EXCHANGE AGREEMENT

EXCHANGE AGREEMENT

OXYGEN BIOTHERAPEUTICS, INC.
2530 Meridian Parkway, Suite 3005
Durham, North Carolina 27713

U.S Holders : The common stock of Oxygen Biotherapeutics, Inc., described in the Confidential Limited Offering Memorandum dated June 8, 2009 (the “Memorandum”), and this Exchange Agreement (collectively the “Securities”) have not been registered with the United States Securities and Exchange Commission or any state securities agency, and are being offered in reliance on exemptions from registration provided in sections 4(2) of the Securities Act of 1933, as amended, or Regulation D promulgated thereunder and certain exemptions from the registration requirements of applicable state laws.

Non-U.S. Holders : The Securities have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States or to U.S. persons (other than distributors) unless the securities are registered under the Securities Act of 1933, or an exemption from the registration requirements of the Securities Act of 1933 is available. Persons participating in the exchange described in the Memorandum are prohibited from engaging in hedging transactions in our securities, unless in compliance with the Securities Act of 1933, as amended.

This EXCHANGE AGREEMENT (this “Agreement”), is made by and between OXYGEN BIOTHERAPEUTICS, INC., a Delaware corporation (the “Company”), and the undersigned holder of warrants in the Company (the “Holder”).

1.          The Exchange.

(a)         The Holder hereby agrees to exchange all of the following securities (collectively the “Warrants”):

Check the box below for each class of Warrants you are offering for exchange – you may offer any or all of the classes of Warrants you hold

The exchange of the Warrants will be consummated at the Closing, as hereinafter defined, upon the Company’s acceptance of this Agreement. The Holder may withdraw this Agreement and offer of exchange at any time prior to the Closing by sending written notice of withdrawal to the Company. No offer can be withdrawn after the Closing.

(b)         The exchange of Warrants offered under this Agreement is subject to the following terms and conditions:

(i)         If the Holder has in its possession the original agreements representing the Warrants offered for exchange, the Holder must deliver the original Warrant agreements on or before July 9, 2009, to the Company’s counsel acting as receiving agent for the Company at the following address:

Parsons Behle & Latimer
Attn: Mark Lehman
201 South Main Street, Suite 1800
Salt Lake City, Utah 84111
USA

(ii)         If the Holder does not have in its possession the original agreements representing the Warrants offered for exchange, the Holder must sign and return with this Agreement the certificate attached hereto as Exhibit B (page 11).

(iii)         Company may reject this Agreement if not properly completed and signed by the Holder or if the Company reasonably determines the Holder may not meet one or more of the conditions required for the Company to rely on the exemptions from registration the Company is relying on for issuing its securities in the exchange.

(iv)         All of the holders of Company Warrants are entitled to elect to participate by submitting to the Company agreements of like tenor to this Agreement (“Exchange Agreements”). There is no minimum number of total Warrants that must be offered by holders before the Company will exchange any Warrants. The Company expects it will accept offers of exchange for approximately 80 million total Warrants. However, this is an estimate only and the Company reserves the right exercisable in its sole discretion to accept offers of exchange on Exchange Agreements it receives for any number of Warrants, more or less than 80 million, and reject this Agreement to the extent the Warrants offered hereunder exceeds the number of Warrants the Company elects to exchange, subject to proration as provided below.

(v)         If this Agreement is not rejected, the Company will accept this Agreement in accordance with the following acceptance priority that will be applied to all Exchange Agreements properly submitted to the Company:

First, all of the Class I Warrants,

Second, all of the Class II Warrants up to the maximum number of Warrants OBI elects to accept for exchange, and

Third, all of the Class III Warrants up to the maximum number of Warrants OBI elects to accept for exchange.

(vi)         If the number of Class II or Class III Warrants properly offered for exchange under all Exchange Agreements exceeds the total number of Warrants the Company elects to exchange after taking into account the Warrants of each class accepted for exchange under the order of priority stated above, the number of Class II Warrants or Class III Warrants, as the case may be, properly offered for exchange will be accepted on a prorata basis with respect to the holders of that class making the offer based on the number of Warrants of such class offered for exchange by the Holder and each other holder submitting an Exchange Agreement offering to exchange that class of Warrants, and the total number of Warrants of such class offered under all Exchange Agreements, including this Agreement.

(c)         At the Closing the Company shall cause to be issued to the Holder the following consideration for the Warrants accepted for exchange:

(i)         For each one share purchasable under the Class I Warrants, cash in the amount of $0.04 and one-half (½) share of Company common stock, par value $0.0001;

(ii)         For each one share purchasable under the Class II Warrants, cash in the amount of $0.04 and one-half (½) share of Company common stock, par value $0.0001; and

(iii)         For each one share purchasable under the Class III Warrants, cash in the amount of $0.001 and one-quarter (¼) share of Company common stock, par value $0.0001.

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On the date of Closing, the Warrants shall be cancelled on the books and records of the Company and no longer represent any right to acquire any securities of the Company.

(d)         The closing of the exchange (the “Closing”) shall take place on the third business day following the date that the Company receives payment of $5 million pursuant to Section 2.2 of the Securities Purchase Agreement between the Company and Vatea Fund dated June 8, 2009. If for any reason the Closing does not take place on or before July 31, 2009, this Agreement shall terminate, the Warrants delivered by the Holder to the Company will be promptly returned to the Holder, and no party to this Agreement shall have any obligation or liability to the other hereunder.

2.          General Representations of the Holder . The Holder hereby represents and warrants as follows:

(a)         The Holder is over the age of 18 years.

(b)         The Holder acknowledges that neither the United States Securities and Exchange Commission nor the securities commission of any state or other federal agency has made any determination as to the merits of purchasing these securities.

(c)         The Holder has received and read the Memorandum with respect to the purchase of these securities, including each of the Company’s SEC reports included in the CD, and understands the risk of an investment in the Company and acknowledges that an investment in the Company involves high risks.

(d)         The Holder, either alone or with the assistance of one or more advisers engaged by it, has such knowledge and experience in business and financial matters that he or she is capable of evaluating the Company, its business operations, and the risks and merits of an investment in the Company.

(e)         The Holder has been provided with all materials and information requested by the Holder or its representatives, including any information requested to verify any information furnished, and the Holder has been provided the opportunity for direct communication between the Company and its representatives and the Holder and its representatives regarding the purchase made hereby, including the opportunity to ask questions of and receive answers from the Company.

(f)         All information that the Holder has provided to the Company or its agents or representatives concerning the Holder's suitability to invest in the Company is complete, accurate, and correct as of the date of the Holder's signature on this Agreement. Such information includes, but is not limited to, information concerning the Holder's personal financial affairs, business position, and the knowledge and experience of the Holder and the Holder's advisers.

(g)         The Holder has no present intention of dividing any of the securities or the rights under this Agreement with others or of reselling or otherwise disposing of any portion of the securities, either currently or after the passage of a fixed or determinable period of time or on the occurrence or nonoccurrence of any predetermined event or circumstance.

(h)         The Holder was at no time solicited by any leaflet, public promotional meeting, circular, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or solicitation in connection with the offer, sale, or purchase of the securities through this Agreement.

(i)         The Holder has adequate means of providing for its current needs and possible contingencies and has no need now and anticipates no need in the foreseeable future, to sell any portion of the securities the Holder acquires under this Agreement. The Holder is able to bear the economic risks of this investment and, consequently, without limiting the generality of the foregoing, is able to hold the securities for an indefinite period of time, and has a sufficient net worth to sustain a loss of the entire investment, in the event such loss should occur.

(j)         The Holder acknowledges that this Agreement may be accepted or rejected in whole or in part by the Company and that, to the extent the offer of exchange may be rejected, the Warrants delivered by the Holder to the Company will be promptly returned to the Holder.

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3.          Representations and Covenants Regarding Exemptions and Restrictions on Transfer.

Representations by U.S. Holder . The Holder represents that the securities are being acquired without a view to, or for, resale in connection with any distribution of the securities or any interest therein without registration or other compliance under the Act, and that the Holder has no direct or indirect participation in any such undertaking or in the underwriting of such an undertaking. The Holder understands that the securities have not been registered, but are being acquired by reason of a specific exemption under the Act as well as under certain state statutes for transactions by an issuer not involving any public offering and that any disposition of the securities may, under certain circumstances, be inconsistent with this exemption and may make the Holder an “underwriter” within the meaning of the Act. The Holder acknowledges that the securities must be held and may not be sold, transferred, or otherwise disposed of for value unless they are subsequently registered under the Act or an exemption from such registration is available. The Company is under no obligation to register the securities under the Act, except as specifically provided herein. The certificates representing the securities will bear a legend restricting transfer, except in compliance with applicable federal and state securities statutes.

Representations by Non-U.S. Holder . The Holder represents that the securities are being acquired without a view to, or for, resale in connection with any distribution of the securities or any interest therein without registration or other compliance under the Act, and that the Holder has no direct or indirect participation in any such undertaking or in the underwriting of such an undertaking. The Holder understands that the securities have not been registered, but are being acquired by reason of a specific terms of Regulation S adopted the Act, the securities have not been registered under the Act, and may not be offered or sold in the United States or to U.S. persons (other than distributors) unless the securities are registered under the Act, or an exemption from the registration requirements of the Act is available. Holder agrees it will not engage in hedging transactions in any securities of the Company, unless in compliance with the Act. The offer or sale of the securities, if made prior to the expiration of a six-month distribution compliance period, cannot be made to a U.S. person or for the account or benefit of a U.S. person (other than a distributor). Any such offer or sale made by the Holder prior to the expiration of a six-month distribution compliance period, must be made pursuant to the provisions of Rule 903 or Rule 904 of Regulation S, pursuant to registration under the Act, or pursuant to an available exemption from registration. Holder agrees and acknowledges that OBI is required by the terms of this Agreement to refuse to register any transfer of the securities not made in accordance with the foregoing requirements. The certificates representing the securities will bear a legend restricting transfer, except in accordance with the provisions of Regulation S, pursuant to registration under the Act, or pursuant to an available exemption from registration.

4.          Specific Information Represented by U.S. Holder.

[NOTE: Complete this Section 4 only if the Holder is a “U.S. Person” as defined in Rule 902(k) of Regulation S.]

(a)          Personal Financial Information . The following information pertaining to the Holder as a natural person is being provided here in lieu of furnishing a personal financial statement.

(i)         My individual net worth, or joint net worth with my spouse, exceeds $1,000,000.

(ii)         My individual income in the past two calendar years exceeded $200,000 in each such year, and I reasonably expect my individual income will exceed $200,000 in the current calendar year.

(iii)         The joint income of my spouse and me in the past two calendar years exceeded $300,000 in each such year, and I reasonably expect our joint income will exceed $300,000 in the current calendar year.

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(iv)         Considering the foregoing and all other relevant factors in my financial and personal circumstances, I am able to bear the economic risk of an investment in the Company.

(b)          Business Financial Information . The following information pertaining to the Holder as a corporation, partnership, or other legal entity is being provided here in lieu of furnishing a financial statement.

(i)         The Holder is an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, and investment decisions are made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor and the employee benefit plan has total assets in excess of $5,000,000.

(ii)         The Holder is an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, and the employee benefit plan is a self-directed plan with investment decisions made solely by persons who satisfy one or more of the other criteria set forth in Items 4 and 5, and the employee benefit plan has total assets in excess of $5,000,000.

(iii)         The Holder is a private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940.