

        

      

      
        
        

      

    

     

    12. Until
      all
      Secured Obligations shall have been paid in full in cash, the power of sale
      and
      all other rights, powers and remedies granted to Pledgee hereunder shall
      continue to exist and may be exercised by Pledgee at any time and from time
      to
      time pursuant to the terms hereof.

     

    13. Pledgee
      may at any time deliver the Pledged Collateral or any part thereof to a Pledgor
      and the receipt thereof by such Pledgor shall be a complete and full acquittance
      for the Pledged Collateral so delivered, and Pledgee shall thereafter be
      discharged from any liability or responsibility therefore, except for such
      as is
      directly caused by Pledgee’s gross negligence or willful misconduct.


     

    14. The
      rights, powers and remedies given to Pledgee by this Pledge Agreement shall
      be
      in addition to all rights, powers and remedies given to Pledgee by virtue of
      any
      statute or rule of law. Any forbearance, failure or delay by Pledgee in
      exercising any right, power or remedy hereunder shall not be deemed to be a
      waiver of such right, power or remedy, and any single or partial exercise of
      any
      right, power or remedy hereunder shall not preclude the further exercise thereof
      and every right, power and remedy of Pledgee shall continue in full force and
      effect until such right, power or remedy is specifically waived by an instrument
      in writing executed by Pledgee.

     

    15. If
      any
      provision of this Pledge Agreement is held to be unenforceable for any reason,
      all other provisions of this Pledge Agreement shall be deemed valid and
      enforceable to the full extent possible.

     

    16. This
      Pledge Agreement shall be governed by, and construed in accordance with, the
      laws of the State of California.

     

    17. Upon
      the
      payment in full in cash of all Secured Obligations (other than inchoate
      indemnity obligations) and the cancellation or termination of any commitment
      to
      extend credit or make Advances under the Loan Agreement, the security interest
      granted herein shall terminate and all rights to the Pledged Collateral shall
      revert to the Pledgors, and Pledgee shall immediately return all Pledged
      Collateral to the applicable Pledgor. Upon such termination, Pledgee shall,
      at
      Pledgors’ cost and expense, execute and deliver to any Pledgor any additional
      documents or instruments as such Pledgor reasonably request to evidence such
      termination.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        5.

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      each
      Pledgor has executed this Pledge Agreement as of the date first set forth
      above.

     

    
      	
              DIOMED
                HOLDINGS, INC.

            
	 	 
	
              By:

            	 
	
              Name:
                

            	 
	
              Title:
                

            	 
	 	 
	
              DIOMED,
                INC.

            
	 	 
	
              By:

            	 
	
              Name:
                

            	 
	
              Title:
                

            	 


    

     

    
      
        
        

      

      
        1.

        
          

        

      

      
        
        

      

    


    Exhibit
      A

     

    Pledgor:
      Diomed Holdings, Inc.

    


    
      	
              Name of
                

              Pledged
                

              Share
                

              Issuer

            	 	
              Jurisdiction
                

              of
                

              Organization

            	 	
              Number of
                

              Shares
                

              Authorized

            	 	
              Number of
                

              Shares
                

              Issued

            	 	
              Number of
                

              Shares
                

              Outstanding

            	 	
              Number of
                

              Shares
                

              Owned by
                

              Pledgor

            	 	
              % of
                

              Outstanding
                

              Shares
                

              Pledged

            	 	
              Certificate
                

              Number

            
	
              Diomed,
                Inc.

            	 	
              Delaware

            	 	
              3,500,000

              Preferred

            	 	
              3,500,000
                Preferred

            	 	
              3,500,000
                Preferred

            	 	
              3,500,000

              Preferred

            	 	
              100%

            	 	
              P-1

            
	
              Diomed,
                Inc.

            	 	
              Delaware

            	 	
              40,000,000

              Common

            	 	
              40,000,000

              Common

            	 	
              40,000,000

              Common

            	 	
              40,000,000

              Common

            	 	
              100%

            	 	
              1

            


    

     

    Pledgor:
      Diomed, Inc.

    


    
      	
              Name of
                

              Pledged
                

              Share
                

              Issuer

            	 	
              Jurisdiction
                

              of
                

              Organization

            	 	
              Number of
                

              Shares
                

              Authorized

            	 	
              Number of
                

              Shares
                

              Issued

            	 	
              Number of
                

              Shares
                

              Outstanding

            	 	
              Number of
                

              Shares
                

              Owned by
                

              Pledgor

            	 	
              % of

              Outstanding
                

              Shares
                

              Pledged

            	 	
              Certificate
                

              Number

            
	
              Diomed
                PDT, Inc.

            	 	
              Delaware

            	 	
              100

              Common

            	 	
              100

              Common

            	 	
              100

              Common

            	 	
              100

              Common

            	 	
              100%

            	 	
              1

            
	
              Diomed
                Acquisition Corp.

            	 	
              Delaware

            	 	
              1,000

              Common

            	 	
              1,000

              Common

            	 	
              1,000

              Common

            	 	
              1,000

              Common

            	 	
              100%

            	 	
              1

            


    

     

    
      
        
        

      

      
        2.

        
          

        

      

      
        
        

      

    

     

    Schedule
      1

    


    Pledge
      Agreement Supplement

    


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

    


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

    


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

     

    
      	
              [PLEDGOR]

            
	 	 
	
              By:

            	 
	
              Name:
                

            	 
	
              Title:
                

            	 


    

     

    
      
        
        

      

      
        3.

        
          

        

      

      
        
        

      

    

     

    
      	
              Name of
                

              Pledged
                

              Share
                

              Issuer

            	 	
              Jurisdiction
                

              of
                

              Organization

            	 	
              Number of
                

              Shares
                

              Authorized

            	 	
              Number of
                

              Shares
                

              Issued

            	 	
              Number of
                

              Shares
                

              Outstanding

            	 	
              Number of
                

              Shares
                

              Owned by
                

              Pledgor

            	 	
              % of
                

              Outstanding
                

              Shares
                

              Pledged

            	 	
              Certificate
                

              Number

            
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 


    

     

    
      
        
        

      

      
        4.