Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is effective as of December 1, 2010,
between Oxygen Biotherapeutics, Inc., a Delaware corporation (hereinafter
sometimes referred to as “OBI” or the “Corporation”) and Michael Jebsen
(“Jebsen”).

1. TERM OF EMPLOYMENT. OBI hereby employs Jebsen and Jebsen hereby accepts
employment with OBI for the period beginning on December 1, 2010 and ending on
November 30, 2011; thereafter, this Agreement and Jensen’s employment hereunder
shall be automatically renewed on a yearly basis unless canceled or
renegotiated. As used herein, the phrase “Employment Term” refers to the entire
period of employment of Jebsen by OBI hereunder, whether for the period provided
above, or whether terminated earlier as hereinafter provided, or extended either
by operation of this paragraph or by mutual agreement of OBI and Jebsen. In the
event OBI wishes to cancel this agreement as of November 30, 2011, or at the end
of any annual renewal period thereafter, it shall give 120 days’ prior written
notice to Jebsen.

2. DUTIES OF JEBSEN.

2.1 General Duties. Jebsen shall serve as Executive Vice President of Finance
and Administration and Chief Financial Officer of OBI.

2.2 Specific Duties. Jebsen’s responsibilities shall be to act as the Chief
Financial Officer of the Corporation with overall responsibility for all of the
day to day financial activities of the Corporation. Subject to approval by the
Board of Directors, Jebsen shall serve as an Officer of OBI. Jebsen shall have
the duties and responsibilities customarily held or assigned to a Chief
Financial Officer including without limitation overall responsibility for all
financial and fiscal management aspects of company operations and coordinating
the administrative, business planning, accounting and budgeting efforts of the
company.

2.3 Work Base. Jebsen’s work base shall be Durham, North Carolina.

2.4 Devotion of Time to OBI’s Business. Jebsen shall devote whatever time,
ability and attention to the business of OBI during the term of this Agreement
as is reasonably required to fulfill his responsibilities.

2.5 Certain non-competing activities. OBI acknowledges that Jebsen is allowed to
serve on board of director’s of other non-competing companies. As long as these
activities do not interfere with Jebsen’s duties for OBI, OBI acknowledges and
agrees to those activities.

3. COMPENSATION OF JEBSEN.

3.1 Base Salary. As compensation for services hereunder, OBI shall pay Jebsen a
base annual salary of $210,000, payable as per company regulations (currently
payments twice a month).

3.2 Stock Compensation. Additionally, Jebsen shall receive for the duration of
this agreement 12,500 options of common stock per year, in accordance with the
Stock Plan in effect.

3.3 Additional Compensation.

(a) Annual Bonus. Jebsen shall be eligible for a cash bonus payable at year’s
end starting December 31, 2010. The bonus shall be $50,000 based on 100%
achievement of annual goals. There is no cap on the bonus for achievements
exceeding 100% of goals.

(b) Compensation Review. The Chief Executive Officer will perform an annual
performance evaluation and may recommend an increase in compensation, subject to
approval from the Board of Directors. Additional compensation to be awarded to
Jebsen may be in the form of cash, stock options or other consideration deemed
appropriate by the CEO and Board.

(c) Options. Jebsen shall receive 667 options per month as compensation for
holding the position of Corporate Secretary. This compensation shall cease
beginning on the first day of the month following Jebsen’s removal from this
office.

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4. JEBSEN BENEFITS.

4.1 Use of Automobile. OBI shall pay all expenses of one automobile to be used
in part by Jebsen in the course of his employment, at a flat expense of Eight
Hundred Dollars ($800.00) per month during the term hereof.

4.2 Medical, Dental Insurance Coverage. OBI shall provide Jebsen with medical
and dental insurance coverage on the same basis as provided for other senior
management employees of OBI.

4.3 401 (k) Plan. OBI shall continue to implement and Jebsen shall be entitled
to participate, to the maximum extent allowed by law, in a retirement plan under
Internal Revenue Code Section 401 (k).

4.4. Time Off. Jebsen shall be entitled to paid and unpaid time off as per the
company plan in effect.

4.5 Stock Options and Plans. Jebsen shall participate in the 1999 Stock Plan and
shall be eligible to participate in other OBI stock option and related plans as
determined by the Board of Directors. Stock options shall be granted as per
Section 3 of this agreement. All options granted to Jebsen shall be fully vested
ten-year options. Jebsen shall be entitled to participate in additional grants
of options on terms and conditions as are specified by the Board of Directors,
consistent with the 1999 Stock Plan, or amendments thereto.

5. BUSINESS EXPENSES.

5.1 Entertainment Expenses. The services required by OBI require Jebsen to incur
travel, entertainment, and other expenses on behalf of OBI. OBI will promptly
reimburse Jebsen for all reasonable business expenses incurred by Jebsen in
promoting the business of OBI, including expenditures for entertainment, gifts,
and travel.

5.2 Other Business Expenses. OBI will promptly reimburse Jebsen for all other
business expenses reasonably incurred by Jebsen in connection with the business
of OBI.

6. TERMINATION OF EMPLOYMENT.

6.1 Resignation, Retirement, Death or Disability. Jebsen’s employment hereunder
shall be terminated at any time by Jebsen’s resignation or by Jebsen’s
retirement at or after attainment of age 70 (“Retirement”), death or his
inability to perform his duties under this Agreement, with or without reasonable
accommodation, because of a physical or mental illness (“Disability”).

6.2 Termination for Cause. Jebsen’s employment hereunder may be terminated for
Cause. “Cause” shall only mean willful misconduct, conflict of interest or
breach of fiduciary duty, or a material breach of any provision of this
Agreement.

6.3 Expiration. Jebsen’s employment hereunder shall be terminated upon
expiration of the Employment Term as provided in Section 1.

6.4 Resignation for Good Reason. Jebsen may regard Jebsen’s employment as being
constructively terminated and may, therefore, resign within ninety (90) days of
Jebsen’s discovery of any one of the following events which will constitute
“Good Reason” for such resignation:

(a) Without Jebsen’s express written consent, the assignment to Jebsen of any
duties materially inconsistent with Jebsen’s current position, duties,
responsibilities and status with OBI, or any subsequent removal of Jebsen from,
or any failure to re-elect Jebsen to any such position;

(b) Without Jebsen’s express written consent, the termination and/or material
reduction in Jebsen’s staff reporting and available to Jebsen;

(c) A material reduction or diminution by the Corporation of Jebsen’s
compensation. For purposes of this provision, a “material” reduction or
diminution shall be deemed to occur if Jebsen’s overall compensation package is
reduced by 5% or more from its then-current level.

(d) A failure by Corporation to maintain any of the Jebsen benefits to which
Jebsen was entitled at a level substantially equal to or greater than the value
of those Jebsen benefits in effect prior to such reduction in benefits, through
the continuation of the same or substantially similar plans, programs and
policies; or the taking of any action by OBI or its affiliates which would
materially affect Jebsen’s participation in or reduce Jebsen’s benefits under
any such plans, programs or policies, or deprive Jebsen of any material fringe
benefits enjoyed by Jebsen;

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(e) OBI or any affiliate requiring Jebsen to relocate or to be based anywhere
other than where Jebsen was based for the one year period prior to such
relocation; except for required travel on OBI’s or affiliate’s business to an
extent substantially consistent with Jebsen’s business travel obligations;

(f) Any purported termination of Jebsen’s employment by OBI or the Board which
is not effected pursuant to the requirements of this Section 6 with respect to
Death, Retirement, Disability or Termination for Cause; and

(g) Receipt of notice by Jebsen that the Agreement will not be renewed pursuant
to Section 1.

(h) The occurrence of any of the following:

(1) A merger or consolidation where OBI is not the consolidated or surviving
entity;

(2) A sale or transfer of all or substantially all of the assets of OBI;

(3) Voluntary or involuntary dissolution of OBI; or

(4) A change in control of OBI. For purposes of this provision, a change in
control shall be defined to include:

(i) The acquisition by any person, entity or group of affiliated persons or
entities of twenty five percent (25%) or more of the issued and outstanding
stock of the Company; or

(ii) Any transaction or occurrence which results in a majority of the
then-current Directors no longer, after such transaction or occurrence,
constituting a majority of the entire Board of Directors.

6.5 Damages for Breach of Agreement. In the event of the breach of this
Agreement by either OBI or Jebsen resulting in damages to the other party may
recover from the party breaching the Agreement any and all damages that may be
sustained.

7. PAYMENTS TO JEBSEN UPON TERMINATION.

7.1 Death, Disability or Retirement. In the event of Jebsen’s Retirement, Death
or Disability, all benefits generally available to Jebsen as of the date of such
an event shall be payable to Jebsen or Jebsen’s estate without reduction, in
accordance with the terms of any plan, contract, understanding or arrangement
forming the basis for such payment. Jebsen shall be entitled to such other
payments as might arise from any other plan, contract, understanding or
arrangement between Jebsen and OBI at the time of any such event.

7.2 Termination for Cause or Resignation without Good Reason. In the event
Jebsen is terminated by OBI for Cause or Jebsen resigns for other than a Good
Reason, neither OBI nor an affiliate shall have any further obligation to Jebsen
under this Agreement or otherwise, except to the extent provided in any other
plan, contract, understanding or arrangement, or Section 8, or as may be
required by law. Any bonuses earned under Section 3(a) hereof shall immediately
be paid in full.

7.3 Termination Without Cause or Resignation For Good Reason. Subject to other
provisions in this Section 7 to the contrary, upon the occurrence of a
termination without Cause, which shall include but not be limited to, a
Resignation for Good Reason as defined in Section 6.4, OBI shall:

(a) Pay to Jebsen, or in the event of Jebsen’s subsequent death, to Jebsen’s
surviving spouse, or if none, to Jebsen’s estate, as severance pay or liquidated
damages, or both, a sum equal to one year of base salary, payable under this
Agreement pursuant to Section 3 immediately prior to such termination.

(b) Pay to Jebsen the economic value of replacement cost for substantially
identical benefits during a period of one year for those benefits to which the
Jebsen is entitled to immediately prior to the termination.

(c) Notwithstanding any provision in the 1999 Stock Plan or amendments thereto,
or in any other plan which may be adopted by the Corporation with respect to
stock options, all options granted to or owned by Jebsen shall immediately
become exercisable for cashless exercise.

(d) Any bonuses earned under Section 3(a) hereof shall immediately be paid in
full.

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8. COVENANT NOT TO COMPETE.

8.1 Scope of Covenant. Jebsen agrees that he shall not, either directly or
indirectly, carry on, participate, or engage in, either as Jebsen, employer,
principal, agent, consultant, owner, part-owner, co-venturer, officer, director,
shareholder, partner, manager, operator, financier, employee, salesman, or in
any other individual or representative or participating capacity, any business
which develops or markets oxygen biotherapeutics for a period of two (2) years
from the date of separation from OBI in the area of the Continental United
States.

8.2 Interpretation. Should any portion or provision of this covenant not to
compete be found by a court of competent jurisdiction to be overly broad, it is
the express intent of the parties hereto that such provisions shall nevertheless
be enforced to the maximum extent permitted by law and shall govern and apply to
as much geographical area and/or time duration, not to exceed that which is set
forth above, as possible. This agreement shall not be interpreted for or against
either party on the ground that such party drafted the agreement, or any
provision thereof.

9. CONFIDENTIALITY PROVISION.

9.1 Proprietary Information Defined. The following terms shall have the meanings
respectively set forth for them below:

(a) “Proprietary Information” shall mean any and all inventions, research,
designs, products, processes, formulae, know-how, customer lists, customer
requirements information, trade secrets and/or other non-public information or
data comprising or related to the business of Corporation as the same is carried
on from time to time;

(b) “Proprietary Rights” shall mean all trademarks, patents, copyrights, rights
of creators and/or similar rights and privileges, whether domestic or foreign,
statutory or at common law, filed or not filed, perfected or unperfected, or
otherwise, relating to any Proprietary Information;

(c) “Proprietary Proceeds” shall mean all proceeds and products of any
Proprietary Information and/or Proprietary Rights; and

(d) “Proprietary Assets” shall mean Proprietary Information and/or Proprietary
Rights and/or Proprietary Proceeds, considered collectively or separately.

(e) “Proprietary Information” and “Proprietary Assets” shall not include any
information or other item that is known to the public or known in the industry
in which OBI is engaged, or which subsequently becomes publicly known by lawful
means.

9.2 Acknowledgement of OBI’s Proprietary Information. Jebsen agrees and
acknowledges that any and all Proprietary Information (together with all
Proprietary Rights and/or Proprietary Proceeds relating thereto) wholly or
partially created, developed or further developed, perfected and/or completed by
Jebsen, acting alone or jointly with others at any time during Jebsen’s
employment with OBI, shall immediately upon creation, completion and/or
development become or have become, and shall at all times thereafter remain, the
sole and exclusive property of OBI.

9.3 OBI’s Property. Jebsen specifically agrees and acknowledges that (a) any and
all Proprietary Assets, however, whenever and from whomever acquired by OBI, are
and shall at all times remain the sole and exclusive property of OBI, (b) Jebsen
shall not use, possess, disclose, transfer and/or otherwise deal with any such
Proprietary Assets at any time during his employment with OBI other than
specifically within the scope of his employment and in furtherance of the
business and affairs of OBI, and (c) Jebsen shall not use, possess, disclose,
transfer and/or otherwise deal with any Proprietary Assets at any time after the
termination of his employment with OBI under any circumstances whatsoever.

9.4 Jebsen’s Duties. Jebsen agrees that he shall, both throughout the term of
his employment with OBI and at any and all times following the termination
thereof, execute and deliver all such further instruments and documents, and do
and perform all such further acts and things, as may be necessary or helpful
and/or as may be reasonably requested by OBI in furtherance of the purposes and
intent of this Agreement. By way of illustration and not by way of limitation of
the foregoing, Jebsen specifically agrees that he shall:

(a) Immediately communicate and thoroughly describe to OBI in writing any and
all such Proprietary Information as is described in Section 9.1 above;

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(b) Promptly execute and deliver all such instruments or agreements of
assignment and/or transfer as OBI may from time to time request to carry out the
purposes and intent of Section 9.1 above;

(c) Assist OBI, at such times and in such manner as OBI may request, in
connection with OBI’s efforts to secure, apply for, renew or otherwise perfect
Proprietary Rights with respect to any and all Proprietary Information; and

(d) Upon termination of his employment with OBI, immediately deliver to OBI any
and all written recorded or other physical evidence of any and all Proprietary
Assets in his possession or under his control;

PROVIDED, that in consideration of the foregoing, OBI agrees that all reasonable
costs and expenses incurred by Jebsen, including reasonable compensation for his
time in complying with the provisions of this Section 9 shall be for OBI’s
account.

9.5 Disclosure of Information. Jebsen will not, during the employment term or
after, disclose or use any Proprietary Information or permit disclosure to any
person, firm, corporation, association or other entity if such disclosure would
be detrimental to OBI.

9.6 Survival. It is specifically understood and agreed by both such parties that
this Agreement shall survive Jebsen’s employment with OBI and/or the making
and/or termination of any contract or agreement with respect thereto.

10. GENERAL PROVISIONS.

10.1 Notices. Any notices to be given hereunder by each party to the other may
be effected by personal delivery in writing or by mail registered or certified,
postage prepaid with return receipt requested. Notices delivered personally
shall be deemed communicated as of actual receipt; mailed notices shall be
deemed communicated as of two (2) days after mailing.

10.2 Violation of Other Agreements. OBI hereby warrants to Jebsen that the
execution of this Agreement will not violate any outstanding agreements or
covenants to which OBI is a party. Further, OBI hereby warrants that the
execution of this Agreement and the performance of its terms hereunder do not
violate any provisions of the By-Laws of OBI.

10.3 Applicable Law. This Agreement shall be construed under the laws of the
State of California and may not be altered or modified except by an agreement in
writing, signed by both parties.

10.4 Arbitration. Any dispute, controversy or claim arising out of or in respect
to this Agreement (or its validity, interpretation or enforcement), the
employment relationship, the termination of the employment relationship or the
subject matter hereof shall at the request of either party be submitted to and
settled by arbitration conducted before a single arbitrator in Durham County,
North Carolina in accordance with the Employment Dispute Arbitration Rules of
the American Arbitration Association. The issue of arbitrability shall be
governed by the Federal Arbitration Act (9 U.S.C. §§ 1-16). The arbitrator in
such action shall not be authorized to change or modify any provision of this
Agreement. Judgment upon the award rendered by the arbitrator may be entered by
any court having jurisdiction thereof. Arbitration shall be the exclusive remedy
of Jebsen and OBI and the award of the arbitrator shall be final and binding
upon the parties.

10.5 Entire Agreement. This Agreement supersedes any and all other or previous
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Jebsen by OBI and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever. This Agreement shall not supersede, affect or amend the 1999 Stock
Plan (or amendments thereto), or any other stock option or similar plans adopted
by OBI, or any other Jebsen benefit plan in effect during the Employment Term;
provided, however, that, should any provision of this Agreement contradict or be
inconsistent with any provision of any stock option Plan, or any amendment
thereto, or with the terms of any other Jebsen benefit plan, the terms of this
Agreement shall govern.

10.6 Partial Invalidity. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired or
invalidated in any way.

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10.7 Merger or Consolidation. OBI hereby agrees that it shall not merge or
consolidate into or with or sell substantially all its assets to any firm,
entity, company or person until such other firm, entity, company or person
expressly agrees, in writing, to assume and discharge the duties and obligations
of OBI under this Agreement. This Agreement shall be binding upon the parties
hereto, their successors, beneficiaries, heirs and personal representatives.

10.8 Amendments and Waivers. This Agreement shall not be varied, altered,
waived, modified, changed or in any way amended in any of its parts except by an
instrument in writing, executed by the parties hereto, or by their legal
representatives. A waiver by either party of any of the terms of this Agreement
in any instance shall not be deemed or construed to be a waiver of such term or
condition for the future or of any subsequent breach thereof.

10.9 Directors and Officers Liability Insurance. The Corporation shall purchase
and maintain in effect Directors and Officers Liability insurance, naming Jebsen
as an insured, in an amount not less than $5,000,000, for the Employment Term.
Said Directors and Officers Liability insurance shall provide for coverage for
Jebsen, in the event Jebsen is terminated, dies, resigns or retires, for any
post-termination claims made against Jebsen that arose during the period Jebsen
served as a director, Jebsen and/or officer of OBI.

Executed at Durham, North Carolina.

 

  EMPLOYER:   Oxygen Biotherapeutics, Inc. Dated: 7 December 2010   By:  

/s/ Chris J. Stern

    Chris J. Stern, Chairman & CEO   EMPLOYEE:   Michael Jebsen: Dated: 7
December 2010   By:  

/s/ Michael Jebsen

  Michael Jebsen