Exhibit 10.1


    Exhibit
      10.1

     

    RENEWAL
      AND MODIFICATION PROMISSORY NOTE

     

     

    


    
      	
               

              $405,600

            	
               

              June
                2, 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 FIVE
      THOUSAND SIX HUNDRED AND 00/100 DOLLARS ($405,600.00),
      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 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 June 2, 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 also include any trade
                debt
                and accrued expenses which have not been paid within 60 days of the
                initial customary due dates specified in the original invoices or
                other
                original documents evidencing the liabilities.


            


    

    


    
      	(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 this
                Note.

            


    

    


    
      	(n)  	
              “Non-Permitted
                Event” is defined later herein.

            


    

    


    
      	(o)  	
              “Note”
                shall mean this Renewal and Modification 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 on this Note shall
                be due
                and payable on June 1, 2007, 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)  	
              To
                the fullest extent permitted by applicable law, from and after the
                Maturity Date, the unpaid Financial Obligations shall 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 herein or in any other agreement between
                or
                among Lender and any Borrower, 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, between or among Lender and
                any
                Borrower, 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 of interest,
                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 this Note so that the amount of interest on account
                of this
                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 jointly and severally represent and warrant to Lender 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 signatory to this Note as of
                the
                Effective Date, the Borrowers do not have any other direct or indirect
                subsidiaries which own any 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, investigation, or proceeding pending or,
                to the
                knowledge of Borrowers, threatened against Borrowers before any court,
                arbitrator, 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. 
                By accepting this Note, Lender agrees that:


            


    

     

    
      	(a)  	
              Lender
                has full power and authority to hold 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 such knowledge and experience in financial or business matters
                that
                Lender is capable of evaluating the merits and risks of an investment
                in
                this 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)  	
              After
                October 31, 2006, 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 person a Lien in or on any of the assets of Borrowers without
                the
                prior written consent of the Lender. If Borrowers should grant or
                attempt
                to grant any Lien (other than the Permitted Lien) to any creditor,
                then
                Borrowers intend that they shall be deemed hereby to have pledged,
                granted
                and conveyed to Lender, to secure all Financial Obligations, as of
                the
                date hereof, a prior Lien in the collateral subject to such Lien,
                and the
                Lien of such other 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. Borrowers
                hereby grant Lender the independent right to enforce this Section
                5(j),
                against Borrowers and all relevant parties involved in any transaction
                prohibited by Sections 5(f), 5(g), 5(h), or 5(i) of this Note, at
                any time
                that Lender is not satisfied with Borrowers’ enforcement of this Section
                5(j);

            


    

    


    
      	(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);


            


    

    


    
      	(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);
                and

            


    

    


    
      	(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 such
                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).

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	(n)  	
              Prior
                to executing a debt instrument payable to any other person or entity,
                each
                Borrower shall advise such other person or entity of the terms of
                this
                Note and provide each such person or entity a copy of this
                Note.

            


    

    


    
      	(o)  	
              On
                the first day of each calendar quarter, beginning October 1, 2006,
                any one
                of the Chief Executive Officer, President, or Chief Financial Officer
                of
                Oxis shall provide Lender with a written statement (the “Quarterly
                Certification”) whereby such officer executing the Quarterly Certification
                certifies that each of Oxis and the other Borrowers are in compliance
                with
                all covenants in Section 5 hereof and have been in compliance with
                all
                such covenants since the Effective Date.


            


    

    
      	6.  	
              Payments
                and Prepayments. Borrowers
                may, at their option, prepay the principal amount of this Note, in
                whole
                at any time and in part from time to time without premium or penalty.
                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 this Note, and third to any other
                Financial Obligations.

            


    

    
      	7.  	
              Non-Permitted
                Event.
                Any of the following events is 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, including but not limited to the covenants in Section
                5
                hereof;

            


    

    


    
      	(d)  	
              After
                October 31, 2006, Borrowers or any of their subsidiaries shall fail
                to
                timely pay when due any payment in any amount (or an acceleration
                otherwise occurs) on any Indebtedness (where such Indebtedness is
                in an
                outstanding amount in excess of an aggregate of $300,000).
                

            


    

    


    
      	(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 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; or
                

            


    

    


    
      	(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 hereof shall be contested by Borrowers, or a proceeding
                shall be commenced by Borrowers seeking to establish the invalidity
                or
                unenforceability hereof, or Borrowers shall deny that they have any
                liability or obligation hereunder.

            


    

    


    


    
      	8.  	
              Event
                of Default.
                If any Non-Permitted Event described in Sections 7(a), 7(b), or 7(i)
                occurs, then such Non-Permitted Event will, without any further notice,
                constitute an “Event of Default” hereunder. If any Non-Permitted Event
                described in Sections 7(c), 7(d), 7(e), 7(f), 7(g), or 7(h) occurs
                and is
                not cured within fifteen (15) days after written notice is delivered
                to
                any Borrower regarding such Non-Permitted Event, then such Non-Permitted
                Event will also 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, 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 Lender, and no waiver of any provision of
                this
                Note, and no consent to any departure herefrom, 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 accept 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 those 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 item (i) of the preceding sentence, in connection
                with the
                preparation and execution of this Note and other documents being
                executed
                substantially contemporaneously herewith, Lender’s costs and expenses to
                be reimbursed by Borrowers will be between $5,000 and $7,500, for
                work
                performed through the date of execution of this Note and such other
                documents (even though the date of execution is subsequent to the
                Effective Date).

            


    

    


    
      	15.  	
              Indemnification.
                Borrowers hereby jointly and severally agree to indemnify, defend,
                and
                hold harmless, to the fullest extent permitted by law, 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 fifth day after the repayment of the
                Financial Obligations in full, if any Borrower enters into an agreement
                with any party other than Lender, to issue debt, equity, or equity-linked
                securities of such Borrower (“Subsequently Issued Instruments”), including
                without limitation debt, preferred stock, warrants, options, convertible
                securities or Common Stock, then at Lender’s sole option and discretion
                and within thirty (30) days after Borrowers provide Lender with full
                details of the terms of the Subsequently Issued Instruments, Lender
                may
                both (or either) (i) exchange the remaining Financial Obligations
                due
                under this Note into such Subsequently Issued Instruments on the
                most
                favorable terms provided to any purchaser and/or (ii) separately
                purchase
                up to $405,600 of such Subsequently Issued Instruments on the most
                favorable terms provided to any
                purchaser.

            


    

    


    
      	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,
                issuance 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 with postage prepaid and sent via certified mail, return receipt
                requested, (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 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 Borrowers
                and
                their, and enforceable by Lender and its, 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 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, (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, AND (D) IRREVOCABLY AGREE THAT THIS NOTE IS PERFORMABLE
                IN
                DALLAS COUNTY, TEXAS.

            


    

    
      	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.

            


    

    


    
      	30.  	
              Renewal
                and Modification.
                This Note renews, modifies, amends, and extends that certain Promissory
                Note, dated March 31, 2006, payable by Borrowers to
                Lender.

            


    

    


    IN
      WITNESS WHEREOF, the undersigned have executed this Note 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 & Chief Executive Officer

    


    OXIS
      HEALTH PRODUCTS, INC., a Delaware corporation

    By:____________________________
       

    Name:__________________________

    Title:___________________________

    


    


    OXIS
      THERAPEUTICS, INC., a Delaware corporation

    By:____________________________
       

    Name:__________________________

    Title:___________________________


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    OXIS
      ACQUISITION CORPORATION., a Delaware corporation

    By:____________________________
       

    Name:__________________________

    Title:___________________________

    


    


    OXIS
      ISLE
      OF MAN LIMITED, an Isle of Man corporation

    By:____________________________
       

    Name:__________________________

    Title:___________________________

    


    


    OXIS
      INSTRUMENTS, INC., a Pennsylvania corporation

    By:____________________________
       

    Name:__________________________

    Title:___________________________

    


    


    AGREED
      TO
      AND ACCEPTED:

    


    FAGAN
      CAPITAL, INC.

    


    By:
      /s/
      William S. Fagan  

    William
      S. Fagan, President