Document:

Exhibit 10.1

                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES  PURCHASE  AGREEMENT  (this  "AGREEMENT") is made as of
August 8, 2003 by and among Diomed Holdings,  Inc., a Delaware  corporation (the
"COMPANY"),  and the  purchasers  listed on Schedule 1 as "Scheduled  Investors"
(the "SCHEDULED INVESTORS") and each other purchaser who becomes a party to this
Agreement   pursuant  to  the  provisions  of  Section  2(c)  (the   "ADDITIONAL
INVESTORS", and together with the Scheduled Investors, "Investors"). Capitalized
terms  used in this  Agreement  without  definition  shall  have the  respective
meanings given them in Section 17.

         WHEREAS,  in  order  to  provide  capital  to  the  Company  until  the
conditions to the completion of the transactions  contemplated by this Agreement
are satisfied and further to provide  capital to the Company for the enhancement
of its  intellectual  property,  the Company  desires to issue to certain of the
Investors, and certain of the Investors desire to purchase from the Company, the
Secured Bridge Notes on the terms and  conditions  set forth in this  Agreement;
and

         WHEREAS,  the  Company  desires  to  issue  to the  Investors,  and the
Investors  desire to purchase  from the  Company,  shares of Common Stock on the
terms and conditions set forth in this Agreement.

         NOW  THEREFORE,  in  consideration  of  the  premises  and  the  mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereby
agree as follows:

         1. PURCHASE AND SALE OF SECURED BRIDGE NOTES

              (A) SECURED BRIDGE NOTES

              (i) On or prior to the Tranche I Closing  Date,  the Company shall
have  authorized  the sale,  issuance  and delivery of  $6,995,000  in aggregate
principal amount of the Secured Bridge Notes to the Investors listed on Schedule
1 as purchasers of the Secured Bridge Notes,  including  Secured Bridge Notes in
the principal amount of $495,000 to be issued to the Placement Agent (and/or its
designee(s)) at the Tranche I Closing in lieu of payment of certain fees payable
by the Company to the Placement Agent in connection with this financing.

              (ii) The purchase price (the "NOTE PURCHASE PRICE") to be paid for
the Secured Bridge Notes is 100% of the principal  amount  thereof.  The amounts
invested by the Investors shall be allocated as follows: (w) as to the Placement
Agent and the Persons  designated  by the  Placement  Agent for the  issuance of
Secured Bridge Notes under the Placement Agent  Agreement,  in their  respective
capacities as Investors,  the entire amount to be paid to the Placement Agent in
the form of Secured  Bridge  Notes shall be allocated to the payment of the Note
Purchase  Price for the issuance of the Secured Bridge Notes to be issued to the
Placement Agent or those Persons designated by the Placement Agent, as set forth
in the Placement Agent Agreement;  (x) as to those Investors who are the holders
of Diomed's  Class E Secured Notes due 2006  immediately  prior to the Tranche I
Closing,  their  entire  amount  invested  hereunder  shall be  allocated to the
payment of the Note Purchase  Price for the purchase of the Secured Bridge Notes

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to be purchased by them at the Tranche I Closing;  (y) as to those Investors who
are Additional Investors, their entire amount invested shall be allocated to the
payment of the Share Purchase Price for the Investors' Shares to be purchased by
them at the Tranche II Closing and (z) as to all other Investors,  their amounts
invested  hereunder  shall be  allocated  on a PRO  RATA  basis  among  all such
Investors to the payment of the Note  Purchase  Price to be paid by them for the
Secured Bridge Notes to be purchased by them at the Tranche I Closing and to the
payment  of the  Share  Purchase  Price to be paid by them for the  purchase  of
Investors' Shares to be purchased by them at the Tranche II Closing.

              (iii) Upon payment of the Note  Purchase  Price to be paid by each
Investor for the Secured  Bridge  Notes being  purchased by it, the Company will
issue,  sell and  deliver to such  Investor  one or more  Secured  Bridge  Notes
substantially in the form of EXHIBIT A, in with original  principal amount equal
to the Purchase Price paid therefor.

              (B) ESCROW OF FUNDS.  Not later than three (3) business days after
executing  this  Agreement,  each Scheduled  Investor  (other than the Placement
Agent) that has agreed to purchase the Secured Bridge Notes will deposit 100% of
the Note Purchase Price payable by such Scheduled  Investor under this Agreement
in escrow with the Escrow Agent under the terms of the Escrow  Agreement.  Funds
for the Note Purchase  Price shall be wired to the Escrow Agent at the following
account  (unless  arrangements  for payment by  certified  check are made by the
Investor  and the Escrow  Agent and such payment is tendered to the Escrow Agent
accordingly):

Bank Name:  Fleet Bank
ABA No.:  011000390
Bank Address:  Boston, MA  02110
Account Name:  Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
               P.C. Client Group Account
Account No.: 55214199
Reference:  Sunrise/Diomed 22379001

Funds so deposited shall be held by the Escrow Agent and released to the Company
or to the  parties  designated  by the  Company  at the  Tranche I  Closing,  in
accordance with the terms of the Escrow Agreement. If the Tranche I Closing does
not occur prior to the close of business on September 15, 2003, said funds shall
be  returned   to  the   Investor,   as   provided  by  the  Escrow   Agreement.
Notwithstanding  the  foregoing,  the  Placement  Agent shall not be required to
deposit any funds with the Escrow Agent in  connection  with the Secured  Bridge
Notes to be issued to it  and/or  its  designee(s)  under  the  Placement  Agent
Agreement  and, for the  avoidance of doubt,  the  Placement  Agent shall not be
entitled to receive any funds from the amounts  deposited by the other Investors
with the  Escrow  Agent if the  Tranche  I Closing  does not occur  prior to the
prescribed time set forth in the foregoing sentence.

              (C) TRANCHE I CLOSING.

              (iv)  GENERALLY.  Subject  to the  terms  and  conditions  of this
Agreement, each Investor listed on Schedule 1 agrees, severally and not jointly,
to purchase at the Tranche I Closing,  and the Company  agrees to sell and issue
to each  Investor at the  Tranche I Closing,  that  principal  amount of Secured
Bridge Notes set forth opposite such  Investor's  name on Schedule 1 at the Note
Purchase Price.

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              (v) TIME; PLACE. The purchase and sale of the Secured Bridge Notes
shall  take  place at a closing  (the  "TRANCHE  I  CLOSING")  to be held at the
offices of  McGuireWoods  LLP, 9 West 57th Street,  Suite 1620,  New York, NY at
10:00  a.m.  New York  City  time on the  second  business  day after all of the
conditions  set forth in Sections 5 and 7 have been waived or satisfied (or such
earlier  time after the  conditions  set forth in Section 5 have been  waived or
satisfied as the Company may in its  discretion  determine),  or such other time
and place as the Company and the  Investors  mutually  agree in writing.  At the
Tranche I Closing,  the Company shall deliver to each Investor that is obligated
to purchase  Secured  Bridge Notes under this Agreement the Secured Bridge Notes
that such Investor is purchasing at the Tranche I Closing against payment of the
Note Purchase  Price therefor by the Escrow Agent or otherwise if any Investors'
funds are not held by the Escrow Agent.

         2. PURCHASE AND SALE OF STOCK

              (A) INVESTORS' SHARES

              (i) On or prior to the Tranche II Closing Date,  the Company shall
have  authorized  the sale and issuance to the Investors of  450,000,000  shares
(the "INVESTORS' SHARES") of Common Stock.

              (ii) The purchase  price (the "SHARE  PURCHASE  PRICE") to be paid
for the Investors' Shares is $0.10 per share; PROVIDED,  that the Share Purchase
Price to be paid by the holders of the Secured  Bridge  Notes by  conversion  or
tender of their  Secured  Bridge  Notes  shall be $0.08 per share.  The  amounts
invested  by the  Investors  shall  be  allocated  as  follows:  (x) as to those
Investors  who are the  holders  of  Diomed's  Class E  Secured  Notes  due 2006
immediately  prior to the  Tranche  I  Closing,  their  entire  amount  invested
hereunder  shall be allocated to the payment of the Note Purchase  Price for the
purchase of the Secured  Bridge  Notes to be  purchased by them at the Tranche I
Closing;  (y) as to those Investors who are Additional  Investors,  their entire
amount  invested  shall be allocated to the payment of the Share  Purchase Price
for the Investors'  Shares to be purchased by them at the Tranche II Closing and
(z) as to all  other  Investors,  their  amounts  invested  hereunder  shall  be
allocated  on a PRO RATA basis  among all such  Investors  to the payment of the
Note  Purchase  Price  to be paid by them  for the  Secured  Bridge  Notes to be
purchased  by them at the  Tranche I  Closing  and to the  payment  of the Share
Purchase  Price to be paid by them for the purchase of  Investors'  Shares to be
purchased by them at the Tranche II Closing.

              (iii) Upon payment of the  aggregate  Share  Purchase  Price to be
paid by each  Investor  for the  Investors'  Shares  being  purchased by it, the
Company will issue,  sell and deliver to such  Investor that number of shares of
Common  Stock set forth on  Schedule  1 for  purchase  by such  Investor  at the
Tranche II Closing.

              (B) ESCROW OF FUNDS.  Not later than three (3) business days after
executing this  Agreement,  each Scheduled  Investor that has agreed to purchase
Investors'  Shares and each  Additional  Investor will deposit 100% of the Share
Purchase Price payable by such Scheduled Investor or Additional Investor, as the
case may be,  under this  Agreement  in Escrow  with the Escrow  Agent under the
terms of the Escrow  Agreement  provided  that the  holders of the Class D Notes
shall  submit such notes to be held by the Escrow  Agent and that the holders of
the Secured

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<PAGE>

Bridge Notes shall retain such notes until the Tranche II Closing. Funds for the
Share Purchase Price shall be wired to the Escrow Agent at the following account
(unless  other  arrangements  for  payment  by  certified  check are made by the
Investor  and the Escrow  Agent and such payment is tendered to the Escrow Agent
accordingly):

Bank Name:  Fleet Bank
ABA No.:  011000390
Bank Address:  Boston, MA  02110
Account Name:  Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Client Group
               Account
Account No.:  55214199
Reference:  Sunrise/Diomed 22379001

Funds so deposited shall be held by the Escrow Agent and released to the Company
or to the  parties  designated  by the  Company at the  Tranche II  Closing,  in
accordance  with the terms of the Escrow  Agreement.  If the  Tranche II Closing
does not occur  prior to the close of  business on the date which is ninety (90)
days from the Tranche I Closing  Date (or,  if such date is not a business  day,
the following  business day), then said funds shall be returned to the Investor,
as provided by the Escrow Agreement.

              (C) CLOSING OF PURCHASE AND SALE.

              (i)  GENERALLY.  Subject  to the  terms  and  conditions  of  this
Agreement,  each Investor agrees,  severally and not jointly, to purchase at the
Tranche II Closing, and the Company agrees to sell and issue to each Investor at
the Tranche II Closing, that number of Investors' Shares set forth opposite such
Investor's name on Schedule 1 at the Share Purchase Price.

              (ii) TIME;  PLACE. The purchase and sale of the Investors'  Shares
shall take  place at a closing  (the  "TRANCHE  II  CLOSING")  to be held at the
offices of  McGuireWoods  LLP, 9 West 57th Street,  Suite 1620,  New York, NY at
10:00  a.m.  New York  City  time on the  third  business  day  after all of the
conditions  set forth in Sections 6 and 8 have been waived or  satisfied,  or at
such other time and place not later than date which is ninety (90) days from the
Tranche I Closing Date (or, if such date is not a business  day,  the  following
business day), as the Company and the Investors shall mutually agree in writing.
At  the  Tranche  II  Closing,  the  Company  shall  deliver  to  each  Investor
certificates representing the Investors' Shares that such Investor is purchasing
at the Tranche II Closing  against (A) in the case of the holders of the Class D
Notes,  delivery to the Company of the Class D Notes, duly endorsed for transfer
to the  Company,  (B) in the case of the  holders of the Secured  Bridge  Notes,
delivery to the Company of the Secured Bridge Notes,  duly endorsed for transfer
to the  Company  and  (C) in the  case  of each  Investor  that  is to  purchase
Investors'  Shares at the Tranche II Closing  other than by surrender of Class D
Notes or the Secured Bridge Notes,  payment of the Share Purchase Price therefor
by the  Escrow  Agent or,  if any  Investor's  funds are not held by the  Escrow
Agent, by that Investor's certified check, official bank check, wire transfer or
any combination thereof.

              (iii) ADDITIONAL INVESTORS.  The Company may offer and sell at the
Tranche II Closing up to the  balance  of the  authorized  number of  Investors'
Shares to additional  investors  proposed by the Placement  Agent,  each of whom
shall be reasonably acceptable to the Company

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<PAGE>

(each, an "ADDITIONAL  INVESTOR");  PROVIDED,  that the aggregate  amount of the
Share Purchase Price to be paid to the Company by the Investors shall not exceed
$23,200,000  (excluding  the amounts  deemed to have been paid by the  Placement
Agent in connection  with that part of its Placement  Agent fee satisfied by the
Company  by way  of its  issuance  of  Secured  Bridge  Notes  in the  aggregate
principal amount of $495,000 to the Placement Agent and/or its designee(s)). Any
such additional investor shall execute and deliver a counterpart  signature page
to, and thereby, without further action by any Initial Investor,  become a party
to, and be deemed an Additional Investor under, this Agreement, the Stockholders
Agreement and the Investors'  Rights  Agreement,  and all schedules and exhibits
hereto and thereto  shall  automatically  be updated to reflect such  Additional
Investor as a party hereto and thereto.

         3. INVESTORS' REPRESENTATIONS AND WARRANTIES.

         Each Investor,  severally and not jointly, with respect only to itself,
represents  and  warrants  to, and  covenants  and agrees  with,  the Company as
follows:

              (A) Without  limiting any Investor's right to sell such Investors'
Shares pursuant to the Registration  Statement,  such Investor is purchasing the
Securities for its own account for  investment  only and not with a view towards
the public  sale or  distribution  thereof and not with a view to or for sale in
connection with any distribution thereof.

              (B) Such Investor is (i) an "accredited  investor" as that term is
defined in Rule 501 of the General Rules and  Regulations  under the  Securities
Act by reason of Rule 501(a), (ii) experienced in making investments of the kind
described in this Agreement and the related documents,  (iii) able, by reason of
the  business  and  financial  experience  of its  officers  (if an entity)  and
professional  advisors (who are not affiliated with or compensated in any way by
the  Company or any of its  affiliates  or selling  agents),  to protect its own
interests in connection with the transactions  described in this Agreement,  and
the related documents, and (iv) able to afford the entire loss of its investment
in the Securities.

              (C) All  subsequent  offers  and sales of the  Securities  by such
Investor shall be made only pursuant to  registration  of the Investors'  Shares
under the  Securities  Act or pursuant to an  exemption  from  registration  and
compliance with applicable states' securities laws.

              (D) Such  Investor  understands  that  the  Securities  are  being
offered and sold to it in reliance on specific  exemptions from the registration
requirements  of United States  federal and state  securities  laws and that the
Company is relying upon the truth and accuracy of, and the Investors' compliance
with,  the   representations,   warranties,   agreements,   acknowledgments  and
understandings  of the  Investors  set forth  herein in order to  determine  the
availability  of such exemptions and the eligibility of the Investors to acquire
the Securities.

              (E) Such  Investor and its advisors,  if any, have been  furnished
with all  materials  relating to the  business,  finances and  operations of the
Company and  materials  relating to the offer and sale of the  Securities  which
have been  requested by such Investor.  Such Investor and its advisors,  if any,
have been  afforded  the  opportunity  to ask  questions of the Company and have
received  complete  and  satisfactory  answers  to any such  inquiries.  Without
limiting  the  generality  of the  foregoing,  each  Investor  has  also had the
opportunity  to obtain and to review

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the Company's (1) Annual  Reports on Form 10-KSB/A for the years ended  December
31, 2001 and 2002,  (2) Quarterly  Reports on Form 10-QSB for the quarters ended
March 31, 2003 and June 30, 2003, (3) Registration  Statement on Form SB-2 which
became  effective on October 24, 2002,  (4)  Prospectus on Form 424B3 filed with
the SEC on October 30, 2002, (5)  Registration  Statement on Form SB-2 MEF filed
with the SEC on November 1, 2002, (6) Proxy Statement on Schedule 14A filed with
the SEC on July 2, 2003 and (7)  Current  Reports on Form 8-K filed with the SEC
on  October  22,  2002,  May  19,  2003,  July  29,  2003  and  August  6,  2003
(collectively, the "SEC DOCUMENTS").

              (F)  Such  Investor   understands   that  its  investment  in  the
Securities involves a high degree of risk.

              (G) Such Investor  understands  that no United  States  federal or
state agency or any other  government  or  governmental  agency has passed on or
made any recommendation or endorsement of the Securities.

              (H) Such Investor is duly organized,  validly existing and in good
standing under the laws of the jurisdiction of its organization.  This Agreement
and the Investment Documents have been duly and validly authorized, executed and
delivered on behalf of such Investor and create a valid and binding agreement of
such  Investor   enforceable  in  accordance  with  its  terms,  subject  as  to
enforceability  to general  principles of equity and to bankruptcy,  insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.

              (I) The jurisdiction in which any offer to purchase Securities was
made  to or  accepted  by  such  Investor  is the  jurisdiction  shown  as  such
Investor's address on Schedule 1 hereto.

              (J)  Such  Investor  was not  formed  solely  for the  purpose  of
investing in the Securities.

              (K)  Such  Investor  is  able to bear  the  complete  loss of such
Investor's investment in the Securities.

              (L) Such  Investor  acknowledges  and agrees that the  information
contained in the Documents,  including the fact of such  Investor's  purchase of
the Securities and the information  regarding the Investors that is contained in
this  Agreement,  may be disclosed by the Company in its  discretion,  including
without limitation by way of a press release,  the filing with the SEC of a Form
8-K, proxy  statement,  registration  statement or other public filing which may
contain counterparts of all or certain of the Investment  Documents,  and hereby
grants  the  Company  permission  to make any  such  public  disclosure  of said
information.

              (M)  If  such  Investor  is  (or,  by  virtue  of  its  investment
hereunder,  becomes) an  "affiliate" of the Company (as defined in Section 16 of
the Exchange  Act),  then such Investor shall timely comply with all SEC filings
required of it under said Section 16,  including  without  limitation the filing
with the SEC of a statement of change in  beneficial  ownership of Securities on
Form 4,  reflecting the  acquisition  of beneficial  ownership of the Investors'
Shares pursuant to such Investor's purchase of the Investors' Shares.

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              (N)  All   negotiations   relative  to  this   Agreement  and  the
transactions contemplated hereby have been carried out by such Investor directly
without the intervention of any person on behalf of such Investor in such manner
as to give rise to any valid claim by any person  against  such  Investor or the
Company for a finder's fee, brokerage commission or similar payment,  other than
the  obligations of the Company to the Placement Agent under the Placement Agent
Agreement.

              (O) If such Investor is an  individual,  such  Investor  certifies
that he or she is not, nor to his or her  knowledge  has been  designated  as, a
"suspected terrorist" as defined in Executive Order 13224. If such Investor is a
corporation,   trust,   partnership,   limited   liability   company   or  other
organization,  such Investor certifies that, to the best of its knowledge,  such
Investor  has not been  designated  as,  and is not  owned or  controlled  by, a
"suspected  terrorist" as defined in Executive Order 13224. Such Investor hereby
acknowledges  that the Company seeks to comply with all applicable laws covering
money laundering and related activities.  In furtherance of those efforts,  such
Investor  hereby  represents,  warrants and agrees that: (i) none of the cash or
property that such Investor will pay or will  contribute to the Company has been
or shall be derived from,  or related to, any activity  that is deemed  criminal
under United States law; and (ii) no contribution or payment by such Investor to
the Company, to the extent that they are within such Investor's  control,  shall
cause the Company to be in violation of the Untied  States Bank Secrecy Act, the
United  States  Money  Laundering  Control  Act of  1986  or the  Untied  States
International  Money Laundering  Abatement and  Anti-Terrorist  Financing Act of
2001.  Such  Investor  shall  promptly  notify  the  Company  if  any  of  these
representations  ceases to be true and accurate  regarding such  Investor.  Such
Investor agrees to provide the Company with any additional information regarding
such  Investor  that  the  Company  deems  necessary  or  convenient  to  ensure
compliance  with all applicable  laws  concerning  money  laundering and similar
activities.  Such  Investor  understands  and  agrees  that if at any time it is
discovered  that  any of the  foregoing  representations  are  incorrect,  or if
otherwise  required by applicable law or regulation  related to money laundering
similar  activities,  the Company may  undertake  appropriate  actions to ensure
compliance  with  applicable  law or  regulation,  including  but not limited to
segregation and/or redemption of such Investor's investment in the Company. Such
Investor  further   understands  that  the  Company  may  release   confidential
information  about such Investor and, if applicable,  any underlying  beneficial
owners, to proper authorities if the Company, in its sole discretion, determines
that it is in the best  interest of the  Company in light of relevant  rules and
regulations under the laws set forth in subsection (ii) above.

              (P) Such  Investor  has  completed  and  provided  to the  Company
herewith  the  AMEX  Questionnaire  attached  hereto  as  Schedule  2,  and  all
information  contained therein is complete and accurate in all material respects
with respect to such Investor.

         4.   REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.   The  Company
represents  and  warrants to each of the  Investors  that,  except as  otherwise
disclosed in the Disclosure Schedules to this Agreement, with any exceptions set
forth  therein to be  cross-referenced  to the clause of this Section 3 to which
such exception is made:

              (A)  COMPANY  AND  SUBSIDIARIES.  The  Company  and  each  of  its
Subsidiaries  is a  corporation  duly  organized,  validly  existing and in good
standing under the laws of the  jurisdiction  of its  incorporation  and has the
requisite  corporate power to own its properties and to

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carry on its  business  as now  being  conducted.  The  Company  and each of its
Subsidiaries are each duly qualified as foreign  corporations to do business and
are in good  standing  in each  jurisdiction  where the  nature of the  business
conducted or property owned by it makes such qualification necessary, other than
those jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect.

              (B) CAPITALIZATION OF THE COMPANY. The authorized capital stock of
the Company  consists of 100,000,000  shares,  of which 80,000,000 are shares of
Common Stock,  of which  29,711,749  shares are issued and outstanding as of the
date of this Agreement and 20,000,000 are shares of Preferred  Stock,  par value
$0.001  per share  (the  "PREFERRED  STOCK"),  of which 44 shares are issued and
outstanding  as of the  date of  this  Agreement,  consisting  of 20  shares  of
Preferred  Stock  that are  Class E Stock,  exchangeable  pursuant  to the Share
Exchange  Agreement for an aggregate of 27,117,240 shares of Common Stock and 24
shares of Preferred Stock that are Class F Stock,  exchangeable  pursuant to the
Share Exchange  Agreement for an aggregate of 3,021,552  shares of Common Stock.
Upon the approval by the Company's  stockholders of the Certificate of Amendment
at the Annual Meeting,  and the Company's filing of the Certificate of Amendment
with the Secretary,  the authorized capital stock of the Company will consist of
520,000,000  shares  of  which  500,000,000  are  shares  of  Common  Stock  and
20,000,000 are shares of Preferred Stock. The Disclosure Schedules set forth the
Company's complete equity capitalization on a fully diluted basis as of the date
of this  Agreement,  including all  outstanding  stock  options,  stock purchase
warrants  and any other  rights to acquire  shares of its  capital  stock of any
class.

              (C)  SUBSIDIARIES.  The  Company  owns  100%  of  the  issued  and
outstanding  shares of Diomed.  Diomed  owns 100% of the issued and  outstanding
shares of Diomed,  Ltd., an English  company,  and Diomed PDT,  Inc., a Delaware
corporation.  All of the outstanding  shares of capital stock of each Subsidiary
have been duly authorized and validly issued,  are fully paid and nonassessable,
and are owned, beneficially and of record, by the Company or Subsidiaries wholly
owned by the Company free and clear of all Liens.

              (D) AUTHORIZED SHARES. All issued and outstanding shares of Common
Stock and Preferred  Stock have been duly  authorized and validly issued and are
fully paid and nonassessable. Upon the approval by the Company's stockholders of
the Certificate of Amendment at the Annual Meeting,  and the Company's filing of
the  Certificate  of  Amendment  with  the  Secretary,  the  Company  will  have
sufficient authorized and unissued shares of Common Stock as may be necessary to
effect the issuance of the Investors'  Shares.  At all times after the filing of
the  certificate  of  Amendment  with the  Secretary,  the  Company  shall  keep
available  Common Stock duly  authorized for issuance  against the conversion of
the  Secured  Bridge  Notes  and the  issuance  of the  Investors'  Shares to be
purchased at the Tranche II Closing. When issued and paid for in accordance with
this Agreement,  the Investors' Shares will be duly authorized,  validly issued,
fully paid and non-assessable.

              (E)  AUTHORIZATION  OF INVESTMENT  DOCUMENTS,  ETC. The Investment
Documents, and the transactions contemplated thereby, have been duly and validly
authorized  by the Company and the  Investment  Documents  will be executed  and
delivered  at the  Tranche I Closing  and the  Tranche  II  Closing  by the duly
authorized  officer(s) of the Company.  Each of the Investment  Documents,  when
executed and delivered by the Company, are and will be, valid,

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legal and binding agreements of the Company enforceable in accordance with their
respective terms,  subject as to enforceability to general  principles of equity
and to bankruptcy,  insolvency, moratorium, and other similar laws affecting the
enforcement of creditors'  rights  generally.  The execution and delivery of the
Investment  Documents by the Company,  the issuance of the Secured  Bridge Notes
and the  Investors'  Shares,  and the  consummation  by the Company of the other
transactions  contemplated  by the  Investment  Documents  do not and  will  not
conflict with or result in a breach by the Company or Diomed of any of the terms
or  provisions  of,  or  constitute  a  default  under  (i) the  certificate  of
incorporation  or by-laws  of the  Company,  as  currently  in effect,  (ii) any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or any of
its properties or assets are bound, or an event which results in the creation of
any lien,  charge or encumbrance upon any assets of the Company or of any of its
subsidiaries  or the  triggering of any  preemptive or  anti-dilution  rights or
rights of first  refusal or first offer on the part of holders of the  Company's
debt  or  equity  securities,  (iii)  any  existing  applicable  law,  rule,  or
regulation,  including without limitation the Sarbanes-Oxley Act of 2002, or any
applicable  decree,  judgment,  or order of any court,  United States federal or
state regulatory body,  administrative agency, or other governmental body having
jurisdiction  over the Company or any of its  properties or assets,  or (iv) the
Company's  listing agreement for its Common Stock with the AMEX or the rules and
regulations  of the AMEX,  except in the case of clauses (i)  through  (iv) such
conflict,  breach or default  which  would not have a Material  Adverse  Effect.
There are no preemptive  rights of any stockholder of the Company to acquire the
Investors' Shares.

              (F) APPROVALS. No authorization, approval or consent of any court,
governmental body,  regulatory agency,  self-regulatory  organization,  or stock
exchange or market or the  stockholders  of the Company or Diomed is required to
be obtained by the Company for the issuance and sale of the Secured Bridge Notes
and the Investors'  Shares to the Investors as  contemplated  by this Agreement,
except (i) such authorizations,  approvals and consents that have been obtained,
or such authorizations,  approvals and consents,  the failure of which to obtain
would not have a Material  Adverse Affect and (ii) the listing of the Investors'
Shares on the AMEX requires the affirmative vote of the Company's stockholders.

              (G)  FINANCIAL  STATEMENTS.  The  audited  consolidated  financial
statements  of the Company as of and for the years ended  December  31, 2001 and
2002  (collectively,  the  "ANNUAL  FINANCIAL  STATEMENTS")  and  the  unaudited
consolidated  financial statements of the Company as of and for the three months
ended March 31, 2003 and June 30, 2003  (collectively,  the  "INTERIM  FINANCIAL
STATEMENTS"),  which  have  been  made  available  to the  Investors,  have been
prepared in accordance with US generally accepted accounting principles ("GAAP")
applied on a basis consistent throughout the periods indicated (except as may be
indicated in the notes thereto) and, present fairly in all material respects the
consolidated  financial  condition  and  consolidated  operating  results of the
Company as of the dates and during the periods  indicated therein in conformance
with GAAP, subject, in the case of the Interim Financial  Statements,  to normal
year-end  adjustments,  consistent  with past  practices.  The Annual  Financial
Statements of the Company,  including the notes thereto,  were duly certified by
independent  public  accountants  as  required  by the  Securities  Act  and the
regulations  promulgated  under the Securities  Act.  Except as set forth in the
Annual  Financial  Statements,   the  Interim  Financial  Statements,   the  SEC
Documents, the Disclosure Schedule or arising in the ordinary course of business
since June 30, 2003, as of the date of this  Agreement,  none of the Company nor
any Subsidiary has (A)

                                       9
<PAGE>

incurred any material liabilities of any nature (matured or unmatured,  fixed or
contingent)  or (B) made any material  disposal of assets,  suffered any loss or
material  damage of any assets,  waived any valuable  rights,  made any material
change in any  material  contract to which it is a party or declared or paid any
dividends.

              (H) SEC FILINGS.  None of the Company's filings with the SEC filed
with respect to periods ending on or after February 14, 2002 contained,  and, to
the best of the Company's  knowledge,  none of the Company's SEC Documents filed
with respect to periods  prior to February 14, 2002,  contained at the time they
were  filed,  any untrue  statement  of a material  fact or omitted to state any
material fact required to be stated  therein or necessary to make the statements
made  therein in light of the  circumstances  under  which  they were made,  not
misleading.  The Company has since  February 14, 2002 timely filed all requisite
forms,  reports and exhibits thereto with the SEC,  assuming that the SEC grants
the Company's request to consider its Form 10-QSB for the quarter ended June 30,
2003 to have been timely filed due to the power  outage that  occurred on August
14 and 15, 2003. The Company is not aware of any event occurring on or prior to,
as to the Tranche I Closing, the Tranche I Closing Date or, as to the Tranche II
Closing,  the  Tranche II Closing  Date (other  than the  transactions  effected
hereby)  that would  require the filing of, or with respect to which the Company
intends to file, a Form 8-K after such date. As of their  respective  dates, the
SEC Documents  complied in all material  respects with the  requirements  of the
Exchange  Act or the  Securities  Act,  as the case may be,  and the  rules  and
regulations of the SEC promulgated thereunder applicable to the SEC Documents.

              (I) ABSENCE OF CERTAIN CHANGES. Since February 14, 2002, except as
set forth in the SEC Documents, there has been no material adverse change and no
material adverse development in the business, properties,  operations, condition
(financial or otherwise),  or results of operations of the Company or any of its
Subsidiaries.  Since February 14, 2002, except as contemplated by the Investment
Documents,  neither the Company nor any of its  Subsidiaries has (i) incurred or
become  subject to any  material  liabilities  (absolute or  contingent)  except
liabilities  incurred in the ordinary  course of business  consistent  with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material  obligation  or  liability  (absolute  or  contingent),  other than
current liabilities paid in the ordinary course of business consistent with past
practices;  (iii) declared or made any payment or  distribution of cash or other
property to  stockholders  with  respect to its capital  stock,  or purchased or
redeemed,  or made any  agreements  to  purchase  or  redeem,  any shares of its
capital stock; (iv) sold,  assigned or transferred any other tangible assets, or
canceled  any  debts or  claims,  except  in the  ordinary  course  of  business
consistent with past  practices;  (v) suffered any material losses or waived any
rights of material value, whether or not in the ordinary course of business,  or
suffered the loss of any  material  amount of existing  business;  (vi) made any
changes in  employee  compensation,  except in the  ordinary  course of business
consistent with past practices;  or (vii) experienced any material problems with
labor or  management  in  connection  with the  terms  and  conditions  of their
employment.

              (J) ABSENCE OF LITIGATION.  There is no action, suit,  proceeding,
inquiry or investigation before or by any court, public board or body pending or
threatened against or affecting the Company or any of its subsidiaries,  wherein
an unfavorable decision,  ruling or finding would have a Material Adverse Effect
or which  would  adversely  affect the  validity  or  enforceability  of, or the
authority  or ability of the  Company and its  subsidiaries  taken as a whole

                                       10
<PAGE>

to perform its obligations under, any of the Investment  Documents.  Neither the
Company nor any of its  subsidiaries  is a party to or subject to the provisions
of, any order, writ,  injunction,  judgment or decree of any court or government
agency or instrumentality  which could reasonably be expected to have a Material
Adverse Effect.

              (K)  ABSENCE OF EVENTS OF  DEFAULT.  No event of  default  (or its
equivalent term), as defined in the respective agreement to which the Company or
any of its  subsidiaries  is a party,  and no event  which,  with the  giving of
notice or the passage of time or both,  would become an event of default (or its
equivalent  term)  (as so  defined  in  such  agreement),  has  occurred  and is
continuing, which would have a Material Adverse Effect.

              (L) NO  DEFAULT.  Neither  the  Company  nor  Diomed or any of the
Company's  other  subsidiaries is in default in the performance or observance of
any  material  obligation,  agreement,  covenant or  condition  contained in any
indenture,  mortgage, deed of trust or other instrument or agreement to which it
is a party or by which it or its property is bound,  including the Patent Rights
Acquisition  Agreements,  except to the extent that any such  default  would not
have a Material Adverse Effect.

              (M) REGULATORY  PERMITS.  Each of the Company and its Subsidiaries
has all such  permits,  easements,  consents,  licenses,  franchises  and  other
governmental and regulatory  authorizations from all appropriate federal, state,
local or other public authorities  ("PERMITS") as are necessary to own and lease
its respective  properties and conduct its respective businesses in all material
respects  in the  manner  described  in the SEC  Documents  as  currently  being
conducted.  All such  Permits  are in full force and effect and the  Company and
Diomed have fulfilled and performed all of its material obligations with respect
to such Permits, and no event has occurred that allows, or after notice or lapse
of time would allow,  revocation  or  termination  thereof or will result in any
other  material  impairment  of the  rights of the  holder  of any such  Permit,
subject  in each  case  to such  qualification  as may be  disclosed  in the SEC
Documents. Such Permits contain no restrictions that would materially impair the
ability of the Company or Diomed to conduct  businesses in the manner consistent
with its past  practices.  Neither the Company nor Diomed has received notice or
otherwise has knowledge of any  proceeding or action  relating to the revocation
or modification of any such Permit.

              (N) LISTED CLASS OF SHARES.  The Company has registered its Common
Stock  pursuant  to  Section  12 of the  Exchange  Act,  and  the  Common  Stock
(excluding  the shares of Common Stock the issuance of which is to be voted upon
at the Annual  Meeting) is duly listed for trading on the AMEX.  The Company has
received  no notice,  either  oral or  written,  with  respect to the  continued
eligibility of the Common Stock for such listing.

              (O) INTELLECTUAL PROPERTY. The Company and the Subsidiaries own or
have the right to use, under valid license agreements or otherwise, all material
patents  (including but not limited to the EVLT Patent),  licenses,  franchises,
trademarks,  trademark rights, trade names, trade name rights, trade secrets and
copyrights  necessary  to  the  conduct  of  its  respective  businesses  as now
conducted,   without  known  conflict  with  any  patent,  license,   franchise,
trademark, trade secrets and confidential commercial or proprietary information,
trade name,  copyright,  rights to trade secrets or other proprietary  rights of
any other person. The Patent Rights Acquisition Agreements are in full force and
effect and have not been  amended.  Upon

                                       11
<PAGE>

payment  of the  amounts  due to be paid  under the  Patent  Rights  Acquisition
Agreements  at the time of the  Tranche  I  Closing,  Diomed  will own or be the
exclusive licensee of all outstanding interests in the EVLT Patent and currently
filed foreign  counterparts  of the EVLT Patent.  The Disclosure  Statement sets
forth all of the Company's material intellectual property.

              (P) INTERNAL ACCOUNTING  CONTROLS.  Each of the Company and Diomed
maintains  a system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurances  that (1)  transactions  are executed in accordance  with
management's general or specific authorization; (2) transactions are recorded as
necessary to permit  preparation  of financial  statements  in  conformity  with
generally  accepted  accounting  principles and to maintain  accountability  for
assets;  (3) access to assets is permitted only in accordance with  management's
general or  specific  authorization;  and (4) the  recorded  accountability  for
assets is compared with existing assets at reasonable  intervals and appropriate
action is taken with respect to any differences.

              (Q) TAX LIABILITIES.  The Company has filed all material  federal,
state and local tax reports and returns  required by any law or regulation to be
filed by it, except for extensions  duly obtained,  and has either duly paid all
taxes,  duties  and  charges  indicated  due on the  basis of such  returns  and
reports,  or made  adequate  provision  for the  payment  thereof.  To the  best
knowledge  of the  Company,  there are no unpaid  taxes in any  material  amount
claimed to be due by the taxing authority of any jurisdiction,  and the officers
of the Company know of no basis for any such claim. The Company has not executed
a waiver with respect to the statute of  limitations  relating to the assessment
or collection of any foreign, federal, state or local tax. None of the Company's
tax returns is presently being audited by any taxing authority.

              (R)  HAZARDOUS  MATERIALS.  Each of the Company,  Diomed and their
respective subsidiaries is in compliance with all applicable  Environmental Laws
in all  respects  except where the failure to comply does not have and could not
reasonably be expected to have a Material  Adverse  Effect.  For purposes of the
foregoing:

              "ENVIRONMENTAL  LAWS"  means,   collectively,   the  Comprehensive
Environmental Response,  Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource  Conservation
and Recovery Act, the Toxic  Substances  Control Act, as amended,  the Clean Air
Act, as amended,  the Clean Water Act,  as  amended,  any other  "Superfund"  or
"Superlien" law or any other applicable  federal,  state or local statute,  law,
ordinance, code, rule, regulation,  order or decree regulating,  relating to, or
imposing  liability or standards of conduct  concerning,  the environment or any
Hazardous Material.

              "HAZARDOUS  MATERIAL"  means and includes any hazardous,  toxic or
dangerous  waste,  substance or material,  the  generation,  handling,  storage,
disposal, treatment or emission of which is subject to any Environmental Law.

              (S) PENSION  RELATED  MATTERS.  Each employee  pension plan (other
than a  multiemployer  plan within the meaning of Section  3(37) of ERISA and to
which the Company or any ERISA Affiliate has or had any obligation to contribute
(a  "MULTIEMPLOYER  PLAN"))  maintained  by the  Company  or  any  of its  ERISA
Affiliates to which Section 4021(a) of ERISA applies and (a) which is maintained
for employees of the Company or any of its ERISA  Affiliates or (b) to which the
Company  or any  of  its  ERISA  Affiliates  made,  or  was  required  to

                                       12
<PAGE>

make,  contributions at any time within the preceding five (5) years (a "PLAN"),
complies in all material respects,  and is administered in accordance,  with its
terms and all  material  applicable  requirements  of ERISA and of the  Internal
Revenue  Code of 1986  as  amended  (the  "TAX  CODE")  and  with  all  material
applicable  rulings and regulations issued under the provisions of ERISA and the
Tax Code setting forth those requirements.  No "Reportable Event" or "Prohibited
Transaction"  (as each is defined in ERISA) or withdrawal  from a  Multiemployer
Plan caused by the Company has occurred and no funding  deficiency  described in
Section 302 of ERISA  caused by the Company  exists with  respect to any Plan or
Multiemployer  Plan which could have a Material Adverse Effect.  The Company and
each ERISA  Affiliate has satisfied all of their  respective  funding  standards
applicable to such Plans and Multiemployer  Plans under Section 302 of ERISA and
Section  412 of the  Tax  Code  and the  Pension  Benefit  Guaranty  Corporation
("PBGC")  has not  instituted  any  proceedings,  and  there  exists no event or
condition  caused  by  the  Company  which  would  constitute  grounds  for  the
institution of proceedings by PBGC, to terminate any Plan or Multiemployer  Plan
under  Section 4042 of ERISA which could have a material  adverse  effect on the
assets,  financial  condition,  results of operation or business of a Company or
any ERISA Affiliate. For purposes of the foregoing:

              "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, together with the regulations thereunder.

              "ERISA AFFILIATE" means any corporation,  trade or business, which
together  with the Company would be treated as a single  employer  under Section
4001 of ERISA.

              (T) TITLE TO PROPERTIES. Except as set forth in the SEC Documents,
each of the  Company  and  Diomed  has good and  marketable  title to all of its
respective  personal property,  subject to no transfer  restrictions or Liens of
any kind.

              (U)  INSURANCE.  The Company and its  Subsidiaries  are insured by
insurers of recognized  financial  responsibility  against such losses and risks
and in such  amounts as  management  of the  Company  believes to be prudent and
customary in the businesses in which the Company is engaged.

              (V) NO CONFLICT OF INTEREST.  Except as set forth in the Company's
Proxy  Statement on Schedule 14A filed with the SEC on July 2, 2003,  and except
for salary deferrals  incurred during 2003, the Company or any Subsidiary is not
indebted,  directly or  indirectly,  to any of its  officers or  directors or to
their  respective  spouses or children,  in any amount  whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business or relocation expenses of employees. None of the Company's officers,
directors  or  employees,  or any  members  of  their  immediate  families,  are
directly,  or  indirectly,  indebted  to the  Company  or,  to the  best  of the
Company's  knowledge,  have any direct or  indirect  ownership  interest  in any
entity  with which the  Company is  affiliated  or with which the  Company has a
business  relationship,  or any entity which  competes with the Company,  except
that officers,  directors,  employees and/or stockholders of the Company may own
stock in (but not exceeding five percent (5%) of the  outstanding  capital stock
of) any publicly  traded company that may compete with the Company.  To the best
of the Company's  knowledge,  except as set forth in the SEC Documents,  none of
the Company's officers, directors or employees or any members of their immediate
families are,  directly or indirectly,  interested in any material contract with
the Company. The Company is not a guarantor or indemnitor of any indebtedness of
any other person or entity other than a Subsidiary.

                                       13
<PAGE>

              (W) BLUE SKY.  The  Company  will  timely file a Notice of Sale of
Securities  on  Form D  with  respect  to  the  Securities,  as  required  under
Regulation D. Based on the  information  provided by the Investors,  the Company
will take such action as it reasonably determines to be necessary to qualify the
Securities  for sale to the  Investors  under this  Agreement  under  applicable
securities (or "blue sky") laws of the states of the United States (or to obtain
an exemption from such qualification).

              (X) FULL DISCLOSURE.  No representation or warranty by the Company
in this Agreement,  nor in any Investment  Document delivered or to be delivered
in connection with this Agreement  contains or will contain any untrue statement
of material  fact or omits or will omit to state a material  fact  necessary  to
make the statements contained herein or therein not misleading. To the knowledge
of  the  Company,  there  is no  information  concerning  the  Company  and  its
subsidiaries  or their  respective  businesses  which  has not  heretofore  been
disclosed to the Investors which could reasonably be expected to have a Material
Adverse Effect.

              (Y) BROKERS AND FINDERS FEES.  All  negotiations  relative to this
Agreement and the transactions  contemplated hereby have been carried out by the
Company directly without the intervention of any person on behalf of the Company
in such  manner as to give rise to any valid  claim by any  person  against  the
Investors or the Company for a finder's  fee,  brokerage  commission  or similar
payment,  except for the obligations of the Company to the Placement Agent under
the Placement Agent Agreement.

         5. CONDITIONS TO THE INVESTORS' OBLIGATIONS AT THE TRANCHE I CLOSING.

         The  obligations  of each Investor at the Tranche I Closing are subject
to the  fulfillment  at or before the Tranche I Closing of each of the following
conditions,  the waiver of which shall not be effective against any Investor who
does not consent thereto:

              (A) The representations and warranties of the Company contained in
Section 4 shall be true on and as of the  Tranche  I Closing  Date with the same
effect as though such  representations and warranties had been made on and as of
the Tranche I Closing Date.

              (B) The  Company  shall  have  performed  and  complied  with  all
agreements,  obligations  and  conditions  contained in this  Agreement that are
required  to be  performed  or  complied  with by it at or before the  Tranche I
Closing, and shall have delivered any document, instrument or certificate by any
officer of the Company required to be furnished pursuant to this Section 5, each
of which shall have been duly authorized by the Company.

              (C) The Chief  Financial  Officer of the Company  shall deliver to
each Investor at the Tranche I Closing a certificate stating that the conditions
specified in Sections 5(a) and 5(b) have been fulfilled.

              (D) Each other Investor that has agreed to purchase Secured Bridge
Notes has tendered the Note Purchase Price therefor at or prior to the Tranche I
Closing.

                                       14
<PAGE>

              (E) This  Agreement has been duly executed by Scheduled  Investors
(exclusive  of the  holders of the Class D Notes and the  holders of the Class E
Notes) that have agreed to pay the aggregate  Share  Purchase  Price of at least
$12,000,000, subject to the terms and conditions of this Agreement.

              (F)  Simultaneously  with the completion of the Tranche I Closing,
the Company has paid all principal of and accrued  interest on the Class E Notes
and the holders of the Class E Notes have terminated their security  interest in
the assets of the Company and the Subsidiaries.

              (G)  Simultaneously  with the completion of the Tranche I Closing,
the  Company  has paid to  Endolaser  Associates,  L.L.C.  all amounts due under
Section 5.1(a) of the Patent License  Agreement,  including  making all payments
due thereunder to Endolaser  Associates,  LLC, and the Patent License  Agreement
has been made effective.

              (H)  Simultaneously  with the completion of the Tranche I Closing,
the Company has performed all  obligations  to be performed at the closing to be
held  pursuant to Article II of the Patent  Purchase  Agreement,  including  the
making of all payments due  thereunder to Dr. Robert J. Min, and the Closing (as
defined in the Patent Purchase Agreement) shall have occurred.

              (I) The Company has delivered to the Investors an opinion of legal
counsel of the Company substantially in the form of EXHIBIT H.

              (J) The Company has  delivered  the  Secured  Bridge  Notes to the
Investors that are  purchasing the Secured Bridge Notes in accordance  with this
Agreement.

              (K) The Company has executed  and  delivered  the Patent  Security
Agreement.

              (L) The Company has executed and delivered the Security Agreement.

              (M) The Company has executed and delivered the Pledge Agreement.

              (N)  There  shall  not be in effect  any law,  rule or  regulation
prohibiting or restricting the transactions  contemplated  hereby,  or requiring
any consent or approval which shall not have been obtained.

              (O) All corporate  and other  proceedings  in connection  with the
transactions   contemplated  at  the  Tranche  I  Closing  shall  be  reasonably
satisfactory  in form and substance to the Investors  purchasing  Secured Bridge
Notes in the Tranche I closing and their special counsel, and such Investors and
their  special  counsel shall have  received all such  counterpart  original and
certified or other copies of such documents as they may reasonably request.

         6. CONDITIONS TO THE INVESTORS' OBLIGATIONS AT THE TRANCHE II CLOSING.

         The  obligations of each Investor at the Tranche II Closing are subject
to the  fulfillment at or before the Tranche II Closing of each of the following
conditions,  the waiver of which shall not be effective against any Investor who
does not consent thereto:

                                       15
<PAGE>

              (A) The representations and warranties of the Company contained in
Section 4 shall be true on and as of the  Tranche II Closing  Date with the same
effect as though such  representations and warranties had been made on and as of
the Tranche II Closing Date.

              (B) The  Company  shall  have  performed  and  complied  with  all
agreements,  obligations  and  conditions  contained in this  Agreement that are
required  to be  performed  or  complied  with by it at or before the Tranche II
Closing, and delivery of any document,  instrument or certificate by any officer
of the Company required or furnished  pursuant to this Section 6 shall have been
duly authorized by the Company.

              (C) The  stockholders of the Company have approved the issuance of
the Investors' Shares as contemplated by this Agreement.

              (D) The Chief  Financial  Officer of the Company  shall deliver to
each  Investor  at such  Closing  a  certificate  stating  that  the  conditions
specified in Sections 6(a) through (d) have been fulfilled.

              (E) The  settlement of the Class Action has been finally  approved
pursuant to its terms and is no longer subject to appeal.

              (F) Each other  Investor  that has agreed to  purchase  Investors'
Shares has tendered the Share Purchase Price therefor at or prior to the Tranche
II Closing.

              (G) Each  holder of the Class D Notes  has  delivered  the Class D
Notes owned by such holder to the Company as payment for the  Investors'  Shares
to be purchased under this Agreement.

              (H) Each holder of the Secured  Bridge Notes shall have  delivered
the Secured  Bridge Notes owned by such holder to the Company as payment for the
Investors' Shares to be purchased under this Agreement.

              (I) All  outstanding  shares of the  Company's  Class E  Preferred
Stock and Class F Preferred  Stock shall have been exchanged for Common Stock by
the Company and the holders thereof, pursuant to the Share Exchange Agreement.

              (J) The Company has filed the  Certificate  of Amendment  with the
Secretary.

              (K) The Company's  stockholders  have approved the  certificate of
amendment to be proposed to them at the Annual  Meeting that permits the Company
to effectuate the Reverse Stock Split.

              (L) The  Investors'  Shares have been listed for trading  with the
AMEX.

              (M) The Company has executed and delivered the  Investors'  Rights
Agreement.

              (N) The Company  has  executed  and  delivered  the  Stockholders'
Agreement.

                                       16
<PAGE>

              (O) The Company has delivered to the  Investors  the  certificates
representing the shares of Investors'  Shares to be purchased in accordance with
this Agreement;

              (P) No facts or  circumstance  first  arising  after the Tranche I
Closing  and prior to the  Tranche  II  Closing  have  caused or  resulted  in a
Material  Adverse  Effect,  which  Material  Adverse Effect is continuing on the
Tranche II Closing Date.

              (Q) The Company has delivered to the Investors an opinion of legal
counsel of the Company substantially in the form of EXHIBIT I.

              (R)  There  shall  not be in effect  any law,  rule or  regulation
prohibiting or restricting the transactions  contemplated  hereby,  or requiring
any consent or approval which shall not have been obtained.

              (S) All corporate  and other  proceedings  in connection  with the
transactions  contemplated  at  the  Tranche  II  Closing  shall  be  reasonably
satisfactory  in form and substance to the Investors and their special  counsel,
and such  Investors  and their  special  counsel  shall have  received  all such
counterpart original and certified or other copies of such documents as they may
reasonably request.

         7. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT THE TRANCHE I CLOSING.

         The  obligations  of the Company to each  Investor  that is  purchasing
Secured Bridge Notes at the Tranche I Closing are subject to the  fulfillment at
or before such Closing of each of the following conditions by that Investor:

              (A) The  representations and warranties of the Investors contained
in  Section 3 shall be true on and as of the  Tranche I Closing  Date,  with the
same effect as though such  representations  and warranties had been made on and
as of the Tranche I Closing Date.

              (B) Each  Investor  shall have  performed  and  complied  with all
agreements,  obligations  and  conditions  contained in this  Agreement that are
required  to be  performed  or  complied  with by it on or before the  Tranche I
Closing Date and delivery of any  document,  instrument  or  certificate  by any
representative  of any of the Investors  required or furnished  pursuant to this
Section  7 shall  have  been  duly  authorized  by the  respective  Investor  so
represented.

              (C) The Designated Note Investor,  as agent for the Investors that
are  purchasing  Secured  Bridge  Notes has executed  and  delivered  the Patent
Security Agreement.

              (D) The Designated Note Investor,  as agent for the Investors that
are  purchasing  Secured  Bridge Notes has executed and  delivered  the Security
Agreement.

              (E) This Agreement has been duly executed by Investors  (exclusive
of the  holders of the Class D Notes and the Class E Notes)  that have agreed to
pay the aggregate Share Purchase Price of at least  $12,000,000,  subject to the
terms and conditions of this Agreement.

                                       17
<PAGE>

              (F) The  Company  has  received  not less than  $6,500,000  as the
aggregate  Note Purchase Price of the Secured Bridge Notes sold at the Tranche I
Closing,  in addition to the  satisfaction of $495,000 of the amount of the fees
payable  by the  Company  to the  Placement  Agent  under  the  Placement  Agent
Agreement.

              (G)  There  shall  not be in effect  any law,  rule or  regulation
prohibiting or restricting the transactions  contemplated  hereby,  or requiring
any consent or approval which shall not have been obtained.

         8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT THE TRANCHE II CLOSING.

         The  obligations  of the  Company to each  Investor  at the  Tranche II
Closing are subject to the  fulfillment  at or before such Tranche II Closing of
each of the following conditions by that Investor:

              (A) The  representations and warranties of the Investors contained
in Section 3 shall be true on and as of the  Tranche II Closing  Date,  with the
same effect as though such  representations  and warranties had been made on and
as of the Tranche II Closing Date.

              (B) Each  Investor  shall have  performed  and  complied  with all
agreements,  obligations  and  conditions  contained in this  Agreement that are
required  to be  performed  or  complied  with by it on or before the Tranche II
Closing Date and delivery of any  document,  instrument  or  certificate  by any
representative  of any of the Investors  required or furnished  pursuant to this
Section  8 shall  have  been  duly  authorized  by the  respective  Investor  so
represented.

              (C) The  settlement of the Class Action has been finally  approved
pursuant to its terms and is no longer subject to appeal.

              (D) If the  Investor  is not a holder  of the Class D Notes or the
Secured  Bridge Notes,  that Investor has delivered to the Company good funds as
payment  in full of an amount  equal to the  purchase  price for the  Investors'
Shares in accordance with this Agreement.

              (E) If the  Investor  is a  holder  of the  Class  D  Notes,  that
Investor has delivered to the Company the Class D Notes owned by such  Investor,
duly endorsed for transfer to the Company.

              (F) If the Investor is a holder of the Secured Bridge Notes,  that
Investor  has  delivered  to the Company the Secured  Bridge Notes owned by such
Investor, duly endorsed for transfer to the Company.

              (G) The Company has received the full amount of the Share Purchase
Price to be paid to it at the Tranche II Closing.

              (H) The  stockholders  of the Company have  approved the Amendment
and the  amendment  necessary  to effect the  Reverse  Stock Split at the Annual
Meeting.

                                       18
<PAGE>

              (I) The  Investors  have  executed and  delivered  the  Investors'
Rights Agreement.

              (J) The  Signatory  Investors  have  executed  and  delivered  the
Stockholders' Agreement.

              (K)  There  shall  not be in effect  any law,  rule or  regulation
prohibiting or restricting the transactions  contemplated  hereby,  or requiring
any consent or approval which shall not have been obtained.

         9.  AMEX  LISTING  OF  INVESTORS'   SHARES.   The  Company  shall  seek
stockholder  approval  under the rules and  regulations  of the AMEX  (including
without  limitation   Section  713  of  the  Listing  Standards,   Policies  and
Requirements)  at its Annual  Meeting,  as  described in Section 14. The Secured
Bridge Notes shall not be convertible into Investors'  Shares until the issuance
of the Investors' Shares upon such conversion has been approved by the Company's
stockholder, as contemplated by Section 14.

         10.  REVERSE  STOCK SPLIT.  The Company will  consider a reverse  stock
split (the "REVERSE STOCK SPLIT") of its issued and outstanding  Common Stock to
be voted on by the Company's stockholders at the Annual Meeting, as set forth in
this  Section 10. Not later than  fifteen  (15) days after the Tranche I Closing
Date, the Company shall send a notice (the "REVERSE STOCK SPLIT NOTICE") to each
Investor of its proposal regarding the Reverse Stock Split.  Failure to send the
Reverse  Stock Split Notice shall be deemed to be an election by the Company not
to effect the Reverse Stock Split. If the Company elects to complete the Reverse
Stock Split, the Reverse Stock Split Notice shall specify the exact ratio of the
Reverse Stock Split. If, within ten (10) days after the Company has provided the
Reverse  Stock Split Notice or failed to timely  provide the Reverse Stock Split
Notice,  an Investor  Majority  disagrees with the Company's  proposal as to the
Reverse Stock Split or the Company's proposal for the ratio of the Reverse Stock
Split, such Investors shall send a notice ( the "INVESTORS'  REVERSE STOCK SPLIT
NOTICE")  specifying  the action that the Investors  require the Company to take
with  respect to the  Reverse  Stock  Split and the  Company  shall use its best
reasonable  efforts to cause the Board of  Directors  to take action  consistent
with the  Investors'  Reverse  Stock Split Notice so that the proposal  shall be
voted on at the Annual Meeting. Any failure by the Investor Majority to send the
Investors'  Reverse  Stock Split Notice shall be deemed to be the consent by the
Investor  Majority to the Company's  proposal in the Reverse Stock Split Notice.
If the Reverse  Stock  Split is  approved  at the Annual  Meeting it shall occur
simultaneously with (or within two business days after) the Tranche II Closing.

         11. BOARD OF  DIRECTORS.  Within  twelve (12) days after the Tranche II
Closing  Date,  the  Company  will use its best  efforts  to cause  the Board of
Directors  to  increase  the size of the Board of  Directors  from eight to nine
directors, and, in accordance with the Stockholders' Agreement, to appoint up to
three directors that have been selected by the Signatory  Investor  Majority (as
defined in the  Stockholders'  Agreement)  shall be  appointed as members of the
Board of Directors. Subject to applicable law and the applicable requirements of
the AMEX,  the Company will use its best efforts to cause the Board of Directors
to appoint a member of the Board of Directors  designated by the Investors to be
a member of any nominating, compensation, stock option or audit committee of the
Board of Directors.

                                       19
<PAGE>

         12. RIGHTS OFFERING. Within ten (10) days after the Tranche II Closing,
the  Company  may elect to  commence a rights  offering  (as  described  in this
Section 12, the "RIGHTS  OFFERING") to the holders of the Common Stock by filing
with the SEC a  registration  statement  for the  rights  and the  resale of the
shares of Common Stock  acquired upon exercise of the rights  distributed in the
Rights  Offering.  In the Rights  Offering,  the Company will distribute to each
stockholder of record as of the business day immediately  prior to the Tranche I
Closing Date a right to acquire shares of Common Stock at a purchase price equal
to the Share Purchase Price paid by the Investors (other than the holders of the
Secured Bridge Notes), exercisable for a 45-day period, in the ratio of one such
right for each share of Common Stock held by the  stockholder.  The rights shall
not be transferable. If the Reverse Stock Split occurs prior to the commencement
of the rights offering,  the exercise price in the Rights Offer will be adjusted
accordingly.

         13.  CERTAIN  COVENANTS.  From and after the  Tranche  I  Closing,  the
Company covenants to each Investor that:

              (A)  FILINGS.  The  Company  will  make all  required  filings  in
connection  with the sale of the  Investors'  Shares to the  Investors  required
under any United States laws and  regulations  applicable to the Company,  or by
the AMEX,  and to provide a copy thereof to the  Investors  promptly  after such
filing if so requested by the Investors.

              (B)  REPORTING  STATUS.  So  long  as the  any  of  the  Investors
beneficially  own any of the  Investors'  Shares,  the  Company  shall  file all
reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the
1934 Act, and the Company shall not  terminate its status as an issuer  required
to file  reports  under  the 1934 Act  even if the  1934  Act or the  rules  and
regulations  thereunder would permit such  termination.  Except as otherwise set
forth in this  Agreement and the other  Investment  Documents,  the Company will
take all  reasonable  action  under its  control to obtain and to  continue  the
listing  and  trading  of its  Common  Stock on the AMEX and will  comply in all
material  respects with the Company's  reporting,  filing and other  obligations
under the by-laws or rules of the AMEX.

              (C) USE OF PROCEEDS.  The Company  will use the proceeds  from the
sale of the Secured  Bridge  Notes for the payments of the amounts due under the
Patent Rights Acquisition  Agreements,  and for general working capital purposes
including the economic  exploitation  of Diomed's  rights in the EVLT Patent and
commercialization  of Diomed's  EVLT(R)  product line.  The Company will use the
proceeds  from the sale of the  Investors'  Shares  for the  enforcement  of the
Patent Rights and for general working capital purposes.

              (D) EVLT PATENT  MAINTENANCE.  While any Secured  Bridge Notes are
outstanding and for so long as the Investors shall continue to beneficially  own
at least fifty percent (50%) of the Investors'  Shares,  the Company shall cause
Diomed  to use  its  commercially  reasonable  best  efforts,  including  in any
proceeding before the United States Patent and Trademark Office, to maintain the
registration  of the EVLT  Patent and to defend the EVLT  Patent  from any third
party proceedings seeking to invalidate the EVLT Patent.

         14. ANNUAL  MEETING OF  STOCKHOLDERS.  The Company will call the Annual
Meeting  after the  Tranche I Closing  to  obtain  stockholder  approval  of the
issuance  of each of (i)

                                       20
<PAGE>

the Investors'  Shares and (ii) the shares of Common Stock  exchangeable for the
outstanding  shares of the Company's Class E Preferred  Stock,  par value $0.001
per share,  and Class F  Preferred  Stock,  par value  $0.001 per share.  At the
Annual Meeting the Company will also seek approval of its stockholders of (i) an
increase in the number of authorized  shares of Common Stock from  80,000,000 to
500,000,000,  (ii) a reverse  stock  split in a ratio of between  35:1 and 10:1,
(iii) the Company's 2003 Omnibus Incentive Plan, (iv) the election of directors,
and (v) the  appointment of independent  auditors.  For this purpose,  within 15
days after the Tranche I Closing Date, the Company will file a preliminary proxy
statement  with the SEC for the Annual  Meeting and will use its best efforts to
have the SEC clear the preliminary  proxy statement prior to September 30, 2003.
Promptly  after  receiving  clearance  from  the  SEC of the  preliminary  proxy
statement, the Company will file a definitive proxy statement with the SEC, call
the Annual  Meeting and  distribute  the  definitive  proxy  statement and other
necessary proxy soliciting materials to the Company's stockholders.

         15. INDEMNIFICATION.

              (A) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor against any losses,  claims,  damages or liabilities
(joint or several)  to which they may become  subject,  insofar as such  losses,
claims,  damages or liabilities (or actions in respect  thereof) arise out of or
are based  upon any  material  breach of or  inaccuracy  in any  representation,
warranty or covenant by the Company in Section 4 or Section 13 of this Agreement
as of the  date  such  representation  or  warranty  was  made (a  "VIOLATION");
PROVIDED,  that the  indemnity  contained  in this  Section  shall  not apply to
amounts paid in settlement of any such loss, claim, damage,  liability or action
if such  settlement  is  effected  by the  Investor  without  the consent of the
Company.

              (B)  Promptly  after  receipt by an  indemnified  party under this
Section of actual  knowledge of the  commencement  of any action  (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made  against the Company,  deliver to the Company a written  notice of
the commencement  thereof (the  "INDEMNIFICATION  NOTICE") and the Company shall
have the right to participate in, and, to the extent the Company so desires,  to
assume the defense  thereof with counsel  mutually  satisfactory to the parties;
PROVIDED, that an indemnified party (together with all other indemnified parties
that may be represented without conflict by one counsel) shall have the right to
retain  one  separate  counsel,  with the fees  and  expenses  to be paid by the
Company,  if representation of such indemnified party by the counsel retained by
the  Company  would  be  inappropriate  due to  actual  or  potential  differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. In addition to the restrictions contained in Section
15(d), the failure to deliver an Indemnification  Notice to the Company within a
reasonable time of the  commencement  of any such action,  if prejudicial to its
ability to defend such action, shall relieve the Company of any liability to the
indemnified party under this Section to the extent of such prejudice.

              (C) Notwithstanding the foregoing, in no event shall any indemnity
payable by the Company under this Section  exceed the aggregate  purchase  price
for the Investors' Shares acquired by the Investor being indemnified pursuant to
this  Agreement.  Further,  the  Company  shall have no  obligations  under this
Section to indemnify any Investor unless and until the actual  aggregate  losses
incurred by all Investors arising out of or based upon one or more Violations as
provided for in Section  from the Tranche I Closing Date on a cumulative  basis,
are at least U.S.$25,000.

                                       21
<PAGE>

              (D) The Company  shall not be required to  indemnify  any Investor
under this  Section in respect of any  Violation as to which the Company has not
received,  within  eighteen  (18)  months of the  Tranche  II Closing  Date,  an
Indemnification Notice.

         16. FURTHER  ASSURANCES.  Each Investor and the Company shall from time
to time and at all times hereafter make, do, execute,  or cause or procure to be
made,  done and executed such further  acts,  deeds,  conveyances,  consents and
assurances  without further  consideration,  which may reasonably be required to
effect the transactions contemplated by this Agreement.

         17. DEFINTIONS.

              DEFINITIONS.   As  used  herein,   unless  the  context  otherwise
requires,  each of the following  terms has the meaning set forth below,  unless
the context otherwise requires:

              (i)  "ADDITIONAL  INVESTOR"  has the  meaning  given it in Section
2(b)(ii).

              (ii) "AFFILIATE" means, with respect to a specific Person referred
to in the  relevant  provision,  another  Person  who or  which  Controls  or is
Controlled by or is under common Control with such specified Person.

              (iii) "AMEX" means the American Stock Exchange.

              (iv) "ANNUAL  MEETING"  means the Company's 2003 Annual Meeting of
Stockholders.

              (v) "BOARD OF DIRECTORS" means the Company's board of directors as
constituted from time to time.

              (vi)  "CERTIFICATE OF AMENDMENT"  means the proposed  amendment to
the Company's  Certificate  of  Incorporation  that would increase the number of
shares of authorized Common Stock to 500,000,000.

              (vii) "CLASS ACTION" means  AUGENBAUM VS. DIOMED  HOLDINGS,  INC.,
Case No. 20454, filed in Delaware Chancery Court on July 28, 2003.

              (viii)  "CLASS D NOTES" means the Company's  Class D Notes,  dated
May 6, 2003, and outstanding in the aggregate principal amount of $1,200,000.

              (ix) "CLASS E NOTES" means the Company's Class E Notes,  dated May
6, 2003, and outstanding in the aggregate principal amount of $2,000,000.

              (x) "COMMON  STOCK" means the Company's  Common  Stock,  par value
$0.001 per share.

                                       22
<PAGE>

              (xi)  "CONTROL"  has the  meaning  given to such  term in Rule 405
promulgated under the Securities Act.

              (xii)  "DESIGNATED NOTE PURCHASER"  means the Investor  purchasing
Secured  Bridge  Notes  or the  trust  company,  bank or other  fiduciary  agent
appointed by the Secured  Parties and agreed to by the Company and the Placement
Agent, as the case may be, and any successor  thereto,  in its capacity as agent
for the Secured Parties.

              (xiii) "DIOMED" means Diomed,  Inc., a wholly owned  subsidiary of
the Company.

              (xiv) "DISCLOSURE  SCHEDULE" means the Disclosure Schedule setting
forth  certain   information   regarding  the  Company  and  its   Subsidiaries,
substantially in the form attached hereto.

              (xv) "ESCROW AGENT" means Mintz, Levin, Cohn, Ferris,  Glovsky and
Popeo, P.C.

              (xvi) "ESCROW AGREEMENT" means the Escrow Agreement,  dated August
__,  2003,  among  the  Company,  the  Placement  Agent  and the  Escrow  Agent,
substantially in the form of EXHIBIT B.

              (xvii)  "EXCHANGE ACT" means the Securities  Exchange Act of 1934,
as amended.

              (xviii) "EVLT PATENT" means U.S. Patent No. 6,398,777.

              (xix) "GUARANTEES" means, collectively, each Guaranty by Diomed of
each Secured  Bridge  Note,  substantially  in the form  included on the Form of
Secured Bridge Notes attached hereto as EXHIBIT A.

              (xx)  "INVESTMENT  DOCUMENTS"  means this  Agreement,  the Secured
Bridge  Notes,  the  Guarantees,  the Security  Agreement,  the Patent  Security
Agreement, the Investors' Rights Agreement and the Stockholders' Agreement.

              (xxi) "INVESTOR MAJORITY" means the Investors that hold a majority
of the issued and outstanding shares of the Investors' Shares.

              (xxii)  "INVESTORS'  RIGHTS AGREEMENT" means the Investors' Rights
Agreement, dated as of the date of the Tranche II Closing Date, by and among the
Company and the Investors,  substantially in the form attached hereto as EXHIBIT
C.

              (xxiii)  "LIEN"  means  any  interest  in  property  securing  any
obligation  owed  to,  or a claim  by,  a person  other  than  the  owner of the
property, whether such interest is based on the common law, statute or contract,
and  including but not limited to the lien or security  interest  arising from a
mortgage,  encumbrance,  pledge,  security agreement,  conditional sale or trust
receipt or a lease, consignment or bailment for security purposes.

                                       23
<PAGE>

              (xxiv)  "MATERIAL  ADVERSE EFFECT" means a material adverse effect
on the business,  operations or condition (financial or otherwise) or results of
operation of the Company and the Subsidiaries taken as a whole.

              (xxv) "PERSON" means any living person or any entity, such as, but
not  necessarily  limited  to, a  corporation,  partnership,  limited  liability
company or trust.

              (xxvi) "PATENT  LICENSE  AGREEMENT"  means the License  Agreement,
dated as of June 16, 2003,  between  Diomed and  Endolaser  Associates,  L.L.C.,
under which the Diomed becomes the exclusive licensee of the EVLT Patent.

              (xxvii) "PATENT PURCHASE  AGREEMENT" means the Purchase Agreement,
dated as of July 23, 2003 between  Diomed and Dr. Robert Min, under which Diomed
acquires an undivided interest in the EVLT Patent.

              (xxviii)  "PATENT RIGHTS  ACQUISITION  AGREEMENTS" mean the Patent
Purchase Agreement and the Patent License Agreement.

              (xxix)  "PATENT  SECURITY  AGREEMENT"  means the  Patent  Security
Agreement,  dated  the  Tranche  I  Closing  Date,  by  Diomed  in  favor of the
Designated  Note  Investor,  as agent for the  Secured  Parties  named  therein,
substantially in the form of EXHIBIT D.

              (xxx) "PLACEMENT AGENT" means Sunrise Securities Corporation.

              (xxxi)  "PLACEMENT  AGENT  AGREEMENT"  means the Agreement,  dated
April 11, 2003, between the Company and the Placement Agent, as amended.

              (xxxii) "PLEDGE  AGREEMENT"  means the Second Amended and Restated
Pledge Agreement,  dated as of the Tranche I Closing Date, by Diomed in favor of
the  Designated  Pledgeholder,  as agent for the Secured  Parties named therein,
substantially in the form of EXHIBIT G.

              (xxxiii)  "REVERSE  STOCK  SPLIT"  has the  meaning  set  forth in
Section 10.

              (xxxiv) "RIGHTS OFFERING" has the meaning set forth in Section 12.

              (xxxv) "SEC" means the U.S. Securities and Exchange Commission.

              (xxxvi)  "SECRETARY"  means the Secretary of State of the State of
Delaware.

              (xxxvii)  "SECURED  BRIDGE  NOTES"  means  the  Company's  Secured
Convertible Bridge Notes, substantially in the form attached hereto as EXHIBIT A
due on the  first  anniversary  of the  Tranche I  Closing  Date,  issued in the
original aggregate principal amount of $6,995,000.

              (xxxviii)  "SECURITIES"  means the  Secured  Bridge  Notes and the
Investors' Shares.

                                       24
<PAGE>

              (xxxix) "SECURITY  AGREEMENT" means the Security Agreement,  dated
the Tranche I Closing Date, by Diomed in favor of the Designated  Note Investor,
as agent for the Secured  Parties named  therein,  substantially  in the form of
EXHIBIT E.

              (xl)  "SECURITIES  ACT"  means  the  Securities  Act of  1934,  as
amended.

              (xli)  "SHARE  EXCHANGE   AGREEMENT"   means  the  Share  Exchange
Agreement,  dated as of August 6, 2003, between the Company,  the holders of the
Company's  Class C Convertible  Preferred Stock and the holders of the Company's
Class D Convertible Preferred Stock.

              (xlii) "SHARE PURCHASE PRICE" has the meaning set forth in Section
2(a)(ii).

              (xliii)  "SIGNATORY  INVESTOR"  means each Investor that elects to
execute and deliver at the Tranche II Closing a counterpart of the Stockholders'
Agreement and to thereby become a party to the Stockholders' Agreement.

              (xliv)   "STOCKHOLDERS'   AGREEMENT"   means   the   Stockholders'
Agreement, dated as of the Tranche II Closing Date, by and among the Company and
the Signatory Investors, substantially in the form attached hereto as EXHIBIT F.

              (xlv)  "SUBSIDIARIES"  means Diomed, Inc., Diomed, Ltd. and Diomed
PDT, Inc.

              (xlvi)  "TRANCHE I CLOSING"  has the  meaning set forth in Section
1(b)(ii). (xlvii) "TRANCHE I CLOSING DATE" means the date on which the Tranche I
Closing is held.

              (xlviii) "TRANCHE II CLOSING" has the meaning set forth in Section
2(b)(ii).

              (xlix)  "TRANCHE  II  CLOSING  DATE"  means  the date on which the
Tranche II Closing is held.

         18. NOTICES.  Any notice required or permitted hereunder shall be given
in writing (unless otherwise  specified herein) and shall be deemed  effectively
given on the earliest of:

              (A) the date  delivered,  if  delivered  by  personal  delivery as
against written receipt therefor or by confirmed facsimile transmission,

              (B) the seventh business day after deposit,  postage  prepaid,  in
the United States Postal Service by registered or certified mail, or

              (C) the third  business  day after  mailing  by  next-day  express
courier,  with delivery costs and fees prepaid, in each case,  addressed to each
of the other parties thereunto  entitled at the following  addresses (or at such
other  addresses as such party may designate by ten (10) days'  advance  written
notice similarly given to each of the other parties hereto):

                                       25
<PAGE>

COMPANY:        Diomed Holdings, Inc.
                One Dundee Park
                Andover, MA  01810
                ATTN: President and Chief Executive Officer
                Telecopier No.  978-475-8488

                With a copy to:

                McGuireWoods LLP
                9 West 57th Street, 16th Floor
                New York, NY  10019
                ATTN:  William A. Newman, Esq.
                (212) 548-2160 (Telephone)
                (212) 548-2150 (Facsimile)

INVESTORS:      To the respective Investors at their addresses set forth in
                Schedule 1

                Mintz Levin Cohn Ferris Glovsky and Popeo P.C.
                666 Third Avenue
                New York, NY  10017
                Attn:  Kenneth R. Koch, Esq.
                (212) 935-3000 (Telephone)
                (212) 983-3115 (Facsimile)

         19.  FEES;  EXPENSES.  At the Tranche II Closing or within  thirty (30)
days thereafter,  upon presentation by the Investors of documentation reasonably
satisfactory to the Company, the Company shall pay the reasonable legal fees and
expenses of counsel  incurred by the Investors in  connection  with their review
and approval of the transactions  contemplated hereby, up to a maximum aggregate
amount of  $100,000.00.  At the Tranche I Closing and at the Tranche II Closing,
the Company shall pay the fees of the Placement  Agent pursuant to the Placement
Agent Agreement that have become due and payable at such Closing.

         20. GOVERNING LAW: MISCELLANEOUS.

              (A) With respect to governing law, jurisdiction and waiver of jury
trial, the parties agree as follows:

              (i)  THIS  AGREEMENT   SHALL  BE  GOVERNED  BY  AND  CONSTRUED  IN
ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,  WITHOUT  REGARD TO
CONFLICTS OF LAWS PRINCIPLES.

              (ii) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY
OR OF THE UNITED  STATES FOR THE  SOUTHERN  DISTRICT OF SUCH STATE.  EACH OF THE
COMPANY  AND THE  INVESTORS  IRREVOCABLY  WAIVES ANY  OBJECTION,  INCLUDING  ANY
OBJECTION  TO THE  LAYING  OF  VENUE  OR  BASED  ON THE  GROUNDS  OF  FORUM  NON
CONVENIENS,  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH  JURISDICTION  IN RESPECT OF THIS AGREEMENT OR OTHER DOCUMENT
RELATED  THERETO.  EACH OF THE COMPANY AND THE INVESTORS WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

                                       26
<PAGE>

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

              (B)  Failure of any party to  exercise  any right or remedy  under
this  Agreement or otherwise,  or delay by a party in  exercising  such right or
remedy, shall not operate as a waiver thereof.

              (C) This  Agreement  shall  inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.

              (D)  All  pronouns  and  any  variations   thereof  refer  to  the
masculine, feminine or neuter, singular or plural, as the context may require.

              (E) A facsimile  transmission  of this signed  Agreement  shall be
legal and binding on all parties hereto.

              (F) This Agreement may be signed in one or more counterparts, each
of which shall be deemed an original.

              (G)  The  headings  of  this  Agreement  are  for  convenience  of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

              (H) If any  provision  of  this  Agreement  shall  be  invalid  or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or  enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

              (I) This  Agreement may be amended only by the written  consent of
the Investor Majority and an instrument in writing signed by the Company.

                                       27
<PAGE>

              (J) This Agreement and the other  Investment  Documents  represent
the final agreement among the parties and may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements of the parties or by prior
or contemporaneous  written agreements.  There are no unwritten agreements among
the parties.

                            [Signature page follows.]

<PAGE>
         IN  WITNESS  WHEREOF,  this  Agreement  has been duly  executed  by the
Investors and the Company as of the date set forth above.

                              COMPANY:

                              DIOMED HOLDINGS, INC.

                              By: /s/  JAMES A. WYLIE, JR.
                                  -----------------------------------------
                                  Name: James A. Wylie, Jr.
                                  Title: President and Chief Executive Officer

                              INVESTOR

                              Name:
                                   ----------------------------------------

                              By:
                                  -----------------------------------------
                                  (Signature of Authorized Person)

                              Name:  ____________________________________
                              Title:    ____________________________________
                              Total Amount of Investment:  $_________________

<PAGE>

                             SCHEDULES AND EXHIBITS

Exhibit A         FORM OF SECURED BRIDGE NOTE

Exhibit B         ESCROW AGREEMENT

Exhibit C         INVESTORS' RIGHTS AGREEMENT

Exhibit D         PATENT SECURITY AGREEMENT

Exhibit E         SECURITY AGREEMENT

Exhibit F         STOCKHOLDERS' AGREEMENT

Exhibit G         FORM OF PLEDGE AGREEMENT

Exhibit H         FORM OF LEGAL OPINION OF COMPANY COUNSEL (TRANCHE I CLOSING)*

Exhibit I         FORM OF LEGAL OPINION OF COMPANY COUNSEL (TRANCHE II CLOSING)*

Schedule 1        Schedule of Investors
Schedule 2        AMEX Questionnaire*
Disclosure Schedule*

* Omitted from this filing on Form 8-K

<PAGE>

                  SCHEDULE 1 TO SECURITIES PURCHASE AGREEMENT

                                 NEW INVESTORS*

<TABLE>
<CAPTION>
                       NAME OF INVESTOR                                     TOTAL INVESTED (1)
                       ----------------                                     ------------------
<S>                                                                               <C>
Sanford Antignas                                                                  10,000
BPW Israel Ventures LLC                                                          250,000
Emilio Bassini                                                                   100,000
HUG Funding LLC                                                                  400,000
West End Convertible Fund, L.P.                                                  100,000
F Berdon Defined Benefit Plan                                                     40,000
Chana Braun                                                                       25,000
Smithfield Fiduciary, LLC                                                        500,000
Meredith A. Rauhut                                                                50,000
Sean B. Curran                                                                    50,000
Incap Company Limited                                                            250,000
Bel-Cal Holdings, Ltd.                                                           200,000
SDS Merchant Fund, LP                                                            500,000
BayStar Capital II, LP                                                           500,000
Craig Drill Capital                                                              450,000
Duchman, Joseph                                                                   25,000
Bear Stearns Securities Corp., Custodian for J. Steven
Emerson IRA II                                                                   600,000
Michael D. Farkas                                                                 75,000
The Riverview Group, LLC                                                       1,410,000
Robert Schecter                                                                   30,000
Shimon S. Fishman                                                                 15,000
Platinum Partners Global Macro Fund LP                                           250,000
Platinum Partners Value Arbitrage Fund, LP                                       750,000
Melton Management Ltd.                                                           100,000
Asher Gottesman                                                                   10,000
</TABLE>

<PAGE>

<TABLE>
<S>                                                                               <C>
James G. Groninger                                                                60,000
Yehuda Harats                                                                    200,000
David Hirsh and Ruth Hirsh                                                        25,000
J.M.Hull Associates, LP                                                          100,000
Benjamin J. Jesselson 8/21/74 Trust                                              150,000
Michael G. Jesselson 4/8/71 Trust                                                150,000
Ron Katz                                                                         150,000
Joseph Klein III                                                                  50,000
Abraham Koot                                                                       5,000
ProMed Offshore Fund, Ltd.                                                        73,000
ProMed Partners, LP                                                              427,000
Dwight E. Lee                                                                     30,000
Jonathan Leifer                                                                   50,000
David Leiner                                                                      25,000
Ruth Low                                                                         100,000
Avi Lyons                                                                         10,000
Jason Lyons                                                                        5,000
David D. May                                                                      50,000
Balestra Capital Partners, LP                                                    200,000
Monmouth Consulting Inc.                                                          25,000
MTD Holdings LLC                                                                 250,000
Israel Nekritz                                                                     5,000
Tammy Newman                                                                      10,000
Pequot Navigator Offshore Fund, Inc.                                             600,000
Pequot Navigator Onshore Fund, LP                                                350,000
Pequot Scout Fund, LP                                                          1,050,000
Piers Playfair                                                                    25,000
William J. Ritger                                                                100,000
Orion Biomedical Fund, LP (Paramount)                                            410,750
</TABLE>

<PAGE>

<TABLE>
<S>                                                                               <C>
Orion Biomedical Offshore Fund, LP (Paramount)                                    89,250
Reuven Y. Rosenberg                                                              250,000
Joan Schapiro                                                                     25,000
Rock Associates                                                                   25,000
Alexander Scharf                                                                  25,000
David Scharf                                                                      30,000
Abraham Schwartz                                                                  15,000
Rivie Schwebel                                                                    25,000
Morton Seelenfreund IRA                                                          100,000
Sherleigh Associates Inc. Profit Sharing Plan                                    500,000
Terrapin Partners                                                                500,000
Stanley B. Stern                                                                  10,000
David Stone                                                                      250,000
Richard B. Stone                                                                  10,000
Peter Sugarman                                                                   200,000
Langley Partners, L.P.                                                           200,000
Ellis International Ltd.                                                         250,000
Fred Weber & Chaya Weber JT Ten                                                   20,000
George Weinberger                                                                100,000
Congregation Mishkan Sholom                                                      150,000
North Sound Legacy Fund LLC                                                       45,000
North Sound Legacy Institutional Fund LLC                                        455,000
North Sound Legacy International Ltd.                                            500,000
East Hudson Inc. (BVI)                                                            59,000
The Conus Fund (QP), LP                                                           49,000
The Conus Fund Offshore Ltd.                                                      43,000
The Conus Fund, LP                                                               349,000
Bull & Co.                                                                        65,000
Albert L. Zesiger                                                                 50,000
</TABLE>

<PAGE>

<TABLE>
<S>                                                                               <C>
Cudd & Co.                                                                        74,000
Barrie Ramsay Zesiger                                                             50,000
City of Milford Pension & Retirement Fund                                        690,000
City of Stamford Firemen's Pension Fund                                          330,000
Domenic J. Mizio                                                                 100,000
Francois deMenil                                                                  70,000
HBL Charitable Unitrust                                                           65,000
Cudd & Co.                                                                        80,000
James F. Cleary                                                                   10,000
Jeanne L. Morency                                                                 50,000
John J. & Catherine H. Kayola                                                      8,000
Hare & Co.                                                                        70,000
Meehan Foundation                                                                 65,000
Morgan Trust Co. of the Bahamas Ltd. As Trustee U/A/D
11/30/93                                                                         215,000
Murray Capital, LLC                                                               80,000
Huland & Co.                                                                     190,000
Huland & Co.                                                                      35,000
Huland & Co.                                                                     150,000
Peter Looram                                                                      30,000
Psychology Associates                                                             20,000
Mellon Bank NA custodian for PERSI-Zesiger Capital                             1,200,000
Robert K. Winters                                                                  3,000
Susan Uris Halpern                                                               135,000
Theeuwes Family Trust, Felix Theeuwes Trustee                                     65,000
William B. Lazar                                                                  50,000
Wolfson Investment Partners, LP                                                   50,000
Zinc Partners II, LP                                                               2,248
Zinc Partners Offshore, Ltd.                                                     166,760
Zinc Partners, LP                                                                180,992

TOTAL:                                                                       $20,000,000
                                                                             ===========
</TABLE>

                       INVESTORS HOLDING CLASS E NOTES: **

        NAME OF INVESTORS                                TOTAL INVESTED
        -----------------                                --------------

Gibralt US, Inc.                                           $1,500,000
Belzberg, Morris                                              300,000
Diamond, Charles                                              100,000
Schraiberg, Steven                                            100,000
         TOTAL                                             $2,000,000
                                                           ==========

                      INVESTORS HOLDING CLASS D NOTES: ***

        NAME OF INVESTORS                         TOTAL INVESTED (1)
        -----------------                         ------------------

Gibralt US, Inc.                                     $1,100,000
Norris, Peter                                            50,000
Wylie, Jr., James A.                                     50,000

         TOTAL                                       $1,200,000
                                                     ==========

                              PLACEMENT AGENT ****
                                               TOTAL DEEMED
       AGENT NAME                              INVESTED (1)
Sunrise Securities Corp.                        $495,000

         TOTAL                                  $495,000
                                                ========

(1)      Total Invested  excludes amounts invested by way of accrued interest on
         Secured Bridge Notes and Class D Notes.

*        All amounts  invested  allocated pro rata to purchase of Secured Bridge
         Notes purchased by such Investors and Investors' Shares.

**       All amounts invested allocated to purchase of Secured Bridge Notes.

***      All amounts invested allocated to purchase of Investors' Shares.

****     Amounts deemed invested allocated to purchase of Secured Bridge Notes.Exhibit 10.2

                         SECURED CONVERTIBLE BRIDGE NOTE

         NEITHER THESE  SECURITIES NOR THE SECURITIES  ISSUABLE UPON  CONVERSION
         HEREOF  HAVE BEEN  REGISTERED  WITH THE UNITED  STATES  SECURITIES  AND
         EXCHANGE COMMISSION OR THE SECURITIES  COMMISSION OF ANY STATE OR UNDER
         THE SECURITIES  ACT OF 1933, AS AMENDED.  THE SECURITIES ARE RESTRICTED
         AND MAY NOT BE  OFFERED,  RESOLD,  PLEDGED  OR  TRANSFERRED  EXCEPT  AS
         PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION  REQUIREMENTS  THEREOF
         OR  EXEMPTION  THEREFROM.  ADDITIONALLY,  THIS  NOTE MAY NOT BE SOLD OR
         TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF DIOMED HOLDINGS, INC.

$___________                                                          No.  ____

                              DIOMED HOLDINGS, INC.

              SECURED CONVERTIBLE BRIDGE NOTE DUE AUGUST ____, 2004

         FOR VALUE RECEIVED,  DIOMED HOLDINGS, INC., a corporation organized and
existing under the laws of the State of Delaware (the "COMPANY") hereby promises
to pay to  ____________________________________________,  having its  address at
____________________________________________or  its assigns  (the  "HOLDER"  and
together with the other holders of Secured  Convertible  Bridge Notes due August
____,  2004 issued  pursuant to the  Securities  Purchase  Agreement (as defined
below),  the "HOLDERS"),  the principal sum of _____________  and 00/100 Dollars
($__________________)  on August  ____,  2004 (the  "MATURITY  DATE") and to pay
simple interest on the principal sum  outstanding  from time to time as provided
for herein in arrears at the rate of 8% per annum,  calculated on the basis of a
360-day  year and the number of days  elapsed  (but in no event in excess of the
maximum rate  permitted by  applicable  law) upon the Maturity  Date or the date
when the Company  elects to redeem this Note in full prior to the Maturity  Date
pursuant  to Section 3.  Interest  shall  commence to accrue on this Note on the
first such  business day to occur after the date hereof and shall  continue on a
daily basis  until  payment in full of the  principal  sum has been made or duly
provided  for or  until  the  full  outstanding  amount  of this  Note  has been
converted in accordance with the provisions hereof.

         This  Note  is one of  the  Secured  Bridge  Notes  referred  to in the
Securities Purchase Agreement, dated as of August 8, 2003, among the Company and
the  Investors  (as defined  therein)  (the  "SECURITIES  PURCHASE  AGREEMENT").
Capitalized  terms used  herein  without  definition  shall have the  respective
meanings given to them in the Securities  Purchase  Agreement.  By acceptance of
this  Note,  the  Holder  accepts  the  terms  and  conditions  set forth in the
Securities  Purchase  Agreement  and  irrevocably  agrees  to be bound  thereby,
including without limitation the appointment and authorization of the Designated
Note Investor pursuant to (i) Section 2 of the Patent Security Agreement,  dated
as of August ___, 2003, by and among

<PAGE>

Diomed,  the Note Investors named therein and the Designated Note Investor named
therein  (the  "PATENT  SECURITY  AGREEMENT"),  (ii)  Section 6 of the  Security
Agreement,  dated as of August ___,  2003, by Diomed in favor of the  Designated
Note Investor named therein for the benefit of the Secured Parties named therein
(the  "SECURITY  AGREEMENT")  and (iii)  Section  5 of the  Second  Amended  and
Restated  Pledge  Agreement,  dated as of August ___, 2003 by Diomed in favor of
the  Designated  Lender named therein and the  Designated  Note Investor for the
benefit of the Secured  Parties  named  therein  (the  "PLEDGE  AGREEMENT").  In
addition to the  provisions of the  Securities  Purchase  Agreement,  the Patent
Security Agreement,  the Security Agreement and the Pledge Agreement,  this Note
is subject to the following additional provisions:

         1.  TRANSFER  RESTRICTIONS.  This  Note  has  been  issued  subject  to
investment  representations  of the  original  purchaser  hereof  and may not be
transferred or exchanged  without the prior written  consent of the Company.  In
the event of any proposed transfer of this Note to which the Company has granted
its  consent,  the Company may  require,  prior to issuance of a new Note in the
name of such other person,  that it receive  reasonable  transfer  documentation
including  legal  opinions that the issuance of the Note in such other name does
not and will not cause a violation of the Securities Act or any applicable state
or foreign  securities  laws. Prior to due presentment for transfer of this Note
to which the Company has consented, the Company and any agent of the Company may
treat the person in whose  name this Note is duly  registered  on the  Company's
Note Register as the owner hereof for the purpose of receiving payment as herein
provided and for all other  purposes,  whether or not this Note be overdue,  and
neither  the  Company  nor any such  agent  shall be  affected  by notice to the
contrary.

         2. CONVERSION OF NOTES. The outstanding principal amount of, and unpaid
accrued  interest  on,  this Note shall be  converted  into shares of the Common
Stock upon the  delivery of this Note by the Holder at the Tranche II Closing at
a conversion price (the "Conversion Price") equal to the Share Purchase Price to
be paid by  Holders  of the  Secured  Bridge  Notes at the  Tranche  II  Closing
pursuant to Section 2(a)(ii) of the Securities  Purchase  Agreement and pursuant
to the following terms and conditions:

                  (i) The  conversion  of this Note into Common  Stock shall not
         occur  unless and until the Company has  obtained  the  approval of its
         stockholders  to the  issuance of Common Stock upon the  conversion  of
         this Note.

                  (ii) The  conversion of this Note shall be deemed to have been
         effected  as of the  delivery  of this Note on the  Tranche  II Closing
         Date.  At the time such  conversion  has  occurred,  the  rights of the
         Holder as a holder of this Note shall cease and shall be deemed to be a
         right to receive  the Common  Stock,  and the Holder  shall  become the
         holder of record of the Common  Stock.  If the Holder of this Note does
         not deliver this Note for  conversion  of the Tranche II Closing,  then
         the  Company may redeem this Note by issuing to the Holder of this Note
         that number of  Investors'  Shares as shall  equal (A) the  outstanding
         principal  amount of, and unpaid  accrued  interest on, this Note,  (B)
         divided .08.

                  (iii) The issuance of  certificates  for Common Stock shall be
         made without charge to the Holders of this Note for any issuance tax in
         respect thereof (so long as such certificates are issued in the name of
         the record  holder of such shares of this Note) or other cost  incurred
         by the  Company in  connection  with such  conversion  and the  related
         issuance of Common Stock.

                                       2
<PAGE>

                  (iv) Upon  conversion of this Note, the Company shall take all
         such actions as are  necessary in order to ensure that the Common Stock
         shall be validly issued,  fully paid and nonassessable,  free and clear
         of all taxes (other than any taxes  relating to any dividends paid with
         respect thereto),  liens,  charges and encumbrances with respect to the
         issuance thereof.

                  (v) The Corporation shall assist and cooperate with any holder
         of such shares required to make any governmental  filings or obtain any
         governmental  approval prior to or in connection with any conversion of
         such  shares  hereunder  (including,  without  limitation,  making  any
         filings required to be made by the Company).

                  (vi) When  converted,  this Note shall be cancelled  and shall
         not be held in treasury or otherwise be available for reissuance.

                  (vii)  In   determining   amounts   of   Common   Stock,   the
         determination of the Company shall be final,  absent manifest error. No
         fractional  shares of Common Stock or scrip  representing  fractions of
         shares will be issued on conversion, but the number of issued shares of
         Common Stock shall be rounded to the nearest whole share.

         3.  DIVIDENDS,  SPLITS,  ETC. If, at any time while any portion of this
Note remains outstanding, the Company effectuates a stock split or reverse stock
split of its Common Stock or issues a dividend on its Common Stock consisting of
shares  of  Common  Stock or  otherwise  recapitalizes  its  Common  Stock,  the
Conversion Price shall be equitably  adjusted to reflect such action.  By way of
illustration,  and  not in  limitation,  of  the  foregoing  (i) if the  Company
effectuates  a 2:1 split of its Common  Stock,  thereafter,  with respect to any
conversion for which the Company issues the shares after the record date of such
split,  the Conversion  Price shall be deemed to be one-half of what it had been
calculated  to  be  immediately  prior  to  such  split;  (ii)  if  the  Company
effectuates a 1:10 reverse split of its Common Stock,  thereafter,  with respect
to any  conversion for which the Company issues the shares after the record date
of such reverse split,  the Conversion Price shall be deemed to be the amount of
such Conversion Price calculated immediately prior to the record date multiplied
by 10; and (iii) if the Company declares a stock dividend of one share of Common
Stock  for  every  10  shares  outstanding,  thereafter,  with  respect  to  any
conversion for which the Company issues the shares after the record date of such
dividend,  the  Conversion  Price  shall  be  deemed  to be the  amount  of such
Conversion Price calculated  immediately prior to such record date multiplied by
a fraction,  of which the numerator is the number of shares for which a dividend
share  will be issued  and the  denominator  is such  number of shares  plus the
dividend share(s) issuable or issued thereon.

         4. PAYMENT AT MATURITY.  That portion of the  principal  amount of this
Note which is outstanding  on the Maturity Date shall be payable,  together with
accrued  interest  thereon as provided  herein,  on the Maturity Date by payment
accordance  with  Section 8. All  payments  made hereon  shall be applied  first
towards accrued interest and second to the principal amount hereof.

                                       3
<PAGE>

              5. NO IMPAIRMENT.  No provision of this Note shall alter or impair
the obligation of the Company,  which is absolute and unconditional,  to convert
this Note into Common Stock in the manner as herein  prescribed.  This Note is a
direct obligation of the Company.

              6. SECURITY;  GUARANTY. The Holder of this Note has the benefit of
certain  security  provided to it as a Secured  Party under the Patent  Security
Agreement as provided  therein.  The Holder of this Note also has the benefit of
the Acknowledgement  and Unconditional  Guaranty of Diomed, Inc. set forth below
the Company's signature on this Note, as provided therein.

              7.  ADJUSTMENT FOR MERGER OR  REORGANIZATION,  ETC. In case of any
consolidation,  share  exchange  or merger of the Company  with or into  another
entity or person, or the conveyance of all or substantially all of the assets of
the Company to another entity or person (each, an "Extraordinary  Transaction"),
this Note shall  thereafter be convertible into the kind and number of shares of
stock or other  securities  or  property,  if any, to which a holder of the same
number of Investors'  Shares into which this Note would have been  converted (if
this Note had been converted on the business day immediately  preceding the date
on which the Extraordinary  Transaction  occurred) would have been entitled upon
such event; and, in any such case,  adjustment shall be made to this Note, as is
appropriate  for the  circumstances,  to the end that the  provisions  set forth
herein  shall  be  thereafter  applicable,   as  nearly  as  reasonably  may  be
practicable,  in relation to any shares of stock,  securities or other  property
thereafter  deliverable upon the conversion of this Note. The provisions of this
Section 7 shall similarly apply to successive Extraordinary Transactions.

              8. MANNER OF PAYMENT. All payments  contemplated hereby to be made
"in cash" shall be made by wire transfer of immediately  available funds in such
coin or  currency  of the United  States of America as at the time of payment is
legal tender for payment of public and private  debts.  All payments of cash and
each delivery of shares of Common Stock  issuable to the Holder as  contemplated
hereby  shall be made to the  Holder to an account  designated  by the Holder to
Diomed and if the Holder has not  designated  any such  accounts  at the address
last  appearing on the Note  Register of Diomed as  designated in writing by the
Holder  from time to time;  except that the Holder may  designate,  by notice to
Diomed, a different  delivery  address for any one or more specific  payments or
deliveries.

              9. HOLDER ACKNOWLEDGEMENTS. The Holder of this Note, by acceptance
hereof,  agrees that this Note is being  acquired for  investment  and that such
Holder will not offer,  sell or otherwise  dispose of this Note or the Shares of
Common Stock  issuable upon  conversion  thereof  except in compliance  with the
terms of the Securities  Purchase  Agreement and the Investors' Rights Agreement
and under  circumstances  which will not result in a violation of the Securities
Act or any applicable state Blue Sky or foreign laws or similar laws relating to
the sale of securities.

              10.   GOVERNING   LAW,  ETC.   With  respect  to  governing   law,
jurisdiction and waiver of Jury trial:

              (a) THIS NOTE SHALL BE GOVERNED  BY AND  CONSTRUED  IN  ACCORDANCE
WITH  THE  LAWS OF THE  STATE  OF NEW YORK  APPLICABLE  TO  AGREEMENTS  MADE AND
PERFORMED ENTIRELY WITHIN SUCH STATE.

                                       4
<PAGE>

              (b) ANY LEGAL ACTION OR  PROCEEDING  WITH RESPECT TO THIS NOTE MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK  SITTING IN NEW YORK  COUNTYOR
OF THE UNITED STATES FOR THE SOUTHERN  DISTRICT OF SUCH STATE.  BY THE COMPANY'S
EXECUTION AND DELIVERY OF THIS NOTE AND BY THE HOLDER'S ACCEPTANCE OF THIS NOTE,
EACH OF THE  COMPANY AND THE HOLDER  CONSENTS,  FOR ITSELF AND IN RESPECT OF ITS
PROPERTY,  TO THE  NON-EXCLUSIVE  JURISDICTION OF THOSE COURTS,  AND IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON  CONVENIENS,  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR  PROCEEDING  IN SUCH  JURISDICTION  IN RESPECT OF THIS
NOTE OR OTHER DOCUMENT RELATED THERETO.  FURTHER, BY THE COMPANY'S EXECUTION AND
DELIVERY OF THIS NOTE AND BY THE HOLDER'S  ACCEPTANCE OF THIS NOTE,  EACH OF THE
COMPANY AND THE HOLDER  WAIVES  PERSONAL  SERVICE OF ANY  SUMMONS,  COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH
STATE.

              (c) BY THE  COMPANY'S  EXECUTION  AND DELIVERY OF THIS NOTE AND BY
THE HOLDER'S  ACCEPTANCE OF THIS NOTE, EACH OF THE COMPANY AND THE HOLDER HEREBY
EXPRESSLY  WAIVES  ANY RIGHT TO TRIAL BY JURY OF ANY  CLAIM,  DEMAND,  ACTION OR
CAUSE OF ACTION  ARISING  UNDER  ANY  INVESTMENT  DOCUMENT  (AS  DEFINED  IN THE
SECURITIES  PURCHASE  AGREEMENT)  OR IN ANY WAY  CONNECTED  WITH OR  RELATED  OR
INCIDENTAL  TO THE DEALINGS OF THE COMPANY AND THE HOLDER OR ANY OTHER HOLDER OF
NOTES  OR  ANY  OF  THEM  WITH  RESPECT  TO  ANY  TRANSACTION  DOCUMENT  OR  THE
TRANSACTIONS  RELATED  THERETO,  IN EACH CASE  WHETHER NOW EXISTING OR HEREAFTER
ARISING,  AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE;  AND EACH OF THE
COMPANY AND THE HOLDER HEREBY  AGREES AND CONSENTS THAT ANY SUCH CLAIM,  DEMAND,
ACTION OR CAUSE OF ACTION  SHALL BE DECIDED BY COURT TRIAL  WITHOUT A JURY,  AND
THAT THE COMPANY,  THE HOLDER AND ANY PARTY TO THE OTHER  TRANSACTION  DOCUMENTS
MAY FILE AN ORIGINAL  COUNTERPART  OR A COPY OF THIS  SECTION  WITH ANY COURT AS
WRITTEN  EVIDENCE OF THE CONSENT OF THE COMPANY,  THE HOLDER OR ANY OTHER HOLDER
OF NOTES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         11. DEFAULT. The following shall constitute an "Event of Default":

              (a) Diomed  fails in the payment of  principal or interest on this
Note as required  hereunder and the same shall continue for a period of five (5)
days; or

              (b) Any of the representations or warranties made by Diomed or the
Company in this Note or in the other Investment Documents, or in any certificate
or other material written statement  heretofore or hereafter furnished by Diomed
or the Company in connection with the execution and delivery of this Note or the
other  Investment  Documents  shall have been or shall be false or misleading in
any material respect at the time made; or

                                       5
<PAGE>

                  (c) Diomed or the Company shall fail to perform or observe, in
any material respect, any covenant,  term,  provision,  condition,  agreement or
obligation under this Note or the other Investment  Documents,  and such failure
shall continue  uncured for a period of thirty (30) days after written notice of
such failure from the Holder; or

                  (d) The voluntary or judicial  dissolution  or  termination of
the Company or Diomed; or

                  (e) The  Company  or Diomed  shall (i)  admit in  writing  its
inability  to pay  its  debts  as they  become  due;  (ii)  file a  petition  in
bankruptcy or for  reorganization  or for the adoption of an agreement under the
Bankruptcy Code; (iii) make an assignment for the benefit of its creditors; (iv)
have  commenced  against it a  proceeding  for the  appointing  of a receiver or
trustee for all or a substantial  part of its property which is not dismissed or
stayed  for a period  of 30  days;  (v)  allow  the  assumption  of  custody  or
sequestration by a court of competent  jurisdiction of all or a substantial part
of its property;  (vi) suffer an attachment on all or a substantial  part of his
property or (vii) take any action in furtherance of the foregoing;  inability to
pay its debts generally as they mature; or

                  (f) Any  declared  default of the Company or Diomed  under any
Indebtedness  that  gives  the  holder  thereof  the  right to  accelerate  such
Indebtedness,  and such  Indebtedness is in fact accelerated by the holder.  The
term  "INDEBTEDNESS"  means  indebtedness  for borrowed money  outstanding in an
amount in excess of $500,000.

Then, or at any time thereafter,  and in each and every such case, at the option
and in the  discretion  of, in the case of Events of Default  under  Subsections
11(b) and (c), the Holders holding at least twenty five (25%) of the outstanding
principal amount of the Secured Bridge Notes may declare this Note and the other
outstanding Secured Bridge Notes,  together with all accrued and unpaid interest
thereon, to be immediately due and payable, without presentment, demand, protest
or notice of any  kinds,  all of which are  hereby  expressly  waived,  anything
herein  or  in  any  note  or  other  instruments   contained  to  the  contrary
notwithstanding,  and the Holders  holding at least twenty five percent (25%) of
the  outstanding  principal  amount of the Secured Bridge Notes may  immediately
enforce any and all of the Holder's  rights and remedies  provided herein or any
other  rights  or  remedies  afforded  by law.  Further,  then,  or at any  time
thereafter, and in each and every such case, at the option and in the discretion
of, in the case of Events of Default  under  Subsections  11(a) and (d)  through
(f), any individual Holder, may declare this Note, together with all accrued and
unpaid interest thereon, to be immediately due and payable, without presentment,
demand,  protest  or notice of any  kinds,  all of which  are  hereby  expressly
waived,  anything  herein or in any note or other  instruments  contained to the
contrary notwithstanding, and such Holder may immediately enforce any and all of
the Holder's rights and remedies provided herein or any other rights or remedies
afforded by law.

              12. NO RIGHTS AS A  STOCKHOLDER.  Nothing  contained  in this Note
shall be construed as conferring upon the Holder the right to vote or to receive
dividends  or to consent or receive  notice as a  shareholder  in respect of any
meeting  of  shareholders  or any  rights  whatsoever  as a  shareholder  of the
Company, unless and to the extent converted in accordance with the terms hereof.

                                       6
<PAGE>

              13.  AMENDMENT.  This  Note  may be  amended  only by the  written
consent of Holder of this Note and the Company.

              14. WAIVERS AND CONSENTS.  No waivers or consents in regard to any
provision  of this Note may be given  other  than by an  instrument  in  writing
signed by the Holder.

                            [Signature page follows.]

<PAGE>

              IN  WITNESS   WHEREOF,   the  Company  has  caused  this   Secured
Convertible  Bridge  Note to be  duly  executed  by an  officer  thereunto  duly
authorized.

Dated:  August ____, 2003

                                       DIOMED HOLDINGS, INC.

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

            ACKNOWLEDGMENT AND UNCONDITIONAL GUARANTY BY DIOMED, INC.

         Diomed,  Inc.  ("Guarantor"),  a wholly-owned  subsidiary of the Diomed
Holdings,  Inc.  (the  "Company"),  hereby  acknowledges  that  it has  received
valuable  consideration  from the  making  of this  Note by  virtue  of  certain
proceeds therefrom being contributed by the Company to the Guarantor.  Guarantor
hereby absolutely and  unconditionally  guarantees to the Holder full and prompt
payment and performance (and not merely collection) of the Company's obligations
when due,  whether  at  maturity  or  earlier  by  reasons  of  acceleration  or
otherwise,  of the debts,  liabilities,  and  obligations  under this Note. This
Guaranty  shall remain in force and be binding upon the Guarantor for so long as
any  indebtedness,  liabilities  or other  obligations  under  this Note  remain
unsatisfied  by the  Company.  This  Guaranty  shall  not be  terminated  by any
renewals,  extensions or refinancings of this Note, and shall be binding against
the Guarantor by the Holder and any successor or assign of the Holder. Guarantor
hereby waives all defenses,  except the defense of discharge by payment in full.
The liability of Guarantor under this Guaranty shall be direct and immediate and
not conditional or contingent upon the pursuit of any remedies against any other
person, nor against securities or liens available to the Holder. In the event of
the Company's  default or breach of the Note, the Holder shall have the right to
enforce its rights,  powers,  and remedies  under the Note and  hereunder in any
order,  and all rights,  powers,  and  remedies  available to the Holder in such
event shall be  nonexclusive  and  cumulative of all other rights,  powers,  and
remedies  provided  thereunder  or hereunder  or by law or in equity.  No act or
thing need occur to establish the liability of the Guarantor  hereunder,  and no
act or thing, except full payment and discharge of all debts,  liabilities,  and
obligations  contained in the Note,  shall in any way exonerate the undersigned,
or modify,  reduce,  limit, or release the requirements  herein of the Guarantor
hereunder.

                                           DIOMED, INC.

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

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