Exhibit
        10.1

       

      PROMISSORY
        NOTE

       

    

    
      	
              $400,000

            	
              Effective
                Date:

               

              March
                31,2006
                

            


    

    


    For
      value
      received, OXIS INTERNATIONAL, INC., a Delaware corporation (“Oxis”)
      and
      each of the undersigned subsidiaries of Oxis, jointly and severally, hereby
      promise to pay, on or before the Maturity Date (as defined below), to the order
      of FAGAN
      CAPITAL INC., a Texas corporation (the
      "Lender"),
      the
      principal amount of FOUR
      HUNDRED THOUSAND
      AND 00/100 DOLLARS ($400,000.00),
      plus all accrued and unpaid interest thereon plus any other sums owing under
      or
      pursuant to this Note, all upon the terms and conditions set forth below.


     

    
      	 	
              1.

            	
              Definitions.
                For
                purposes of this Note, certain other capitalized terms used herein
                shall
                have the following meanings:

            


    

    


    
      	 	
              (a)

            	
              “Acceleration”
                is defined later herein. 

            


    

    


    
      	 	
              (b)

            	
              “Borrowers”
                shall mean Oxis and each of the undersigned subsidiaries of Oxis,
                individually, collectively, jointly, severally, and interchangeably
                any,
                each, and/or all of them. 

            


    

    


    
      	 	
              (c)

            	
              “Effective
                Date” shall mean March 31, 2006. 

            


    

    


    
      	 	
              (d)

            	
              “Event
                of Default” is defined later
                herein.

            


    

    


    
      	 	
              (e)

            	
              “Excluded
                Indebtedness” shall mean the following obligations of the Borrowers:
                

            


    

    


    
      	 	
              i.

            	
              The
                Existing Secured Debt in a principal amount not to exceed at any
                time
                $3,100,000, plus accrued interest thereon,
                plus

            


    

    
      	 	
              ii.

            	
              Any
                indebtedness which is specifically subordinated to this Note (and
                upon
                which no payments of principal can be made while any Financial Obligations
                are outstanding). 

            


    

    


    
      	 	
              (f)

            	
              “Existing
                Secured Debt” shall mean the existing loan due by Borrowers to Bridge Bank
                N.A. whose address is 2120 El Camino Real, Santa Clara, CA 95050.,
                

            


    

    


    
      	 	
              (g)

            	
              “Financial
                Obligations” shall mean collectively, the principal amount of this Note,
                plus all accrued and unpaid interest thereon, plus any other sums
                owing
                under this Note.

            


    

    


    
      	 	
              (h)

            	
              “Fundamental
                Transaction” is defined later
                herein.

            


    

    


    
      	 	
              (i)

            	
              “Indebtedness”
                shall mean all indebtedness of the Borrowers (inclusive of the Financial
                Obligations), as the term indebtedness is generally understood;
                provided
                that the term Indebtedness specifically shall not include normal
                course
                trade debt and normal course accrued expenses which are generally
                being
                paid when due. 

            


    

    


    
      	 	
              (j)

            	
              “Indemnified
                Party” is defined later herein.

            


    

    


    
      	 	
              (k)

            	
              “Lien”
                shall mean a lien and/or security interest.


            


    

    


    
      	 	
              (l)

            	
              “Maturity
                Date” is defined later herein.

            


    

    


    
      	 	
              (m)

            	
              “Maximum
                Legal Rate” shall mean the highest legal non-usurious interest rate
                permissible by law from time to time under the laws of the State
                of Texas
                or the federal laws of the United States, or the laws of an applicable
                foreign jurisdiction in the case of non-U.S. companies, as the case
                may
                be, whichever applicable laws allow the highest rate of interest
                to be
                charged on all amounts due under the
                Note.

            


    

    


    
      	 	
              (n)

            	
              “Non-Permitted
                Event” is defined later herein.

            


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	
              (o)

            	
              “Note”
                shall mean this Promissory Note.

            


    

    


    
      	 	
              (p)

            	
              “Permitted
                Lien” shall mean the existing Lien on a certificate of deposit owned by
                Borrowers, in a face amount not to exceed at any time $3,100,000,
                plus
                accrued interest, which certificate of deposit secures the Existing
                Secured Debt.

            


    

     

    
      	 	
              2.

            	
              Payments
                Due Under This Note.

            


    

    


    
      	 	
              (a)

            	
              Unless
                sooner paid, all principal and accrued interest shall be due and
                payable
                on June 2, 2006, or earlier upon the occurrence of an Event of Default
                (the “Maturity Date”). 

            


    

    


    
      	 	
              (b)

            	
              Interest
                shall accrue and be payable on the outstanding principal balance
                until the
                Maturity Date at the lesser of eight percent (8%) per annum or the
                Maximum
                Legal Rate. 

            


    

    


    
      	 	
              (c)

            	
              Upon
                an Event of Default, the Financial Obligations shall thereafter bear
                interest from such date until paid in full at the lesser of eighteen
                percent (18%) per annum or the Maximum Legal
                Rate.

            


    

    


    
      	 	
              (d)

            	
              Notwithstanding
                anything else to the contrary, it is the intent of Borrowers and
                Lender to
                conform to and contract in strict compliance with applicable usury
                laws
                from time to time in effect. All agreements between Lender and Borrowers
                are hereby limited by the provisions of this paragraph which shall
                override and control all agreements, whether now existing or hereafter
                arising and whether written or oral. In no way, nor in any event
                or
                contingency (including, but not limited to, prepayment, default,
                demand
                for payment, or acceleration of the maturity of any obligation),
                shall the
                interest taken, reserved, contracted for, charged or received under
                this
                Note or otherwise, exceed the maximum non-usurious amount permissible
                under applicable law. If, from any possible construction of any document,
                interest would otherwise be payable in excess of the maximum non-usurious
                amount, any such construction shall be subject to the provisions
                of this
                paragraph and such document shall be automatically reformed and the
                interest payable shall be automatically reduced to the maximum
                non-usurious amount permitted under applicable law, without the necessity
                of execution of any amendment or new document. If Lender shall ever
                receive anything of value which is characterized as interest under
                applicable law and which would apart from this provision be in excess
                of
                the maximum lawful amount, an amount equal to the amount which would
                have
                been excessive interest shall, without penalty, be applied to the
                reduction of the Financial Obligations other than accrued interest
                or
                shall be refunded to Borrowers to the extent such amount exceeds
                the
                then-outstanding Financial Obligations other than accrued interest.
                The
                right to accelerate maturity of this Note does not include the right
                to
                accelerate any interest which has not otherwise accrued on the date
                of
                such acceleration, and Lender does not intend to charge or receive
                any
                unearned interest in the event of acceleration. All interest paid
                or
                agreed to be paid to Lender shall, to the extent permitted by applicable
                law, be amortized, prorated, allocated and spread throughout the
                full
                stated term (including any renewal or extension) of the Note so that
                the
                amount of interest on account of such Note does not exceed the maximum
                non-usurious amount permitted by applicable
                law.

            


    

    


    
      	 	
              (e)

            	
              All
                interest shall be computed on the basis of a year of 360 days for
                the
                actual number of days (including the first day but excluding the
                last day)
                elapsed. 

            


    

    


    
      	 	
              (f)

            	
              All
                payments on the Financial Obligations are payable in lawful money
                of the
                United States of America in immediately available funds at Fagan
                Capital
                Inc., 5201 North O'Connor Blvd. Suite 440, Irving, Texas 75039, or
                at such
                other office as the Lender may
                designate.

            


    

    


    
      	 	
              3.

            	
              Representations
                and Warranties of Borrowers. Borrowers
                hereby represent and warrant as follows:


            


    

     

    
      	 	
              (a)

            	
              Oxis
                is a corporation duly organized, validly existing and in good standing
                under the laws of the State of Delaware.

            


    

    


    
      	 	
              (b)

            	
              Each
                undersigned subsidiary of Oxis is a corporation or other legal entity
                duly
                organized, validly existing and in good standing under the laws of
                the
                jurisdiction shown in the signature block for each such subsidiary.
                

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        	 	
                (c)

              	Excluding Biocheck Inc., a California corporation
                (“Biocheck”) which is a 51%-owned subsidiary of Oxis and which is not a
                party to this Note as of the Effective Date, the Borrowers do not
                have any
                other direct or indirect subsidiaries which own any assets. Within
                21 days
                after Effective Date, Borrowers will provide a letter to Lender which
                is
                signed by an officer of Oxis reaffirming this representation, after
                conducting a further internal review of the status of any subsidiaries
                presently believed to have no assets. 


      

       

    

    
      	 	
              (d)

            	
              The
                execution, delivery and performance of this Note by Borrowers are
                within
                Borrowers' corporate powers, have been duly authorized by all necessary
                corporate action, and do not contravene (i) Borrowers' charter or
                by-laws
                or (ii) any law or any contractual restriction binding on or affecting
                Borrowers or their properties;

            


    

     

    
      	 	
              (e)

            	
              No
                authorization or approval or other action by, and no notice to or
                filing
                with, any governmental authority or regulatory body is required for
                the
                due execution, delivery and performance by Borrowers of this Note
                and any
                other documents or instruments executed in connection with this
                Note;

            


    

     

    
      	 	
              (f)

            	
              This
                Note constitutes the legal, valid and binding obligation of Borrowers,
                enforceable against Borrowers in accordance with its
                terms;

            


    

     

    
      	 	
              (g)

            	
              All
                information and other materials concerning Borrowers which have been
                made
                available by, or on behalf of Borrowers are, when considered as a
                whole,
                complete and correct in all material respects and do not contain
                any
                untrue statement of material fact or omit to state a material fact
                necessary in order to make the statements contained therein not misleading
                in light of the circumstances under which such statements have been
                made.

            


    

    


    
      	 	
              (h)

            	
              There
                is no action, litigation or proceeding pending or, to the knowledge
                of
                Borrowers, threatened against Borrowers before any court or administrative
                agency which might result in any material adverse change in the business
                or financial condition of
                Borrowers.

            


    

    


    
      	 	
              4.

            	
              Representations
                and Warranties of Lender. 
                Lender hereby represents and warrants as follows:
                

            


    

    


    
      	 	
              (a)

            	
              Lender
                represents that Lender has full power and authority to enter into
                and
                purchase this Note. 

            


    

    


    
      	 	
              (b)

            	
              This
                Note is being purchased for investment for Lender’s own account, not as a
                nominee or agent, and not with a view to the public resale or distribution
                thereof within the meaning of the 1933 Act, and Lender has no present
                intention of selling, granting any participation in, or otherwise
                distributing the same. 

            


    

    


    
      	 	
              (c)

            	
              Lender
                has received or has had full access to all the information it considers
                necessary or appropriate to make an informed investment decision
                with
                respect to the Note.  Lender further has had an opportunity to ask
                questions and receive answers from Borrowers regarding the terms
                and
                conditions of the offering of the Note and to obtain additional
                information (to the extent the Borrowers possessed such information
                or
                could acquire it without unreasonable effort or expense) necessary
                to
                verify any information furnished to Lender. 
                

            


    

    


    
      	 	
              (d)

            	
              Lender
                understands that the purchase of the Note involves substantial risk. 
                Lender has experience as an investor in securities of companies and
                acknowledges that Lender is able to fend for itself, can bear the
                economic
                risk of Lender’s investment in the Note and has such knowledge and
                experience in financial or business matters that Lender is capable
                of
                evaluating the merits and risks of this investment in the Note and
                protecting its own interests in connection with this investment.
                

            


    

    


    
      	 	
              (e)

            	
              Lender
                understands that this Note may be characterized as a “restricted security”
                under the 1933 Act and Rule 144 promulgated thereunder inasmuch as it
                is being acquired from the Borrowers in a transaction not involving
                a
                public offering, and that under the 1933 Act and applicable regulations
                thereunder such Note may be subject to restrictions on resale. 
                Lender understands that the Borrowers are under no obligation to
                register
                the Note. 

            


    

    


    
      	 	
              5.

            	
              Covenants
                of Borrowers. So
                long as any portion of the Financial Obligations shall remain outstanding,
                unless the Lender shall otherwise consent in
                writing:

            


    

     

    
      	 	
              (a)

            	
              Borrowers
                will comply in all material respects with all applicable laws, ordinances,
                rules, regulations, orders and other requirements of governmental
                authorities;

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	
              (b)

            	
              Borrowers
                will maintain and preserve their existence, rights and privileges,
                intellectual property, licenses and franchises and obtain, maintain
                and
                preserve all permits, licenses, authorizations and approvals that
                are
                necessary in the proper conduct of their
                business;

            


    

     

    
      	 	
              (c)

            	
              Borrowers
                will keep adequate and proper records and books of account, in which
                complete and correct entries will be made in accordance with generally
                accepted accounting principles consistently applied, reflecting all
                financial matters and transactions in relation to the business and
                activities of Borrowers and their subsidiaries and
                affiliates;

            


    

     

    
      	 	
              (d)

            	
              Borrowers
                shall file, on a timely basis, all Federal, state and local tax returns
                and other reports required by applicable law to be filed by Borrowers
                and
                all taxes, assessments and other charges imposed by any governmental
                authority upon Borrowers or any property of Borrowers (including,
                without
                limitation, all federal income and social security taxes on employees'
                wages) and all such taxes, assessments and other charges which become
                due
                and payable shall be paid when due;

            


    

     

    
      	 	
              (e)

            	
              Borrowers
                will not merge or consolidate with any person or entity or sell,
                convey,
                transfer, lease or dispose of (whether in one transaction or in a
                series
                of transactions) all or substantially all of their assets to any
                person or
                entity, or abandon all or substantially all of their assets (any
                such
                transaction, a "Fundamental Transaction"); provided, however, that
                Borrowers may consummate a Fundamental Transaction if (i) Borrowers
                are
                the surviving entities and, after the consummation of such Fundamental
                Transaction, Borrowers will reaffirm in writing their obligations
                under
                this Note if requested to do so by Lender, (ii) no other provision
                of this
                Note would be violated by or after consummation of such Fundamental
                Transaction, and (iii) no Non-Permitted Event shall have occurred
                either
                before or after giving effect to such Fundamental Transaction;
                

            


    

    


    
      	 	
              (f)

            	
              Borrowers
                shall not incur or maintain total Indebtedness, other than Excluded
                Indebtedness, which at any time exceeds a total of $1,000,000;
                

            


    

    


    
      	 	
              (g)

            	
              Other
                than the Permitted Lien, Borrowers shall not pledge, grant or convey
                to
                any other party a Lien in or on any of the assets of Borrowers. If
                Borrowers should attempt to grant any Lien other than the Permitted
                Lien
                to a creditor, Borrowers shall be deemed hereby to have pledged,
                granted
                and conveyed to Lender, to secure all Financial Obligations, a prior
                Lien
                in the collateral subject to such Lien, and the Lien of such creditor
                shall be automatically subordinated to the Lien of Lender;
                

            


    

    


    
      	 	
              (h)

            	
              Oxis
                shall not reduce its ownership of the capital stock of Biocheck or
                its
                voting interest in Biocheck below fifty one percent
                (51%);

            


    

    


    
      	 	
              (i)

            	
              Oxis
                shall not make any distributions or dividends of any of its cash
                or assets
                to any of its shareholders and shall not redeem or repurchase any
                of its
                outstanding capital stock;

            


    

    


    
      	 	
              (j)

            	
              Any
                transaction which Borrowers purport to enter into, which would be
                in
                violation of Borrowers’ covenants in Sections 5(f), 5(g), 5(h), or 5(i) of
                this Note shall
                be null and void and of no force or effect;

            


    

    


    
      	 	
              (k)

            	
              If
                subsequent to the Effective Date, Borrowers increase their ownership
                of
                the capital stock of or voting interest in Biocheck to 80% or greater,
                Borrowers will immediately cause Biocheck to enter into this Note
                as one
                of the joint and several obligors hereunder (or at the option of
                Lender,
                to enter into a full guaranty of this Note); and
                

            


    

    


    
      	 	
              (l)

            	
              Subsequent
                to the Effective Date, Borrowers will not acquire or form, or contribute
                any assets to any existing, acquired or newly formed subsidiary,
                in any
                jurisdiction worldwide, without simultaneously causing each such
                entity to
                become a joint and several obligor under this Note (or at the option
                of
                Lender, to enter into a full guaranty of this
                Note).

            


    

    


    
      	 	
              (m)

            	
              If
                subsequent to the Effective Date, Borrowers discover than any of
                their
                existing subsidiaries which are not obligors under this Note, in
                fact have
                any assets whatsoever, Borrowers will immediately cause each subsidiary
                which has assets to become a joint and several obligor under this
                Note (or
                at the option of Lender, to enter into a full guaranty of this
                Note).

            


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    
      	 	
              6.

            	
              Payments
                and Prepayments. Borrowers
                may, at their option, prepay the principal amount of the Note, in
                whole at
                any time and in part from time to time. No check, draft or other
                instrument shall constitute final payment unless and until such checks,
                drafts or instruments have actually been collected. Any monies received
                shall be applied first to accrued and unpaid interest hereunder,
                second to
                principal of the Note, and third to any other Financial
                Obligations.

            


    

     

    
      	 	
              7.

            	
              Non-Permitted
                Event.
                Any of the following events will be a “Non-Permitted Event”:
                

            


    

    


    
      	 	
              (a)

            	
              Borrowers
                shall fail to pay any principal of, or interest on, this Note when
                due
                (whether by scheduled maturity, acceleration, demand or
                otherwise):

            


    

     

    
      	 	
              (b)

            	
              Any
                representation or warranty made by Borrowers in this Note shall have
                been
                incorrect in any material respect when
                made;

            


    

     

    
      	 	
              (c)

            	
              Borrowers
                shall fail to perform or observe any term, covenant or agreement
                contained
                in the Note; 

            


    

     

    
      	 	
              (d)

            	
              Borrowers
                or any of their subsidiaries shall fail to pay when due any payment
                on any
                debt for borrowed money or other similar obligation or liability
                in excess
                of $200,000;

            


    

     

    
      	 	
              (e)

            	
              One
                or more judgments or orders for the payment of money exceeding any
                applicable insurance coverage by more than $200,000 in the aggregate
                shall
                be rendered against Borrowers or any of their subsidiaries;
                

            


    

     

    
      	 	
              (f)

            	
              Borrowers
                or any of their subsidiaries shall be generally not paying their
                debts as
                such debts become due, or shall admit in writing their inability
                to pay
                their debts generally, or shall make a general assignment for the
                benefit
                of creditors;

            


    

     

    
      	 	
              (g)

            	
              The
                filing by or against Borrowers of any voluntary or involuntary petition
                in
                bankruptcy or any petition for relief under the federal bankruptcy
                code or
                any other state or federal law for the relief of debtors; provided
                ,
                however
                ,
                with respect to an involuntary petition in bankruptcy, such petition
                has
                not been dismissed within sixty (60) days after the filing of such
                petition; 

            


    

     

    
      	 	
              (h)

            	
              The
                execution by Borrowers of an assignment for the benefit of creditors
                or
                the appointment of a receiver, custodian, trustee or similar party
                to take
                possession of a material portion of Borrowers’ assets or property.
                

            


    

     

    
      	 	
              (i)

            	
              Any
                provision of this Note shall at any time for any reason be declared
                to be
                null and void by a court of competent jurisdiction, or the validity
                or
                enforceability thereof shall be contested by Borrowers, or a proceeding
                shall be commenced by Borrowers seeking to establish the invalidity
                or
                unenforceability thereof, or Borrowers shall deny that they have
                any
                liability or obligation hereunder or thereunder.

            


    

    


    
      	 	
              8.

            	
              Event
                of Default.
                If any Non-Permitted Event occurs and is not cured within five (5)
                days
                after written notice is delivered to Borrowers regarding such
                Non-Permitted Event, then such Non-Permitted Event will constitute
                an
                “Event of Default”. Upon an Event of Default, all Financial Obligations
                will become immediately due and payable ("Acceleration"), without
                the need for any further action on the part of Lender. Lender will
                have,
                in addition to its rights and remedies under this Note, full recourse
                against any real, personal, tangible or intangible assets of Borrowers,
                and may pursue any legal or equitable remedies that are available
                to
                Lender, and
                Lender may take any other actions or remedies available to it under
                this
                Note or other applicable law. Borrowers will not have an opportunity
                to
                cure any Event of Default, and prevent Acceleration, if Borrowers
                have
                failed to cure within the cure period provided in this Section 8,
                absent
                written Lender approval at such time, which approval may be granted
                or
                withheld in Lender's sole discretion.


            


    

    


    
      	 	
              9.

            	
              Amendments
                and Waivers of Note Provisions.
                No amendment of any provision of this Note shall be effective unless
                it is
                in writing and signed by Borrowers and Lender, and no waiver of any
                provision of this Note, and no consent to any departure therefrom,
                shall
                be effective unless it is in writing and signed by Lender, and then
                such
                waiver or consent shall be effective only in the specific instance
                and for
                the specific purpose for which given. No
                course of dealing between Borrowers and Lender will operate as a
                waiver or
                modification of any party’s rights or obligations under this Note. 
                No delay or failure on the part of Lender in exercising any right
                or
                remedy under this Note will operate as a waiver of such right or
                any other
                right.  A waiver given on one occasion will not be construed as a bar
                to, or as a waiver of, any right or remedy on any future occasion.
                

            


    

    


    
      	 	
              10.

            	
              Joint
                and Several Obligation.
                It
                is the express intention of Lender and Borrowers that the obligations
                under this Note shall be joint and several as to Borrowers. The fact
                that
                this Note is a joint and several obligation of Borrowers, is a material
                inducement and bargained-for exchange pursuant to which Lender has
                agreed
                to purchase this Note. Borrowers agree that they have received or
                shall
                receive a material benefit, whether direct or indirect, from entering
                into
                this Note, and do hereby waive any claim or argument, whether now
                or
                hereafter existing, relating in any way to fraudulent conveyance
                or lack
                of consideration for entering into this Note.


            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      


      
        	 	
                11.

              	Other Waivers by Borrowers.
                Presentment for payment, demand, notice of nonpayment or nonperformance,
                protest, notice of protest, notice of intent to accelerate, notice
                of
                acceleration, and all other notices (except only for any notices
                which are
                specifically required by this Note), filing of suit and diligence
                in
                collecting this Note or enforcing any of the security herefor are
                hereby
                waived by Borrowers, all makers, sureties, guarantors and endorsers
                hereof. This Note shall be the joint and several obligation of Borrowers,
                all makers, sureties, guarantors and endorsers, and shall be binding
                upon
                them and their successors and assigns. Borrowers, and any endorsers,
                or
                guarantors hereof, severally waive and relinquish, to the fullest
                extent
                permitted by law, all rights to the benefits of any moratorium,
                reinstatement, marshaling, forbearance, valuation, stay, extension,
                redemption, appraisement, and exemption now or hereafter provided
                by the
                constitution and laws of the United States of America and of each
                state
                thereof and any other jurisdiction, both as to themselves and in
                and to
                all of their property, real and personal, against the enforcement
                of the
                obligations evidenced by this Note.  


      

    

    


    
      	 	
              12.

            	
              Exercise
                of Remedies. No
                failure on the part of the Lender to exercise, and no delay in exercising,
                any right hereunder shall operate as a waiver thereof, nor shall
                any
                single or partial exercise of any such right preclude any other or
                further
                exercise thereof or the exercise of any other right.
                

            


    

    


    
      	 	
              13.

            	
              Severability; Unenforceability;
                Deemed Amendment. The
                invalidity or unenforceability of any term or provision of this Note
                will
                not affect the validity or enforceability of any other term or provision
                hereof.  Any
                provision of this Note which is prohibited or unenforceable in any
                jurisdiction shall, as to such jurisdiction, be ineffective to the
                extent
                of such prohibition or unenforceability without invalidating the
                remaining
                portions hereof or thereof or affecting the validity or enforceability
                of
                such provision in any other jurisdiction. With respect to any
                jurisdiction, it
                is also the intent and agreement of the Borrowers and Lender that
                this
                Note shall be deemed amended by modifying such invalid or unenforceable
                provision to the extent necessary to make it legal and enforceable
                while
                preserving its intent or, if that is not possible, by substituting
                therefor another provision that is legal and enforceable and achieves
                the
                same objectives.

            


    

    


    
      	 	
              14.

            	
              Fees
                and Expenses.
                Borrowers hereby agree to reimburse on demand, to Lender all costs
                and
                expenses (including, without limitation, all legal fees and expenses)
                incurred by Lender in connection with (i) the preparation, execution,
                delivery and administration of this Note, and (ii) the enforcement of
                Lender's rights, and the collection of all amounts due, hereunder.
                Notwithstanding the above, in connection with the preparation and
                execution of this Note, Lender’s costs and expenses will be deemed to be
                exactly $4500, for work performed through the Effective Date only.
                

            


    

    


    
      	 	
              15.

            	
              Indemnification.
                Borrowers hereby indemnify and hold harmless to the fullest lawful
                extent
                the Lender and each of its directors, officers, shareholders, employees,
                agents, affiliates and advisors (each, an “Indemnified Party”) from and
                against any and all claims, damages, losses, liabilities and expenses
                (including, without limitation, all legal fees and expenses) which
                may be
                incurred by or asserted against Lender or any other Indemnified Party
                in
                connection with or arising out of any investigation, litigation or
                proceeding related to or arising out of this Note or any other related
                document or instrument or any transaction contemplated hereby or
                thereby
                (but in any case excluding any such claims, damages, losses, liabilities
                or expenses incurred solely by reason of the gross negligence or
                willful
                misconduct of any such Indemnified Party). The obligations of Borrowers
                under this Section shall survive the payment in full of this
                Note.

            


    

    


    
      	 	
              16.

            	
              Exchange
                Rights.
                At any time on or before the repayment of the Financial Obligations
                in
                full, if Borrowers enter into an agreement with any party other than
                Lender, to incur debt, then Lender may, at Lender’s sole option and
                discretion, exchange the remaining Financial Obligations due under
                this
                Note into such debt arrangement, on the same terms and conditions
                (including the right to receive or purchase any equity-linked securities
                which are offered to such other debt providers in conjunction with
                such
                debt offering).

            


    

    


    
      	 	
              17.

            	
              Assignment.
                This
                Note is freely transferable and assignable by Lender, provided that
                such
                transfer is made in compliance with all applicable state and federal
                laws.  Any reference to Lender herein will be deemed to refer to any
                subsequent transferee of this Note at such time as such transferee
                acquires title to this Note.   This Note may not be assigned or
                delegated by Borrowers, whether by voluntary assignment or transfer,
                operation of law, merger or
                otherwise.

            


    

    


    
      	 	
              18.

            	
              No
                Impairment.
                Borrowers will not, by amendment of any of Borrowers’ charters, by-laws or
                similar governing documents, or through any reorganization,
                recapitalization, transfer of assets, consolidation, merger, dissolution,
                issue or sale of securities or any other voluntary action, avoid
                or seek
                to avoid the observance or performance of any of the terms and covenants
                to be observed or performed hereunder by Borrowers, but will at all
                times
                in good faith assist in the carrying out and abidance of all the
                terms and
                covenants of this Note and in the taking of all such action as may
                be
                necessary or appropriate in order to protect the intent of all the
                terms
                and covenants of this Note.

            


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	
              19.

            	
              Notices.
                All notices and other communications provided for hereunder shall
                be in
                writing and shall be mailed, telecopied or delivered, if to Lender,
                to
                Fagan Capital Inc., 5201 North O'Connor Blvd. Suite 440, Irving,
                Texas
                75039, facsimile no.: 972-869-4066; and if to Borrowers, to Oxis
                International Inc., 323 Vintage Park Drive, Suite B, Foster City,
                California 94404, facsimile no.: 650-573-1969
                attention: Steven Guillen; or at such other addresses as shall be
                designated in a written notice complying as to delivery with the
                terms of
                this paragraph. All such demands, notices, and other communications
                shall
                be effective (i) if mailed, three days after being deposited in the
                mails, (ii) if telecopied, when received, and (iii) if
                delivered, upon delivery.

            


    

    


    
      	 	
              20.

            	
              Headings.
                 The
                headings of this Note have been inserted for convenience of reference
                only
                and shall in no way restrict or otherwise modify any of the terms
                or
                provisions hereof or affect in any way the meaning or interpretation
                of
                this Note.

            


    

    


    
      	 	
              21.

            	
              Pronouns
                and Plurals.
                Whenever the context may require, any pronoun used in this Note shall
                include the corresponding masculine, feminine, or neuter forms, and
                the
                singular form of nouns, pronouns, and verbs shall include the plural
                and
                vice versa.

            


    

    


    
      	 	
              22.

            	
              Further
                Action. Borrowers
                and Lender shall execute all documents, provide all information,
                and take
                or refrain from taking all actions as may be necessary or appropriate
                to
                comply with the terms and covenants of this
                Note.

            


    

    


    
      	 	
              23.

            	
              Binding
                Effect.
                The terms and covenants of this Note shall be binding upon and enforceable
                by Borrowers and Lender and their respective executors, administrators,
                successors, personal represent-atives, heirs, and
                assigns.

            


    

    


    
      	 	
              24.

            	
              Replacement
                of Note.
                On
                receipt by Borrowers of evidence of the loss, theft, destruction
                or
                mutilation of this Note, Borrowers shall execute and deliver, in
                lieu
                thereof, a new Note of like tenor.

            


    

    


    
      	 	
              25.

            	
              Entire
                Agreement.
                This Note constitutes the entire agreement and understanding between
                Borrower and Lenders relating to the subject matter hereof and thereof
                and
                supersedes all prior representations, inducements, promises, projections,
                endorsements, premises, agreements, memoranda, communications,
                negotiations, discussions, understandings, and arrangements, whether
                oral,
                written, or inferred, between the parties relating to the subject
                matter
                hereof.

            


    

    


    
      	 	
              26.

            	
              Counterparts.
                This Note may be executed in any number of counterparts, each of
                which
                shall be deemed an original, but all of which together shall constitute
                one and the same instrument. The parties intend that faxed versions
                or pdf
                versions of signature pages will be enforceable without presentation
                of
                the manually executed signature
                pages.

            


    

    


    
      	 	
              27.

            	
              Jurisdiction.
                BORROWERS HEREBY (A) IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION
                OF
                ANY TEXAS STATE OR FEDERAL COURT SITTING IN DALLAS, TEXAS IN ANY
                ACTION OR
                PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, (B) WAIVE ANY
                DEFENSE BASED ON DOCTRINES OF VENUE OR FORUM NON CONVENIENS, OR SIMILAR
                RULES OR DOCTRINES, AND (C) IRREVOCABLY AGREE THAT ALL CLAIMS IN
                RESPECT OF SUCH AN ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
                IN
                SUCH TEXAS STATE OR FEDERAL COURT.

            


    

     

    
      	 	
              28.

            	
              Jury
                Trial.
                BORROWERS AND LENDER MUTUALLY WAIVE ANY RIGHT TO TRIAL BY JURY IN
                ANY
                ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
                THIS
                NOTE.

            


    

    


    
      	 	
              29.

            	
              Governing
                Law.
                This Note shall be governed by, and construed and interpreted in
                accordance with, the internal laws of the State of Texas applicable
                to
                contracts made and to be performed therein without consideration
                as to
                choice of law.

            


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the undersigned have executed this Note under seal as of the
      date first set forth above.

    


    OXIS
      INTERNATIONAL, INC., a Delaware corporation

    By:
      /s/
      Steven T.
      Guillen                           


    Name:
      Steven
      T.
      Guillen                            


    Title:
      President
      &
CEO                              

    


    OXIS
      HEALTH PRODUCTS, INC., a Delaware corporation

    By:
      /s/
      Steven T.
      Guillen                           

    Name:
      Steven
      T.
      Guillen                            


    Title:
      President
      &
CEO                              

    


    


    OXIS
      THERAPEUTICS, INC., a Delaware corporation

    By:
      /s/
      Steven T.
      Guillen                            


    Name:
      Steven
      T.
      Guillen                             


    Title:
      President
      &
CEO                               


     

    


    


    AGREED
      TO
      AND ACCEPTED:

    


    FAGAN
      CAPITAL, INC.

    


    By:
      /s/
      William S.
      Fagan                            


    William
      S. Fagan, President