Exhibit 10.1

FORM OF SUBSCRIPTION AGREEMENT

Oxygen Biotherapeutics, Inc.

2530 Meridian Parkway

Suite 3078

Durham, NC 27713

Gentlemen:

The undersigned (the “Investor”) hereby confirms its agreement with Oxygen
Biotherapeutics, Inc., a Delaware corporation (the “Company”), as follows:

1. This Subscription Agreement, including the Terms and Conditions For Purchase
of Units attached hereto as Annex I (collectively, (this “Agreement”) is made as
of the date set forth below between the Company and the Investor.

2. The Company has authorized the sale and issuance to certain investors (the
“Investors”) of up to an aggregate of 1,724,138 units (the “Units”), each
consisting of (i) one share (each a “Share,” collectively, the “Shares”) of its
common stock, par value $0.0001 per share (the “Common Stock”) and (ii) a
warrant (each, a “Warrant,” collectively, the “Warrants”) to purchase 0.425 of
one share of Common Stock and exercisable for a period of five (5) years, in
substantially the form attached hereto as Exhibit B, for a purchase price of
$2.90 per Unit (the “Purchase Price”). Units will not be issued or certificated.
The Shares and Warrants are immediately separable and will be issued separately.
The shares of Common Stock issuable upon exercise of the Warrants are referred
to herein as the “Warrant Shares” and, together with the Units, the Shares and
the Warrants, are referred to herein as the “Securities”).

3. The offering and sale of the Units (the “Offering”) are being made pursuant
to (1) an effective Registration Statement on Form S-3, File No. 333-165733, as
amended (the “Registration Statement”) filed by the Company with the Securities
and Exchange Commission (the “Commission”) (including the prospectus contained
therein (the “Base Prospectus”)), (2) if applicable, certain “free writing
prospectuses” (as that term is defined in Rule 405 under the Securities Act of
1933, as amended (the “Securities Act”)), that have been or will be filed with
the Commission and delivered to the Investor on or prior to the date hereof (the
“Issuer Free Writing Prospectus”), containing certain supplemental information
regarding the Units, the terms of the Offering and the Company and (3) a
Prospectus Supplement (the “Prospectus Supplement” and together with the Base
Prospectus, the “Prospectus”) containing certain supplemental
information regarding the Securities and terms of the Offering that has been or
will be filed with the Commission and delivered to the Investor (or made
available to the Investor by the filing by the Company of an electronic version
thereof with the Commission).

4. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor the Units set forth
below for the aggregate purchase price set forth below, less up to Fifteen
Thousand Dollars ($15,000) in the aggregate (for all Investors) to be used to
pay the legal fees of the Investors in the Offering to Tannenbaum Helpern
Syracuse & Hischtritt LLP. The Units shall be purchased pursuant to the

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Terms and Conditions for Purchase of Units attached hereto as Annex I and
incorporated herein by this reference as if fully set forth herein. The Investor
acknowledges that the Offering is not being underwritten by the placement agent
(the “Placement Agent”) named in the Prospectus Supplement and that there is no
minimum offering amount.

5. The manner of settlement of the Shares included in the Units purchased by the
Investor shall be determined by such Investor as follows (check one):

 

[        ] A. Delivery by crediting the account of the Investor’s prime broker
(as specified by such Investor on Exhibit A annexed hereto) with the Depository
Trust Company (“DTC”) through its Deposit/Withdrawal At Custodian (“DWAC”)
system, whereby Investor’s prime broker shall initiate a DWAC transaction on the
Closing Date using its DTC participant identification number, and released by
Interwest Transfer Company, the Company’s transfer agent (the “Transfer Agent”),
at the Company’s direction. NO LATER THAN ONE (1) BUSINESS DAY AFTER THE
EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

 

  (I) DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED
WITH THE SHARES ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE TRANSFER AGENT
TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND

 

  (II) REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE
PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING
ACCOUNT:

Citibank NA

ABA No. 322271724

Oxygen Biotherapeutics, Inc.

Account No. 0202705034

Attention: Michael Jebsen

Phone: 1-877-528-0990

—OR—

 

[        ] B. Delivery versus payment (“DVP”) through DTC (i.e., on the Closing
Date, the Company shall issue Shares registered in the Investor’s name and
address as set forth below and released by the Transfer Agent directly to the
account(s) at Roth Capital Partners, LLC (“Roth”) identified by the Investor;
upon receipt of such Shares, Roth shall promptly electronically deliver such
Shares to the Investor, and simultaneously therewith payment shall be made by
Roth by wire transfer to the Company). NO LATER THAN ONE (1) BUSINESS DAY AFTER
THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR
SHALL:

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  (I) NOTIFY ROTH OF THE ACCOUNT OR ACCOUNTS AT ROTH TO BE CREDITED WITH THE
SHARES BEING PURCHASED BY SUCH INVESTOR, AND

 

  (II) CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT ROTH TO BE CREDITED WITH THE
SHARES BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE
AGGREGATE PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR.

IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR
CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR
SETTLEMENT BY WAY OF DWAC OR DVP IN A TIMELY MANNER. IF THE INVESTOR DOES NOT
DELIVER THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR DOES NOT MAKE PROPER
ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES AND WARRANTS MAY NOT
BE DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE
CLOSING ALTOGETHER.

6. The executed Warrants shall be delivered in accordance with the terms
thereof.

7. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (b) it is
not a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) or
an Associated Person (as such term is defined under the FINRA’s NASD Membership
and Registration Rules Section 1011) as of the Closing, and (c) neither the
Investor nor any group of Investors (as identified in a public filing made with
the Commission) of which the Investor is a part in connection with the Offering,
acquired, or obtained the right to acquire, 20% or more of the Common Stock (or
securities convertible into or exercisable for Common Stock) or the voting power
of the Company on a post-transaction basis. Exceptions:

 

 

(If no exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

8. The Investor represents that it has received (or otherwise had made available
to it by the filing by the Company of an electronic version thereof with the
Commission) the Base Prospectus, dated April 14, 2010, as amended, which is a
part of the Company’s Registration Statement, the documents incorporated by
reference therein and any free writing prospectus (collectively, the “Disclosure
Package”), prior to or in connection with the receipt of this Agreement. The
Investor acknowledges that, prior to the delivery of this Agreement to the
Company, the Investor will receive certain additional information regarding the
Offering, including pricing information and risk factors (the “Offering
Information”). Such information may be provided to the Investor by any means
permitted under the Securities Act, including the Prospectus Supplement, a free
writing prospectus and oral communications.

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9. No offer by the Investor to buy Units will be accepted and no part of the
Purchase Price will be delivered to the Company until the Investor has received
the Offering Information and the Company has accepted such offer by
countersigning a copy of this Agreement, and any such offer may be withdrawn or
revoked, without obligation or commitment of any kind, at any time prior to the
Company (or Roth on behalf of the Company) sending (orally, in writing or by
electronic mail) notice of its acceptance of such offer. An indication
of interest will involve no obligation or commitment of any kind until the
Investor has been delivered the Offering Information and this Agreement is
accepted and countersigned by or on behalf of the Company.

10. The Company acknowledges that the only material, non-public information
relating to the Company or its subsidiaries that the Company, its employees or
agents has provided to the Investor in connection with the Offering prior to the
date hereof is the existence of the Offering.

11. For a period of thirty (30) months from the date of this Agreement, the
Company shall not, in any manner, (a) issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock that are directly or
indirectly convertible into or exchangeable for Common Stock at a price which
resets as a function of market price of the Common Stock at the time of such
exercise, exchange or conversion, or (b) issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock or directly or indirectly
convertible into or exchangeable or exercisable for Common Stock at a
conversion, exchange or exercise price which varies or may vary after issuance
with the market price of the Common Stock, including by way of one or more
reset(s) to any fixed price, including any “at the market offerings” as such
term is defined in Rule 415(a)(4) of the Securities Act.

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Number of Units:                                         

Purchase Price Per Unit:     $2.90                        

Aggregate Purchase Price: $                                         

Number of Warrant Shares (Equal to Number of Units multiplied by .425 and
rounded down to the nearest whole
number):                                          

Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.

 

Dated as of: May [—], 2010

 

INVESTOR

 

By:  

 

Print Name:  

 

Title:  

 

Address:  

 

 

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Agreed and Accepted this             day of May, 2010:

 

OXYGEN BIOTHERAPEUTICS, INC. By:  

 

  Name: Michael B. Jebsen   Title: Chief Financial Officer

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ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF UNITS

1. Authorization and Sale of the Units. Subject to the terms and conditions of
this Agreement, the Company has authorized the sale of the Units.

2. Agreement to Sell and Purchase the Units; Placement Agent.

2.1 At the Closing (as defined in Section 3.1), the Company will sell to the
Investor, and the Investor will purchase from the Company, upon the terms and
conditions set forth herein, the number of Units set forth on the last page of
the Agreement to which these Terms and Conditions for Purchase of Units are
attached as Annex I (the “Signature Page”) for the aggregate purchase price
therefor set forth on the Signature Page.

2.2 The Company proposes to enter into substantially this same form of
Subscription Agreement with certain other investors (the “Other Investors”) and
expects to complete sales of Units to them. The Investor and the Other Investors
are hereinafter sometimes collectively referred to as the “Investors,” and this
Agreement and the Subscription Agreements executed by the Other Investors are
hereinafter sometimes collectively referred to as the “Agreements.”

2.3 Investor acknowledges that the Company has agreed to pay Roth Capital
Partners, LLC (the “Placement Agent”) a fee (the “Placement Fee”) and certain
expenses in respect of the sale of Units to the Investor.

2.4 The Company has entered into a Placement Agency Agreement, dated the date
hereof, (the “Placement Agreement”), with the Placement Agent that contains
certain representations, warranties, covenants and agreements of the Company
that may be relied upon by the Investor, which shall be a third
party beneficiary thereof. The Company hereby incorporates such representations,
warranties, covenants and agreements herein, as if made on (a) the date hereof
and (b) the Closing Date. The Company confirms that neither it nor any other
Person acting on its behalf has provided the Investor or their agents or counsel
with any information that constitutes or could reasonably be expected to
constitute material, nonpublic information, except as will be disclosed in the
Prospectus and/or in the Company’s Form 8-K to be filed with the Commission in
connection with the Offering. The Company understands and confirms that the
Investor will rely on the foregoing representations in effecting transactions in
securities of the Company.

3. Closings and Delivery of the Units and Funds.

3.1 Closing. The completion of the purchase and sale of the Units (the
“Closing”) shall occur at 10:00 A.M., New York City time, on the third full
business day following the date of this Agreement or at such other date as shall
be determined by the Investor and the Company (the “Closing Date”). At the
Closing, (a) the Company shall cause Interwest Transfer Company, the Company’s
“Transfer Agent”, to deliver to the Investor the number of Shares set forth on
the Signature Page registered in the name of the Investor or, if so indicated on
the Investor Questionnaire attached hereto as Exhibit A, in the name of a
nominee designated by the Investor, (b) the Company shall cause to be delivered
to the Investor one Warrant for the number of Warrant Shares set forth on the
Signature Page and (c) the aggregate purchase price for the Units

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being purchased by the Investor will be delivered by or on behalf of the
Investor to the Company.

3.2 Conditions to the Obligations of the Parties.

3.3 Conditions to the Company’s Obligations. The Company’s obligation to issue
and sell the Units to the Investor shall be subject to: (i) the receipt by the
Company of the purchase price for the Units being purchased hereunder as set
forth on the Signature Page and (ii) the accuracy of the representations and
warranties made by the Investor and the fulfillment of those undertakings of the
Investor to be fulfilled prior to the Closing Date. Notwithstanding any
additional listing application with Nasdaq Capital Market, or any other listing
requirements, the Company shall be unconditionally obligated to issue and sell
the Units to the Investor.

3.4 Conditions to the Investor’s Obligations. The Investor’s obligation to
purchase the Units will be subject to the accuracy of the representations and
warranties made by the Company and the fulfillment of those undertakings of the
Company to be fulfilled prior to the Closing Date, including without limitation,
those contained in the Placement Agreement, and to the condition that the
Placement Agent shall not have: (a) terminated the Placement Agreement pursuant
to the terms thereof or (b) determined that the conditions to the closing in the
Placement Agreement have not been satisfied. The Investor’s obligations are
expressly not conditioned on the purchase by any or all of the Other Investors
of the Units that they have agreed to purchase from the Company. The Investor
understands and agrees that, in the event that the Placement Agent in its sole
discretion determines that the conditions to closing in the Placement Agreement
have not been satisfied or if the Placement Agreement may be terminated for any
other reason permitted by such Placement Agreement, then the Placement Agent
may, but shall not be obligated to, terminate such Agreement, which shall have
the effect of terminating this Subscription Agreement pursuant to Section 14
below.

3.5 Delivery of Funds.

(a) DWAC Delivery. If the Investor elects to settle the Shares purchased by such
Investor through DTC’s Deposit/Withdrawal at Custodian (“DWAC”) delivery system,
no later than one (1) business day after the execution of this Agreement by the
Investor and the Company, the Investor shall remit by wire transfer the amount
of funds equal to the aggregate purchase price for the Units being purchased by
the Investor to the following account designated by the Company:

Citibank NA

ABA No. 322271724

Oxygen Biotherapeutics, Inc.

Account No. 0202705034

Attention: Michael Jebsen

Phone: 1-877-528-0990

(b) Delivery Versus Payment through The Depository Trust Company. If the
Investor elects to settle the Shares purchased by such Investor by delivery
versus

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payment through DTC, no later than one (1) business day after the execution of
this Agreement by the Investor and the Company, the Investor shall confirm that
the account or accounts at the Placement Agent to be credited with the Units
being purchased by the Investor have a minimum balance equal to the aggregate
purchase price for the Units being purchased by the Investor.

3.6 Delivery of Shares.

(a) DWAC Delivery. If the Investor elects to settle the Shares purchased by such
Investor through DTC’s DWAC delivery system, no later than one (1) business day
after the execution of this Agreement by the Investor and the Company, the
Investor shall direct the broker-dealer at which the account or accounts to be
credited with the Shares being purchased by such Investor are maintained, which
broker/dealer shall be a DTC participant, to set up a DWAC instructing the
Transfer Agent to credit such account or accounts with the Shares. Such DWAC
instruction shall indicate the settlement date for the deposit of the Shares,
which date shall be provided to the Investor by the Placement Agent. Upon the
closing of the Offering, the Company shall direct the Transfer Agent to credit
the Investor’s account or accounts with the Shares pursuant to the information
contained in the DWAC.

(b) Delivery Versus Payment through The Depository Trust Company. If the
Investor elects to settle the Shares purchased by such Investor by delivery
versus payment through DTC, no later than one (1) business day after the
execution of this Agreement by the Investor and the Company, the Investor shall
notify the Placement Agent of the account or accounts at the Placement Agent to
be credited with the Shares being purchased by such Investor. On the Closing
Date, the Company shall deliver the Shares to the Investor through DTC directly
to the account(s) at the Placement identified by Investor and simultaneously
therewith payment shall be made by the Placement Agent by wire transfer to the
Company.

4. Representations, Warranties and Covenants of the Investor.

The Investor acknowledges, represents and warrants to, and agrees with, the
Company and the Placement Agent that:

4.1 The Investor (a) is knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to, investments in securities
presenting an investment decision like that involved in the purchase of the
Units, including investments in securities issued by the Company and investments
in comparable companies, (b) has answered all questions on the Signature Page
and the Investor Questionnaire and the answers thereto are true and correct as
of the date hereof and will be true and correct as of the Closing Date and
(c) in connection with its decision to purchase the number of Units set forth on
the Signature Page, has received and is relying only upon the Disclosure Package
and the documents incorporated by reference therein and the Offering
Information.

4.2 (a) If the Investor is outside the United States, it will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Securities or has in its possession or
distributes any offering material, in all cases at its own expense.

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4.3 (a) The Investor has full right, power, authority and capacity to enter into
this Agreement and to consummate the transactions contemplated hereby and has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement, and (b) this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as to the enforceability of any rights to indemnification or
contribution that may be violative of the public policy underlying any law, rule
or regulation (including any federal or state securities law, rule or
regulation).

4.4 The Investor understands that nothing in this Agreement, the Prospectus, the
Disclosure Package, the Offering Information or any other materials presented to
the Investor in connection with the purchase and sale of the Units constitutes
legal, tax or investment advice. The Investor has consulted such legal, tax and
investment advisors and made such investigation as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of Units.
The Investor also understands that there is no established public trading market
for the Warrants being offered in the Offering, and that the Company does not
expect such a market to develop. In addition, the Company does not intend to
apply for listing of the Warrants on any securities exchange. The Investor
understands that without an active market, the liquidity of the Warrants will be
limited.

4.5 The Investor will maintain the confidentiality of all information acquired
as a result of the transactions contemplated hereby prior to the public
disclosure of that information by the Company in accordance with Section 13 of
this Annex.

4.6 Since the time at which the Placement Agent first contacted such Investor
about the Offering, the Investor has not disclosed any information regarding the
Offering to any third parties (other than its legal, accounting and other
advisors) and has not engaged in any purchases or sales of the securities of the
Company (including, without limitation, any Short Sales (as defined herein)
involving the Company’s securities). The Investor covenants that it will not
engage in any purchases or sales of the securities of the Company (including
Short Sales) prior to the time that the transactions contemplated by this
Agreement are publicly disclosed. The Investor agrees that it will not use any
of the Securities acquired pursuant to this Agreement to cover any short
position in the Common Stock if doing so would be in violation of applicable
securities laws. For purposes hereof, “Short Sales” include, without limitation,
all “short sales” as defined in Rule 200 promulgated under Regulation SHO under
the Securities Exchange Act of 1934 (the “Exchange Act”), whether or not against
the box, and all types of direct and indirect stock pledges, forward sales
contracts, options, puts, calls, short sales, swaps, “put equivalent positions”
(as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements
(including on a total return basis), and sales and other transactions through
non-U.S. broker dealers or foreign regulated brokers.

5. Survival of Representations, Warranties and Agreements; Third Party
Beneficiary. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company and the

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Investor herein, including any representations and warranties incorporated
herein by reference from the Placement Agency Agreement, will survive the
execution of this Agreement, the delivery to the Investor of the Shares and
Warrants being purchased and the payment therefor. The Placement Agent shall be
a third party beneficiary with respect to the representations, warranties and
agreements of the Investor in Section 4 hereof.

6. Notices. All notices, requests, consents and other communications hereunder
will be in writing, will be mailed (a) if within the domestic United States by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, or by facsimile or (b) if delivered from
outside the United States, by International Federal Express or facsimile, and
will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed and (iv) if delivered by facsimile, upon electronic confirmation of
receipt and will be delivered and addressed as follows:

(a) if to the Company, to:

Oxygen Biotherapeutics, Inc.

2530 Meridian Parkway

Suite 3078

Durham, North Carolina 27713

Attention: Michael B. Jebsen

Facsimile: (919) 806-4417

with a copy (which shall not constitute notice) to:

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.

P.O. Box 2611

Raleigh, North Carolina 27602

Attention: Margaret N. Rosenfeld

Facsimile: (919) 821-6800

(b) if to the Investor, at its address on the Signature Page hereto, or at such
other address or addresses as may have been furnished to the Company in writing.

7. Changes. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Investor.

8. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and will not be deemed to be part of
this Agreement.

9. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.

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10. Governing Law. This Agreement will be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law that would require the application
of the laws of any other jurisdiction.

11. Counterparts. This Agreement may be executed in two or more counterparts,
each of which will constitute an original, but all of which, when taken
together, will constitute but one instrument, and will become effective when one
or more counterparts have been signed by each party hereto and delivered to the
other parties. The Company and the Investor acknowledge and agree that the
Company shall deliver its counterpart to the Investor along with the Prospectus
Supplement (or the filing by the Company of an electronic version thereof
with the Commission).

12. Confirmation of Sale. The Investor acknowledges and agrees that such
Investor’s receipt of the Company’s signed counterpart to this Agreement,
together with the Prospectus Supplement (or the filing by the Company of an
electronic version thereof with the Commission), shall constitute written
confirmation of the Company’s sale of Units to such Investor.

13. Press Release. The Company and the Investor agree that the Company shall
prior to the opening of the financial markets in New York City on May 4, 2010
(a) issue a press release announcing the Offering and disclosing all material
information regarding the Offering and (b) file a current report on Form 8-K
with the Securities and Exchange Commission including, but not limited to, a
form of this Agreement and forms of Warrant as exhibits thereto. The Company
shall not identify the Investor by name in any press release or public filing,
or otherwise publicly disclose the Investor’s name, without the Investor’s prior
written consent, unless required by applicable laws, rules and regulations.

14. Termination. In the event that the Placement Agreement is terminated by the
Placement Agent pursuant to the terms thereof, this Agreement shall terminate
without any further action on the part of the parties hereto.

15. Lock-Up. Until the earlier to occur of (a) the date that is one hundred and
eighty (180) days after the date hereof and (b) beginning on the ninety-first
(91st) day after the date hereof, any day when the aggregate trading volume of
the Company’s Common Stock equals or has exceeded five million
(5,000,000) shares traded, in the aggregate, since the date hereof and the
closing price of the Company’s Common Stock, as reported by the Nasdaq Capital
Market, exceeds $5.00 per share (the “Lock-Up Period”), the Company will not
directly or indirectly, (1) offer to sell, hypothecate, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to
purchase (to the extent such option or contract to purchase is exercisable
within one year from the Closing Date), purchase any option or contract to sell,
grant any option, right or warrant to purchase, any shares of Common Stock or
any securities convertible or exchangeable for Common Stock, or otherwise
transfer or dispose of, directly or indirectly, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Exchange Act, with respect to, any shares of
Common Stock, or any securities convertible into or exercisable or exchangeable
for shares of Common Stock, (2) file or cause to become effective a registration
statement under the Securities Act relating to the offer and sale of any shares
of Common Stock or securities convertible into or

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exercisable or exchangeable for shares of Common Stock, or (3) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clauses (1), (2) or (3) above is to be settled by delivery of
shares of Common Stock or such other securities, in cash or otherwise, without
the prior written consent of the Placement Agent (which consent may be withheld
in its sole discretion), other than (i) the Securities to be sold hereunder,
(ii) the issuance of stock options or shares of restricted stock to employees,
directors and consultants pursuant to the Company’s 1999 Amended Stock Plan, as
amended, (iii) issuances of shares of Common Stock upon the exercise of options
or warrants disclosed as outstanding in the Disclosure Package and the
Prospectus or upon the conversion or exchange of convertible or exchangeable
securities disclosed as outstanding in the Disclosure Package and the
Prospectus, (iv) the issuance by the Company of any shares of Common Stock as
consideration for mergers, acquisitions, other business combinations, or
strategic alliances, occurring after the date of this Agreement; provided that
each recipient of shares pursuant to this clause, (iv) agrees that all such
shares remain subject to restrictions substantially similar to those contained
in this Section 15, (v) the issuance by the Company of shares of Common Stock as
consideration under Amendment No. 2 to the Securities Purchase Agreement between
the Company and Vatea Fund entered into prior to the execution of this
Agreement; provided, that the number of shares issued during the Lock-Up Period
under such agreement shall not exceed 2,420,400, (vi) the purchase or sale of
the Company’s securities pursuant to a plan, contract or instruction that
satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect
prior to the date hereof or (vii) the issuance of shares of Common Stock in
connection with a stock split, stock dividend or other similar recapitalization
or reorganization. Notwithstanding the foregoing, for the purpose of allowing
the Placement Agent to comply with FINRA Rule 2711(f)(4), if (1) during the last
seventeen (17) days of the Lock-Up Period, the Company releases earnings results
or publicly announces other material news or a material event relating to the
Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the sixteen (16)-day
period beginning on the last day of the Lock-Up Period, then in each case the
Lock-Up Period will be extended until the expiration of the eighteen (18)-day
period beginning on the date of release of the earnings results or the public
announcement regarding the material news or the occurrence of the material
event, as applicable, unless the Placement Agent waives, in writing, such
extension. The Placement Agent agrees to waive such extension if the provisions
of FINRA Rule 2711(f)(4) are not applicable to the Offering. The Company agrees
not to accelerate the vesting of any option or warrant or the lapse of any
repurchase right prior to the expiration of the Lock-Up Period.

16. Participation In Future Financing

16.1 For purposes of this Section 16, the following definitions shall apply:

(a) “Common Stock Equivalents” means, collectively, Options and Convertible
Securities.

(b) “Convertible Securities” means any stock or securities (other than Options)
convertible into or exercisable or exchangeable for Common Stock.

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(c) “Options” means any rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.

16.2 From the date hereof until November 1, 2011 (the “Trigger Date”), the
Company will not, directly or indirectly, offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition of) any of its or its subsidiaries’
equity or equity equivalent securities, including without limitation any debt,
preferred stock or other instrument or security that is, at any time during its
life and under any circumstances, convertible into or exchangeable or
exercisable for Common Stock or Common Stock Equivalents (any such offer, sale,
grant, disposition or announcement being referred to as a “Subsequent
Placement”) unless the Company shall have first complied with this Section 16;
provided, that this Section 16, and any restriction contained in Section 15,
shall not apply to (a) Securities to be sold hereunder, (b) stock options or
shares of restricted stock granted or issued to employees, directors and
consultants pursuant to the Company’s 1999 Amended Stock Plan, as amended,
(c) shares of Common Stock issued upon the exercise of any Common Stock
Equivalents disclosed as outstanding in the Disclosure Package or the Prospectus
or upon the conversion or exchange of any Common Stock Equivalents disclosed as
outstanding in the Disclosure Package or the Prospectus, (d) any shares of
Common Stock issued as consideration for mergers, acquisitions, other business
combinations, or strategic alliances, occurring after the date of this
Agreement; provided that each recipient of shares pursuant to this clause
(d) agrees that all such shares remain subject to lock-up restrictions
substantially similar to those contained in this Section 16; (e) the issuance by
the Company of shares of Common Stock as consideration under Amendment No. 2 to
the Securities Purchase Agreement between the Company and Vatea Fund entered
into prior to the execution of this Agreement; (f) the purchase or sale of the
Company’s securities pursuant to a plan, contract or instruction that satisfies
all of the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect prior to
the date hereof; or (g) any shares issued pursuant to a stock split, stock
dividend or other similar recapitalization or reorganization.

(a) The Company shall deliver to Investor a written notice stating that the
Company may have information to share with Investor and requesting Investor to
inform the Company if it is willing to receive a notice of such information. If
Investor indicates its willingness to receive such information, then the Company
shall deliver promptly, but in any event no later than one (1) business day
after being informed by Investor of its willingness to receive the information,
a written notice (the “Offer Notice”) of any proposed or intended issuance or
sale or exchange (the “Offer”) of the securities being offered (the “Offered
Securities”) in a Subsequent Placement, which Offer Notice shall (w) identify
and describe the Offered Securities, (x) describe the price and other terms upon
which they are to be issued, sold or exchanged, and the number or amount of the
Offered Securities to be issued, sold or exchanged, (y) identify the persons or
entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with Investor fifty percent (50%) of the Offered Securities, allocated
among all investors in the Offering (a) based on each such investor’s pro rata
portion of the aggregate principal amount of Units purchased hereunder (the
“Basic Amount”), and (b) to the extent that Investor elects to purchase its
Basic Amount, any additional portion of the Offered Securities attributable to
the Basic Amounts of other investors that Investor shall indicate it will
purchase

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or acquire should the other investors subscribe for less than their Basic
Amounts (the “Undersubscription Amount”), which process shall be repeated no
more than one time so that the investors in the Offering shall have an
opportunity to subscribe for any remaining Undersubscription Amount.

(b) To accept an Offer, in whole or in part, Investor must deliver a written
notice to the Company prior to the end of twenty-four (24) hours after
Investor’s receipt of the Offer Notice (the “Offer Period”), setting forth the
portion of such Investor’s Basic Amount that Investor elects to purchase and, if
Investor shall elect to purchase all of its Basic Amount, the Undersubscription
Amount, if any, that Investor elects to purchase (in either case, the “Notice of
Acceptance”). If the Basic Amounts subscribed for by all investors in the
Offering are less than the total of all of the Basic Amounts, then each investor
in the Offering who has set forth an Undersubscription Amount in its Notice of
Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided,
however, that if the Undersubscription Amounts subscribed for exceed the
difference between the total of all the Basic Amounts and the Basic Amounts
subscribed for (the “Available Undersubscription Amount”), each investor in the
Offering who has subscribed for any Undersubscription Amount shall be entitled
to purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such investor bears to the total Basic Amounts of all investors
in the Offering that have subscribed for Undersubscription Amounts, subject to
rounding by the Company to the extent its deems reasonably
necessary. Notwithstanding anything to the contrary contained herein, if the
Company desires to modify or amend the terms and conditions of the Offer prior
to the expiration of the Offer Period, the Company may deliver to Investor a new
Offer Notice and the Offer Period shall expire on the tenth (10th) Business Day
after Investor’s receipt of such new Offer Notice.

(c) The Company shall have ten (10) business days from the expiration of the
Offer Period above to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by the
investors to the Offering (the “Refused Securities”) pursuant to a definitive
agreement (the “Subsequent Placement Agreement”) but only to the offerees
described in the Offer Notice (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates) that
are not more favorable to the acquiring person or persons or less favorable to
the Company than those set forth in the Offer Notice and (ii) to publicly
announce (a) the execution of such Subsequent Placement Agreement, and
(b) either (x) the consummation of the transactions contemplated by such
Subsequent Placement Agreement or (y) the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report on
Form 8-K with such Subsequent Placement Agreement and any documents contemplated
therein filed as exhibits thereto.

(d) In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 16.2(c) above), then Investor may, at its sole option and in its sole
discretion, reduce the number or amount of the Offered Securities specified in
its Notice of Acceptance to an amount that shall be not less than the number or
amount of the Offered Securities that Investor elected to purchase pursuant to
Section 16.2(b) above multiplied by a fraction, (i) the numerator of which shall
be

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the number or amount of Offered Securities the Company actually proposes to
issue, sell or exchange (including Offered Securities to be issued or sold to
investors pursuant to Section 16.2(c) above prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that any investor to the Offering so elects to reduce
the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have
again been offered to Investor in accordance with Section 16.2(a) above.

(e) Upon the closing of the issuance, sale or exchange of all or less than all
of the Refused Securities, or if there are no Refused Securities, then within
ten (10) business days from the expiration of the Offer Period, the investors in
the Offering shall acquire from the Company, and the Company shall issue to the
investors, the number or amount of Offered Securities specified in the Notices
of Acceptance, as reduced pursuant to Section 16.2(d) above if the investors
have so elected, upon the terms and conditions specified in the Offer. The
purchase by the investors of any Offered Securities is subject in all cases to
the preparation, execution and delivery by the Company and the investors of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Investor and its counsel. The Investor and the
Company shall each use their reasonable best efforts to consummate such offering
as promptly as commercially practicable.

(f) Any Offered Securities not acquired by the investors or other persons in
accordance with Section 16.2(c) above may not be issued, sold or exchanged until
they are again offered to the investors under the procedures specified in this
Agreement.

(g) The Company and Investor agree that if any investor elects to participate in
the Offer, neither the Subsequent Placement Agreement with respect to such Offer
nor any other transaction documents related thereto (collectively, the
“Subsequent Placement Documents”) shall include any term or provisions whereby
any investor shall be required to agree to any restrictions in trading as to any
securities of the Company owned by such investor prior to such Subsequent
Placement.

(h) Notwithstanding anything to the contrary in this Section 16 and unless
otherwise agreed to by Investor, the Company shall either confirm in writing to
Investor that the transaction with respect to the Subsequent Placement has been
abandoned or shall publicly disclose its intention to issue the Offered
Securities, in either case in such a manner such that the Investor will not be
in possession of material non-public information, by the sixteenth (16th
) business day following delivery of the Offer Notice. If by the sixteenth
(16th) business day following delivery of the Offer Notice no public disclosure
regarding a transaction with respect to the Offered Securities has been made,
and no notice regarding the abandonment of such transaction has been received by
Investor, such transaction shall be deemed to have been abandoned and Investor
shall not be deemed to be in possession of any material, non-public information
with respect to the Company. Should the Company decide to pursue such
transaction with respect to the Offered Securities, the Company shall provide
Investor with another Offer Notice and Investor will again have the right of
participation set forth in this

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Section 16. The Company shall not be permitted to deliver more than one such
Offer Notice to Investor in any 60 day period.

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EXHIBIT A

OXYGEN BIOTHERAPEUTICS, INC.

INVESTOR QUESTIONNAIRE

Pursuant to Section 3 of Annex I to the Agreement, please provide us with the
following information:

 

1.    The exact name that your Shares and Warrants are to be registered in. You
may use a nominee name if appropriate:   

 

2.    The relationship between the Investor and the registered holder listed in
response to item 1 above:   

 

3.    The mailing address of the registered holder listed in response to item 1
above:   

 

4.    The Social Security Number or Tax Identification Number of the registered
holder listed in the response to item 1 above:   

 

5.    Name of DTC Participant (broker-dealer at which the account or accounts to
be credited with the Shares are maintained):   

 

6.    DTC Participant Number:   

 

7.    Name of Account at DTC Participant being credited with the Shares:   

 

8.    Account Number at DTC Participant being credited with the Shares:   

 

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EXHIBIT B

FORM OF WARRANT