# SENIOR
SUBORDINATED SECURED CONVERTIBLE PROMISSORY NOTE

THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), NOR
UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD, ASSIGNED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR COUNSEL TO THE HOLDER OF SUCH
SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT
SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED, OR TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.

|$_________  
No.:_________ |  | Columbia, Maryland
September 30, 2004
|-------------------------- |  | -------------------------------------

FOR
VALUE RECEIVED, Hemagen Diagnostics, Inc., a Delaware corporation with offices at 9033 Red
Branch Road, Columbia, Maryland 21045 (the Company), and its subsidiary,
Reagents Applications, Inc. a Delaware corporation with offices at 8225 Mercury Court, San
Diego, California 92111, (collectively, the Obligors), jointly and severally
promise to pay to the order of «name» and its successors and assigns (the
Holder) at such place as the Holder may designate by written notice to the
Company, in lawful money of the United States of America, the sum of
«amountwrittenout» dollars ($«amount») (the Principal
Amount) plus all accrued and unpaid interest on the outstanding Principal Amount at
the rate of eight percent (8%) per annum. The Obligors shall pay accrued interest on the
outstanding Principal Amount on a quarterly basis, commencing December 31, 2004, and on
payment of the Principal Amount. All principal, premiums and interest are to be paid
without setoff or counterclaim as set forth below. This Notes is one of a series of the
8% Senior Subordinated Secured Convertible Notes due 2009 issued by the
Obligors. The 8% Senior Subordinated Secured Convertible Notes due 2009 are
collectively referred to as the 2009 Notes.

The
Company further agrees as follows:

# Section 1.    Payments.

(a)   
          Unless this Note shall be converted in accordance with the provisions of Section
          6 or redeemed earlier in accordance with Section 1(b) hereof, the Principal
          Amount, together with the redemption premium described below, shall be due and
          payable on September 30, 2009.

(b)   
          At any time upon twenty (20) business days notice to the Holder specifying
          the date on which payment is to be made, the Obligors shall have the right to
          prepay this Note, in full or in part, at any time in an amount equal to the
          unpaid Principal Amount plus all accrued but unpaid interest. If notice of
          prepayment is given as provided above, but the Obligors fail to prepay on the
          date specified, the Obligors shall be jointly and severally liable for the
          Principal Amount, plus all accrued interest to the date specified plus default
          interest from the date specified, at the rate of twelve percent (12%) per annum
          until this Note is paid in full. Notice of prepayment having been given, this
          Note shall nevertheless continue to accrue interest and to be convertible until
          paid in full. If less than all of the Notes are to be redeemed, all Notes shall
          be proportionately redeemed.

(c)   
          The Obligors and the Holder intend that this Note comply with any applicable
          usury laws from time to time in effect. In furtherance thereof, the Obligors and
          the Holder stipulate and agree that none of the items and provisions contained
          in this Note shall be construed to create a contract to pay, as consideration
          for the use, forbearance or detention of money, interest at a rate in excess of
          the highest lawful rate under applicable law.

# Section 2.   
Representations, Warranties and Covenants of the Obligors.

The
Obligors represent, warrant and covenant to the Holder as follows:

(a)   
          Due Organization, etc. The Obligors are corporations duly
          organized, validly existing, and in good standing under the laws of the
          jurisdiction of their incorporation or organization.

(b)   
          Authority. The Obligors have all requisite corporate power and authority
          to own, lease, license and use their properties and assets and to conduct the
          business in which they are engaged. The Obligors have full power and authority
          to execute and deliver this Note and to grant the Security Interest (as defined
          herein) granted herein, and the execution and delivery by the Obligors of this
          Note, and the performance of their obligations hereunder, has been duly
          authorized by all necessary corporate or other action. This Note is the legal,
          valid and binding obligation of the Obligors enforceable against them in
          accordance with the terms hereof.

(c)   
          Qualification. The Obligors are each duly licensed or qualified and in
          good standing as a foreign corporation in each jurisdiction wherein the nature
          of the business transacted by them or the nature of the property owned or leased
          by them makes such licensing or qualification necessary, the failure of which
          would have a material adverse effect on the business, operations, properties or
          condition (financial or otherwise) of the Obligors.

(d)   
          Capitalization. As of September 30, 2004, after giving effect to
          the shares of Common Stock to be issued in connection with the Obligors
          offer to exchange (the Offering) Common Stock and 2009 Notes for the
          Obligors 8% Senior Subordinated Secured Convertible Notes due 2005
          pursuant to an Offer to Exchange dated September 2, 2004, as amended or
          supplemented, the Companys authorized capital stock consisted of
          30,000,000 shares of common stock, $0.01 par value per share (the Common
          Stock) and 1,000,000 shares of preferred stock, $0.01 par value per share
          (the Preferred Stock), of which 15,294,343 shares of Common Stock
          were issued and outstanding (excluding 2,348,014 shares issuable upon the
          exercise of outstanding options and 5,377,633 shares issuable upon conversion of
          the 2009 Notes) and no shares of Preferred Stock were issued and outstanding. As
          of September 30, 2004, except for 2,348,014 shares of Common Stock issuable upon
          exercise of outstanding options at prices ranging from $0.29 to $2.00 per share
          and 5,377,633 shares issuable upon conversion of the 2009 Notes, there were no
          other outstanding subscriptions, options, warrants rights, pre-emptive rights or
          other contracts, commitments, undertakings or arrangements, including any right
          of conversion or exchange under any outstanding security, promissory note,
          instrument or option (collectively Options), obligating the Obligors
          to issue or sell any share of its capital stock or grant, extend or enter into
          any Option.

(e)   
          No Dividends, Redemptions. The Company will not (i) declare
          or pay any dividend or make any other distribution on any equity securities of
          the Company, except dividends or distributions payable in equity securities of
          the Company or (ii) purchase, redeem or otherwise acquire or retire for value
          any equity securities of the Company.

(f)   
          Related Transactions. The Obligors will not, without the prior
          written consent of the Majority Holders (as hereinafter defined), engage in any
          transaction of any kind or nature with any affiliate of the Obligors unless such
          transaction, or in the case of a course of related or similar transactions or
          continuing transactions, is or are upon terms which are fair to the Obligors, as
          the case may be, and which are reasonably similar to, or more beneficial to the
          Obligors than the terms deemed likely to occur in similar transactions with
          unrelated persons under the same circumstances.

(g)   
          No Liens. The Obligors shall not, without the prior written
          consent of the Holders of at least a majority of the outstanding Principal
          Amount on all of the 2009 Notes (Majority Holders) create, incur,
          assume or suffer to exist (collectively, incur) any mortgage,
          pledge, security interest, assignment, lien (statutory or other), claim,
          encumbrance of any kind, license or sublicense or security interest
          (collectively, Lien) in or upon any of the Collateral (as defined
          herein), except for (1) liens for taxes, assessments or similar charges incurred
          in the ordinary course of business that are not yet due and payable; (2)
          statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
          materialmen and other Liens imposed by law incurred in the ordinary course of
          business for sums not yet delinquent, (3) Liens incurred or deposits made in the
          ordinary course of business in connection with workers compensation,
          unemployment insurance and other types of social security, (4) easements,
          rights-of-way, encroachments, leases, royalties, restrictions and other similar
          title exceptions or encumbrances provided such do not, in the aggregate,
          materially interfere with the ordinary conduct of business of Obligors or
          materially reduce or impair the value of the real estate so encumbered, (5)
          Liens granted to the Holders of 2009 Notes, (6) Liens securing any conditional
          sales agreements, security agreements, equipment leases in the nature of title
          retention agreements or security agreements or other similar title retention
          agreements entered into by Obligors on, prior to the date hereof or after the
          date hereof in order to secure the payment of the purchase price of any
          equipment purchased, leased or otherwise acquired by Obligors for use in the
          ordinary course of its business having aggregate cost of less than One Hundred
          Thousand Dollars ($100,000), (7) Liens granted to (i) a lender pursuant to or
          with respect to a credit facility of up to Three Million Dollars ($3,000,000)
          entered into at any time by the Obligors, (ii) secure indebtedness incurred by
          Obligors if the proceeds of which are used to prepay any 2009 Note, which such
          indebtedness shall be senior in right of payment and preference to this Note
          (Take-out Indebtedness ) or (iii) real estate financing that the
          Obligors may incur in the future for the purchase of a corporate facility
          provided that the annual mortgage payments are less than the rent expense that
          the Obligors paid in 2004 for its leased facilities.

(h)   
          Indebtedness. Except for the indebtedness incurred to financial
          institutions and other individuals listed and described on Schedule 2(h) annexed
          hereto, the Obligors do not have any outstanding indebtedness (outside of the
          ordinary course of business). The Obligors shall not at any time create, incur
          or assume, or become or be liable in respect of, any indebtedness, other than
          (1) indebtedness arising under the 2009 Notes, (2) extensions of trade debt in
          the ordinary course of business, (3) indebtedness secured by Liens permitted by
          Section 2(g), (4) indebtedness as described on Schedule 2(h) annexed hereto, or
          other subordinated indebtedness in an aggregate principal amount not to exceed
          Four Million Dollars ($4,000,000) at any one time outstanding for the purpose of
          financing an acquisition by an Obligor of the business of another person.

(i)   
          Maintenance of Collateral. The Obligors will maintain the
          Collateral (as hereinafter defined) in good operating condition and repair.

(j)   
          Sale or Disposition. The Obligors will not sell, contract
          for sale or otherwise dispose of any of the Collateral or any interest therein
          except as provided in Section 2(s).

(k)   
          Taxes. The Obligors will pay promptly when due all taxes, due from
          them, except for taxes and assessments which are being contested in good faith.

(l)   
          Further Assurances. The Obligors will promptly execute and deliver
          to the Representative (as defined in Section 5(b)) as agent for the Holders,
          such financing statements, certificates, notices and other documents or
          instruments as may be necessary to enable the Representative to perfect or from
          time to time perfect, renew or continue the Security Interest granted herein for
          the benefit of the Holders of the 2009 Notes, including, without limitation,
          such financing statements, certificates and other documents as may be necessary
          to perfect a security interest in any additional Collateral hereafter acquired
          by the Obligors or in any replacements or proceeds thereof. The Obligors hereby
          authorize Representative to take all action (including, without limitation, the
          filing of any Uniform Commercial Code Financing Statements or amendments thereto
          without the signature of the Obligors or the notification of any account debtor
          or payor) that Holder may deem necessary or desirable to perfect or otherwise
          protect the Security Interest described hereunder and to obtain the benefits of
          this Note.

(m)   
          No Conflict. Except as provided on Schedule 2(m) which is annexed
          hereto, the Obligors are not in default under any indenture, mortgage, deed of
          trust, agreement or other instrument to which they or either of them is a party
          or by which they or any of their assets may be bound; and (ii) the execution and
          delivery of this Note and compliance with the provisions hereof shall not
          violate any provision of law applicable to the Obligors; nor shall the same
          conflict with or result in a breach of any of the terms, conditions or
          provisions of, or constitute a default under, the certificate of incorporation
          or by-laws of either of the Obligors, or result in the breach of, constitute any
          default under, or conflict with the terms of any indenture, mortgage, agreement
          or other instrument to which the Obligors are party or by which they or any of
          their assets may be bound or result in the creation or imposition of any Lien
          upon any of the Collateral, other than for the Security Interest granted
          pursuant to the 2009 Notes.

(n)   
          Consents. No consent, approval, order, authorization of, or registration,
          qualification or filing with, any governmental authority or any other party is
          required on the part of the Obligors in connection with the execution and
          delivery of this Note, the granting of the Security Interest granted herein, and
          the performance and consummation of the transactions contemplated hereby, other
          than (i) such consents that have been obtained and (ii) the filing of any
          financing statement or similar instrument that is required to perfect
          Holders Security Interest.

(o)   
          Litigation. There are no suits, proceedings or investigations pending or,
          to the Obligors knowledge, threatened, against either of the Obligors
          which questions the validity of this Note or which, individually or in the
          aggregate, if determined adversely, would have a material adverse effect on the
          Collateral or the business, operation or condition (financial or otherwise) of
          either of the Obligors.

(p)   
          Title. Except as otherwise disclosed in Schedule 2(p) which is attached
          hereto, the Obligors are the sole owners of, and have good title to, the
          Collateral, free and clear of any Lien, except for the Security Interest granted
          hereby and there is no financing statement or similar filing now on file in any
          public office covering any material part of the Collateral.

(q)   
          Locations. The corporate offices of the Obligors is located at the
          addresses set forth above. All inventory and equipment held on the date hereof
          by the Obligors is located at one of the locations shown on Schedule 2(q)
          hereto.

(r)   
          Ordinary Course. While all or any portion of this Note is
          outstanding, the Obligors shall conduct their operations according to the
          ordinary and usual course of the business consistent with past practice, to
          preserve intact their present business organization and structure, to keep
          available the services of their present officers, agents and employees, to
          preserve and maintain their assets and the goodwill of the business and to
          preserve their relationships with employees, customers and others having
          business dealings with them and not to enter into, amend, modify, terminate,
          renew, extend, or waive any existing material right under any material
          agreements of the Obligors.

(s)   
          Limitation on Disposition of Assets. No
          Obligor shall sell, lease, transfer or otherwise dispose of any of its property,
          business, assets or shares of capital stock or other equity securities in a
          subsidiary, except to an Obligor, except for bona fide sales of inventory in the
          ordinary course of business and dispositions of obsolete equipment in the
          ordinary course of business, unless (1) the consideration received is in cash
          and at least equal to the fair market value of such assets or (2) the aggregate
          market value of assets sold or otherwise disposed of in any series of
          transactions does not exceed One Hundred Thousand Dollars ($100,000).

(t)   
          Subsequent Transactions. Notwithstanding Section 1(b), while all
          or any portion of this Note is outstanding, the Obligors shall use the following
          funds to reduce the outstanding Principal Amount and accrued and unpaid interest
          due on the 2009 Notes on a pro rata basis:

| | (i)   
               Fifty Percent (50%) of the net proceeds from funds received by either or both of
               the Obligors from the exercise of outstanding options or warrants, provided such
               funds, in the aggregate, exceed One Million Dollars ($1,000,000);
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)   
               One Hundred Percent (100%) of the net proceeds from all sales of assets
               (excluding sales of inventory and obsolete equipment in the ordinary course of
               business) exceeding One Hundred Thousand Dollars ($100,000), at fair market
               value and for cash; and
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii)   
               50% of the net proceeds from the sale of the Companys Raichem division
               received by either or both of the Obligors to reduce the outstanding Principal
               Amount and accrued and unpaid interest due on the 2009 Notes held by investors
               in the Offering on a pro rata basis.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Any
reduction in Principal Amount or the accrued and unpaid interest on the 2009 Notes made
pursuant to this Section 2(t) shall be made on or before the thirtieth (30th) day after
the date Company receives any funds listed above.

Notwithstanding
the foregoing, all secured debt raised by the Obligors subsequent to the date hereof shall
be used to repay the Principal Amount and accrued and unpaid interest on the 2009 Notes,
provided, however, that the Obligors shall not be obligated to use any portion of any debt
secured by Liens described in Section 2(g)(7) of this Note.

(u)   
          Reports. The Common Stock of the Company is registered pursuant to
          Section 12(g) of the Securities Exchange Act of 1934, as amended (the
          Exchange Act), and the Company has filed all reports and other
          documents required to be filed by it with the Securities and Exchange Commission
          pursuant to the reporting requirements of the Exchange Act. The Obligors
          covenant that the Company shall file such reports and other documents required
          to be filed by it with the Securities and Exchange Commission on a timely basis,
          and the Company will provide the Holders of the 2009 Notes with copies of such
          reports and other documents, until such time as the later of the repayment, in
          full, of all of the Principal Amount and accrued and unpaid interest thereon, or
          the sale of all of the Common Stock issuable upon conversion of the 2009 Notes.

(v)   
          Reservation of Common Stock. There have been
          reserved and the Company shall at all times keep reserved, out of the authorized
          but unissued Common Stock of the Company free from any preemptive rights, rights
          of first refusal or other restrictions (other than pursuant to the Act), a
          number of shares of Common Stock sufficient to provide for the rights of Holders
          to convert the 2009 Notes. Once delivered upon valid conversion of the 2009
          Notes, any shares of the Common Stock will be valid, fully-paid and
          non-assessable. The transfer agent, if any, for the Common Stock, and every
          subsequent transfer agent for any Common Stock issuable upon the exercise of any
          of the rights of conversion as set out in this Note, shall be irrevocably
          authorized and directed at all times to reserve such number of authorized Common
          Stock as shall be requisite for such purpose. The Obligors shall keep a copy of
          this Note on file with any transfer agent for the Common Stock and with every
          subsequent transfer agent for the Common Stock issuable upon the exercise of the
          rights of conversion represented by this Note. Any transfer agent for the Common
          Stock and any successor transfer agent for the Common Stock is hereby
          irrevocably authorized to cause to be issued from time to time the share
          certificates required to honor this Note upon its conversion in accordance with
          the terms hereof. The Obligors shall supply any such transfer agent with duly
          executed share certificates for such purpose.

# Section 3.    Security
Interest.

(a)   
          Subject to paragraph (b) in this Section 3, the Obligors hereby grant to the
          Holder a first priority security interest in and lien on (the Security
          Interest) the Collateral to secure performance and payment of (i) this
          Note, and (ii) all other obligations and indebtedness of the Obligors to Holder
          hereunder, of whatever kind and whenever or however created or incurred, whether
          absolute or contingent, matured or unmatured, direct or indirect (all of the
          foregoing being the Secured Indebtedness). The Security Interest
          granted herein shall continue in full force and effect until, and Holder shall
          release the Security Interest when, all of the Secured Indebtedness has been
          discharged or converted into Common Stock in accordance with the terms hereof.

(b)   
          The Secured Indebtedness shall be secured by the Security Interest in the
          Collateral, and shall be senior to all other indebtedness of the Obligors.
          Notwithstanding the foregoing, the Security Interest shall be subordinate to (i)
          a credit facility that is equal to or less than Three Million Dollars
          ($3,000,000), (ii) any secured financing that is greater than Two Million
          Dollars ($2,000,000), provided that (A) the Obligors provide the Holder twenty
          (20) business days written notice of such secured financing, and (B) all
          of the funds raised in connection with such secured financing shall be used to
          reduce, on a pro rata basis, the Principal Amount and accrued and unpaid
          interest owed on the 2009 Notes and (iii) real estate financing that the
          Obligors may incur in the future for the purchase of a corporate facility
          provided that the annual mortgage payments are less than the rent expense that
          the Obligors paid in 2004 for its leased facilities.

(c)   
          As used herein, the term Collateral shall mean and include
          all of the Obligors right, title and interest in and to all real, tangible
          and intangible property of the Obligors, whether now or hereafter existing, of
          every kind and description, now owned or hereafter acquired and wherever located
          and the proceeds (including any insurance proceeds), products and accessions of
          and to any thereof, and all books and records pertaining to all of the
          foregoing, all of which are and shall at all times be and remain, free and clear
          of any and all Liens except for any Lien in connection with the indebtedness
          listed in the second sentence of Section 3(b).

# Section 4.    Events of
Default.

It
shall be an event of default (Event of Default) with respect to this Note upon
the occurrence and, where applicable, continuation uncured, of any of the following
events:

(a)   
          Default in Payment, etc.

| | (i)   
               a default in the payment of (A) the Principal Amount or (B) quarterly interest
               payment on this Note, when and as the same shall become due and payable, either
               by the terms hereof or upon redemption or otherwise, which default in the case
               of clause (B) of this Section 4(a)(i) shall continue uncured for a period of
               seven (7) days after receipt by the Obligors of written notice of such default provided
however, that, in the case of clause (B) of this Section 4(a)(1) such seven (7) day period can be
extended to thirty (30) days upon the consent of the Majority Holders;
               or
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)   
               a default in the performance, or breach, of any representation, warranty or
               covenant of the Obligors in this Note and (to the extent such default or breach
               can be cured) the continuance of such default or breach uncured for a period of
               seven (7) days after receipt by the Obligors of written notice as to such
               breach provided that such seven (7) day period can be
extended to thirty (30) days upon the consent of the Majority Holders.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)   
          Bankruptcy, Insolvency, etc. Either of the Obligors
          becoming insolvent (however defined or evidenced) or the entry of a decree or
          order by a court having jurisdiction adjudging either of the Obligors bankrupt
          or insolvent, or approving a petition seeking reorganization, arrangement,
          adjustment, or composition of or in respect of either of the Obligors, under
          federal or other applicable bankruptcy law, as now or hereafter constituted, or
          any other applicable federal or state bankruptcy, insolvency, dissolution,
          liquidation or other similar law, or the commencement by either of the Obligors
          of a voluntary case under federal or other applicable bankruptcy law, as now or
          hereafter constituted, or any other applicable federal or state bankruptcy,
          insolvency, dissolution, liquidation or other similar law, or the consent by
          either of the Obligors to the institution of bankruptcy, dissolution,
          liquidation or insolvency proceedings against it, or the filing by either of
          them of a petition or answer or consent seeking reorganization or relief under
          federal or other applicable bankruptcy law or any other applicable federal,
          state or other law, or the consent by either of them to the filing of such
          petition or to the appointment of a receiver, liquidator, assignee, trustee,
          sequestrator, or similar official, of either of them or of any substantial part
          of either of their property, or the making by either of them of an assignment
          for the benefit of creditors, or the admission by either of them in writing of
          the inability to pay their debts generally as they become due, or the taking of
          corporate action by either of the Obligors in furtherance of any such action.

(c)   
          Involuntary Bankruptcy. A proceeding or case being commenced,
          without the application or consent of one or more of the Obligors in any court
          of competent jurisdiction, seeking (i) its reorganization, liquidation,
          dissolution, arrangement or winding-up, or the composition or readjustment of
          its debts, (ii) the appointment of a receiver, custodian, trustee, examiner,
          liquidator or the like of such Obligor, or of all or any substantial part of its
          property or (iii) similar relief in respect of such Obligor under any law
          relating to bankruptcy, insolvency, reorganization, winding-up, or composition
          or adjustment of debts, and such proceeding or case continuing undismissed, or
          an order, judgment or decree approving or ordering any of the foregoing being
          entered and continuing unstayed and in effect, for a period of sixty (60) or
          more days; or an order for relief against one or more of the Obligors being
          entered in an involuntary case under the U.S. Bankruptcy Code.

(d)   
          Default on Other Indebtedness. The default in
          payment of principal of or interest on any other indebtedness for borrowed money
          owed by the Obligors or default in the performance or observance of the terms of
          any instrument pursuant to which such indebtedness was created or secured, the
          effect of which default is to cause any holder of any such indebtedness to
          cause, or (with the giving of any notice or the lapse of any time) to permit the
          holder or holders of such indebtedness to cause the same to become due or
          prepaid in full prior to its stated maturity.

# Section 5.    Remedies Upon
Default.

(a)   
          Acceleration and Penalty Interest. Upon an Event of
          Default specified in Section 4(a), Section 4(c) or Section 4(d), and at any time
          during the continuation thereof, the Holder, by notice given to the Obligors,
          may declare the entire unpaid Principal Amount, and, if applicable, redemption
          premium, of this Note then outstanding to be due and payable immediately, and
          upon any such declaration the same shall, together with accrued interest thereon
          and all other obligations of the Obligors accrued hereunder, without
          presentment, demand, protest or other notice of any kind, all of which are
          hereby waived by each Obligor. Upon an Event of Default specified in Section
          4(b), the entire unpaid Principal Amount, and, if applicable, redemption
          premium, of this Note then outstanding shall automatically become due and
          payable immediately, together with accrued interest thereon and all other
          obligations of the Obligors accrued hereunder, without presentment, demand,
          protest or notice of any kind, all of which are hereby waived by each Obligor.
          After acceleration and until the Principal Amount and all accrued and unpaid
          interest is paid pursuant to this Section 5(a), interest shall accrue on the
          unpaid Principal Amount and on the accrued and unpaid interest on this Note up
          to and including the date of the Event of Default at the rate of twelve percent
          (12%) per annum.

(b)   
          Remedies Regarding Security Interest in
          Collateral. Upon the occurrence of any Event of Default, the Holder,
          together with the Majority Holders, shall have the following additional rights
          and remedies, provided such rights and remedies shall be enforced on behalf of
          the Majority Holders solely by a representative of Jesup & Lamont Securities
          Corp. (the Representative), such Representative to be identified by
          written notice to the Obligors:

| | (i)   
               All rights and remedies provided by law, including, without limitation, those
               provided by the Uniform Commercial Code as in effect in the State of Maryland
               from time to time (the UCC).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)   
               The right to take possession of the Collateral and, in addition thereto, the
               right to enter upon any premises on which the Collateral or any part thereof may
               be situated, without notice, and remove the same therefrom. Representative may
               require the Obligors to make the Collateral (to the extent the same is moveable)
               available to the Representative at a place to be designated by the
               Representative which is reasonably convenient to both parties at the
               Obligors expense. Unless the Collateral threatens to decline speedily in
               value or is of a type customarily sold on a recognized market, the
               Representative will give the Obligors at least two (2) days prior written
               notice at the address of the Obligors set forth above (or at such other address
               or addresses as the Obligors shall specify in writing to the Representative) of
               the time and place of any public sale thereof or of the time after which any
               private sale or any other intended disposition thereof is to be made. Any such
               notice shall be deemed to meet any requirement hereunder or under any applicable
               law (including the UCC) that reasonable notification be given of the time and
               place of such sale or other disposition. After deducting all costs and expenses
               of collection, storage, custody, sale or other disposition and delivery
               (including reasonable legal costs and attorneys fees, expenses and
               disbursements) and all other reasonable charges against the Collateral, the
               remaining proceeds of any such sale or disposition shall be applied to the
               payment of the Secured Indebtedness in such order of priority as the
               Representative shall determine and any surplus shall be returned to the Obligors
               or to any person or party lawfully entitled thereto. In the event the proceeds
               of any sale, lease or other disposition of the Collateral hereunder are
               insufficient to pay all of the Secured Indebtedness in full, the Obligors will
               be liable for the deficiency, together with interest thereon at the highest rate
               of interest provided in this Note, and the costs and expenses of collection of
               such deficiency, including (to the extent permitted by law), without limitation,
               reasonable attorneys fees, expenses and disbursements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(c)   
          Proceedings and Actions. During the continuation of any
          Event of Default, the Holder may institute such actions and proceedings in law
          or equity as it shall deem expedient for the protection of its rights and may
          prosecute and enforce its claims against all assets of the Obligors, and in
          connection with any such action or proceeding shall be entitled to receive from
          the Obligors payment of the Principal Amount of this Note plus any accrued and
          unpaid interest, to the date of payment plus reasonable expenses of collection
          including, without limitation, reasonable attorneys fees and expenses. All
          rights and remedies available to the Holder pursuant to the provisions of this
          Note, applicable law and otherwise are cumulative, not exclusive and are
          enforceable alternatively and/or concurrently.

# Section 6.    Conversion of
the Note.

At
the option of the Holder at any time after September 30, 2005, all or any portion of the
outstanding Principal Amount, plus all accrued and unpaid interest on this Note, shall be
convertible into shares of Common Stock at a conversion price of Zero and 75/100 Dollars
($0.75) per share (the Conversion Price), provided, that the Holder shall not,
on any one occasion, convert an amount that is less than Twenty-Five Thousand Dollars
($25,000).

Notwithstanding
the foregoing, if after September 30, 2005, the closing bid price for the Common Stock, as
reported by the NASDAQ Over-the-Counter Bulletin Board or other primary market or exchange
upon which the Common Stock is then traded or listed, has exceeded One and 25/100 Dollars
($1.25) for twenty (20) consecutive trading days, the Obligors, at their sole discretion,
upon ten (10) days written notice to the Holder, may require the Holder to convert the
outstanding Principal Amount, plus all accrued and unpaid interest on this Note at the
Conversion Price in effect on the date of such conversion (the Forced
Conversion). The officers, directors and affiliates of the Obligors who have
purchased units in the Offering and are Holders of Notes (the D&O
Investors) shall only be subject to a Forced Conversion to the extent that such
Forced Conversion does not cause a short swing profit violation as provided in
Section 16(b) of the Securities Exchange Act of 1934.

In
the event of a split, subdivision or combination or similar transaction in the
Companys Common Stock, or the issuance of a dividend consisting of the
Companys Common Stock, the Conversion Price shall be proportionally increased or
decreased, as the case may be. Additionally, in the event of any reclassification,
consolidation, merger or sale of substantially all of the Companys assets or similar
transaction, the Holder shall be entitled to receive upon conversion the kind and number
of shares of stock and other securities and property receivable upon such transaction as
if the Holder were the owner of the Common Stock issuable hereunder immediately prior to
any such event at the Conversion Price in effect on the date of the closing of such
transaction.

# Section 7.    Restrictions
on Transfer.

The
Holder acknowledges that it has been advised by the Company that this Note, or the shares
of Common Stock issuable upon conversion of this Note (collectively, the
Securities) have not been registered under the Act, that the Securities are
being issued on the basis of the statutory exemption provided by Section 4(2) of the Act
and/or Regulation D promulgated thereunder relating to transactions by an issuer not
involving any public offering. The Holder acknowledges that it has been informed by the
Company of, or is otherwise familiar with, the nature of the limitations imposed by the
Act and the rules and regulations thereunder on the transfer of Securities. In particular,
the Holder agrees that no sale, assignment, or transfer of the Securities shall be valid
or effective, and the Obligors shall not be required to give any effect to any such sale,
assignment, or transfer, unless (i) the sale, assignment, or transfer of the Securities is
registered under the Act, it being understood that the Securities are not currently
registered under the Act and that the Obligors intend to register the 2009 Notes within a
reasonable time after the completion of the Offering, or (ii) the Securities are sold,
assigned, or transferred in accordance with all the requirements and limitations of Rule
144 under the Act, it being understood that Rule 144 is not available at the present time
for the sale of this Note and that there can be no assurance that Rule 144 sales will be
available at any time in the future, or (iii) such sale, assignment, or transfer is
otherwise exempt from registration under the Act. The Holder and each transferee hereof
further agrees that if any distribution of the Securities is proposed to be made by them
otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the
Act, such action shall be taken only after submission to the Obligors of an opinion of
counsel, reasonably satisfactory in form and substance to the Obligors counsel, to
the effect that the proposed distribution will not be in violation of the Act or of
applicable state law. Furthermore, it shall be a condition to the transfer of this Note
that any transferee thereof deliver to the Company his written agreement to accept and be
bound by all of the terms and conditions contained in this Note.

# Section 8.    Miscellaneous.

(a)   
          This Note may be altered only by prior written agreement signed by the party
          against whom enforcement of any waiver, change, modification, or discharge is
          sought. This Note may not be modified by an oral agreement, even if supported by
          new consideration.

(b)   
          Notwithstanding anything provided herein, Holder may assign this Note in whole
          or in part to one or more officers or partners of Holder. The obligations under
          this Note may not be assigned by the Obligors without the prior written consent
          of the Holder (or all of the Holders). The covenants, terms and conditions
          contained in this Note apply to and bind the heirs, successors, executors,
          administrators and assigns of the parties.

(c)   
          This Note shall be governed by and construed in accordance with the laws of the
          State of New York without giving effect to its conflicts of law principles. The
          Company agrees that any dispute or controversy arising out of this Note shall be
          adjudicated in a court located in New York City, and hereby submits (on its
          behalf and on behalf of Subsidiary) to the exclusive jurisdiction of the courts
          of the State of New York located in New York, New York, and of the federal
          courts in the Southern District of New York, and irrevocably waives any
          objection it now or hereafter may have respecting the venue of such action or
          proceeding brought in such a court or respecting the fact that such court is an
          inconvenient forum, and consents to the service of process in any such action or
          proceeding by means of registered or certified mail, return receipt requested,
          to the address set forth below.

(d)   
          Upon receipt by the Obligors of evidence reasonably satisfactory to the Obligors
          of the loss, theft, destruction or mutilation of this Note, and of indemnity or
          security reasonably satisfactory to the Obligors, and upon reimbursement to the
          Obligors of all reasonable expenses incidental thereto, and upon surrender and
          cancellation of this Note, if mutilated, the Obligors will make and deliver a
          new Note of like tenor and of the same series, in lieu of this Note.

(e)   
          This Note constitutes a final written expression of all of the terms of the
          agreement between the parties regarding the subject matter hereof, and
          supersedes all prior agreements, understandings, and representations between the
          parties. If any provision or any word, term, clause, or other part of any
          provision of this Note shall be invalid for any reason, the same shall be
          ineffective, but the remainder of this Note shall not be affected and shall
          remain in full force and effect.

(f)   
          All notices, consents, or other communications provided for in this Note or
          otherwise required by law shall be in writing and delivered by first class mail,
          and will be deemed to have been given or delivered on the date such notice,
          purchase price or other communication is so delivered, and, if to the Company,
          it will be addressed to the address specified above, and if to the Holder, it
          will be addressed to the registered Holder at his address as it appears on the
          books of the Corporation.

Such
addresses may be changed by notice given as provided in this subsection. Notices shall be
effective upon the date of receipt; provided, however, that a notice (other than a notice
of a changed address) sent by first class mail shall be presumed received no later than
three (3) business days following the date of sending.

---

IN WITNESS WHEREOF, the Company has
executed this Note effective as of the date first set forth above.

| |  | HEMAGEN DIAGNOSTICS, INC.BY: /s/
      Name:
      Title:  
| |  | -------------------------------------------------------------------------
| |  | REAGENTS APPLICATIONS, INC.BY: /s/
      Name:
      Title:

---

# NOTE CONVERSION FORM

To:    Hemagen Diagnostics, Inc. and
Reagents Applications, Inc.

The
undersigned irrevocably elects to convert:

| | [  ]     ALL, or  _________________
| | -----------------------------------

of the accrued and unpaid interest
and principal owed on the Senior Subordinated Secured Convertible Promissory Note (the
Note) which is attached hereto. The undersigned requests that the certificates
representing the shares of common stock as to which this Note is being converted (the
 Conversion Shares)be registered as follows and requests Hemagen Diagnostics,
Inc. to so cause the registration thereof:

Name:____________________________________________________________________

Social Security or
Employer Identification Number:_____________________________

Address:_________________________________________________________________

Deliver
to:_______________________________________________________________

Address:_________________________________________________________________

If
only a portion of the principal amount and accrued and unpaid interest owed on the Note is
converted, please issue a new Note for the balance of the unpaid principal amount and
accrued and unpaid interest owed on the Note to the registered holder thereof and deliver
it to the undersigned at the following address:

Address:_________________________________________________________________

Date: _______________, 20
__

__________________________________________________
        (Signature
must conform to the name of the holder
of the Note specified on the face of the Note)

---

# SCHEDULE 2(h)

# EXISTING INDEBTEDNESS

$25,000
Senior Subordinated Secured Convertible Note due April 27, 2005.

---

# SCHEDULE 2(m)

# DEFAULT OF INDEBTEDNESS

None.

---

# SCHEDULE 2(q)

# LOCATION OF INVENTORY
& EQUIPMENT

Hemagen Diagnostics, Inc.
9033 Red Branch Road
Columbia, Maryland 21045

Hemagen Diagnostics, Inc.
Reagents Applications, Inc.
8225 Mercury Court
San Diego, California 92111

Hemagen Diagnostics, Inc. 
c/o Hemagen Diagnosticos Commercio Importacao E Exportacao Ltd.
Rua Dioga Moreira
222 Pinheiras
Sao Paulo  SP  CEP 05423-010 Brazil

Hemagen Diagnostics, Inc.
c/o Dade Behring, Inc.
Building 100
Route 896
Newark, Delaware 19714-6101

---

# SCHEDULE 2(p)

# LIENS AND TITLE
EXCEPTIONS

|Secured Party |  | Date Filed |  | Filing Number |  | Collateral | 
|------------- |  | ---------- |  | ------------- |  | ---------- | 

# Hemagen Diagnostics,
Inc.California Secretary of
StateThrough Date: January
18, 2005

|Jesup & Lamont Securities
Corporation, as Agent |  | 4-27-00 |  | 0012460869 |  | Blanket Lien on all assets | 
|----------------------------------------------- |  | ------- |  | ---------- |  | -------------------------- | 

# Hemagen Diagnostics,
Inc.Delaware Secretary of
StateThrough Date: January
24, 2005

|Jesup & Lamont Securities
Corporation, as Agent |  | 4-27-00 |  | 0025823  |  | Blanket Lien on all assets                                 | 
|----------------------------------------------- |  | ------- |  | -------- |  | ---------------------------------------------------------- | 
|                                                |  |         |  |          |  |                                                            | 
|Bay National Bank                               |  | 9-26-02 |  | 22481319 |  | Blanket Lien on all assets                                 | 
|                                                |  |         |  |          |  |                                                            | 
|IOS Capital, LLC                                |  | 5-30-03 |  | 31371627 |  | Specific leased equipment
under Agreement No. 480639-00278

# Hemagen Diagnostics,
Inc.Massachusetts
Secretary of StateThrough Date: January
26, 2005

|Jesup & Lamont Securities |  | 4-28-00 |  | 712790 |  | Blanket Lien on all assets | 
|------------------------- |  | ------- |  | ------ |  | -------------------------- | 
|Corporation, as Agent     | 

# Reagents Applications,
Inc. California Secretary
of State Through Date: January
18, 2005

|Jesup & Lamont Securities |  | 4-27-00 |  | 0012460867 |  | Blanket Lien on all assets | 
|------------------------- |  | ------- |  | ---------- |  | -------------------------- | 
|Corporation, as Agent     | 

# Reagents Applications,
Inc.Delaware Secretary of
StateThrough Date: January
24, 2005

|Jesup & Lamont Securities
Corporation, as Agent |  | 4-27-00  |  | 0025820  |  | Blanket Lien on all assets                      | 
|----------------------------------------------- |  | -------- |  | -------- |  | ----------------------------------------------- | 
|                                                |  |          |  |          |  |                                                 | 
|Bay National Bank                               |  | 9-26-02  |  | 22481095 |  | Blanket Lien on all assets                      | 
|                                                |  |          |  |          |  |                                                 | 
|Safeco Credit Co. Inc.                          |  | 11-04-02 |  | 22550444 |  | Specific leased equipment
under Lease No. 21175