STANDSTILL AND FORBEARANCE AGREEMENT

This Standstill and Forbearance Agreement (this “ Agreement ”) is made and entered into as of October 1, 2009 by and among OXIS International, Inc., a Delaware corporation (“ OXIS ” or the “ Company ”) and Bristol Investment Fund, Ltd. (the “ Lender ”).

(a)           The Company and the Lender are parties to that certain Securities Purchase Agreement, dated October 25, 2006 (the “ Purchase Agreement ”), pursuant to which the Company issued to the Lender convertible debentures (the “ October 2006 Debentures ”), of which $2,689,958.06 remain currently outstanding, inclusive of principal and interest (the “October 2006 Indebtedness ”).

(b)           The Company acknowledges that an Event of Default has occurred under the October 2006 Debentures as set forth on Schedule 1 attached hereto (the “ Existing Defaults ”).  As a result of the occurrence and continuation of the Existing Defaults, the Lender is entitled to, among other things, immediately enforce its rights and remedies against the Company.

(c)           The Lender presently holds demand notes (the “Bridge Notes”) issued by the Company on October 8, 2008, March 19, 2009, April 7, 2009, April 28, 2009, May 21, 2009 and June 25, 2009 (the “Bridge Indebtedness” and together with the October 2006 Indebtedness, the “Indebtedness”)

(d)           The Company has requested that the Lender refrain and forbear from exercising certain rights and remedies with respect to the Indebtedness, and the Lender is willing to do so on the terms and conditions set forth herein.

NOW THEREFORE , in consideration of the premises and the mutual agreement contained therein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

Section 1.                 Definitions and Recitals .   Capitalized terms used and not otherwise defined herein have the meanings ascribed to such terms in the Purchase Agreement.  The above recitals shall be incorporated and construed as part of this Agreement.

Section 2.                 Ratification and Incorporation of Purchase Agreement, October 2006 Debentures, and Related Agreements .  Except as expressly modified by this Agreement, (a) the Company hereby acknowledges, confirms and ratifies all of the terms and conditions set forth in, and all of its obligations under, the Purchase Agreement, October 2006 Debentures, and related Transaction Documents, which documents are valid, binding and in full force and effect and (b) all of the terms and conditions set forth in the foregoing Transaction Documents are legal, valid and binding obligations and are incorporated herein by this reference as if set forth in full herein.

Section 3.                 Acknowledgement of Indebtedness .

(a)           The Company acknowledges and agrees that as of the date hereof, the aggregate principal amount of the October 2006 Indebtedness due under the October 2006 Debentures is not less than $2,689,958.06 (exclusive of any accrued and unpaid interest) and the aggregate principal amount of the Bridge Indebtedness due under the Bridge Notes is not less than $286,040.00 (exclusive of any accrued and unpaid interest).   The Company represents and agrees that it has no offset, defense, counterclaim, dispute or disagreement of any kind or nature whatsoever with respect to the liability or amount of such foregoing Indebtedness.

(b)           In addition to the amount set forth above, the Company is and shall be liable to the Lender for all interest accrued and accruing, fees, costs, liquidated damages, expenses, and costs of collection (including attorney’s fees and expenses and other amounts due under the Purchase Agreement and other Transaction Documents) heretofore or hereafter accrued or incurred in connection with the Indebtedness, including, without limitation, all attorney’s fees and expenses incurred in connection with the negotiation and preparation of this Agreement and all documents, instruments, and agreements incidental hereto, as provided in the applicable Transaction Document; and

(c)           The Company hereby acknowledges and agrees that Existing Defaults have occurred and are continuing, each of which constitutes an Event of Default and entitles the Lender to exercise its rights and remedies under the Transaction Documents, applicable law or otherwise.  The Lender has not waived, presently does not intend to waive and may never waive such Existing Defaults and nothing contained herein or the transactions contemplated hereby shall be deemed to constitute any such waiver.  The Company hereby acknowledges and agrees that Lender has the right to declare the Indebtedness to be immediately due and payable under the terms of this Agreement; provided, however, that during the Standstill Period (as defined below), the Lender may only declare such Indebtedness due and payable with the written consent of Theorem Group, LLC (the “Theorem Consent”).  After the Standstill Period, the Lender may declare the Indebtedness due and payable at any time without the Theorem Consent.

Section 4.                The Standstill Period .  In reliance upon the representations, warranties and covenants of the Company contained in this Agreement, and subject to Section 5, the Lender agrees that, from the date of this Agreement until less than 25% of the original principal amount of the October 2009 Debentures is then outstanding (the “Standstill Period”), it will forbear from exercising its rights and remedies. The “ October 2009 Debentures ” means the 0% Convertible Debentures to be issued by the Company on or about the date hereof to the purchasers signatory to that certain Securities Purchase Agreement, dated at or about the date hereof, in the original aggregate principal amount equal to $2,000,000.

Section 5.                 Termination of Standstill Obligations.

(a)           The obligation of the Lender under Section 4 hereof shall terminate (the “ Termination ”) on the earliest of (i) the date that less than 25% of the original principal amount of the October 2009 Debentures, in the aggregate, is then outstanding, (ii) the date, if any, on which a petition for relief under the United States Bankruptcy Code or any similar state is filed by or against the Company or any of its subsidiaries, (iii) the date that the Company defaults under any of the terms and conditions of this Agreement, or (iv) the date this Agreement is otherwise terminated or expires, it being understood that the Lender shall have the right to terminate this Agreement on 3 Business Days’ prior notice to the Company and Theorem.

(b)           Upon Termination, the agreement of Lender to forbear shall automatically and without further notice or action terminate and be of no force and effect, it being understood and agreed that the effect of such Termination will be to permit the Lender to exercise such rights and remedies hereunder, under the Transaction Documents, or applicable law, immediately without any further notice, passage of time or forbearance of any kind.

(c)           The Company agrees that all of the Indebtedness shall, if not sooner paid, be absolutely and unconditionally due and payable in full in cash or other immediately available funds by the Company and the Lender on the Termination.

(d)           Both parties acknowledge that this Agreement shall not impact or restrict the Lender’s ability to convert the Indebtedness into shares of common stock of the Company.

Section 6.                Representations and Warranties .  In order to induce the Lender to enter into this Agreement and to forbear with respect to the Existing Defaults in the manner provided in this Agreement, the Company represents and warrants to the Lender as follows:

(a)            Power and Authority .  The Company has the requisite corporate power and authority to enter into and to