Document:

Unassociated Document

    September
      28, 2006

    

    

    

    Dennis
      J.
      Mouras

    CareAdvantage,
      Inc.

    President
      and Chief Executive Officer

    485-C
      Route One South

    Iselin,
      NJ 08830-4124

    

    
      	 	
              Re:

            	
              Termination
                of Services and Licenses
                Agreement

            

    

    

    Dear
      Dennis:

    

    Following
      up on our conversation last week, this letter provides written notification
      that
      Kaiser Foundation Health Plan of the Northwest (“Kaiser”) is exercising its
      right to terminate its Services and License Agreement (“Agreement”) with
      CareAdvantage, Inc. In accordance with Section 5.2, the Agreement will terminate
      effective December 31, 2006.

     

    Upon
      termination, all data disclosed to CareAdvantage should either be returned
      to
      Kaiser or destroyed. Please work with Gary Smith to help us determine the most
      appropriate approach. No copies should be retained by
      CareAdvantage.

     

    As
      we
      discussed, this was not an easy decision and in no way reflects on the quality
      of work performed by CareAdvantage. Nevertheless, due to budget issues, we
      believe that the decision was necessary. I have found the staff of CareAdvantage
      to be professional and proactive in working with Kaiser. We have been pleased
      with the work performed to date and hope that our decision will not negatively
      affect our ability to continue our relationship at some point in the
      future.

     

    Please
      feel free to contact me with any questions.

     

    

    
      	 	 	Sincerely, 
	 	 	 
	 	 	/s/
              Gary O. Morgan 
	 	 	Gary
              O. Morgan 
	 	 	Vice President, Product & Business
              Development

    

     

     

    
      	cc:	
              Tricia
                Peters, Acting President

            

      	 	William N. Wiechmann, Vice President,
              Regional
              CounselNEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT IF SO REQUIRED BY THE  COMPANY.  THIS  SECURITY  AND THE  SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase             Shares of Common Stock of
                            ----------
                     Initial Issue Date: September 29, 2006

                              Diomed Holdings, Inc.

      THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for
value received, _____________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date of approval of the listing of the Warrant
Shares (as defined below) by the Trading Market (the "Initial Exercise Date")
and on or prior to the close of business on earlier of (i) the five year
anniversary of the date of listing of the Warrant Shares with the Principal
Trading Market and (ii) such earlier date as the warrant shall no longer be
exercisable pursuant to the terms hereof (in either case, the "Termination
Date"), but not thereafter, to subscribe for and purchase from Diomed Holdings,
Inc., a Delaware corporation (the "Company"), up to ______ shares (the "Warrant
Shares") of Common Stock, par value $0.001 per share, of the Company (the
"Common Stock"). The purchase price of one share of Common Stock (the "Exercise
Price") under this Warrant shall be $1.15, subject to adjustment hereunder.

      Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase
Agreement (the "Purchase Agreement"), dated July 27, 2006, by and among the
Company and the purchasers signatory thereto.

      Section 2. Exercise. (a) Exercise of Warrant. Exercise of the purchase
rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination
Date by delivery to the Company of a duly executed facsimile copy of the Notice
of Exercise Form annexed hereto (or such other office or agency of the Company
as it may designate by notice in writing to the registered Holder at the address
of such Holder appearing on the books of the Company); provided, that within
three Trading Days of the date said Notice of Exercise is delivered to the
Company, the Holder shall have surrendered this Warrant to the Company and the
Company shall have received (i) payment of the aggregate Exercise Price of the
shares thereby purchased by wire transfer or cashier's check drawn on a United
States bank or (ii) if the Holder is effectuating a cashless exercise pursuant
to Section 2(c), a written notice of an election to effect a cashless exercise
for the Warrant Shares specified in the Notice of Exercise Form duly executed by
the Holder.

<PAGE>

                  (b) Exercise Price. The Exercise Price of each share of Common
      Stock under this Warrant shall be $1.15, subject to adjustment hereunder.

                  (c) Cashless Exercise. This Warrant may also be exercised at
      by means of a "cashless exercise" in which the Holder shall be entitled to
      receive a certificate for the number of Warrant Shares equal to the
      quotient obtained by dividing [(A-B) (X)] by (A), where:

                  (A) = the VWAP on the Trading Day immediately preceding the
                  date of such election;

                  (B) = the Exercise Price of this Warrant, as adjusted; and

                  (X) = the number of Warrant Shares issuable upon exercise of
                  this Warrant in accordance with the terms of this Warrant by
                  means of a cash exercise rather than a cashless exercise.

Where:

(")VWAP"  means,  for any security as of any date,  the price  determined by the
first of the  following  clauses that  applies:  (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of
the Common  Stock for such date on the Trading  Market on which the Common Stock
is then listed or quoted as reported by  Bloomberg  Financial  L.P.  (based on a
Trading Day from 9:30 a.m.  Eastern Time to 4:02 p.m.  Eastern Time); (b) if the
Common Stock is not then listed or quoted on a Trading  Market and if prices for
the Common Stock are then quoted on the OTC Bulletin Board,  the volume weighted
average price of the Common Stock for such date on the OTC Bulletin  Board;  (c)
if the Common Stock is not then listed or quoted on the OTC  Bulletin  Board and
if prices for the Common Stock are then reported in the "Pink Sheets"  published
by the National  Quotation  Bureau  Incorporated  (or a similar  organization or
agency  succeeding  to its functions of reporting  prices),  the most recent bid
price per share of the Common Stock so reported;  or (c) in all other cases, the
fair market value of a share of Common  Stock as  determined  by an  independent
appraiser  selected  in good  faith by the  holders of the  Preferred  Stock and
reasonably  acceptable to the  Corporation,  where  "Trading Day" means a day on
which the Common Stock is traded on a Trading Market, and "Trading Market" means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question:  the Nasdaq SmallCap  Market,  the American
Stock Exchange, the New York Stock Exchange or the Nasdaq National Market.

                                       2
<PAGE>

      (d) Intentionally Omitted.

      (e) Mechanics of Exercise.

                        (i)  Authorization  of  Warrant  Shares;   Listing.  The
      Company  covenants  that all Warrant  Shares  which may be issued upon the
      exercise of the purchase  rights  represented  by this Warrant will,  upon
      exercise of the  purchase  rights  represented  by this  Warrant,  be duly
      authorized, validly issued, fully paid and nonassessable and free from all
      taxes, liens and charges in respect of the issue thereof (other than taxes
      in respect of any transfer occurring  contemporaneously  with such issue).
      The Company  covenants that during the period the Warrant is  outstanding,
      it will reserve from its authorized and unissued Common Stock a sufficient
      number of shares to provide for the  issuance  of the Warrant  Shares upon
      the  exercise  of any  purchase  rights  under this  Warrant.  The Company
      further  covenants that its issuance of this Warrant shall constitute full
      authority to its officers who are charged with the duty of executing stock
      certificates  to  execute  and issue the  necessary  certificates  for the
      Warrant  Shares  upon the  exercise  of the  purchase  rights  under  this
      Warrant.  The  Company  will  take all such  reasonable  action  as may be
      necessary  to assure  that such  Warrant  Shares may be issued as provided
      herein without  violation of any  applicable law or regulation,  or of any
      requirements  of the  Trading  Market  upon which the Common  Stock may be
      listed.  The Company shall promptly secure the listing or quotation of the
      shares of Common Stock  issuable  upon  exercise of this Warrant upon each
      national securities exchange or automated or electronic  quotation system,
      if any,  upon which  shares of Common  Stock are then  listed or quoted or
      become  listed or quoted  (subject  to official  notice of  issuance  upon
      exercise of this Warrant) and shall maintain,  so long as any other shares
      of Common Stock shall be so listed or quoted, such listing or quotation of
      all shares of Common Stock from time to time issuable upon the exercise of
      this Warrant; and the Company shall so list or apply for quotation on each
      national securities exchange or automated or electronic  quotation system,
      as the case may be, and shall  maintain  such listing or quotation of, any
      other shares of capital stock of the Company issuable upon the exercise of
      this  Warrant  if and so long as any  shares  of the same  class  shall be
      listed or quoted on such  national  securities  exchange or  automated  or
      electronic  quotation system.  The Company shall, on or before the date of
      issuance of any Warrant  Shares,  take such  actions as the Company  shall
      reasonably  determine are necessary to qualify the Warrant  Shares for, or
      obtain  exemption  for the Warrant  Shares for, sale to the holder of this
      Warrant upon the exercise hereof under applicable securities or "blue sky"
      laws of the states of the United States, and shall provide evidence of any
      such  action so taken to the  holder of this  Warrant  prior to such date;
      provided,  however,  that the Company  shall not be required in connection
      therewith  or as a condition  thereto to (i) qualify to do business in any
      jurisdiction  where it would not  otherwise be required to qualify but for
      this  provision,  (ii)  subject  itself to  general  taxation  in any such
      jurisdiction  or (iii) file a general consent to service of process in any
      such jurisdiction.

                                       3
<PAGE>

                        (ii) Delivery of Certificates Upon Exercise. The Company
      shall  instruct its transfer  agent to deliver to the Holder  certificates
      for shares  purchased  hereunder within two Trading Days from the delivery
      to the Company of the Notice of Exercise  Form,  surrender of this Warrant
      and payment of the aggregate  Exercise Price (unless a cashless  exercise)
      as set forth above ("Warrant Share Delivery Date").  This Warrant shall be
      deemed to have been  exercised as of the close of business on the date the
      Notice of Exercise form and the payment of the Exercise Price or notice of
      cashless exercise,  as applicable,  is received by the Company or, if such
      date is not a business day, on the next  succeeding  business day, and the
      Warrant Shares shall be deemed to have been issued,  and the Holder or any
      other person so  designated  to be named  therein  shall be deemed to have
      become a holder of  record of such  shares  for all  purposes,  as of such
      date.

                        (iii)  Delivery of New Warrants Upon  Exercise.  If this
      Warrant shall have been exercised in part,  the Company shall,  as soon as
      practicable  after the transfer  agent's  delivery of the  certificate  or
      certificates  representing  Warrant  Shares,  deliver  to the Holder a new
      Warrant  evidencing  the rights of the Holder to purchase the  unpurchased
      Warrant Shares called for by this Warrant,  which new Warrant shall in all
      other respects be identical with this Warrant.

                        (iv) Exercise Default. If, at any time, a holder of this
      Warrant  submits  this  Warrant,  a Notice of Exercise  and payment to the
      Company of the Exercise Price for each of the Warrant Shares  specified in
      the Notice of Exercise (including  pursuant to a cashless  exercise),  and
      the  Company  fails for any reason to  deliver,  on or prior to the fourth
      business day following the Warrant Share  Delivery Date for such exercise,
      the number of shares of Common Stock to which the Holder is entitled  upon
      such exercise (an "Exercise  Default"),  then,  subject to the  Liquidated
      Damages  Cap,  the  Company  shall pay to the Holder  payments  ("Exercise
      Default  Payments") for an Exercise  Default in the amount of (i) (N/365),
      multiplied  by (ii) the  amount by which the  Market  Price of the  Common
      Stock on the date the  Notice  of  Exercise  giving  rise to the  Exercise
      Default is transmitted in accordance  with the terms hereof (the "Exercise
      Default  Date")  exceeds  the  Exercise  Price in respect of such  Warrant
      Shares,  multiplied  by (iii) the  number  of  shares of Common  Stock the
      Company failed to so deliver in such Exercise Default,  multiplied by (iv)
      R, where N equals the number of days from the Exercise Default Date to the
      date that the Company effects the full exercise of this Warrant which gave
      rise to the  Exercise  Default  and R equals  the lower of 0.18  (eighteen
      percent) and the highest  interest rate per annum  permitted by applicable
      law, expressed as a decimal. The accrued Exercise Default Payment for each
      calendar  month  shall be paid in cash and shall be made to the  Holder by
      the fifth day of the month  following  the month in which it has  accrued.
      Nothing herein shall limit the holder's right to pursue actual damages for
      the Company's failure to maintain a sufficient number of authorized shares
      of Common  Stock as required  pursuant to the terms hereof or to otherwise
      issue shares of Common Stock upon  exercise of this Warrant in  accordance
      with the terms  hereof,  and the Holder shall have the right to pursue all
      remedies  available  at law or in equity  (including  a decree of specific
      performance and/or injunctive relief).

                                       4
<PAGE>

                        (v) No Fractional  Shares or Scrip. No fractional shares
      or scrip representing  fractional shares shall be issued upon the exercise
      of this  Warrant.  As to any  fraction of a share  which the Holder  would
      otherwise be entitled to purchase  upon such  exercise,  the Company shall
      pay a cash adjustment in respect of such final fraction in an amount equal
      to such fraction multiplied by the Exercise Price.

                        (vi)  Closing of Books.  The Company  will not close its
      stockholder  books or  records  in any manner  which  prevents  the timely
      exercise of this Warrant, pursuant to the terms hereof.

Section 3. Certain Adjustments.

      (a) Stock  Dividends  and Splits.  If the Company,  at any time while this
Warrant  is  outstanding:  (A)  pays a  stock  dividend  or  otherwise  makes  a
distribution or  distributions on shares of its Common Stock or any other equity
or equity equivalent  securities  payable in shares of Common Stock (which,  for
avoidance  of doubt,  shall not include any shares of Common Stock issued by the
Company pursuant to this Warrant),  (B) subdivides  outstanding shares of Common
Stock into a larger number of shares, (C) combines  (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
(D)  issues by  reclassification  of shares of the  Common  Stock any  shares of
capital  stock of the Company or (E) takes any similar  action having the effect
of  increasing or  decreasing  the number of shares of Common Stock  outstanding
immediately  prior to the taking  effect of such  action,  then in each case the
Exercise  Price shall be  multiplied  by a fraction:  (i) the numerator of which
shall be the number of shares of Common Stock  (excluding  treasury  shares,  if
any)  outstanding  before such event and (ii) the  denominator of which shall be
the  number of shares of Common  Stock  outstanding  after such  event,  and the
number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted.  Any  adjustment  made  pursuant  to this  Section  3(a) shall  become
effective   immediately   after  the  record  date  for  the   determination  of
stockholders  entitled to receive such dividend or distribution and shall become
effective  immediately  after the effective  date in the case of a  subdivision,
combination or re-classification.

                                       5
<PAGE>

      (b)  Distributions.  If,  at any time this  Warrant  is  outstanding,  the
Company  declares or makes any  distribution of its assets (or rights to acquire
its assets) pro rata to the record holders of any class of Common Stock, whether
as a partial  liquidating  dividend,  by way of return of capital or  otherwise,
(including any dividend or distribution to the Company's stockholders in cash or
shares (or rights to acquire  shares) of capital stock of a subsidiary  (i.e., a
spin-off))  (a  "Distribution"),  then the Holder  shall be  entitled,  upon any
exercise of this Warrant after the date of record for  determining  stockholders
entitled to such  Distribution (or if no such record is taken, the date on which
such  Distribution  is declared  or made),  to receive the amount of such assets
which would have been payable to the Holder with  respect to the Warrant  Shares
issuable  upon such  exercise  had the Holder  been the  holder of such  Warrant
Shares on the record date for the determination of stockholders entitled to such
Distribution (or if no such record is taken, the date on which such Distribution
is declared or made).

      (c) Convertible Securities and Purchase Rights. If, at any time while this
Warrant is outstanding, the Company issues pro rata to the record holders of any
class of Common Stock any securities or other  instruments which are convertible
into or exercisable or exchangeable for Common Stock ("Convertible  Securities")
or options,  warrants or other rights to purchase or subscribe  for Common Stock
or Convertible  Securities ("Purchase Rights"),  whether or not such Convertible
Securities  or  Purchase  Rights are  immediately  convertible,  exercisable  or
exchangeable,  then the Holder  shall be  entitled,  upon any  exercise  of this
Warrant  after the date of  record  for  determining  stockholders  entitled  to
receive such Convertible  Securities or Purchase Rights (or if no such record is
taken,  the date on which such  Convertible  Securities  or Purchase  Rights are
issued),  to receive the aggregate number of Convertible  Securities or Purchase
Rights which the Holder would have received  with respect to the Warrant  Shares
issuable upon such exercise (without giving effect to the limitations  contained
in Section  2(d)) had the Holder been the holder of such  Warrant  Shares on the
record date for the  determination  of  stockholders  entitled  to receive  such
Convertible  Securities or Purchase  Rights (or if no such record is taken,  the
date on which such  Convertible  Securities or Purchase Rights were issued).  If
the right to  exercise or convert any such  Convertible  Securities  or Purchase
Rights would expire in accordance with their terms prior to the exercise of this
Warrant, then the terms of such Convertible  Securities or Purchase Rights shall
provide that such exercise or convertibility  right shall remain in effect until
30 days  after the date the  Holder  receives  such  Convertible  Securities  or
Purchase Rights pursuant to the exercise hereof.

      (d) Subsequent Equity Sales.

                  (i)  If  at  any  time  while  this   Warrant  is  issued  and
      outstanding,  other than in an Exempt  Issuance,  the Company shall offer,
      sell,  grant any option to purchase  or offer,  sell or grant any right to
      reprice its securities,  or otherwise  dispose of or issue (or announce or
      be deemed to have made any offer, sale, grant or any option to purchase or
      other  disposition)  any  Common  Stock or Common  Stock  Equivalents  (as
      defined  below)  entitling any Person to acquire shares of Common Stock at
      an effective price per share less than the then Exercise Price (such lower
      price,  with respect to each class of securities  being issued,  the "Base
      Share  Price"  of such  securities  and each  such  issuance  a  "Dilutive
      Issuance"),  as  adjusted  hereunder,  then the  Exercise  Price  shall be
      reduced  according  to  the  following  formula:

((Fully  Diluted Shares  Outstanding  Before x Adjusted  Exercise Price) + Total
Consideration) Fully Diluted Shares Outstanding After

                                       6
<PAGE>

            Where:

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

            "Common Stock  Equivalents" shall mean any securities of the Company
            or its  Subsidiaries  which  would  entitle  the  holder  thereof to
            acquire at any time Common Stock, including without limitation,  any
            Purchase  Rights  or  Convertible   Securities,   including  without
            limitation the Preferred Stock and the Warrants;

            "Adjusted  Exercise  Price" shall mean the Exercise  Price in effect
            immediately prior to the Dilutive  Issuance;

            "Total  Consideration"  shall  mean  the  sum of  all  consideration
            received  by  the  Company  in  the  Dilutive  Issuance,  calculated
            pursuant to Section 3(d)(ii); and

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

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

                                       7
<PAGE>

                        (ii) Effect on  Exercise  Price of Certain  Events.  For
            purposes of determining the adjusted Exercise Price under clause (i)
            of this Section 3(d), the following will be applicable:

                                            (A) Issuance of Purchase Rights.  If
                           the  Company  issues  or sells any  Purchase  Rights,
                           whether or not immediately exercisable, and the price
                           per share for which Common Stock is issuable upon the
                           exercise  of such  Purchase  Rights (and the price of
                           any   conversion  of   Convertible   Securities,   if
                           applicable) is less than the Exercise Price in effect
                           on the  date of  issuance  or  sale of such  Purchase
                           Rights,  then the maximum  total  number of shares of
                           Common Stock  issuable  upon the exercise of all such
                           Purchase Rights (assuming full  conversion,  exercise
                           or exchange of Convertible Securities, if applicable)
                           shall, as of the date of the issuance or sale of such
                           Purchase  Rights,  be deemed to be outstanding and to
                           have been  issued  and sold by the  Company  for such
                           price  per  share.  For  purposes  of  the  preceding
                           sentence, the "price per share for which Common Stock
                           is  issuable  upon  the  exercise  of  such  Purchase
                           Rights" shall be determined by dividing (x) the total
                           amount, if any, received or receivable by the Company
                           as consideration for the issuance or sale of all such
                           Purchase Rights, plus the minimum aggregate amount of
                           additional  consideration,  if  any,  payable  to the
                           Company  upon  the  exercise  of  all  such  Purchase
                           Rights,  plus, in the case of Convertible  Securities
                           issuable upon the exercise of such  Purchase  Rights,
                           the   minimum    aggregate   amount   of   additional
                           consideration  payable upon the conversion,  exercise
                           or exchange  thereof  (determined in accordance  with
                           the calculation method set forth in clause (ii)(B) of
                           this  Section  3(d))  at the  time  such  Convertible
                           Securities first become  convertible,  exercisable or
                           exchangeable,  by (y) the  maximum  total  number  of
                           shares of Common Stock  issuable upon the exercise of
                           all such Purchase Rights  (assuming full  conversion,
                           exercise or exchange of  Convertible  Securities,  if
                           applicable).  No further  adjustment  to the Exercise
                           Price shall be made upon the actual  issuance of such
                           Common  Stock  upon  the  exercise  of such  Purchase
                           Rights or upon the  conversion,  exercise or exchange
                           of Convertible  Securities  issuable upon exercise of
                           such Purchase Rights.

                                            (B)    Issuance    of    Convertible
                           Securities.  If  the  Company  issues  or  sells  any
                           Convertible  Securities,  whether or not  immediately
                           convertible,  exercisable  or  exchangeable,  and the
                           price per share for which  Common  Stock is  issuable
                           upon such  conversion,  exercise  or exchange is less
                           than  the  Exercise  Price in  effect  on the date of
                           issuance or sale of such Convertible Securities, then
                           the maximum  total  number of shares of Common  Stock
                           issuable upon the conversion, exercise or exchange of
                           all such Convertible Securities shall, as of the date
                           of  the   issuance   or  sale  of  such   Convertible
                           Securities,  be deemed to be outstanding  and to have
                           been  issued and sold by the  Company  for such price
                           per share. If the Convertible Securities so issued or
                           sold do not have a fluctuating conversion or exercise
                           price or exchange ratio, then for the purposes of the
                           preceding  sentence,  the  "price per share for which
                           Common  Stock  is  issuable  upon  such   conversion,
                           exercise or exchange" shall be determined by dividing
                           (x) the total amount,  if any, received or receivable
                           by the Company as  consideration  for the issuance or
                           sale of all  such  Convertible  Securities,  plus the
                           minimum aggregate amount of additional consideration,
                           if any,  payable to the Company upon the  conversion,
                           exercise   or   exchange   thereof   (determined   in
                           accordance with the  calculation  method set forth in
                           this clause (ii)(B) of this Section 3(d)) at the time
                           such Convertible Securities first become convertible,
                           exercisable or exchangeable, by (y) the maximum total
                           number of shares of Common  Stock  issuable  upon the
                           exercise,   conversion   or   exchange  of  all  such
                           Convertible Securities. If the Convertible Securities
                           so issued or sold have a  fluctuating  conversion  or
                           exercise  price or exchange  ratio (a "Variable  Rate
                           Convertible Security"), then for purposes of the next
                           preceding  sentence,  the  "price per share for which
                           Common  Stock  is  issuable  upon  such   conversion,
                           exercise  or  exchange"  shall  be  deemed  to be the
                           lowest  price per  share  which  would be  applicable
                           (assuming all holding period and other  conditions to
                           any   discounts   contained  in  such  Variable  Rate
                           Convertible  Security  have  been  satisfied)  if the
                           conversion  price of such Variable  Rate  Convertible
                           Security on the date of issuance or sale  thereof was
                           seventy-five  percent (75%) of the actual  conversion
                           price on such  date  (the  "Assumed  Variable  Market
                           Price"),  and,  further,  if the conversion  price of
                           such Variable Rate  Convertible  Security at any time
                           or  times  thereafter  is less  than or  equal to the
                           Assumed  Variable  Market  Price last used for making
                           any  adjustment  under this Section 3(d) with respect
                           to  any  Variable  Rate  Convertible  Security,   the
                           Exercise  Price  in  effect  at such  time  shall  be
                           readjusted  to equal the  Exercise  Price which would
                           have resulted if the Assumed Variable Market Price at
                           the time of issuance of the Variable Rate Convertible
                           Security had been  seventy-five  percent (75%) of the
                           actual   conversion   price  of  such  Variable  Rate
                           Convertible  Security  existing  at the  time  of the
                           adjustment  required  by this  sentence.  No  further
                           adjustment  to the Exercise  Price shall be made upon
                           the  actual   issuance  of  such  Common  Stock  upon
                           conversion,  exercise or exchange of such Convertible
                           Securities.

                                       8
<PAGE>

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

                                       9
<PAGE>

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

                                       10
<PAGE>

                  (e) Calculations.  All calculations under this Section 3 shall
      be made to the nearest cent or the nearest 1/100th of a share, as the case
      may be.  For  purposes  of this  Section 3, the number of shares of Common
      Stock  outstanding  as of a given  date  shall be the sum of the number of
      shares of Common Stock (excluding treasury shares, if any) outstanding.

                  (f)  Adjustment in Number of Shares.  Upon each  adjustment of
      the  Exercise  Price  pursuant to the  provisions  of this  Section 3, the
      number of shares of Common Stock issuable upon exercise of this Warrant at
      each such Exercise  Price shall be adjusted by  multiplying a number equal
      to the Exercise Price in effect  immediately  prior to such  adjustment by
      the  number of  shares of Common  Stock  issuable  upon  exercise  of this
      Warrant at such Exercise Price  immediately  prior to such  adjustment and
      dividing the product so obtained by the adjusted Exercise Price.

                        (g) Notice to Holders.

                                    (i) Adjustment to Exercise  Price.  Whenever
                           the  Exercise  Price  is  adjusted  pursuant  to this
                           Section 3, the Company  shall  promptly  mail to each
                           Holder notice  setting forth the Exercise Price after
                           such  adjustment and setting forth a brief  statement
                           of  the  facts  requiring  such  adjustment.  If  the
                           Company issues a variable rate security,  despite the
                           prohibition  thereon in the Purchase  Agreement,  the
                           Company  shall be deemed to have issued  Common Stock
                           or Common Stock  Equivalents  at the lowest  possible
                           conversion or exercise price at which such securities
                           may  be  converted  or  exercised  in the  case  of a
                           Variable Rate Transaction (as defined in the Purchase
                           Agreement),  or the lowest possible  adjustment price
                           in the case of an MFN  Transaction (as defined in the
                           Purchase Agreement).

                                    (ii) Notice to Allow Exercise by the Holder.
                           If (A) the Company  shall  declare a dividend (or any
                           other  distribution)  on the  Common  Stock;  (B) the
                           Company  shall  declare a special  nonrecurring  cash
                           dividend on or a redemption of the Common Stock;  (C)
                           the  Company  shall  authorize  the  granting  to all
                           holders of the Common  Stock  rights or  warrants  to
                           subscribe for or purchase any shares of capital stock
                           of any class or of any  rights;  (D) the  approval of
                           any  stockholders of the Company shall be required in
                           connection  with any  reclassification  of the Common
                           Stock,  any  consolidation  or  merger  to which  the
                           Company is a party,  any sale or  transfer  of all or
                           substantially  all of the assets of the  Company,  of
                           any  compulsory  share  exchange  whereby  the Common
                           Stock is  converted  into other  securities,  cash or
                           property;   (E)  the  Company  shall   authorize  the
                           voluntary or involuntary dissolution,  liquidation or
                           winding up of the affairs of the  Company;  then,  in
                           each case,  the  Company  shall cause to be mailed to
                           the  Holder at its last  address  as it shall  appear
                           upon the Warrant  Register of the  Company,  at least
                           ten business days prior to the  applicable  record or
                           effective  date  hereinafter   specified,   a  notice
                           stating (x) the date on which a record is to be taken
                           for  the  purpose  of  such  dividend,  distribution,
                           redemption, rights or warrants, or if a record is not
                           to be taken,  the date as of which the holders of the
                           Common  Stock  of  record  to  be  entitled  to  such
                           dividend,   distributions,   redemption,   rights  or
                           warrants  are to be  determined  or (y)  the  date on
                           which such reclassification,  consolidation,  merger,
                           sale,  transfer  or share  exchange  is  expected  to
                           become  effective or close,  and the date as of which
                           it is expected  that  holders of the Common  Stock of
                           record shall be entitled to exchange  their shares of
                           the  Common  Stock  for  securities,  cash  or  other
                           property  deliverable  upon  such   reclassification,
                           consolidation,   merger,   sale,  transfer  or  share
                           exchange;  provided,  that the  failure  to mail such
                           notice  or  any  defect  therein  or in  the  mailing
                           thereof   shall  not  affect  the   validity  of  the
                           corporate  action  required to be  specified  in such
                           notice.  The  Holder is  entitled  to  exercise  this
                           Warrant during the ten business day period commencing
                           the date of such notice to the effective  date of the
                           event triggering such notice.

                                       11
<PAGE>

                  (h)  Fundamental  Transaction.  If,  at any  time  while  this
      Warrant is  outstanding,  (A) the Company  effects a Change of Control (as
      defined  below  in  this  Section   3(h)),   (B)  there  shall  occur  any
      liquidation,  dissolution  or  winding  up of the  Company  (other  than a
      transaction constituting a Change of Control), (C) the Company effects any
      sale of all or  substantially  all of its  assets  in one or a  series  of
      related  transactions  (other than a transaction  constituting a Change of
      Control),  (D) the Company  shall merge or  consolidate  with or into,  or
      engage in any other business combination with, any other person or entity,
      in any  case,  which  results  in either  (x) the  holders  of the  voting
      securities of the Company immediately prior to such transaction holding or
      having the right to direct the  voting of fifty  percent  (50%) or less of
      the total  outstanding  voting  securities  of the  Company  or such other
      surviving  or  acquiring  person  or  entity  immediately  following  such
      transaction  or (y)  the  members  of the  board  of  directors  or  other
      governing  body of the Company  comprising  fifty percent (50%) or less of
      the  members  of the board of  directors  or other  governing  body of the
      Company or such other surviving or acquiring person or entity  immediately
      following  such  transaction,  (other than a  transaction  constituting  a
      Change of Control), (E) any tender offer or exchange offer (whether by the
      Company  or another  Person) is  completed  pursuant  to which  holders of
      Common Stock are  permitted  to tender or exchange  their shares for other
      securities,  cash or property  (other than a  transaction  constituting  a
      Change of Control), or (F) the Company effects any reclassification of the
      Common Stock or any compulsory share exchange pursuant to which the Common
      Stock is  effectively  converted  into or exchanged for other  securities,
      cash or property (any such case, a "Fundamental Transaction"),  then, upon
      any subsequent  exercise of this Warrant,  the Holder shall have the right
      to receive, for each Warrant Share that would have been issuable upon such
      exercise  absent  such  Fundamental  Transaction,  upon  exercise  of this
      Warrant,  the  number  of  shares  of  Common  Stock of the  successor  or
      acquiring   corporation  or  of  the  Company,  if  it  is  the  surviving
      corporation,  and the  such  shares  of  stock,  securities  and/or  other
      property  as  would  have  been  issued  or  payable  in such  Fundamental
      Transaction  with  respect  to or in  exchange  for the  number of Warrant
      Shares which would have been issuable  upon exercise had such  Fundamental
      Transaction  not taken place (without  giving effect to the limitations on
      ownership contained in Section 2(d)) (the "Alternate Consideration"), and,
      in any such case, appropriate provisions (in form and substance reasonably
      satisfactory  to the Holder)  shall be made with respect to the rights and
      interests of the Holder to the end that the economic value of this Warrant
      is in no way  diminished  by such  Fundamental  Transaction  and  that the
      provisions hereof (including,  without limitation, in the case of any such
      consolidation,  merger or sale in which the successor entity or purchasing
      entity is not the Company,  an immediate  adjustment of the Exercise Price
      and  Warrant  Shares  so  that  the  Exercise  Price  and  Warrant  Shares
      immediately after the Fundamental  Transaction  reflects the same relative
      value as compared to the value of the surviving entity's common stock that
      existed between the Exercise Price and the Warrant Shares and the value of
      the  Company's  Common  Stock   immediately   prior  to  such  Fundamental
      Transaction)  shall  thereafter  be  applicable,   as  nearly  as  may  be
      practicable  in relation to any shares of stock or  securities  thereafter
      deliverable  upon the  exercise  thereof.  If holders of Common  Stock are
      given any choice as to the securities,  cash or property to be received in
      a Fundamental Transaction,  then the Holder shall be given the same choice
      as to the  Alternate  Consideration  it receives upon any exercise of this
      Warrant following such Fundamental Transaction. To the extent necessary to
      effectuate  the  foregoing  provisions,  any  successor  to the Company or
      surviving entity in such Fundamental Transaction shall issue to the Holder
      a new warrant consistent with the foregoing  provisions and evidencing the
      Holder's right to exercise such warrant into Alternate Consideration.  The
      terms of any  agreement  pursuant to which a  Fundamental  Transaction  is
      effected  shall  include terms  requiring any such  successor or surviving
      entity to comply with the  provisions  of this  Section  3(h) and ensuring
      that this  Warrant (or any such  replacement  security)  will be similarly
      adjusted  upon  any  subsequent  transaction  analogous  to a  Fundamental
      Transaction.  Notwithstanding  anything to the  contrary set forth in this
      Section  3(h),  in the  event of a  transaction  constituting  a Change of
      Control, if the Company is unable,  after using its best efforts, to cause
      the successor to the Company or surviving entity in such Change of Control
      to  issue to the  Holder  a new  warrant  consistent  with  the  foregoing
      provisions and evidencing the Holder's right to exercise such warrant into
      Alternate  Consideration,  then the  Company  shall pay the Holder in cash
      (the "Change of Control  Consideration")  an amount equal to the intrinsic
      value of the Warrant, as determined by the mutual agreement of the Company
      and  the  Holder.   The  Company   shall  tender  the  Change  of  Control
      Consideration to the Holder at the same time consideration is delivered to
      the Company's stockholders pursuant to the Change of Control. For purposes
      of this Warrant,  "Change of Control"  shall mean the occurrence of either
      of the following events:

                                       12
<PAGE>

                                    (i)  the  Company  shall  sell,   convey  or
                           dispose  of all or  substantially  all of its  assets
                           (the   presentation  of  any  such   transaction  for
                           stockholder  approval being conclusive  evidence that
                           such   transaction   involves  the  sale  of  all  or
                           substantially all of the assets of the Company); or

                                    (ii) merge or  consolidate  with or into, or
                           engage in any other  business  combination  with, any
                           other person or entity, in any case, which results in
                           either (x) the  holders of the voting  securities  of
                           the  Company  immediately  prior to such  transaction
                           holding  or having  the right to direct the voting of
                           fifty percent (50%) or less of the total  outstanding
                           voting  securities  of  the  Company  or  such  other
                           surviving or acquiring  person or entity  immediately
                           following such  transaction or (y) the members of the
                           board of  directors  or other  governing  body of the
                           Company comprising fifty percent (50%) of less of the
                           members of the board of directors or other  governing
                           body  of the  Company  or  such  other  surviving  or
                           acquiring person or entity immediately following such
                           transaction.

                                       13
<PAGE>

                  (i)  Exempt  Issuance.   Notwithstanding  the  foregoing,   no
      adjustments,  Alternate  Consideration  nor notices shall be made, paid or
      issued under this Section 3 in respect of an Exempt Issuance.

                  (j) Voluntary  Adjustment  by the Company.  The Company may at
      any time during the term of this Warrant reduce the then current  Exercise
      Price to any amount and for any period of time deemed  appropriate  by the
      Board of Directors in its good faith judgment.

      Section 4. Transfer of Warrant.

                  (a) Transferability. Subject to compliance with any applicable
      securities  laws and the  conditions  set forth in Sections  4(d) and 5(a)
      hereof and to the  provisions  of Section  4.1 of the  Purchase  Agreement
      (which are hereby incorporated by reference),  this Warrant and all rights
      hereunder are  transferable,  in whole or in part,  upon surrender of this
      Warrant at the  principal  office of the Company,  together with a written
      assignment of this Warrant  substantially in the form attached hereto duly
      executed by the Holder or its agent or attorney  and funds  sufficient  to
      pay any transfer taxes payable upon the making of such transfer. Upon such
      surrender  and, if required,  such payment,  the Company shall execute and
      deliver a new Warrant or Warrants in the name of the assignee or assignees
      and in the denomination or  denominations  specified in such instrument of
      assignment,  and shall issue to the assignor a new Warrant  evidencing the
      portion of this Warrant not so assigned,  and this Warrant shall  promptly
      be cancelled.  A Warrant, if properly assigned,  may be exercised by a new
      holder for the  purchase of Warrant  Shares  without  having a new Warrant
      issued.

                  (b) New Warrants. This Warrant may be divided or combined with
      other  Warrants upon  presentation  hereof at the aforesaid  office of the
      Company,   together  with  a  written  notice  specifying  the  names  and
      denominations in which new Warrants are to be issued, signed by the Holder
      or its agent or attorney.  Subject to compliance  with Section 4(a), as to
      any transfer  which may be involved in such division or  combination,  the
      Company  shall  execute  and deliver a new Warrant or Warrants in exchange
      for the Warrant or Warrants to be divided or combined in  accordance  with
      such notice.

                  (c) Warrant Register. The Company shall register this Warrant,
      upon  records  to be  maintained  by the  Company  for that  purpose  (the
      "Warrant Register"),  in the name of the record Holder hereof from time to
      time. The Company may deem and treat the registered Holder of this Warrant
      as the absolute owner hereof for the purpose of any exercise hereof or any
      distribution  to the Holder,  and for all other  purposes,  absent  actual
      notice to the contrary.

                                       14
<PAGE>

                  (d) Transfer Restrictions. If, at the time of the surrender of
      this Warrant in connection with any transfer of this Warrant, the transfer
      of  this  Warrant  shall  not  be  registered  pursuant  to  an  effective
      registration statement under the Securities Act and under applicable state
      securities  or blue sky laws,  the Company may require,  as a condition of
      allowing  such transfer (i) that the Holder or transferee of this Warrant,
      as the case may be,  furnish to the  Company a written  opinion of counsel
      (which  opinion  shall be in  form,  substance  and  scope  customary  for
      opinions of counsel in  comparable  transactions)  to the effect that such
      transfer may be made without  registration  under the  Securities  Act and
      under  applicable  state securities or blue sky laws, (ii) that the Holder
      or transferee  execute and deliver to the Company an investment  letter in
      form and substance acceptable to the Company and (iii) that the transferee
      be an "accredited investor" as defined in Rule 501(a)(1),  (a)(2), (a)(3),
      (a)(7),  or (a)(8)  promulgated  under the  Securities  Act or a qualified
      institutional buyer as defined in Rule 144A(a) under the Securities Act.

      Section 5. Miscellaneous.

                  (a)  Title  to  Warrant.  Prior  to the  Termination  Date and
      subject to compliance  with applicable laws and Section 4 of this Warrant,
      this Warrant and all rights  hereunder  are  transferable,  in whole or in
      part, at the office or agency of the Company by the Holder in person or by
      duly authorized attorney, upon surrender of this Warrant together with the
      Assignment Form annexed hereto  properly  endorsed.  The transferee  shall
      sign an investment letter in form and substance reasonably satisfactory to
      the Company.

                  (b) No Rights or Liabilities as a Stockholder  Until Exercise.
      This  Warrant  does not entitle  the Holder to any voting  rights or other
      rights as a  stockholder  of the Company  prior to the exercise  hereof in
      accordance with its terms. No provision of this Warrant, in the absence of
      affirmative action by the holder hereof to purchase Warrant Shares, and no
      mere enumeration  herein of the rights or privileges of the holder hereof,
      shall give rise to any liability of such holder for the Exercise  Price or
      as a stockholder of the Company, whether such liability is asserted by the
      Company or by creditors of the Company.

                  (c) Loss,  Theft,  Destruction  or Mutilation of Warrant.  The
      Company covenants that upon receipt by the Company of evidence  reasonably
      satisfactory to it of the loss,  theft,  destruction or mutilation of this
      Warrant or any stock  certificate  relating to the Warrant Shares,  and in
      case of loss,  theft or destruction,  of indemnity or security  reasonably
      satisfactory to it (which,  in the case of the Warrant,  shall not include
      the posting of any bond),  and upon  surrender  and  cancellation  of such
      Warrant or stock  certificate,  if  mutilated,  the Company  will make and
      deliver a new Warrant or stock  certificate  of like tenor and dated as of
      such cancellation, in lieu of such Warrant or stock certificate.

                                       15
<PAGE>

                  (d)  Saturdays,   Sundays,  Holidays,  etc.  If  the  last  or
      appointed day for the taking of any action or the  expiration of any right
      required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be  exercised  on the next
      succeeding day not a Saturday, Sunday or legal holiday.

                  (e) Protection of Holder's Rights. Except and to the extent as
      waived or consented to by the Holder, the Company shall not by any action,
      including,  without limitation,  amending its certificate of incorporation
      or through any reorganization,  transfer of assets, consolidation, merger,
      dissolution,  issue or sale of securities or any other  voluntary  action,
      avoid or seek to avoid the  observance or  performance of any of the terms
      of this  Warrant,  but  will at all  times  in good  faith  assist  in the
      carrying  out of all such terms and in the  taking of all such  actions as
      may be necessary or appropriate to protect the rights of the Holder as set
      forth in this Warrant against impairment.  Without limiting the generality
      of the  foregoing,  the Company will (i) not increase the par value of any
      Warrant  Shares  above the  amount  payable  therefor  upon such  exercise
      immediately prior to such increase in par value, (ii) take all such action
      as may be necessary or  appropriate  in order that the Company may validly
      and legally  issue fully paid and  nonassessable  Warrant  Shares upon the
      exercise  of this  Warrant,  and  (iii)  obtain  all such  authorizations,
      exemptions or consents from any public regulatory body having jurisdiction
      thereof  as  may be  necessary  to  enable  the  Company  to  perform  its
      obligations  under this  Warrant.  Before  taking any action  which  would
      result in an  adjustment  in the number of  Warrant  Shares for which this
      Warrant is exercisable or in the Exercise Price,  the Company shall obtain
      all such authorizations or exemptions thereof, or consents thereto, as may
      be necessary from any public regulatory body or bodies having jurisdiction
      thereof.

                  (f) Jurisdiction.  All questions  concerning the construction,
      validity,   enforcement  and  interpretation  of  this  Warrant  shall  be
      determined in accordance with the provisions of the Purchase Agreement.

                  (g)  Restrictions.  The Holder  acknowledges  that the Warrant
      Shares acquired upon the exercise of this Warrant, if not registered, will
      have  restrictions  upon resale  imposed by state and  federal  securities
      laws.

                  (h) Nonwaiver and Expenses.  No course of dealing or any delay
      or failure to exercise any right hereunder on the part of the Holder shall
      operate  as a waiver of such right or  otherwise  prejudice  the  Holder's
      rights, powers or remedies, notwithstanding all rights hereunder terminate
      on the Termination  Date. If the Company  willfully and knowingly fails to
      comply with any provision of this  Warrant,  which results in any material
      damages to the Holder, the Company shall pay to the Holder such amounts as
      shall be  sufficient  to cover any costs and expenses  including,  but not
      limited to,  reasonable  attorneys'  fees,  including  those of  appellate
      proceedings, incurred by the Holder in collecting any amounts due pursuant
      hereto or in  otherwise  enforcing  any of its rights,  powers or remedies
      hereunder.

                                       16
<PAGE>

                  (i) Notices. Any notice, request or other document required or
      permitted to be given or  delivered to the Holder by the Company  shall be
      delivered  in  accordance  with  the  notice  provisions  of the  Purchase
      Agreement.

                  (j)  Limitation  of  Liability.  No provision  hereof,  in the
      absence of any  affirmative  action by the Holder to exercise this Warrant
      or purchase  Warrant  Shares,  and no enumeration  herein of the rights or
      privileges  of the Holder,  shall give rise to any liability of the Holder
      for the  purchase  price of any Common  Stock or as a  stockholder  of the
      Company, whether such liability is asserted by the Company or by creditors
      of the Company.

                  (k)  Remedies.  The Holder,  in addition to being  entitled to
      exercise all rights granted by law, including recovery of damages, will be
      entitled to specific  performance  of its rights under this  Warrant.  The
      Company  agrees that monetary  damages would not be adequate  compensation
      for any loss  incurred  by reason of a breach by it of the  provisions  of
      this  Warrant  and  hereby  agrees to waive the  defense in any action for
      specific performance that a remedy at law would be adequate.

                  (l) Successors and Assigns.  Subject to applicable  securities
      laws, this Warrant and the rights and obligations  evidenced  hereby shall
      inure to the benefit of and be binding upon the  successors of the Company
      and the successors and permitted assigns of the Holder.  The provisions of
      this  Warrant are  intended to be for the benefit of all Holders from time
      to time of this  Warrant  and shall be  enforceable  by any such Holder or
      holder of Warrant Shares.  (m) Amendment.  This Warrant may be modified or
      amended or the  provisions  hereof waived with the written  consent of the
      Company and the Holder.

                  (n) Severability.  Wherever  possible,  each provision of this
      Warrant shall be  interpreted  in such manner as to be effective and valid
      under  applicable  law,  but if any  provision  of this  Warrant  shall be
      prohibited by or invalid under  applicable  law, such  provision  shall be
      ineffective  to the  extent of such  prohibition  or  invalidity,  without
      invalidating the remainder of such provisions or the remaining  provisions
      of this Warrant.

                  (o)  Headings.  The headings  used in this Warrant are for the
      convenience of reference only and shall not, for any purpose,  be deemed a
      part of this Warrant.

                              ********************
                            [SIGNATURE PAGE FOLLOWS]

                                       17
<PAGE>

      IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.

Dated: September 29, 2006

                                         DIOMED HOLDINGS, INC.

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

                                       18
<PAGE>

                               NOTICE OF EXERCISE

TO:      Diomed Holdings, Inc.

      (1) The undersigned  hereby elects to purchase  ________ Warrant Shares of
the Company  pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

      (2)______Payment shall take the form of (check applicable box):

            [ ] lawful money of the United States; or

            [ ]  the  cancellation  of  such  number  of  Warrant  Shares  as is
            necessary,  in  accordance  with the formula set forth in subsection
            2(c), to exercise this Warrant with respect to the maximum number of
            Warrant  Shares  purchasable   pursuant  to  the  cashless  exercise
            procedure set forth in subsection 2(c).

      (3)Please  issue a certificate or certificates  representing  said Warrant
Shares in the name of the  undersigned  or in such  other  name as is  specified
below:

The Warrant Shares shall be delivered to the following:

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

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

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

      (4) Accredited  Investor.  The undersigned is an "accredited  investor" as
defined in Regulation D promulgated  under the Securities
Act of 1933, as amended.

                                         NAME OF HOLDER:
                                                        ------------------------

                                         By:
                                            --------------------------
                                            Name:
                                            Title:

                                            Dated:
                                                  --------------------

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

      FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to

                                                whose address is
------------------------------------------------

---------------------------------------------------------------.

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

                                         Dated:               ,
                                                 -------------  -----

                           Holder's Signature:
                                              ------------------------

                           Holder's Address:
                                              ------------------------

Signature Guaranteed:
                      --------------------------------------------

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]