DIOMED HOLDINGS INC
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>v07141_ex10-3.txt
<TEXT>

                                                                    EXHIBIT 10.3

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THIS  SECURITY  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                              DIOMED HOLDINGS, INC.

                  THIS COMMON STOCK PURCHASE  WARRANT (the "WARRANT")  certifies
that, for value received,  _____________ (the "HOLDER"),  is entitled,  upon the
terms and subject to the limitations on exercise and the conditions  hereinafter
set forth, at any time on or after the date hereof (the "INITIAL EXERCISE DATE")
and on or prior to the close of  business  on the five year  anniversary  of the
Initial Exercise Date (the "TERMINATION DATE") but not thereafter,  to subscribe
for and  purchase  from  Diomed  Holdings,  Inc.,  a Delaware  corporation  (the
"Company"),  up to ______  shares (the "WARRANT  SHARES") of Common  Stock,  par
value $0.001 per share, of the Company (the "COMMON STOCK").  The purchase price
of one share of Common Stock (the "EXERCISE  PRICE") under this Warrant shall be
$2.10, subject to adjustment hereunder.

         SECTION  1.  DEFINITIONS.  Capitalized  terms  used  and not  otherwise
defined  herein shall have the  meanings  set forth in that  certain  Securities
Purchase Agreement (the "PURCHASE  AGREEMENT"),  dated September 28, 2004, among
the Company and the purchasers signatory thereto.

         SECTION 2. EXERCISE.

                  a)  EXERCISE  OF  WARRANT.  Exercise  of the  purchase  rights
         represented  by this  Warrant  may be made at any  time or  times on or
         after the Initial  Exercise Date and on or before the Termination  Date
         by  delivery to the Company of a duly  executed  facsimile  copy of the
         Notice of Exercise Form annexed  hereto (or such other office or agency
         of  the  Company  as it may  designate  by  notice  in  writing  to the
         registered  Holder at the address of such Holder appearing on the books
         of the Company);  PROVIDED,  HOWEVER, within 5 Trading Days of the date
         said Notice of Exercise is delivered  to the Company,  the Holder shall


<PAGE>

         have surrendered this Warrant to the Company and the Company shall have
         received payment of the aggregate  Exercise Price of the shares thereby
         purchased by wire transfer or cashier's  check drawn on a United States
         bank.

                  b) EXERCISE PRICE.  The Exercise Price of each share of Common
         Stock  under  this  Warrant  shall  be  $2.10,  subject  to  adjustment
         hereunder.

                  c) CASHLESS  EXERCISE.  If at any time after one year from the
         date of issuance of this  Warrant  there is no  effective  Registration
         Statement  registering  the resale of the Warrant Shares by the Holder,
         then  this  Warrant  may also be  exercised  at such time by means of a
         "cashless  exercise" in which the Holder shall be entitled to receive a
         certificate  for the number of  Warrant  Shares  equal to the  quotient
         obtained by dividing [(A-B) (X)] by (A), where:

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

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

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

                           d) RESTRICTIONS.

                           a. HOLDER'S  RESTRICTIONS.  The Holder shall not have
                  the right to exercise any portion of this Warrant, pursuant to
                  Section  2(a) or  otherwise,  to the extent that after  giving
                  effect to such issuance after exercise,  the Holder  (together
                  with the Holder's affiliates),  as set forth on the applicable
                  Notice of Exercise,  would beneficially own in excess of 4.99%
                  of the  number  of  shares  of the  Common  Stock  outstanding
                  immediately after giving effect to such issuance. For purposes
                  of the  foregoing  sentence,  the  number  of shares of Common
                  Stock  beneficially  owned by the  Holder  and its  affiliates
                  shall  include the number of shares of Common  Stock  issuable
                  upon  exercise  of this  Warrant  with  respect  to which  the
                  determination  of such  sentence  is  being  made,  but  shall
                  exclude  the number of shares of Common  Stock  which would be
                  issuable  upon (A)  exercise  of the  remaining,  nonexercised
                  portion of this  Warrant  beneficially  owned by the Holder or
                  any of its  affiliates  and (B) exercise or  conversion of the
                  unexercised or nonconverted portion of any other securities of
                  the  Company  (including,   without   limitation,   any  other
                  Debentures or Warrants)  subject to a limitation on conversion
                  or  exercise  analogous  to the  limitation  contained  herein
                  beneficially  owned by the  Holder  or any of its  affiliates.
                  Except as set forth in the preceding sentence, for purposes of
                  this Section 2(d), beneficial ownership shall be calculated in
                  accordance  with Section  13(d) of the Exchange  Act, it being
                  acknowledged by Holder that the Company is not representing to
                  Holder that such  calculation  is in  compliance  with Section
                  13(d) of the Exchange Act and Holder is solely responsible for
                  any schedules required to be filed in accordance therewith. To
                  the extent that the limitation  contained in this Section 2(d)
                  applies,   the   determination  of  whether  this  Warrant  is
                  exercisable  (in  relation  to other  securities  owned by the
                  Holder) and of which a portion of this Warrant is  exercisable

                                       2
<PAGE>


                  shall  be in the  sole  discretion  of  such  Holder,  and the
                  submission of a Notice of Exercise  shall be deemed to be such
                  Holder's  determination of whether this Warrant is exercisable
                  (in relation to other  securities owned by such Holder) and of
                  which  portion of this  Warrant is  exercisable,  in each case
                  subject  to  such  aggregate  percentage  limitation,  and the
                  Company  shall have no  obligation  to verify or  confirm  the
                  accuracy of such  determination.  For purposes of this Section
                  2(d),  in  determining  the  number of  outstanding  shares of
                  Common Stock, the Holder may rely on the number of outstanding
                  shares of Common Stock as reflected in (x) the Company's  most
                  recent Form 10-QSB or Form  10-KSB,  as the case may be, (y) a
                  more  recent  public  announcement  by the  Company or (z) any
                  other notice by the Company or the  Company's  Transfer  Agent
                  setting   forth  the   number   of  shares  of  Common   Stock
                  outstanding.  Upon the written or oral  request of the Holder,
                  the Company  shall within two Trading Days confirm  orally and
                  in writing to the Holder the number of shares of Common  Stock
                  then  outstanding.  In any case,  the  number  of  outstanding
                  shares of Common Stock shall be determined after giving effect
                  to the  conversion  or exercise of  securities of the Company,
                  including this Warrant,  by the Holder or its affiliates since
                  the date as of which  such  number  of  outstanding  shares of
                  Common Stock was reported.

                           b. Unless Shareholder  Approval has been obtained and
                  deemed  effective in accordance with the rules and regulations
                  of the Trading Market, the Company shall not make any issuance
                  whatsoever of Common Stock or Common Stock  Equivalents to the
                  extent such issuance  would  otherwise  cause an adjustment of
                  the  Conversion  Price of the Debentures or the Exercise Price
                  of the  Warrants,  or the  exercise  price of any Common Stock
                  Equivalents  issued pursuant to the transactions  contemplated
                  by  Sections   2.3(a)(iii)   and  2.3(b)(v)  in  the  Purchase
                  Agreement,  below the  applicable  Floor Prices (as defined in
                  the Debentures and Warrants).  The Holder shall be entitled to
                  obtain  injunctive  relief against the Company to preclude any
                  such issuance,  which remedy shall be in addition to any right
                  to  collect  damages  and the  Company  expressly  waives  any
                  requirement that any court require the Holder to post any bond
                  in connection therewith.

         e)       MECHANICS OF EXERCISE.



                                       3
<PAGE>

                           i.  AUTHORIZATION  OF  WARRANT  SHARES.  The  Company
                  covenants that all Warrant Shares which may be issued upon the
                  exercise of the purchase  rights  represented  by this Warrant
                  will, upon exercise of the purchase rights represented by this
                  Warrant,  be duly authorized,  validly issued,  fully paid and
                  nonassessable  and free from all taxes,  liens and  charges in
                  respect of the issue  thereof  (other than taxes in respect of
                  any transfer occurring contemporaneously with such issue). The
                  Company  covenants  that  during  the  period  the  Warrant is
                  outstanding,  it will reserve from its authorized and unissued
                  Common Stock a sufficient  number of shares to provide for the
                  issuance  of the  Warrant  Shares  upon  the  exercise  of any
                  purchase  rights  under  this  Warrant.  The  Company  further
                  covenants  that its issuance of this Warrant shall  constitute
                  full  authority  to its officers who are charged with the duty
                  of  executing  stock  certificates  to  execute  and issue the
                  necessary   certificates  for  the  Warrant  Shares  upon  the
                  exercise  of the  purchase  rights  under  this  Warrant.  The
                  Company  will  take  all  such  reasonable  action  as  may be
                  necessary to assure that such Warrant  Shares may be issued as
                  provided  herein  without  violation of any  applicable law or
                  regulation,  or of any requirements of the Trading Market upon
                  which the Common Stock may be listed.

                           ii.   DELIVERY   OF   CERTIFICATES   UPON   EXERCISE.
                  Certificates for shares purchased hereunder shall be delivered
                  to the Holder  within 3 Trading  Days from the delivery to the
                  Company  of the Notice of  Exercise  Form,  surrender  of this
                  Warrant and  payment of the  aggregate  Exercise  Price as set
                  forth above  ("WARRANT  SHARE  DELIVERY  DATE").  This Warrant
                  shall  be  deemed  to have  been  exercised  on the  date  the
                  Exercise Price is received by the Company.  The Warrant Shares
                  shall be deemed to have been  issued,  and Holder or any other
                  person so  designated  to be named  therein shall be deemed to
                  have  become  a  holder  of  record  of  such  shares  for all
                  purposes,  as of the date the  Warrant has been  exercised  by
                  delivery to the Company of the Notice of Exercise  form and by
                  payment  to the  Company of the  Exercise  Price and all taxes
                  required to be paid by the Holder, if any, pursuant to Section
                  2(e)(vii)  prior to the  issuance  of such  shares,  have been
                  paid.

                           iii. DELIVERY OF NEW WARRANTS UPON EXERCISE.  If this
                  Warrant shall have been  exercised in part, the Company shall,
                  at the time of delivery  of the  certificate  or  certificates
                  representing  Warrant Shares,  deliver to Holder a new Warrant
                  evidencing  the rights of Holder to purchase  the  unpurchased
                  Warrant  Shares called for by this Warrant,  which new Warrant
                  shall in all other respects be identical with this Warrant.

                           iv.  RESCISSION  RIGHTS.  If  the  Company  fails  to
                  deliver  to  the   Holder  a   certificate   or   certificates
                  representing  the Warrant Shares pursuant to this Section 2(e)
                  by the Warrant Share Delivery Date,  then the Holder will have
                  the right to rescind such exercise.



                                       4
<PAGE>

                           v.  BUY-IN  COMPENSATION.  In  addition  to any other
                  rights  available  to the  Holder,  if the  Company  fails  to
                  deliver  to  the   Holder  a   certificate   or   certificates
                  representing  the Warrant Shares pursuant to an exercise on or
                  before the Warrant Share Delivery Date, and if after such date
                  the Holder is required  by its broker to purchase  (in an open
                  market  transaction  or  otherwise)  shares of Common Stock to
                  deliver in satisfaction of a sale by the Holder of the Warrant
                  Shares  which  the  Holder  anticipated  receiving  upon  such
                  exercise (a "BUY-IN"),  then the Company shall (1) pay in cash
                  to the  Holder  the  amount  by which (x) the  Holder's  total
                  purchase price (including brokerage  commissions,  if any) for
                  the shares of Common Stock so purchased exceeds (y) the amount
                  obtained by multiplying  (A) the number of Warrant Shares that
                  the  Company  was   required  to  deliver  to  the  Holder  in
                  connection  with the  exercise at issue times (B) the price at
                  which the sell order giving rise to such  purchase  obligation
                  was  executed,  and (2) at the  option of the  Holder,  either
                  reinstate the portion of the Warrant and equivalent  number of
                  Warrant  Shares for which  such  exercise  was not  honored or
                  deliver to the  Holder  the  number of shares of Common  Stock
                  that would have been  issued had the Company  timely  complied
                  with its  exercise  and delivery  obligations  hereunder.  For
                  example,  if the Holder  purchases Common Stock having a total
                  purchase price of $11,000 to cover a Buy-In with respect to an
                  attempted exercise of shares of Common Stock with an aggregate
                  sale price giving rise to such purchase obligation of $10,000,
                  under  clause (1) of the  immediately  preceding  sentence the
                  Company shall be required to pay the Holder $1,000. The Holder
                  shall  provide  the  Company  written  notice  indicating  the
                  amounts  payable  to the  Holder  in  respect  of the  Buy-In,
                  together  with  applicable  confirmations  and other  evidence
                  reasonably  requested  by the  Company.  Nothing  herein shall
                  limit a Holder's right to pursue any other remedies  available
                  to it  hereunder,  at  law  or in  equity  including,  without
                  limitation, a decree of specific performance and/or injunctive
                  relief with respect to the Company's failure to timely deliver
                  certificates representing shares of Common Stock upon exercise
                  of the Warrant as required pursuant to the terms hereof.

                           vi. NO  FRACTIONAL  SHARES OR  SCRIP.  No  fractional
                  shares or scrip representing fractional shares shall be issued
                  upon the  exercise of this  Warrant.  As to any  fraction of a
                  share which  Holder  would  otherwise  be entitled to purchase
                  upon such exercise, the Company shall pay a cash adjustment in
                  respect  of such  final  fraction  in an amount  equal to such
                  fraction multiplied by the Exercise Price.

                           vii.  CHARGES,   TAXES  AND  EXPENSES.   Issuance  of
                  certificates  for Warrant  Shares shall be made without charge
                  to  the  Holder  for  any  issue  or  transfer  tax  or  other
                  incidental   expense  in  respect  of  the  issuance  of  such
                  certificate,  all of which taxes and expenses shall be paid by


                                       5
<PAGE>

                  the Company, and such certificates shall be issued in the name
                  of the Holder or in such name or names as may be  directed  by
                  the Holder; PROVIDED,  HOWEVER, that in the event certificates
                  for  Warrant  Shares are to be issued in a name other than the
                  name of the Holder, this Warrant when surrendered for exercise
                  shall be accompanied by the  Assignment  Form attached  hereto
                  duly executed by the Holder; and the Company may require, as a
                  condition  thereto,   the  payment  of  a  sum  sufficient  to
                  reimburse it for any transfer tax incidental thereto.

                           viii.  CLOSING OF BOOKS.  The Company  will not close
                  its stockholder  books or records in any manner which prevents
                  the timely  exercise  of this  Warrant,  pursuant to the terms
                  hereof.

         SECTION 3. CERTAIN ADJUSTMENTS.

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

                  b) SUBSEQUENT  EQUITY SALES.  If the Company or any Subsidiary
         thereof, as applicable,  at any time while this Warrant is outstanding,
         shall offer, sell, grant any option to purchase or offer, sell or grant
         any right to reprice its securities,  or otherwise  dispose of or issue
         (or announce any offer,  sale, grant or any option to purchase or other
         disposition) any Common Stock or Common Stock Equivalents entitling any
         Person to acquire  shares of Common  Stock,  at an effective  price per
         share less than the then  Exercise  Price (such lower price,  the "BASE
         SHARE PRICE" and such issuances  collectively,  a "DILUTIVE ISSUANCE"),
         as  adjusted  hereunder  (if the holder of the  Common  Stock or Common
         Stock Equivalents so issued shall at any time,  whether by operation of
         purchase price  adjustments,  reset  provisions,  floating  conversion,
         exercise or exchange prices or otherwise,  or due to warrants,  options
         or rights per share which is issued in connection  with such  issuance,
         be entitled to receive shares of Common Stock at an effective price per
         share which is less than the Exercise  Price,  such  issuance  shall be
         deemed to have occurred for less than the Exercise  Price),  then,  the
         Exercise  Price  shall be  reduced  to  equal  the  Base  Share  Price;
         PROVIDED,  HOWEVER,  prior to the date the Company obtains  Shareholder
         Approval in accordance  with the rules and  regulations  of the Trading
         Market,  in no event shall the  Exercise  Price be adjusted  under this
         Section 3(b) to less than $1.91,  subject to adjustment for reverse and
         forward stock splits,  stock  dividends,  stock  combinations and other
         similar  transactions  of the Common Stock that occur after the date of


                                       6
<PAGE>

         this  Agreement  (the "FLOOR  PRICE").  Such  adjustment  shall be made
         whenever such Common Stock or Common Stock Equivalents are issued.  The
         Company shall notify the Holder in writing,  no later than the business
         day  following  the  issuance  of any  Common  Stock  or  Common  Stock
         Equivalents subject to this section,  indicating therein the applicable
         issuance  price,  or  of  applicable   reset  price,   exchange  price,
         conversion  price and  other  pricing  terms.  The  provisions  of this
         Section 3(b) shall not apply with respect to an Exempt Issuance.

                  c) PRO RATA  DISTRIBUTIONS.  If the Company, at any time prior
         to the  Termination  Date,  shall  distribute  to all holders of Common
         Stock  (and  not  to  Holders  of  the   Warrants)   evidences  of  its
         indebtedness  or  assets  or rights or  warrants  to  subscribe  for or
         purchase  any  security  other than the Common  Stock  (which  shall be
         subject to Section  3(b)),  then in each such case the  Exercise  Price
         shall  be  adjusted  by  multiplying   the  Exercise  Price  in  effect
         immediately  prior  to the  record  date  fixed  for  determination  of
         stockholders  entitled to receive  such  distribution  by a fraction of
         which the  denominator  shall be the VWAP  determined  as of the record
         date mentioned  above, and of which the numerator shall be such VWAP on
         such  record  date less the then per share  fair  market  value at such
         record date of the  portion of such assets or evidence of  indebtedness
         so distributed  applicable to one outstanding share of the Common Stock
         as determined  by the Board of Directors in good faith.  In either case
         the  adjustments  shall be  described  in a  statement  provided to the
         Holders  of the  portion  of assets or  evidences  of  indebtedness  so
         distributed  or such  subscription  rights  applicable  to one share of
         Common  Stock.   Such  adjustment  shall  be  made  whenever  any  such
         distribution is made and shall become effective  immediately  after the
         record date mentioned above.

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

                  e) NOTICE TO HOLDERS.

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



                                       7
<PAGE>

                           ii.  NOTICE TO ALLOW  EXERCISE BY HOLDER.  If (A) the
                  Company shall  declare a dividend (or any other  distribution)
                  on the Common  Stock;  (B) the Company shall declare a special
                  nonrecurring  cash  dividend on or a redemption  of the Common
                  Stock;  (C) the Company  shall  authorize  the granting to all
                  holders of the Common  Stock  rights or warrants to  subscribe
                  for or purchase any shares of capital stock of any class or of
                  any  rights;  (D)  the  approval  of any  stockholders  of the
                  Company   shall   be   required   in   connection   with   any
                  reclassification  of the Common Stock,  any  consolidation  or
                  merger to which the  Company is a party,  any sale or transfer
                  of all or substantially  all of the assets of the Company,  of
                  any  compulsory  share  exchange  whereby the Common  Stock is
                  converted  into other  securities,  cash or property;  (E) the
                  Company  shall   authorize   the   voluntary  or   involuntary
                  dissolution,  liquidation  or winding up of the affairs of the
                  Company;  then,  in each case,  the Company  shall cause to be
                  mailed to the Holder at its last  addresses as it shall appear
                  upon the Warrant Register of the Company, at least 20 calendar
                  days  prior  to  the  applicable   record  or  effective  date
                  hereinafter  specified, a notice stating (x) the date on which
                  a record  is to be taken  for the  purpose  of such  dividend,
                  distribution,  redemption,  rights or warrants, or if a record
                  is not to be taken,  the date as of which the  holders  of the
                  Common  Stock  of  record  to be  entitled  to such  dividend,
                  distributions,  redemption,  rights  or  warrants  are  to  be
                  determined  or (y) the  date on which  such  reclassification,
                  consolidation,  merger,  sale,  transfer or share  exchange is
                  expected  to become  effective  or  close,  and the date as of
                  which it is  expected  that  holders  of the  Common  Stock of
                  record  shall be  entitled  to  exchange  their  shares of the
                  Common   Stock  for   securities,   cash  or  other   property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange;  PROVIDED,  that the failure
                  to mail such  notice or any defect  therein or in the  mailing
                  thereof shall not affect the validity of the corporate  action
                  required  to be  specified  in  such  notice.  The  Holder  is
                  entitled to exercise  this  Warrant  during the 20-day  period
                  commencing  the date of such notice to the  effective  date of
                  the event triggering such notice.

         f)  FUNDAMENTAL  TRANSACTION.  If, at any time  while  this  Warrant is
outstanding,  (A) the Company effects any merger or consolidation of the Company
with  or into  another  Person,  (B)  the  Company  effects  any  sale of all or
substantially all of its assets in one or a series of related transactions,  (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed  pursuant to which  holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects  any  reclassification  of the  Common  Stock  or any  compulsory  share
exchange  pursuant to which the Common Stock is  effectively  converted  into or
exchanged  for  other  securities,  cash  or  property  (in  any  such  case,  a
"FUNDAMENTAL  TRANSACTION"),  then,  upon  any  subsequent  conversion  of  this
Warrant, the Holder shall have the right to receive, for each Warrant Share that
would have been issuable upon such exercise absent such Fundamental Transaction,
at the option of the Holder,  (a) upon exercise of this  Warrant,  the number of
shares of Common  Stock of the  successor  or  acquiring  corporation  or of the


                                       8
<PAGE>

Company,  if  it is  the  surviving  corporation,  and  Alternate  Consideration
receivable upon or as a result of such reorganization, reclassification, merger,
consolidation  or  disposition  of assets by a Holder of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
event or (b) cash equal to the value of this Warrant as determined in accordance
with the Black-Scholes  option pricing formula (the "ALTERNATE  CONSIDERATION").
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate  Consideration based on the
amount of  Alternate  Consideration  issuable  in respect of one share of Common
Stock in such  Fundamental  Transaction,  and the Company  shall  apportion  the
Exercise  Price  among  the  Alternate  Consideration  in  a  reasonable  manner
reflecting  the relative  value of any  different  components  of the  Alternate
Consideration.  If  holders  of Common  Stock  are  given  any  choice as to the
securities,  cash or property to be received in a Fundamental Transaction,  then
the Holder shall be given the same choice as to the Alternate  Consideration  it
receives  upon  any  exercise  of  this  Warrant   following  such   Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or  surviving  entity in such  Fundamental  Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and  evidencing  the Holder's  right to exercise  such  warrant  into  Alternate
Consideration.  The  terms of any  agreement  pursuant  to  which a  Fundamental
Transaction  is effected  shall  include terms  requiring any such  successor or
surviving  entity  to  comply  with the  provisions  of this  paragraph  (f) and
insuring that this Warrant (or any such replacement  security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

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

         h) VOLUNTARY  ADJUSTMENT BY COMPANY. The Company may at any time during
the term of this Warrant  reduce the then current  Exercise  Price to any amount
and for any period of time deemed  appropriate  by the Board of Directors of the
Company.

SECTION 4. TRANSFER OF WARRANT.

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



                                       9
<PAGE>

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

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

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

SECTION 5. MISCELLANEOUS.

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



                                       10
<PAGE>

         b) NO RIGHTS AS  SHAREHOLDER  UNTIL  EXERCISE.  This  Warrant  does not
entitle the Holder to any voting rights or other rights as a shareholder  of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate  Exercise  Price (or by means of a cashless  exercise),
the  Warrant  Shares  so  purchased  shall be and be deemed to be issued to such
Holder as the record  owner of such  shares as of the close of  business  on the
later of the date of such surrender or payment.

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

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

         e) AUTHORIZED SHARES.

                  The  Company  covenants  that during the period the Warrant is
         outstanding,  it will reserve from its authorized  and unissued  Common
         Stock a sufficient  number of shares to provide for the issuance of the
         Warrant  Shares upon the  exercise of any  purchase  rights  under this
         Warrant.  The  Company  further  covenants  that its  issuance  of this
         Warrant shall constitute full authority to its officers who are charged
         with the duty of executing stock  certificates to execute and issue the
         necessary  certificates for the Warrant Shares upon the exercise of the
         purchase  rights  under this  Warrant.  The Company  will take all such
         reasonable  action  as may be  necessary  to assure  that such  Warrant
         Shares  may be issued  as  provided  herein  without  violation  of any
         applicable law or  regulation,  or of any  requirements  of the Trading
         Market upon which the Common Stock may be listed.

                  Except  and to the  extent as waived  or  consented  to by the
         Holder,  the  Company  shall  not by  any  action,  including,  without
         limitation,  amending its certificate of  incorporation  or through any
         reorganization, transfer of assets, consolidation, merger, dissolution,
         issue or sale of securities  or any other  voluntary  action,  avoid or
         seek to avoid the observance or performance of any of the terms of this
         Warrant, but will at all times in good faith assist in the carrying out
         of all such  terms  and in the  taking  of all such  actions  as may be
         necessary or  appropriate  to protect the rights of Holder as set forth
         in this Warrant against impairment.  Without limiting the generality of
         the  foregoing,  the Company will (a) not increase the par value of any
         Warrant  Shares above the amount  payable  therefor  upon such exercise
         immediately  prior to such  increase  in par  value,  (b) take all such
         action as may be necessary or appropriate in order that the Company may
         validly and legally issue fully paid and  nonassessable  Warrant Shares
         upon the exercise of this Warrant, and (c) use commercially  reasonable
         efforts to obtain all such authorizations,  exemptions or consents from
         any  public  regulatory  body  having  jurisdiction  thereof  as may be
         necessary to enable the Company to perform its  obligations  under this
         Warrant.



                                       11
<PAGE>

                  Before  taking any action which would result in an  adjustment
         in the number of Warrant  Shares for which this Warrant is  exercisable
         or  in  the  Exercise   Price,   the  Company  shall  obtain  all  such
         authorizations or exemptions  thereof,  or consents thereto,  as may be
         necessary from any public regulatory body or bodies having jurisdiction
         thereof.

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

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

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

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

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

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

         l) SUCCESSORS AND ASSIGNS.  Subject to applicable securities laws, this
Warrant  and the rights and  obligations  evidenced  hereby  shall  inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of Holder.  The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.



                                       12
<PAGE>

         m) AMENDMENT. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.

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

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


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



                                       13
<PAGE>





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


Dated:  September __, 2004

DIOMED HOLDINGS, INC.


By:__________________________________________
     Name:
     Title:




                                       14
<PAGE>




                               NOTICE OF EXERCISE

To:      Diomed Holdings, Inc.

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

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

                  [ ] in lawful money of the United States; or

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

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

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

The Warrant Shares shall be delivered to the following:

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

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

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

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

                            [PURCHASER]


                            By: ______________________________
                                  Name:
                                  Title:

                            Dated:  ________________________




                                       15
<PAGE>

                                 ASSIGNMENT FORM

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



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


_____________________________________________________ whose address is

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


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

                Dated:  ______________, _______


                Holder's Signature:       _____________________________

                Holder's Address:_____________________________



Signature Guaranteed:  ___________________________________________


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




                                       16



</TEXT>
</DOCUMENT>
