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                                                                    EXHIBIT 10.4


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT') OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED ("TRANSFERRED") EXCEPT IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF THE ACT OR PURSUANT TO AN
EXEMPTION THEREFROM.

                            DIAMETRICS MEDICAL, INC.

                   CONVERTIBLE SENIOR SECURED FIXED RATE NOTE

                               DUE AUGUST 4, 2003

Principal Amount:   [$       ]
Return Interest Rate:   7% P.A.
Return Date of Issue:  August 4, 1998


         FOR VALUE RECEIVED, the undersigned, DIAMETRICS MEDICAL, INC. a
corporation incorporated in the State of Minnesota with its principal office at
2658 Patton Road, St. Paul, Minnesota 56113 (herein called the "Company"),
promises to pay to the order of [______________________], a [______________]
organized under the laws of [___________], with an office at
______________________________, or its registered assigns (the "Holder") the
amount of [____________________________ ($_________)] or such lesser amount as
may be owing hereunder on or before the Final Payment Date together with
interest thereon from the Issue Date at the rate and on the dates specified in
Article 3, in accordance with the terms hereof.

         This is one of a duly authorized issue of Notes of the Company,
originally issued pursuant to a certain Note Purchase Agreement dated August 4,
1998 by the Company and the signatories thereto, and is entitled to the benefit
of the Note Purchase Agreement, and each holder of this Note, by his acceptance
hereof, agrees to be bound by the provisions of the Note Purchase Agreement. The
Note Purchase Agreement sets forth, among other things certain covenants of the
Company and Events of Default and rights and remedies related thereto.

         Capitalized terms used herein without definition shall have the
meanings given such terms in Article 9 hereof or the Note Purchase Agreement
referred to below.

Article 1.  Security

            Section 1.1 Nature of Security. The obligations of the Company under
            this Note are secured pursuant to the provisions of the Security
            Documents.
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            Section 1.2 Release of Security. Provided that no Default or Event
            of Default shall then exist and subject as hereinafter provided, the
            Company may at any time during any calendar year (commencing with
            1999) require, by notice given to the holders of all of the notes
            issued pursuant to the Note Purchase Agreement and then outstanding,
            that all or any of the Shares that are the subject of the Security
            Documents shall cease to form security for the obligations of the
            Company under such notes and be released from the Security Documents
            PROVIDED THAT:

            (i)         only one such notice may be given in any calendar year;

            (ii)        the Book Value of the Shares must, within four months
                        preceding the date upon which any such notice is given,
                        have exceeded three times the unpaid aggregate principal
                        amounts of all such notes outstanding as at the date
                        such notice is given;

            (iii)       such notice shall include a copy of audited financial
                        statements of DML evidencing the Book Value referred to
                        in (ii) above;

            (iv)        the maximum number of Shares which may cease to form
                        security as aforesaid and be released as aforesaid shall
                        be such number of Shares (and if there is more than one
                        class of Shares, of each class of Shares) as is
                        proportionate (relative to the number of Shares then
                        forming such security) to the amount by which the Book
                        Value of the Shares (as shown in such audited financial
                        statements) exceeds three times the then aggregate
                        unpaid principal amounts under all notes issued pursuant
                        to the Note Purchase Agreement; and

            (v)         in the event that the Book Value of the Shares forming
                        the security for the obligations of the Company under
                        this Note shall at any time be less than three times the
                        aggregate unpaid principal amounts under all such notes
                        issued pursuant to the Note Purchase Agreement, the
                        Company shall cause such number of Shares (if any) not
                        then forming part of such security as is equivalent in
                        value to the deficit to form part of such security and
                        to become subject to the Security Documents.

Article 2.  The Principal Amount

            Section 2.1 Payment of the Principal Amount. The Principal Amount,
            to the extent not previously paid under the terms of this Note,
            shall be due and payable in full on the Final Payment Date.

            Section 2.2 No Early Payment of Principal Amount. Subject to the
            other provisions of this Note (including, but not limited to,
            Sections 2.3 and 4.5 below), the Company may not, prior to the Final
            Payment Date, pay all or any part of the Principal Amount.
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            Section 2.3 Conversion. This Note shall be convertible by the
            Holder, in whole or in part, into shares of common stock of the
            Company on the terms and conditions set forth in the Note Purchase
            Agreement. If the Principal Amount is paid in part by such a
            conversion, then the Company shall execute and deliver to the
            Holder, at the expense of the Company, a new Note in accordance with
            Section 4.4 below.

Article 3.  Interest and Default Interest.

            Section 3.1 Interest. Interest shall be payable at the rate of 7 per
            cent per annum by the Company on the outstanding Principal Amount
            from time to time. Such interest shall accrue, on a daily basis,
            from the Issue Date and be payable, at the Interest Rate, on 31
            December 1998 (in respect of the period from the Issue Date until
            and including 31 December 1998) and thereafter quarterly in arrears
            on 31 March, 30 June, 30 September and 31 December of each year, or
            if any such date is not a Business Day, then on the next Business
            Day. If the Principal Amount (or any part thereof) shall become due
            and payable, interest up to and including the relevant Payment Date
            shall also be due and payable on such Payment Date.

            Section 3.2 Default Interest. If any sum due and payable by the
            Company is not paid on its due date for payment under this Note,
            interest shall accrue at the Interest Rate plus 2 per cent per annum
            on such unpaid sum until the date on which the full amount of such
            unpaid sum is paid to the Holder.

            Section 3.3 Calculation Period. Interest in respect of a period of
            less than one year shall be calculated on the basis of the actual
            number of days elapsed and a 365 day year.

Article 4.  Payment.

            Section 4.1 Place and Method of Payment. All payments made by the
            Company in respect of Principal Amount shall be made to the Holder,
            upon presentation and endorsement (in the case of part payment of
            Principal Amount) or, in the case of payment of the whole of the
            outstanding Principal Amount, surrender of this Note by the Holder
            to the Company, in same day funds to such account of the Holder as
            shall be notified by the Holder to the Company. All payments made by
            the Company in respect of Interest and Default Interest will be paid
            to the Holder as shown in the Register on the last Business Day
            preceding the date fixed for payment of any Interest or Default
            Interest. Payments of Interest and Default Interest will be made by
            electronic funds transfer for value on the due date to such US
            dollar account maintained by the Holder as shall be notified to the
            Company at least 5 Business Days before the due date for payment.
            Upon application by the Holder to the Company not less than 5
            Business Days before the due date for payment of any Interest or
            Default Interest, payments of Interest
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            and Default Interest will be made by US dollar check and mailed to
            the Holder (or the first named of joint Holders) at its address
            appearing in the Register.

            Section 4.2 Currency of Payments. All payments made by the Company
            in respect hereof, whether for the Principal Amount, Interest,
            Default Interest or otherwise shall be made in US Dollars.

            Section 4.3 Payment without Deduction, Etc. Each payment under this
            Note shall be made free and clear of and without any deduction for
            or on account of any set-off or counterclaim.

            Section 4.4 Principal Amount Paid in Part. Upon surrender of this
            Note when the Principal Amount is paid in part the Company shall
            either execute and deliver to the Holder a new Note in substitution
            for this Note reflecting the reduced outstanding Principal Amount or
            otherwise endorse this Note recording the fact of such payment and
            redeliver the Note to the Holder.

            Section 4.5 Setoffs by Holder Against Principal Amounts. Company
            hereby agrees to permit Holder to setoff any obligations owed by
            Holder to Company against the Principal Amount owed under this Note.
            If the Principal Amount is paid in part by such a setoff, then
            Company shall execute and deliver to the Holder a new Note in
            accordance with Section 4.4 above.

Article 5.  Redemption.

            In the event of a Redemption Event, any Holder of this Note shall
have the right to require that the Company repurchase all or any portion of this
Note (equal to $1,000 or any integral multiple thereof) at a repurchase price in
cash equal to 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase in accordance with Sections 4.3 of
the Note Purchase Agreement.

Article 6.  Covenants. [Intentionally deleted. See Note Purchase Agreement
            Article VI.]

Article 7.  Events of Default and Remedies. "[Intentionally deleted. See Note
            Purchase Agreement Article VIII]

Article 8   Registration.

            The Company will keep a register of the holders of the notes issued
            pursuant to the Note Purchase Agreement and outstanding from time to
            time, including the particulars of this Note. Any transfers or
            assignments of this Note will be recorded by the Company in the
            Register.
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Article 9   Definitions.

            Section 9.1 Certain Defined Terms. As used herein, the following
            terms, unless the context otherwise requires, have the following
            meanings:

            "Book Value" means total stockholders equity as shown by audited
            financial statements of DML less any non-cash additions to
            shareholders' equity after June 1, 1998, and less the amounts of any
            intra-Group obligations to the extent counted as assets of DML or
            any of its Subsidiaries.

            "Company" has the meaning given such term in the preamble hereof and
            includes a corporation which shall succeed to or assume the
            obligations of the Company under this Note.

            "Default Interest" means interest in accordance with Section 3.2.

            "DML" means Diametrics Medical, Ltd., an English company formerly
            known as Biomedical Sensors Limited.

            "Dollars" means the lawful currency of the USA.

            "Final Payment Date" means August 4, 2003.

            "Group" means the Company and its Subsidiaries from time to time.

            "Holder" has the meaning given such term in the preamble hereof.

            "Interest Rate" means the rate of 7 per cent per annum.

            "Issue Date" means the date upon which this Note was originally
            issued.

            "Lien" means any pledge, mortgage, hypothecation, security interest,
            lien or encumbrance.

            "Note" means this note and any replacement therefor.

            "Note Purchase Agreement" has the meaning given such term in the
            preamble hereof.

            "Payment Date" means the Final Payment Date and/or, if earlier, any
            date fixed for payment of all or any part of the Principal Amount
            pursuant to Article 2.

            "Principal Amount" means the principal amount of this Note set forth
            on the face hereof, as reduced from time to time by any payment of
            part pursuant to Section 2.2 thereof.
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            "Register" means the Register in respect of the Note maintained by
            the Company pursuant to Article 8.

            "Security Documents" means the a mortgage of shares of even date
            herewith executed by the Company in favor of the holders of the
            notes issued pursuant to the Note Purchase Agreement, or their agent
            or trustee on their behalf, in form and substance satisfactory to
            purchasers of 50.1% in aggregate principal amount of all of the
            notes to be purchased at the Closing pursuant to the Note Purchase
            Agreement, together with any other security documents or instruments
            from time to time executed by the Company in connection with its
            obligations under this Note or the Note Purchase Agreement.

            "Shares" means the ordinary, redeemable preference, and other shares
            of DML.

Article 10  Miscellaneous.

            Section 10.1 Transfer. Subject as hereafter mentioned, this Note may
            be transferred or assigned without any restriction thereon. This
            Note may only be transferred or assigned in whole and not in part.
            The transfer or assignment must not be in favor of more than four
            transferees as joint holders. No transfer of the Note may be made if
            in the reasonable opinion of the directors of the Company the
            proposed transferee is engaged in the business of commercializing
            products for critical care blood analysis in humans. The transfer or
            assignment documentation must be delivered for registration to the
            principal office for the time being of the Company together with the
            Note. The Company shall be entitled to retain the transfer or
            assignment documentation. The Company shall not be obliged to
            register any transfer during the 14 days immediately preceding any
            interest payment date. No transfer or assignment shall be effective
            unless and until the transfer or assignment is registered in the
            Register. The Company shall be obliged to register any transfer or
            assignment subject to the foregoing.

            Section 10.2 Article and Section Titles. The article and section
            titles contained in this Note are and shall be without substantive
            meaning or content of any kind whatsoever.

            Section 10.3 Governing Law. This Note is governed by and is to be
            construed in accordance with the laws of Minnesota, excluding the
            body of law relating to conflict of laws.
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            IN WITNESS WHEREOF, the Company has executed this document as of the
date first above written.

                                        DIAMETRICS MEDICAL, INC.

                                        By: _____________________________
                                        Name: David T. Giddings
                                        Title: Chairman, Chief Executive Officer
                                               and President