Exhibit 10.7
                             STOCKHOLDERS' AGREEMENT

         THIS   STOCKHOLDERS'   AGREEMENT  (this  "Agreement")  is  made  as  of
_____________ ____, 2003 by and among Diomed Holdings,  Inc. (the "Company"),  a
Delaware  corporation,  Gibralt US, Inc. ("Gibralt US"), a Colorado  corporation
(together with Gibralt Capital Corp., a ________  corporation,  and all of their
respective affiliates,  "Gibralt") and the investors listed on Schedule A (each,
a "Signatory Investor,"  collectively,  the "Signatory Investors," and, together
with Gibralt,  the  "Holders").  This Agreement is the  Stockholders'  Agreement
referred to in the  Securities  Purchase  Agreement,  dated as of August 8, 2003
(the "Securities Purchase Agreement") by and among the Company and the Signatory
Investors.  Capitalized  terms used but not defined in this Agreement shall have
the respective meanings given them in the Securities Purchase Agreement.

         WHEREAS,  Gibralt is the holder of 15 shares of the  Company's  Class E
Preferred Stock, par value $0.001 per share (the "Class E Stock"),  and a holder
of 22 shares of the  Company's  Class F Preferred  Stock,  par value $0.001 (the
"Class F Stock"); and

         WHEREAS,  pursuant to the Securities  Purchase  Agreement,  the Company
wishes to sell to the Signatory  Investors,  and the Signatory Investors wish to
purchase from the Company, the Investors' Shares; and

         WHEREAS,  as a condition  precedent to the  obligation of the Signatory
Investors at the Tranche I Closing and the Tranche II Closing, the Company shall
have executed and delivered this Agreement; and

         WHEREAS,  the Holders and the Company wish to make the  agreements  and
covenants set forth in this Agreement.

         NOW, THEREFORE,  for good and valuable  consideration,  the sufficiency
and receipt of which the Company,  Gibralt and the  Signatory  Investors  hereby
acknowledge, it is agreed as follows:

         1. AGREEMENT TO VOTE.

Each Holder,  with respect to all shares of Class E Stock, Class F Stock and the
Investors'  Shares  (collectively,  the "Shares"),  hereby agrees to hold all of
such Shares and any other  voting  securities  of the  Company  acquired by such
Holder in the  future  (and any other  securities  of the  Company  issued  with
respect  to,  in  exchange  or  in  substitution  for  any  of  the  foregoing),
(hereinafter collectively referred to as the "Voting Shares") subject to, and to
vote the Voting  Shares at regular or special  meetings of  stockholders  and/or
give written consent with respect to such Voting Shares in accordance  with, the
provisions of this Agreement.


<PAGE>

2. BOARD SIZE AND COMPOSITION.

(a) The number of directors  comprising the Board of Directors of the Company as
of the date  hereof is eight  (8).  Pursuant  to  Section  11 of the  Securities
Purchase  Agreement,  within twelve (12) days after the Tranche II Closing Date,
the Company  shall,  in accordance  with the  provisions of the  Certificate  of
Incorporation  and  By-Laws of the  Company  and  applicable  law,  use its best
efforts to cause the number of Directors comprising the Board of Directors to be
increased to nine (9), constituted as follows:

         (i)     up to three (3) Directors  designated in writing to the Company
                 by the designee (each, an "Investor  Nominee") of the Signatory
                 Investors  holding a majority of the Investors'  Shares held by
                 all of the Signatory  Investors  (excluding  Investors'  Shares
                 held by Gibralt) (the "Signatory Investor Majority");

         (ii)    one (1) Director selected by the holders of at least 66 2/3% of
                 the outstanding  principal  amount of the Class E Secured Notes
                 due 2006 issued by Diomed (for so long as any such Notes remain
                 outstanding);

         (iii)   one (1) Director  shall be the Chief  Executive  Officer and an
                 additional Director shall remain David Swank; and

         (iv)    three (3) other  Directors,  all of whom shall be "independent"
                 directors,  as such term is defined by the U.S. securities laws
                 and the rules and regulations promulgated by the SEC thereunder
                 or by the rules of the AMEX and/or any other  exchange on which
                 the Company's securities are traded.

(b) Subject to the Certificate of Incorporation and By-Laws,  applicable law and
the applicable  requirements of the AMEX, one (1) Investor Nominee, when elected
as a member of the Board of  Directors,  shall  have the right to be a member of
any nominating, compensation, stock option or audit committee of the Board.

(c) If any of the Investor  Nominees  resigns,  dies,  becomes  incapacitated or
otherwise  is removed  from  office,  the Company  shall use its best efforts to
cause the Board of Directors to nominate and cause the  resulting  vacancy to be
filled with another  Investor  Nominee,  designated in writing to the Company by
the Signatory Investor Majority.

(d) So long as this Agreement  remains in effect,  the Company shall not without
prior written approval of the Signatory  Investor  Majority increase the size of
the Board of Directors to a number of members greater than nine (9);

3. GIBRALT'S AGREEMENT TO VOTE IN FAVOR OF INVESTOR NOMINEES.

Until the date  which is three (3)  years  from the  Tranche  II  Closing  Date,
Gibralt  shall  vote all  Voting  Shares  held by it in  favor  of all  Investor
Nominees at each election of Directors.



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<PAGE>

4. NO LIABILITY FOR ELECTION OF INVESTOR NOMINEES.

None of the  Company,  the  Holders,  nor any  officer,  director,  stockholder,
partner,  employee or agent of such party,  makes any representation or warranty
as to the fitness or competence  of the nominee of any party  hereunder to serve
on the Board of Directors by virtue of such party's  execution of this Agreement
or by the  act of such  party  in  voting  for  such  nominee  pursuant  to this
Agreement.

5. GRANT OF PROXY; RESTRICTIONS IN OTHER AGREEMENTS.

(a) Should the  provisions  of this  Agreement be construed  to  constitute  the
granting of proxies,  such proxies  will be deemed  coupled with an interest and
are irrevocable for the term of this Agreement.

(b) No Holder may enter into any agreement or  arrangement  with any person with
respect to the Common Stock on terms  inconsistent  with the  provisions of this
Agreement.

6. SPECIFIC ENFORCEMENT.

Each party  hereto  agrees that its  obligations  hereunder  are  necessary  and
reasonable  in order to protect the other  parties to this  Agreement,  and each
party expressly agrees and understands that monetary damages would  inadequately
compensate an injured party for the breach of this Agreement by any party,  that
this Agreement will be  specifically  enforceable,  and that, in addition to any
other remedies that may be available at law, in equity or otherwise,  any breach
or threatened breach of this Agreement will be the proper subject of a temporary
or permanent  injunction or restraining order,  without the necessity of proving
actual  damages.  Further,  each party  hereto  waives any claim or defense that
there is an adequate remedy at law for such breach or threatened breach.

7. MANNER OF VOTING.

The voting of Voting  Shares  pursuant  to this  Agreement  may be  effected  in
person,  by proxy,  by written  consent,  or in any other  manner  permitted  by
applicable law.

8. TERMINATION.

This Agreement shall automatically  terminate without any action by the Company,
the  Signatory  Investors  or  Gibralt  if  the  Signatory  Investors  cease  to
beneficially  hold (as such term is defined by the rules and  regulations of the
SEC) less than fifty percent (50%) of the aggregate number of Investors'  Shares
held by all of the Signatory Investors as of the date of this Agreement.

9.       NOTICES.

Notices under this  Agreement  shall be given and deemed  received in accordance
with the notice provisions of the Securities Purchase Agreement.



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<PAGE>

10. 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,  THE SIGNATORY  INVESTORS AND GIBRALT 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,  THE  SIGNATORY  INVESTORS AND
GIBRALT  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.

         (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  INVESTMENT
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.



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<PAGE>

(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 or modified by a written  instrument signed by
the Company,  the Signatory  Investor  Majority and Gibralt;  PROVIDED that this
Agreement  may be  amended or  modified  by a written  instrument  signed by the
Signatory  Investor  Majority and the Company alone if such  amendment  does not
impose additional obligations on Gibralt or diminish Gibralt's rights hereunder.

(j) This Agreement  represents 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.



                            [Signature page follows.]




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<PAGE>

         IN WITNESS WHEREOF, this Stockholders' Agreement has been duly executed
by the Company,  the  Signatory  Investors  and Gibralt 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

                              GIBRALT:

                              GIBRALT US, INC.
                              GIBRALT CAPITAL CORP.

                              By: /s/ JOHNNY CIAMPI
                                  -------------------------------------------
                                  (Signature of Authorized Person)
                                  Name: Johnny Ciampi
                                  Title: Authorized Officer

                              SIGNATORY INVESTORS:

                              Name:

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

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

                              -----------------------------------------------
                              Title:

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