EX 10.8


    DEBENTURE
      HOLDER AGREEMENT AND CONSENT

     

    This
      Agreement and Consent is made as of the 28th day of September, 2007, between
      Diomed Holdings, Inc. (the “Company”),
      a
      Delaware corporation, and the undersigned (the “Holder”),
      who
      is the registered holder of (a) certain Variable Rate Convertible
      Debentures due October 2008 (the “2004
      Debentures”)
      of the
      Company, which are convertible into shares of the Company's common stock, par
      value $0.001 per share (the "Common
      Stock")
      (the
      "Existing
      Conversion Shares"),
      and,
      if applicable, (b) warrants (the “Warrants”)
      to
      purchase Common Stock, issued by the Company pursuant to the Securities Purchase
      Agreement, dated September 28, 2004, between the Company and the Purchasers
      of 2004 Debentures and Warrants named therein (the “2004
      Purchase Agreement”).
      Capitalized terms used herein and not otherwise defined herein shall have the
      respective meanings ascribed to them in the 2004 Purchase
      Agreement.

     

    WHEREAS,
      the Company proposes to enter into a Loan Agreement with Hercules Technology
      Growth Capital, Inc. or an affiliate thereof (“Hercules”),
      pursuant to which Hercules will loan to the Company on a secured basis up to
      the
      aggregate principal amount of $10,000,000 on the terms and conditions described
      in the Term Sheet annexed hereto as Exhibit
      A
      and as
      the Company and Hercules shall agree in the definitive documentation related
      thereto (the “Financing”).
      

     

    WHEREAS,
      Hercules requires the consent of the holders of the 2004 Debentures as a
      condition to the Financing.

     

    WHEREAS,
      the Company and the Holder shall amend and restate such Holder's 2004 Debenture
      for Variable Rate Secured Subordinated Convertible Debenture (the “Secured
      2004 Debenture”),
      substantially in the form of Exhibit
      B
      attached
      to this Agreement and Consent, which shall be convertible into Common Stock
      (the
      "Conversion
      Shares"),
      attached to which Secured 2004 Debenture, and incorporated by reference therein,
      is the Intercreditor Agreement to be entered into among the Holder, each other
      holder of the 2004 Debentures, Hercules and the Company (the “Intercreditor
      Agreement”),
      all
      in consideration for the agreement of the Holder as set forth herein and in
      exchange for the existing 2004 Debenture held by the Holder and the other
      holders of 2004 Debentures.

     

    WHEREAS,
      the amendment and restatement of the 2004 Debentures for the Secured 2004
      Debentures is being made in reliance upon the exemption from registration
      provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the
      "Securities
      Act").

     

    WHEREAS,
      concurrently herewith, the Company has also requested consents from the other
      Holders of 2004 Debentures pursuant to consents in form and substance identical
      to this Agreement (the "Other
      Agreements").

     

    NOW,
      THEREFORE, and in consideration of the mutual promises set forth in this
      Agreement and Consent, the Holder (for itself and on behalf of all subsequent
      holders of the Secured 2004 Debenture held by it), and the Company hereby agree
      as follows: 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    1. The
      Company hereby agrees that:

     

    (a) Contemporaneously
      with the closing of the Financing (the date of such closing, the "Closing
      Date"),
      and
      upon the execution of the Intercreditor Agreement by all parties thereto and
      the
      delivery by the Holder of the 2004 Debentures held by it, the Company will
      deliver to the Holder (i) the Secured 2004 Debenture, reflecting the security
      interest granted to the Holder and the Other Holders (as defined in Section
      5(b)
      of this Agreement and Consent), and the reduced Conversion Price of $0.70,
      having a principal amount equal to the outstanding principal amount of the
      2004
      Debenture held by the Holder as of the date of this Agreement and Consent,
      (ii)
      a fully executed security agreement in the form attached hereto as Exhibit
      C
      (the
      "Security
      Agreement")
      and
      (iii) a fully executed subsidiary guaranty in the form attached hereto as
Exhibit
      D
      (the
      "Guaranty"),
      such
      delivery to be in exchange for such 2004 Debenture.

     

    (b) Contemporaneously
      with the closing of the Financing, the Company will file on behalf of the Holder
      and the Other Holders a financing statement on Form UCC-1 with the Secretary
      of
      State of the State of Delaware.

     

    (c) By
      operation of the provisions of Section 3(b) of the Warrants, as a result of
      the
      issuance of the Secured 2004 Debentures, the Exercise Price of the Warrants
      shall be reduced to $0.70.

     

    (d) Contemporaneously
      with the closing of the Financing, the Company will pay or reimburse the Holder
      the reasonable costs and expenses of its outside counsel [Inserted in Agreement
      and Consent of the Holders other than Portside Growth and Opportunity Fund:,
      in
      an amount not to exceed $5,000], to advise the Holder in connection with the
      negotiation and execution of this Agreement and Consent.

     

    (e) If
      Hercules exercises its right to withhold its consent pursuant to the
      Intercreditor Agreement to the repayment of the Secured 2004 Debentures when
      due
      in accordance with their terms, then the Company will immediately repay the
      indebtedness incurred in the Financing to Hercules so long as the Company has
      received any payment (whether through payment of a judgment, settlement or
      otherwise) of at least $10 million in connection with the judgment in favor
      of
      the Company ordered by the U.S. District Court for the District of Massachusetts
      in the Company’s patent infringement litigation against AngioDynamics, Inc. and
      Vascular Solutions, Inc. (the “’777
      Patent Litigation”)
      [Inserted in Agreement and Consent of the Holders other than Rockmore Investment
      Master Fund Ltd. and if so directed by the Holder, repay the Holder's Secured
      2004 Debentures as soon thereafter as is reasonably practicable].

     

    (f) The
      Company represents and warrants to the Holder as set forth in Section 3.1 of
      the
      2004 Purchase Agreement as if such representations and warranties were made
      as
      of the date hereof and set forth in their entirety in this Agreement and
      Consent, except for those matters described in the Disclosure Schedule to this
      Agreement and Consent (the “Disclosure
      Schedule”).
      Such
      representations and warranties to the transactions thereunder and the securities
      issued thereby are hereby deemed for purposes of this Agreement and Consent
      to
      be references to the transactions hereunder and the issuance of the securities
      hereby, references therein to "Closing Date" being deemed references to the
      Closing Date as defined in Section 1(a) above, and references to "the date
      hereof" being deemed references to the date of this Agreement and
      Consent.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    (g) The
      Company represents and warrants to the Holder that after giving effect to the
      terms of this Agreement and Consent, no Event of Default (as defined in the
      Secured 2004 Debentures) shall have occurred and be continuing as of the date
      hereof.

     

    (h) For
      the
      purposes of Rule 144, the Company acknowledges that the holding period of (i)
      the Secured 2004 Debentures (including the corresponding Conversion Shares)
      may
      be tacked onto the holding period of the 2004 Debentures, and the Company agrees
      not to take a position contrary to this Section 1(h). The Company’s
      representation, covenant and agreement set forth in this Section 1(h) shall
      be
      subject in all respects to Rule 144 and other applicable securities laws, as
      may
      be in effect from time to time.

     

    (i) The
‘777
      Patent Litigation is currently on appeal by the defendants with the judgment
      therein under bond. The Company has no current knowledge of any facts or
      circumstances (except for any filings under Chapter 11 of the United States
      Bankruptcy Code which may be made or any court delays and other circumstances
      beyond the Company’s reasonable control in connection with the ‘777 Patent
      Litigation) that would (i) preclude the appeal from being decided by the Court
      on or prior to June 30, 2008 or (ii) assuming the appeal is unsuccessful,
      preclude the Company from collecting the full judgment awarded in the ‘777
      Patent Litigation on or prior to June 30, 2008 (other than the existence of
      a
      security interest in the proceeds of the judgment in the ‘777 Patent Litigation
      granted by the Company to Hercules pursuant to the Financing, the proceeds
      of
      which, in the case of collection thereof by Hercules, would be applied to reduce
      or retire the Company’s indebtedness to Hercules under the Financing). The
      Holder agrees that it has not relied upon the foregoing representation as an
      inducement to enter into this Agreement and Consent and agrees that the
      Company’s other representations and warranties, agreements and covenants
      contained herein constitute full and adequate consideration for the Holder’s
      execution, delivery and performance of this Agreement and Consent. 

     

    2. In
      connection with the Financing, notwithstanding anything to the contrary in
      the
      2004 Purchase Agreement or the 2004 Debentures, the Holder hereby
      irrevocably:

     

    (a) waives
      the covenants set forth in Sections 7(a) and 7(d) of the 2004 Debenture to
      the
      extent that they may relate to the Financing; 

     

    (b) consents
      to the incurrence by the Company of indebtedness pursuant to the Financing
      and
      to the grant of such security interests as are required to be granted to
      Hercules in the assets of the Company and its subsidiaries pursuant to the
      Financing as described in the Term Sheet and to the subordinated security
      interests to be granted to the Other Holders;

     

    (c) agrees
      that neither the Company’s issuance of the warrants proposed to be issued to
      Hercules, when issued on the terms described in the Term Sheet, nor the
      Company’s issuance of additional shares to the holders of its 2006 Preferred
      Stock, par value $0.001 per share, upon the conversion thereof in an amount
      that
      would have been issued had the conversion price thereof been $0.70 per share,
      will result in an antidilution adjustment to the conversion price of the Secured
      2004 Debentures or exercise price of the Warrants; 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    (d) agrees
      that the Financing shall not be deemed to be a “Subsequent Financing” as defined
      in the 2004 Purchase Agreement and therefore that the 2004 Purchase Agreement
      does not afford to the Holder any participation rights in the Financing; and
      

     

    (e) agrees
      that neither the Holder nor its affiliates will trade in the Company’s Common
      Stock until the earlier of (i) the Company’s public announcement of the closing
      of the Financing, (ii) termination of negotiations between the Holder and the
      Company regarding the Financing and (iii) 30 days after the date
      hereof.

     

    (f) agrees
      that until the Holder is notified by the Company that the American Stock
      Exchange has approved the listing of the additional shares of Common Stock
      issuable upon conversion of the Secured 2004 Debenture which are not already
      listed with the American Stock Exchange on behalf of the Holder, the Holder
      shall not exercise its right to convert more than 66 2/3% of the principal
      amount of the Secured 2004 Debenture.

     

    3. Covenants.

     

    (a) Disclosure
      of Transactions and Other Material Information.
      On or
      before 8:30 a.m., New York City time, on the first Business Day immediately
      following the Closing Date, the Company shall issue a press release and file
      a
      Current Report on Form 8-K describing the terms of the transactions contemplated
      by this Agreement and Consent and the Financing in the form required by the
      Exchange Act and attaching the material Transaction Documents not previously
      filed (including, without limitation, the form of this Agreement and Consent
      and
      the form of the Secured 2004 Debentures) (including all attachments, the
      "8-K
      Filing").
      From
      and after the filing of the 8-K Filing with the Commission, the Holder shall
      not
      be in possession of any material, nonpublic information received from the
      Company, any of its Subsidiaries or any of its respective officers, directors,
      employees or agents, that is not disclosed in the 8-K Filing. The Company shall
      not, and shall cause each of its Subsidiaries and its and each of their
      respective officers, directors, employees and agents, not to, provide the Holder
      with any material, nonpublic information regarding the Company or any of its
      Subsidiaries from and after the filing of the 8-K Filing with the Commission
      without the express written consent of the Holder. Without the prior written
      consent of the Holder, neither the Company nor any of its Subsidiaries or
      affiliates shall disclose the name of the Holder in any filing, announcement,
      release or otherwise other than in connection with the Registration Statement,
      as contemplated pursuant to
      the
      Registration Rights Agreement,
      unless
      such disclosure is required by law, regulation or the Principal
      Market.

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b) On
      or
      before 5:30 p.m., New York City time, on the first Business Day following the
      date of this Agreement and Consent, the Company shall file an additional listing
      application with the American Stock Exchange (the “Amex
      Listing Application”)
      covering the approximately 1.7 million shares of Common Stock issuable upon
      conversion of the Secured 2004 Debentures which are not already listed with
      the
      American Stock Exchange, and the Company shall use its reasonable best efforts
      to cause the Amex Listing Application to be approved as soon as is reasonably
      practicable. On or before 9:30 a.m., New York City time, on the first Business
      Day following the date that the Company is notified in writing by the American
      Stock Exchange that the Amex Listing Application has been approved, the Company
      shall provide written notice of such approval to the Holder by facsimile or
      email.

    


    (c) Within
      five (5) calendar days of the Closing Date the Holder shall have received the
      opinion of the Company's counsel, McGuireWoods LLP, containing opinions
      regarding this Agreement and Consent and the Secured 2004 Debentures,
      substantially in the form set forth in Exhibit
      E,
      with
      customary assumptions, exceptions and exclusions consistent with those included
      in the legal opinion delivered to Hercules on the Closing Date, but for
      distinctions arising from differences in applicable law.

    


    (d) The
      Company shall take all actions reasonably requested by the Holder to permit
      the
      Holder to sell the Conversion Shares without restriction pursuant to Rule 144(k)
      of the Securities Act.

    


    4. Amendment
      to Transaction Documents. Each
      of
      the Transaction Documents are hereby amended as follows:

     

    (a) All
      references to "Debentures" shall be amended to include additionally the Secured
      2004 Debentures as defined in this Agreement and Consent.

     

    (b) All
      references to "Conversion Shares" shall be amended to include additionally
      the
      Conversion Shares as defined in this Agreement and Consent.

     

    (c) The
      defined term "Transaction Documents" is hereby amended to include this Agreement
      and Consent, the Intercreditor Agreement, the Security Agreement and the
      Guaranty.

     

    5. Miscellaneous.

     

    (a) No
      Other Changes.
      All
      other terms and conditions of the 2004 Purchase Agreement shall remain in full
      force and effect.

     

    (b) Effectiveness;
      Other Agreements.
      This
      Agreement and Consent shall be effective at the Closing following the execution
      by each of the other holders of 2004 Debentures who are party to the 2004
      Purchase Agreement with the Company (the “Other
      Holders”)
      of the
      Other Agreements with substantially the same effect as this Agreement and
      Consent (with such adjustments as are necessary to reference the specific
      Company securities held by the Other Holders), provided,
      that
      this Agreement and Consent shall be null and void if the Closing Date does
      not
      occur on or before October 15, 2007. In connection with this Agreement and
      Consent, the Company represents and warrants that none of the terms offered
      to
      Other Holders is more favorable to such Other Holder than those of the Holder
      and this Agreement and Consent shall be, without any further action by the
      Holder or the Company, deemed amended and modified in an economically and
      legally equivalent manner such that the Holder shall receive the benefit of
      the
      more favorable terms contained in the Other Agreements.  The Company
      agrees, at its expense, to take such other actions (such as entering into
      amendments to this Agreement and Consent) as the Holder may reasonably request
      to further effectuate the foregoing. Notwithstanding the foregoing, to the
      extent that the Company and any Other Holder enters into a transaction similar
      to the one contemplated hereby pursuant to an Other Agreement, all such matters
      are solely in the control of the Company, not the action or decision of the
      Holder, and would be solely for the convenience of the Company and not because
      it was required or requested to do so by the Holder or any such other third
      party holder.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c) Disclosure
      of Financing Status.
      The
      Company shall promptly public disclose to the Holder (i) the termination or
      cessation of any discussions in which the Company may be involved with respect
      to the Financing and (ii) the status of any such discussions if the consummation
      of the closing of the Financing or the termination or cessation of any such
      discussions has not been publicly disclosed on or prior to the 30th day after
      the date hereof.

     

    (d) Holder
      Independence.
      The
      Company acknowledges and agrees that nothing contained herein and no action
      taken by the Holder pursuant hereto or in connection herewith shall be deemed
      to
      constitute the Holder and any Other Holder or other third party holder of the
      Company’s securities as a partnership, an association, a joint venture or any
      other kind of group or entity, or create a presumption that the Holder or any
      Other Holder or other such third party holders are in any way acting in concert
      or as a group or entity with respect to such obligations or the transactions
      contemplated hereby or any other matters. The Company further acknowledges
      and
      agrees that the Holder is not acting in concert or as a group with any Other
      Holder or other third party holders of the Company’s securities with respect to
      such obligations or the transactions contemplated by this Agreement and Consent.
      The decision of the Holder to enter into this Agreement and Consent and to
      consummate the transaction contemplated hereby has been made by the Holder
      independently of any Other Holder or other third party holder of the Company’s
      securities. The Company hereby confirms that the Holder has independently
      participated with the Company in the negotiation of the transaction contemplated
      hereby with the advice of its own counsel and advisors. The Holder shall be
      entitled to independently protect and enforce its rights under this Agreement
      and Consent, and it shall not be necessary for any such other third party holder
      to be joined as an additional party in any proceeding for such purpose.


     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF, the undersigned have signed this Agreement and Consent as
      of
      the date and year set forth above.

     

    
      	
              NAME
                OF DEBENTURE HOLDER:

            	 
	 	 
	 	
              By:

            	 
	 	 	
              (Signature
                of authorized person above) 

            
	 	 	
              Name:
                

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	
              DIOMED
                HOLDINGS, INC.

            
	 	 	 	 
	 	
              By:

            	 
	 	 	
              Name:
                

            	
              David
                Swank 

            
	 	 	
              Title:
                

            	
              Chief
                Financial Officer

            


    

     

    
      Signature
        Page

      Debenture
        Holder Agreement and Consent

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A - HERCULES TERM SHEET

     

    Below
      is a summary of the principal business considerations

    related
      to our growth capital financing loan proposal.

     

    
      	
              Commitment
                Amount:

            	 	
              $

            	
              10,000,000

            	 
	
              Interest
                Rate (1)

            	 	 	
              Prime
                + 3.20

            	
              %

            
	
              Deferred
                Interest Charge (2)

            	 	 	
              9.50

            	
              %

            


    

     

    
      	 	
              (1)

            	
              Wall
                Street Journal Prime, which surveys large US banks and publishes
                the
                consensus prime rate. As of the date of this Document,
                Prime is 8.25%.

            


    

     

    
      	
            	(2)	
              One
                time payment due at maturity and calculated against funds
                borrowed.

            


    

    


    
      	
              Lender:

            	
              Hercules
                Technology Growth Capital, Inc. and any affiliate or transferee.
                ('Hercules”
                or 'Lender”).

            
	 	 
	
              Borrower:

            	
              Diomed
                Holdings, Inc. and its subsidiaries. ('Diomed” or
                'Borrower”).

            
	 	 
	
              Term
                Sheet Expiration:

            	
              September
                26, 2007.

            
	 	 
	
              Loan
                Closing:

            	
              Best
                efforts to close by October 2, 2007.

            
	 	 
	
              Availability
                Period:

            	
              The
                commitment is available as follows:

            
	 	 
	 	
              Tranche
                A: $6.0
                million of Loan Commitment is funded at closing.

            
	 	 
	 	
              Tranche
                B:
                Remaining $4.0 million will be available at Borrower’s option beginning
                January 31, 2008 and will remain available through March 30,
                2008.

            
	 	 
	
              Use
                of Proceeds:

            	
              The
                proceeds of the Loan will be used for general corporate
                purposes.

            
	 	 
	
              Interest-only
                Period:

            	
              Through
                June 1, 2008.

            
	 	 
	
              Amortization:

            	
              Beginning
                on July 1, 2008, Borrower shall repay Principal on a schedule comprised
                of twenty-four equal monthly principal and interest
                payments.

            
	 	 
	 	 
	
              Maturity:

            	
              July
                1, 2010.

            
	 	 
	
              Collateral:
                

            	
              The
                Loan will be secured by a perfected first position lien on all of
                the
                borrower's assets, including Intellectual Property (“IP”). This lien will
                allow for licensing in the normal course of business.

            
	 	 
	
              Warrant:
                

            	
              A
                warrant (the “Warrant”) will be issued by Borrower to Lender to purchase
                $100,000 worth of shares of common stock at an Exercise Price of
                $0.70.

            
	 	 
	
              Option
                to invest:

            	
              Borrower
                shall grant to Lender the option to invest up to $1.0 million in
                a
                subsequent institutional equity financing on the same terms, conditions,
                and pricing offered to the investors in such subsequent equity
                financing. This option to invest does not apply to equity transactions
                with strategic partners or regular shelf registered
                offerings.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              Success
                Fee:

            	
              Borrower
                shall remit the following cash payments to Lender:

            
	 	 
	 	
              1)

            	
              $200,000
                at Loan Closing.

            
	 	
              2)

            	
              $900,000
                on June 30, 2008

            
	 	
              3)

            	
              Borrower
                shall remit a cash payment to Lender in an amount equal to 1.00%
                of any
                gross consideration paid for the acquisition of the business of Diomed
                Holdings and its operating subsidiaries.

            
	 	 	 
	
              Financial
                Covenants:

            	
              No
                financial ratio covenants.

            
	 	 
	
              Reporting
                Requirements:

            	
              Borrower
                will furnish to Lender monthly and quarterly financial statements,
                annual
                audited financial statements and all materials provided to the
                shareholders along with other financial information Lender reasonably
                requests or generally provided to other Holders of the common
                stock.

            
	 	 
	
              Expenses:
                

            	
              Borrower
                shall pay the invoiced expenses, including UCC searches, filing costs,
                and
                other miscellaneous expenses, and reasonable fees of counsel (in-house
                and
                outside) applicable to drafting, negotiating and/or finalizing the
                Loan.

            
	 	 
	
              Commitment
                Fee: 

               

            	
              A
                Commitment Fee of 2.0% of the Commitment Amount is required in order for
                Lender to commence the due diligence process. In the event that the
                transaction is not approved, the Commitment Fee shall be returned
                in its
                entirety to Borrower (minus due diligence expenses). In the event
                of
                approval, the Commitment Fee will be applied in its entirety as a
                Facility
                Fee and towards the Lender’s non-legal transaction costs and due diligence
                expenses {Paid}.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    In
      consideration of the time, cost and expense devoted, and to be devoted, by
      the
      Lender in connection with
      the
      transaction contemplated by this proposal, Borrower agrees that until Loan
      Closing (the “Exclusive Period”) it will not (a) solicit or entertain any
      proposal, (b) negotiate with any other person, or
      (c)
      provide any information with respect to Borrower to any person who might be
      expected to propose
      alternate financing, or Commitment Fee will be deemed earned in
      full.

     

    The
      proposed terms and conditions are provided for discussion purposes only and
      do
      not represent an agreement
      or commitment to lend, provided however that the terms entitled and associated
      with “Expenses”,
      “Commitment Fee” and “Exclusive Period” shall be binding obligations of the
      parties hereto.
      The actual terms and conditions upon which the Lender may agree to extend credit
      to the Borrower are subject to satisfactory completion of due diligence,
      internal credit approvals, satisfactory review of documentation and such other
      terms and conditions as may be determined by Lender and which would be contained
      in definitive legal documents for the loan contemplated hereby.

     

    If
      the
      basic terms are acceptable, please fax an executed copy of this letter to
      866-468-8916 and wire payment
      of the Commitment Fee. This
      offer will expire at 5PM (ET) on September 26, 2007 unless
      accepted
      by Borrower or extended by Lender. We look forward to your response. Please
      feel
      free to call us at 617-261-6553 (work) or 617-877-9663 (cell).

     

    We
      appreciate your consideration of this proposal. We look forward to the
      opportunity to work together and establish a long-term strategic relationship
      with you and Diomed, Inc.

     

    Sincerely,

     

    
      	
              Parag
                Shah

            	
              R.
                Bryan Jadot

            
	
              Sr.
                Managing Director & Group Head, Life Sciences

            	
              Principal,
                Life Sciences

            
	
              Hercules
                Technology Growth Capital, Inc.

            	
              Hercules
                Technology Growth Capital, Inc.

            


    

     

    AGREED
      AND ACCEPTED this _____ day of ____________________ 2007

     

    Diomed,
      Inc.

     

    
      	
              By:

            	 
	
              Name:

            	 
	
              Title:

            	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      B
      - FORM OF SECURED 2004 DEBENTURE

    (See
      attached)

    


    EXHIBIT
      C - FORM OF SECURITY AGREEMENT

    (See
      attached)

    


    EXHIBIT
      D - FORM OF SUBSIDIARY GUARANTY

    (See
      attached)

    


    EXHIBIT
      E - FORM OF LEGAL OPINION

    


    Based
      on
      and subject to the foregoing and the other exclusions, qualifications,
      limitations, and assumptions set forth in this opinion letter, we are of the
      opinion that:

    


    1.
       Organizational
      Status.
      Based
      solely on the Good Standing Certificates, each [Obligor] is in good standing
      under the laws of the State of Delaware and Diomed, Inc. is in good standing
      as
      a foreign corporation under the laws of the commonwealth of Massachusetts.
      As of
      the date set forth in the respective Good Standing Certificate and based solely
      on the respective Charter, each [Obligor] is validly existing under the laws
      of
      the State of Delaware as of the date set forth in such Charter. 

     

    2.
       Power
      and Authority.
      Each
      [Obligor] has the corporate power and authority to execute, deliver, and perform
      the terms and provisions of each Subject Document to which it is party and
      has
      taken all necessary organizational action to authorize the execution, delivery,
      and performance thereof.

     

    3.
       Execution,
      Validity, and Enforceability.
      Each
      [Obligor] has duly executed and delivered each Subject Document to which it
      is
      party, and each such Subject Document constitutes the valid, binding, and
      enforceable obligation of such [Obligor].

     

    4.
       Noncontravention.
      Neither
      the execution, delivery, and performance by each [Obligor] of any Subject
      Document to which it is a party, nor the compliance by each [Obligor] with
      the
      terms and provisions thereof: (a)
      violates
      any present law, statute, or regulation of the State of New York or the United
      States (including Regulations T, U and X of the Board of Governors of the
      Federal Reserve System) that, in each case, is applicable to such [Obligor];
      (b) violates
      any provision of the Governing Documents of
      such
      [Obligor]; or (c)
      results
      in any breach of any of the terms of, or constitutes a default under, any of
      the
      Reviewed Agreements or results in the creation or imposition of any lien,
      security interest, or other encumbrance (except as contemplated or otherwise
      permitted by the Subject Documents) upon any assets of such [Obligor] pursuant
      to the terms of any of the Reviewed Agreements.

     

    5.
       Governmental
      Approvals.
      No
      consent, approval, or authorization of, or filing with, any governmental
      authority of the State of New York or the United States that, in each case,
      is
      applicable to each [Obligor] is required for: (a) the due execution, delivery,
      and performance by such [Obligor] of any Subject Document to which it is a
      party, or (b) the validity, binding effect, or enforceability of any Subject
      Document to which such [Obligor] is a party, except (i) in each case, as have
      previously been made or obtained, (ii) filings and recordings that are necessary
      to perfect the liens and security interests granted under the Subject Documents
      (including the filing of financing statements under the Uniform Commercial
      Code), and (iii) consents, approvals, authorizations, or filings as may be
      required to be obtained or made by the [Holder] as a result of their involvement
      in the transactions contemplated by the Subject Documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    6.
       UCC
      Matters.
      After
      giving effect to the making of the loans or other extensions of credit on the
      date hereof as contemplated by the Loan Agreement:

     

    (a) the
      Subject Documents are effective to create an attached security interest (the
      “Article 9 Security Interest”) under Article 9 in favor of the [Holder] in that
      portion of the personal property included within the term “Collateral” (as
      defined in the Loan Agreement) in which a security interest can be granted
      under
      Article 9 (collectively, the “Article 9 Collateral”);

     

    (b) and
      upon
      filing the Financing Statement with the UCC Filing Office and the acceptance
      for
      filing thereof, with the appropriate filing fee tendered, the [Holder] will
      have
      a perfected security interest in those items of the Article 9 Collateral in
      which a security interest may be perfected under Article 9 by the filing of
      a
      financing statement with the UCC Filing Office; 

     

    (c) and
      upon
      the execution by all parties thereto and delivery of the Account Control
      Agreements, such Account Control Agreements are effective under the New York
      UCC
      to create a valid, perfected security interest in favor of the [Holder] in
      the
      deposit accounts described in such Account Control Agreements; and

     

    (d) after
      giving effect to the delivery by the [Obligor]s to the [Holder] in pledge,
      within the State of New York and pursuant to the Pledge Agreement, of each
      of
      the stock certificates representing the shares of capital stock of Diomed Inc.,
      Diomed PDT, Inc. and Diomed Acquisition Corp. (the “Pledged Shares”) to the
      [Holder], together with properly completed and effective stock powers endorsing
      the Pledged Shares and duly executed by the [Obligor] in blank, and assuming
      the
      continued possession of such Pledged Shares and of such stock powers by the
      [Holder] within the State of New York, the [Holder] shall acquire a valid
      security interest in all right, title and interest of the [Obligor] in the
      Pledged Shares pursuant to the Pledge Agreement, to the extent that a security
      interest therein may be created pursuant to Division 9 of the New York UCC,
      and
      such security interest will be perfected, with the consequences of perfection
      by
      control with respect to the Pledged Shares accorded by the New York
      UCC.

     

    7.
       Common
      Stock.
      The
      shares of Holdings Common Stock, par value $0.001 per share (the “Common
      Stock”), issuable upon conversion of the Secured 2004 Debentures have been duly
      authorized, free from preemptive rights, and, based solely on instructions
      addressed to Holdings’ Common Stock transfer agent, Continental Stock Transfer
      and Trust Co., reserved for issuance upon such exercise. When issued and so
      delivered to [Holder] in accordance with the terms of the Secured 2004
      Debentures, such shares will be validity issued, fully paid and
      non-assessable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    8.
       Exemption
      from Registration.
      The
      offer and sale of the Secured 2004 Debentures pursuant to the Agreement and
      Consent and the issuance of the Conversion Shares thereunder in accordance
      with
      the Secured 2004 Debentures constitute and will constitute transactions exempt
      from the registration requirements of Section 5 of the Securities Act of 1933,
      as amended. 

     

    9.
       Eligibility
      for Resale under Rule 144(k).
      The
      resale of Conversion Shares by the [Holder] shall be exempt from the
      registration requirements of Section 5 of the Securities Act of 1933, as
      amended, pursuant to Rule 144(k) promulgated thereunder, assuming that the
      [Holder] is not, and for the three-month period preceding the date of such
      resale has not been, an affiliate of the [Company] within the meaning of
      paragraph (a)(1) of Rule 144 under the Securities Act.

     

    10.
       Proceedings.
      To our
      knowledge, there is no outstanding judgment, action, suit, or proceeding pending
      or threatened in writing against either [Obligor] before any court, governmental
      agency, or arbitrator that challenges the legality, validity, binding effect,
      or
      enforceability of any Subject Document to which such [Obligor] is a
      party.

     

    11.
      Investment
      Company Act.
      Each
      [Obligor] is not an “investment company” or a company “controlled by” an
“investment company” within the meaning of the Investment Company Act of 1940,
      as amended.