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TransGlobe Energy Corporation: Exhibit 10.1 - Filed by newsfilecorp.com

Exhibit 10.1
TransGlobe Energy Corporation Amended and
Restated Stock Option Plan

TRANSGLOBE ENERGY CORPORATION 

AMENDED AND RESTATED
STOCK OPTION PLAN

Effective as of May 9, 2007

     The Board of Directors of
TransGlobe Energy Corporation ("TransGlobe" or the "Corporation")
has established a stock option plan (the "Plan") governing the issuance
of stock options (the "Options") to directors, officers and employees of
the Corporation or subsidiaries of the Corporation and persons or corporations
who provide services to the Corporation or its subsidiaries on an on-going
basis, or have provided or are expected to provide a service or services of
considerable value to the Corporation or its subsidiaries. 

     The terms and conditions of the Plan
for issuance of Options are as follows:

	1. 	Purposes 

The principal purposes of the Plan
are:

	 	(a) 	
      to retain and attract qualified directors, officers,
      employees and service providers which the Corporation and its Subsidiaries
      require;

	 	 	 
	 	(b) 	
      to promote a proprietary interest in the Corporation and
      its Subsidiaries;

	 	 	 
	 	(c) 	
      to provide an incentive element in compensation;
    and

	 	 	 
	 	(d) 	
      to promote the profitability of the Corporation and its
      Subsidiaries.

	2. 	
      Defined Terms

	 	 	 
		
      Where used herein, the following terms shall have the
      following meanings, respectively:

	 	 	 
		(a) 	
      "Blackout Period" means the period of time when,
      pursuant to any policies of the Corporation, any securities of the
      Corporation may not be traded by certain persons as designated by the
      Corporation, including any holder of an Option;

	 	 	 
		(b) 	
      "Board" means the board of directors of the
      Corporation;

	 	 	 
		(c) 	
      "Common Shares" means the common shares of the
      Corporation or, in the event of an adjustment contemplated by Article 13
      hereof, such other Common Shares to which a Participant may be entitled
      upon the exercise of an Option as a result of such adjustment;

	 	 	 
		(d) 	
      "Corporation" means TransGlobe Energy Corporation,
      and includes any successor corporation thereof;

	 	 	 
		(e) 	
      "Exchange" means the Toronto Stock Exchange or, if
      the Common Shares are not then listed and posted for trading on the
      Toronto Stock Exchange, on such stock exchange in Canada on which such
      shares are listed and posted for trading as may be selected for such
      purpose by the Board;

	 	 	 
		(f) 	
      "Insider" shall have the meaning set out in the
      Company Manual of the Exchange, as may be amended from time to
  time;

		(g) 	
      "Market Price" per Common Share at any date shall
      be as defined as the five-day volume weighted average trading price of the
      Common Shares prior to the date of grant;

	 	 	 	 
		(h) 	
      "Option" means an option to purchase Common Shares
      granted by the Board to Participants, subject to the provisions contained
      herein;

	 	 	 	 
		(i) 	
      "Option Price" means the price per share at which
      Common Shares may be purchased under the Option, as the same may be
      adjusted in accordance with Articles 4 and 13 hereof;

	 	 	 	 
		(j) 	
      "Participants" means persons, firms or
      corporations:

	 	 	 	 
			(i) 	
      who are employees (full-time or part-time), officers or
      directors of the Corporation or its Subsidiaries, or who are providing
      services to the Corporation or its Subsidiaries on an on- going basis, or
      have provided or are expected to provide a service or services of
      considerable value to the Corporation or its Subsidiaries; or

	 	 	 	 
			(ii) 	
      subject to applicable laws, a person investing in
      (including lending money to) TransGlobe who is considered by The Toronto
      Stock Exchange to be an insider or an associate of an insider or otherwise
      not acting at arm's length to TransGlobe and thus not entitled to receive
      warrants which would otherwise be granted by TransGlobe in connection with
      such investment in TransGlobe ("Investor"); and

	 	 	 	 
			(iii) 	
      in the case of (i) or (ii) above, who the Board of
      Directors of the Corporation determines should receive Options.

	 	 	 	 
				
      Options may also be granted to corporations which are
      controlled by a Participant. Unless the context otherwise requires, the
      term Participant as used herein, shall include any such
  corporation.

	 	 	 	 
		(k) 	
      "Plan" means the stock option plan of the
      Corporation, as the same may be amended or varied from time to
  time;

	 	 	 	 
		(l) 	
      "Security Based Compensation Arrangements" shall
      have the meaning as set out in the Company Manual of the Exchange, as may
      be amended from time to time;

	 	 	 	 
		(m) 	
      "Subsidiary" means a person or company considered
      to be a subsidiary entity of another person or company as described in
      Section 1.1 of Ontario Securities Commission Rule 45-501.

	 	 	 	 
	3. 	
      Administration of the Plan

	 	 	 	 
		(a) 	
      The Plan shall be administered by the Board. The
      Corporation shall effect the grant of Options under the Plan, in
      accordance with determinations made by the Board pursuant to the
      provisions of the Plan as to:

	 	 	 	 
			(i) 	
      Participants to whom Options will be granted;
  and

	 	 	 	 
			(ii) 	
      the number of Common Shares which shall be the subject of
      each Option;

	 	 	 	 
				
      by the execution and delivery of instruments in writing
      in form approved by the Board.

	 	 	 	 
		(b) 	
      The Board may, from time to time, adopt such rules and
      regulations for administering the Plan as it may deem proper and in the
      best interests of the Corporation and may, subject to applicable law,
      delegate its powers hereunder to administer the Plan to a committee of the
      Board.

	4. 	Granting of Options 

     The Board from time to time shall
grant Options to Participants. The grant of Options will be subject to the
conditions contained herein and may be subject to additional conditions
determined by the Board from time to time.

     The number of Common Shares that
may be issued pursuant to the exercise of Options awarded under the Plan and all
other Security Based Compensation Arrangements of the Corporation is 10% of the
Common Shares outstanding from time to time, subject to the following
limitations:

	 	(a) 	
      the number of Common Shares reserved for issuance to any
      one person under the Plan, together with all other Security Based
      Compensation Arrangements of the Corporation, shall not exceed 5% of the
      outstanding issue of Common Shares;

	 	 	 
	 	(b) 	
      the number of Common Shares reserved for issuance to
      Insiders, at any time, under all Security Based Compensation Arrangements,
      shall not exceed 10% of the outstanding issue of Common Shares, and the
      number of Common Shares issued to Insiders, within any one year period,
      under all Security Based Compensation Arrangements, shall not exceed 10%
      of the outstanding issue of Common Shares;

	 	 	 
	 	(c) 	
      the number of Common Shares reserved for issuance to any
      one Insider and such Insider's associates pursuant to the Plan, and all
      other Security Based Compensation Arrangements of the Corporation, shall
      not exceed 5% of the outstanding issue of Common Shares;

	 	 	 
	 	(d) 	
      the number of Common Shares reserved for issuance to
      Consultants pursuant to the Plan, and all other Security Based
      Compensation Arrangements of the Corporation, shall not exceed 2% of the
      outstanding issue of Common Shares;

	 	 	 
	 	(e) 	
      the number of Common Shares reserved for issuance to any
      single Consultant under the Plan, and all other Security Based
      Compensation Arrangements of the Corporation, within any one-year period,
      shall not exceed 1% of the outstanding issue of Common Shares;
  and

	 	 	 
	 	(f) 	
      the maximum number of Common Shares issuable at any time
      to directors of the Corporation who are not officers or employees of the
      Corporation under all Security Based Compensation Arrangements shall be
      limited to 2% of the issued and outstanding Common
  Shares.

     Common Shares in respect of which
Options are not exercised shall be available for subsequent Options. No
fractional Common Shares may be purchased or issued under this Plan. For the
purposes of this section, "outstanding issue" is determined on the basis of the
number of Common Shares that are outstanding immediately prior to the issuance
in question, excluding Common Shares issued pursuant to Security Based
Compensation Arrangements over the preceding one-year period.

     The Option Price shall be fixed
by the Board but under no circumstances shall any Option Price at the time of
the grant be lower than the Market Price per Common Share.

     The term of Options granted shall
be determined by the Board in its discretion, to a maximum of 10 years from the
date of the grant of the Option. The vesting period or periods within this
period during which an Option or a portion thereof may be exercised by a
Participant shall be determined by the Board.

	5. 	Exercise Price 

     The exercise price of each Stock
Option shall be determined in the discretion of the Board of Directors of the
Corporation at the time of the granting of the Stock Option, provided that the
exercise price shall not be lower than the Market Price.

	6. 	Term and Conditions of Options

     The following general provisions shall
apply to all Options granted by the Corporation (subject to such additional limitations as may be determined by the Board and set forth in
the definitive option agreement between the Corporation and the
Participant):

	 	(a) 	
      The latest date on which an option may be exercised will
      be the tenth anniversary of the date the option was granted.

	 	 	 
	 	(b) 	
      Options granted to each optionee under the Plan will
      become vested and exercisable at such time or times as may be established
      by the Board at the time of grant.

	 	 	 
	 	(c) 	
      If the expiry date of any Option falls within any
      Blackout Period or within ten business days following the end of any
      Blackout Period (the "Restricted Options"), then the expiry date of
      such Restricted Options shall, without any further action, be extended to
      the date that is ten business days following the end such Blackout Period.
      The foregoing extension applies to all Options whatever the date of grant
      and shall not be considered an extension of the term of the Options as
      referred to in Section 17 hereof.

	 	 	 
	 	(d) 	
      Any exercise of an option must be in writing, signed by
      the proper person and delivered or mailed to TransGlobe, accompanied by
      any documents required by the Board and payment in full as provided below
      for the number of Common Shares for which the option is
  exercised.

	 	 	 
	 	(e) 	
      An optionee will have no rights as a shareholder of
      TransGlobe with respect to any Common Shares covered by any option until
      such time as and to the extent only that such option has been
      exercised.

	 	 	 
	 	(f) 	
      If any optionee ceases to be eligible for a grant of
      options under this plan for any reason (a "Termination"), except
      the death of an optionee or by reason of retirement pursuant to an
      established retirement policy of the Board and except in the case of
      options granted to Investors as such, all options granted to the optionee
      under the Plan and then held by the optionee will, to the extent such
      options were exercisable immediately prior to Termination, continue to be
      exercisable by the optionee for a period of 30 days following Termination
      or until the expiration date of the option if earlier.

	 	 	 
	 	(g) 	
      If Termination is by reason of retirement pursuant to an
      established retirement policy of the Board, all options held by the
      retiring optionee will become vested and exercisable, to the extent not
      already vested and exercisable, immediately prior to retirement, and they
      continue to be exercisable until their original expiration date.

	 	 	 
	 	(h) 	
      Except in the case of options granted to Investors as
      such, in the event of the death of an optionee all options granted to the
      optionee under the Plan and held by the optionee immediately before death
      will, to the extent such options were exercisable at that time, continue
      to be exercisable by the legal representative of the optionee for a period
      of 6 months following the death of the optionee or until the expiration
      date of the option if earlier. After such time, the options will
      terminate.

	 	 	 
	 	(i) 	
      The Corporation's retirement policy for directors is that
      if a director either resigns or agrees not to be re-nominated by
      management for election at the next annual general meeting, then so long
      as the director has served as director of the Corporation or of one of its
      subsidiaries for at least two years, then such director's Options shall
      not terminate thirty days following the time such director ceases to be a
      director but, rather, shall continue until the earlier of the expiration
      date of the option and one year following the time such director ceases to
      be a director.

     In addition, but limiting the
generality of the foregoing or the discretion of the Board, the Board of
Directors may determine:

	 	(a) 	
      that a Stock Option is exercisable only during the term
      of employment of the Participant receiving it or during such term and for
      a limited period of time after termination of
employment;

	 	(b) 	
      that a Stock Option can be exercisable for a period of
      time or for its remaining term after the death, disability or incapacity
      of an Participant;

	 	 	 
	 	(c) 	
      that only a portion of a Stock Option is exercisable in a
      specified period;

	 	 	 
	 	(d) 	
      that the unexercised portion of a Stock Option is
      "cumulative" so that any portion of a Stock Option exercisable (but not
      exercised) in a specified period may be exercised in subsequent periods
      until the Stock Option terminates; or

	 	 	 
	 	(e) 	
      that a Stock Option may provide for early exercise and/or
      termination or other adjustment in the event of a death of a
  person;

and other appropriate terms in other circumstances, such as if
the Corporation shall resolve to sell all or substantially all of its assets, to
liquidate or dissolve, or to merge, amalgamate, consolidate or be absorbed with
or into any other corporation, if a take-over bid is made for Common Shares of
the Corporation, or if any change of control of the Corporation occurs, subject
to the provisions of Section 12 with respect to Unsolicited Offers (as
hereinafter defined).

	7. 	
      Additional Provisions Concerning U.S. Optionees

	 	 	 
		(a) 	
      Options granted to an Employee subject to personal income
      tax under the United States Internal Revenue Code (the "Code"),
      (such Employee referred to in this Section as a "U.S. Employee"),
      will be Incentive Options as that term is defined in the Code.

	 	 	 
		(b) 	
      Options granted to an optionee who is subject to personal
      income tax under the Code who is not an Employee will not be Incentive
      Options, and any written agreement with such an optionee for a grant of
      options under the Plan will state that the options granted thereunder are
      Non-Qualifying Options for U. S. income tax purposes.

	 	 	 
		(c) 	
      In addition to the terms and conditions of options
      granted under the Plan listed in Section 6 above, options granted to a
      U.S, Employee will be subject to the following terms and
  conditions:

	 	(i) 	
      options will be designated in the written option
      agreement between the U.S. Employee and TransGlobe as Incentive Options;
      and

	 	 	 
	 	(ii) 	
      if the U.S. Employee is directly or indirectly the
      beneficial owner of 10% or more of the combined voting power of all
      classes of shares in the capital of TransGlobe or a Subsidiary at the time
      an option is granted to the U.S. Employee, the exercise price of such
      option will be equal to at least 110% of the Market Price of TransGlobe's
      Common Shares.

	 	(d) 	
      If a U.S. Employee is granted options under the Plan, the
      written option agreement with the U.S. Employee will contain
      acknowledgements by the U.S. Employee that:

	 	 	 	 	 
	 		(i) 	
      notwithstanding a designation of options granted to a
      U.S. Employee as Incentive Options, to the extent that the aggregate
      Market Price of the Common Shares subject to options which are exercisable
      for the first time by any U.S. Employee during any calendar year exceeds
      US $100,000, such excess options will not be treated as Incentive Options;
      and

	 	 	 	 	 
	 		(ii) 	
      in order for options granted under the Plan to be treated
      as Incentive Options:

	 	 	 	 	 
	 			(A) 	
      Common Shares purchased on the exercise of an option must
      not be sold or otherwise disposed of within 2 years from the date the
      option was granted, or within 1 year from the date the option was
      exercised, and

	 	(B) 	
      the U.S. Employee must maintain his status as a U.S.
      Employee at all times during the period beginning on the date the option
      is granted and ending on the date 30 days before the date the option is
      exercised.

	 	(e) 	
      The acknowledgement of the U. S. Employee in (d)(ii)B
      above does not confer upon the U.S. Employee any right with respect to
      continuation of his employment relationship with TransGlobe, nor will it
      interfere in any way with TransGlobe's right to terminate his employment
      relationship at any time, with or without
cause.

	8. 	Non-Assignability 

     Options shall not be assignable
or transferable by the Participants, except for a limited right of assignment to
allow the exercise of Options by an Participant's legal representative in the
event of death or incapacity, subject to the terms upon which the Stock Option
is granted.

	9. 	Payment of Exercise Price 

     Except as provided in Section 10,
all Common Shares issued pursuant to the exercise of a Stock Option shall be
paid for in full by cash, bank draft or money order at the time of exercise of
the Stock Option and prior to the issue of the shares. All Common Shares of the
Corporation issued in accordance with the foregoing shall be issued as fully
paid and non-assessable Common Shares.

	10. 	Surrender of Options in Lieu of Exercise
  

     Where the Common Shares are
listed and posted for trading on the Toronto Stock Exchange, the Board of
Directors may from time to time in its sole discretion, permit Options to be
surrendered, unexercised to the Corporation in consideration of the receipt by
the holder of such Options of an amount (the "Settlement Amount") equal
to the excess, if any, of the aggregate fair market value of the shares (based
on the Market Price (as hereinafter defined) of the Common Shares on the Toronto
Stock Exchange on the trading day immediately preceding the Surrender Date as
herein defined) able to be purchased pursuant to the vested and exercisable
portion of such Options on the date of surrender (the "Surrender Date"),
over the aggregate Exercise Price for those Common Shares pursuant to those
Options. The Settlement Amount is payable in cash, Common Shares or a
combination thereof, as the Board of Directors may from time to time in its
discretion determine. For greater certainty, those Common Shares underlying the
unexercised Options that are the subject of retirement in consideration for a
Settlement Amount, are deemed to be included in the number of total Common
Shares for which Options may be granted under the Plan.

	11. 	Non-Exercise 

     If any Stock Option granted
pursuant to the Plan is not exercised for any reason whatsoever, the shares
reserved and authorized for issuance pursuant to such Stock Option shall revert
to the Plan and shall be available for other Options, however, at no time shall
there by outstanding Options exceeding in the aggregate the number of Common
Shares of the Corporation reserved for issuance pursuant to Options under this
Plan.

	12. 	Change of Control 

     Notwithstanding the terms of this
Plan, where an Unsolicited Offer for the Common Shares is made, all unexercised
and unvested outstanding Options granted under the Plan shall vest and become
immediately exercisable in respect of any and all Common Shares for which the
holder of Options has not exercised the Options (notwithstanding that an
agreement relating to the grant of Options states that those Options are
exercisable only during a later period or year).

     For the purposes hereof, an
"Unsolicited Offer" means an Offer in respect of which neither the Board
of Directors of the Corporation nor management of the Corporation solicited,
sought out, or otherwise arranged for the offeror party to make such Offer. For
the purposes hereof, "Offer" means an offer made generally to the holders of Common Shares in one or more jurisdictions to acquire, directly
or indirectly, the Common Shares and which is in the nature of a "takeover bid"
as defined in the Securities Act (Alberta) and, where the Common Shares
are listed and posted for trading on a stock exchange, not exempt from the
formal bid requirements of the Securities Act (Alberta). Any Stock Option
remaining unexercised following the earlier of the withdrawal of such
Unsolicited Offer and the expiry of such Unsolicited Offer in accordance with
its terms again becomes subject to the original terms of the agreement relating
to the grant of Options as if the Unsolicited Offer had not been made.

	13. 	Adjustment in Certain Circumstances
  

     In the event:

	 	(a) 	
      of any change in the Common Shares of the Corporation
      through subdivision, consolidation, reclassification, amalgamation, merger
      or otherwise; or

	 	 	 
	 	(b) 	
      of any stock dividend to holders of Common Shares of the
      Corporation (other than such stock dividends issued at the option of
      shareholders of the Corporation in lieu of substantially equivalent cash
      dividends); or

	 	 	 
	 	(c) 	
      that any rights are granted to holders of Common Shares
      to purchase Common Shares of the Corporation at prices substantially below
      fair market value; or

	 	 	 
	 	(d) 	
      that as a result of any recapitalization, merger,
      consolidation or otherwise the Common Shares of the Corporation are
      converted into or exchangeable for any other
shares;

then in any such case the Board of Directors of the Corporation
may make such adjustment in the Plan and in the Options granted under the Plan
as the Board of Directors of the Corporation may in its sole discretion deem
appropriate to prevent substantial dilution or enlargement of the rights granted
to, or available for, holders of Options, and such adjustments may be included
in the Options.

	14. 	Expenses 

All expenses in connection with the Plan shall be borne by the
Corporation.

	15. 	Compliance with Laws 

     The Corporation shall not be
obliged to issue any shares upon exercise of Options if the issue would violate
any law or regulation or any rule of any governmental authority or stock
exchange. The Corporation shall not be required to issue, register or qualify
for resale any shares issuable upon exercise of Options pursuant to the
provisions of a prospectus or similar document, provided that the Corporation
shall notify The Toronto Stock Exchange or any other stock exchange on which the
shares of the Corporation are listed and any other appropriate regulatory bodies
in Canada of the existence of the Plan and the issuance and exercise of
Options.

     Transactions under the plan are
intended to comply with all relevant provisions of law, including, without
limitation, the United States Securities Act of 1933 and the regulations
thereunder, all applicable conditions of Rule 16b-3 or its successors under
Section 16 of the United States Securities Exchange Act of 1934, the Securities
Act and the regulations thereunder of the province in which TransGlobe is
resident and the provinces in which optionees may reside, and the requirements
of The Toronto Stock Exchange, the Nasdaq Stock Market, Inc. ("NASDAQ"),
and any other stock exchange or market upon which the Common Shares may then be
listed or quoted (together, the "Applicable Laws"). To the extent any
provision of the Plan or action by the Board fails to so comply, it will be
deemed null and void, to the extent permitted by law and deemed advisable by the
Board.

     TransGlobe will not be obligated
to issue and deliver any Common Shares pursuant to the exercise of any option
until, in the opinion of TransGlobe's counsel, all Applicable Laws have been
complied with. Without limiting the generality of the foregoing, TransGlobe may
require from the person exercising the option such investment representation,
undertaking or agreement, if any, as counsel for TransGlobe may consider
necessary in order to comply with the Applicable Laws.

	16. 	Form of Stock Option Agreement

     All Options shall be issued by
the Corporation in a form which meets the general requirements and conditions
set forth in this Plan and the requirements of the Exchange or such other
exchange on which the shares of the Corporation are listed from time to
time.

	17. 	
      Amendments and Termination of Plan

	 	 	 	 
		(a) 	
      Subject to the restrictions set out in this Section 17,
      the Board may, without shareholder approval:

	 	 	 	 
			(i) 	
      amend or discontinue the Plan or any Options granted
      hereunder at any time;

	 	 	 	 
			(ii) 	
      reduce the percentage number of Common Shares which may
      be issued under the Plan;

	 	 	 	 
			(iii) 	
      reduce the exercise price of any outstanding Options not
      held by Insiders;

	 	 	 	 
			(iv) 	
      alter the vesting provisions relating to the Options;
      and

	 	 	 	 
			(v) 	
      alter the surrender rights set out in the
  Plan;

provided any amendment to the Plan that
requires approval of the Exchange may not be made without such approval.

	 	(b) 	
      Without the prior approval of the shareholders, as
      may be required by the Exchange, the Board may NOT:

	 	 	 	 
	 		(i) 	
      make any amendment to the Plan to increase the percentage
      of Common Shares issuable on exercise of outstanding Options at any time
      pursuant to Section 4 hereof;

	 	 	 	 
	 		(ii) 	
      reduce the exercise price of any outstanding Options held
      by insiders;

	 	 	 	 
	 		(iii) 	
      extend the term of any outstanding Option beyond the
      original expiry date of such Option, except in accordance with an
      extension to include a Blackout Period;

	 	 	 	 
	 		(iv) 	
      make any amendment to Section 4(b) to increase the
      maximum limit on the number of securities that may be reserved for
      issuance and are issued to Insiders to greater than the 10% thresholds
      within the designated time periods;

	 	 	 	 
	 		(v) 	
      make any amendment to Section 4(f) to increase the
      maximum number of Common Shares issuable to directors who are not officers
      or employees of the Corporation under Security Based Compensation
      Arrangements;

	 	 	 	 
	 		(vi) 	
      make any amendment to the Plan that would permit a
      Participant to transfer or assign Options to a new beneficial Participant
      other than in the case of death of the Participant; or

	 	 	 	 
	 		(vii) 	
      make any amendment to this Section
17.

     In addition, no amendment to
the Plan or Options granted pursuant to the Plan may be made without the consent
of the Participant, if it adversely alters or impairs any Option previously
granted to such Participant under the Plan.

	18. 	Administration of the Plan and Regulation
  

     The Plan will be administered by the
Board of Directors of TransGlobe (the "Board"). The Board may delegate
the administration of the Plan to a committee, in which case
all references to the "Board" hereunder will refer to the committee, except only
the Board of Directors may allot shares and specify the price at which they are
to be issued. The Board will have authority, consistent with the Plan:

	 	(a) 	
      to issue options priced in accordance with the formula
      set forth in this Plan;

	 	 	 
	 	(b) 	
      to prescribe the form of certificate evidencing grants of
      options to Canadian optionees and the form of agreement evidencing grants
      of options to US optionees and the form of certificate evidencing grants
      of options to Investors (as defined hereafter) as such (which may be in
      the form of a warrant) and any other instruments required under the Plan
      and to change such forms from time to time;

	 	 	 
	 	(c) 	
      to adopt, amend and rescind rules and regulations for the
      administration of the Plan, provided however, that except as specified in
      Section 13, no amendment which would increase the maximum number of Common
      Shares for which options may be granted will be made by the Board without
      the approval of shareholders and regulatory authorities under Applicable
      Laws; and

	 	 	 
	 	(d) 	
      to interpret and administer the Plan and to decide all
      questions and settle all controversies that may arise in connection with
      the Plan, all of which decisions of the Board will be final and
      conclusive.

	19. 	Tax Consequences of Plan 

     Notwithstanding Section 7,
TransGlobe does not assume responsibility for the income or other tax
consequences for optionees or persons eligible under the Plan and they are
advised to consult with their own tax advisors.

	20. 	Applicable Law 

This Plan shall be governed by and construed in accordance with
the laws in force in the Province of Alberta.

	21. 	Stock Exchange 

     To the extent applicable, the
issuance of any shares of the Corporation pursuant to Options issued pursuant to
this Plan is subject to approval of the Plan by the Toronto Stock Exchange or
other stock exchange upon which the Corporation's Common Shares are listed, and
the Plan shall be subject to the ongoing requirements of such exchange.NEITHER THE ISSUANCE AND SALE OF THE SECURITIES  REPRESENTED BY THIS CERTIFICATE
NOR THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE  EXERCISABLE  HAVE BEEN
REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,  SOLD,  TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE  REGISTRATION  STATEMENT  FOR
THE SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR (B) AN OPINION
OF COUNSEL TO THE HOLDER (IF  REQUESTED BY THE  COMPANY),  IN A FORM  REASONABLY
ACCEPTABLE TO THE COMPANY,  THAT  REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD OR ELIGIBLE TO BE SOLD  PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT.  NOTWITHSTANDING  THE  FOREGOING,  THE  SECURITIES  MAY BE  PLEDGED IN
CONNECTION  WITH  A  BONA  FIDE  MARGIN  ACCOUNT  OR  OTHER  LOAN  OR  FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

                                 IMAGING3, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Series A Warrant No.: One
Date of Issuance: October 15, 2010 ("ISSUANCE DATE")

         Imaging3,  Inc.,  a  California  corporation  (the  "COMPANY"),  hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Wharton Capital Partners, Ltd., the registered
holder hereof or its permitted assigns (the "HOLDER"),  is entitled,  subject to
the terms set forth below,  to purchase from the Company,  at the Exercise Price
(as defined  below) then in effect,  upon  exercise of this  Warrant to Purchase
Common  Stock  (including  any  Warrants  to  Purchase  Common  Stock  issued in
exchange,  transfer or replacement hereof, the "WARRANT"),  at any time or times
on or after the Issuance  Date,  but not after 11:59 p.m., New York time, on the
Expiration  Date (as defined  below),  Two Hundred  Twenty-Nine  Thousand  Three
Hundred and Fifty-Eight  (229,358)1  (subject to adjustment as provided  herein)
fully paid and  nonassessable  shares of Common  Stock (as  defined  below) (the
"WARRANT SHARES"). Except as otherwise defined herein, capitalized terms in this
Warrant  shall have the  meanings  set forth in the  definition  section of this
Warrant.

1.       EXERCISE OF WARRANT.

         (a) MECHANICS OF EXERCISE.  Subject to the terms and conditions hereof,
this  Warrant may be exercised by the Holder on any day on or after the Issuance
Date, in whole or in part, by delivery (whether via facsimile or otherwise) of a
written  notice,  in the  form  attached  hereto  as  EXHIBIT  A (the  "EXERCISE
NOTICE"),  of the Holder's  election to exercise  this  Warrant.  Within one (1)
Trading Day following an exercise of this Warrant as aforesaid, the Holder shall
deliver  payment to the  Company  of an amount  equal to the  Exercise  Price in
effect on the date of such exercise  multiplied by the number of Warrant  Shares
as to which this Warrant was so exercised (the  "AGGREGATE  EXERCISE  PRICE") in

--------
1  100% warrant coverage.

<PAGE>

cash or via wire transfer of immediately  available  funds if the Holder did not
notify the Company in such Exercise  Notice that such exercise was made pursuant
to a Cashless  Exercise  (as defined in Section  1(c)).  The Holder shall not be
required to deliver the  original of this Warrant in order to effect an exercise
hereunder.  Execution  and  delivery of an Exercise  Notice with respect to less
than all of the Warrant Shares shall have the same effect as cancellation of the
original of this Warrant and issuance of a new Warrant  evidencing  the right to
purchase the remaining  number of Warrant  Shares.  Execution and delivery of an
Exercise Notice for all of the then-remaining Warrant Shares shall have the same
effect as  cancellation  of the original of this Warrant  after  delivery of the
Warrant Shares in accordance with the terms hereof. On or before the first (1st)
Trading Day  following  the date on which the  Company has  received an Exercise
Notice,   the  Company  shall  transmit  by  facsimile  an   acknowledgment   of
confirmation of receipt of such Exercise Notice,  in the form attached hereto as
EXHIBIT  B, to the  Holder  and the  Company's  transfer  agent  (the  "TRANSFER
AGENT").  On or before the fifth (5th)  Trading Day  following the date on which
the Company has received  such Exercise  Notice,  the Company shall (X) provided
that the Transfer Agent is participating in The Depository Trust Company ("DTC")
Fast  Automated  Securities  Transfer  Program,  upon the request of the Holder,
credit such  aggregate  number of shares of Common  Stock to which the Holder is
entitled  pursuant to such  exercise to the Holder's or its  designee's  balance
account with DTC through its Deposit/  Withdrawal at Custodian system, or (Y) if
the Transfer Agent is not  participating  in the DTC Fast  Automated  Securities
Transfer  Program,  issue  and  deliver  to  the  Holder  or,  at  the  Holder's
instruction pursuant to the Exercise Notice, the Holder's agent or designee,  in
each case,  sent by reputable  overnight  courier to the address as specified in
the applicable Exercise Notice, a certificate, registered in the Company's share
register  in the  name  of the  Holder  or its  designee  (as  indicated  in the
applicable  Exercise Notice),  for the number of shares of Common Stock to which
the Holder is entitled  pursuant to such exercise.  Upon delivery of an Exercise
Notice, the Holder shall be deemed for all corporate purposes to have become the
holder of record of the Warrant  Shares with  respect to which this  Warrant has
been exercised, irrespective of the date such Warrant Shares are credited to the
Holder's DTC account or the date of delivery of the certificates evidencing such
Warrant  Shares (as the case may be). If this Warrant is submitted in connection
with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant  Shares being  acquired  upon an exercise,  then,  at the request of the
Holder,  the  Company  shall as soon as  practicable  and in no event later than
three (3) Business  Days after any  exercise  and at its own expense,  issue and
deliver to the Holder (or its designee) a new Warrant  representing the right to
purchase  the number of Warrant  Shares  purchasable  immediately  prior to such
exercise  under this Warrant,  less the number of Warrant Shares with respect to
which this Warrant is exercised.  No fractional shares of Common Stock are to be
issued  upon the  exercise of this  Warrant,  but rather the number of shares of
Common Stock to be issued shall be rounded up to the nearest whole  number.  The
Company  shall pay any and all taxes and fees which may be payable  with respect
to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

         (b) EXERCISE  PRICE.  For purposes of this  Warrant,  "EXERCISE  PRICE"
means $0.31 per share, subject to adjustment as provided herein.

         (c) CASHLESS EXERCISE. Notwithstanding anything contained herein to the
contrary,  if at the time of exercise  hereof a  Registration  Statement  is not
effective (or the prospectus contained therein is not available for use) for the
resale by the Holder of all of the Warrant  Shares,  then the Holder may, in its

                                      -2-
<PAGE>

sole  discretion,  exercise  this  Warrant  in whole or in part and,  in lieu of
making the cash payment  otherwise  contemplated  to be made to the Company upon
such  exercise in payment of the  Aggregate  Exercise  Price,  elect  instead to
receive upon such exercise the "Net Number" of shares of Common Stock determined
according to the following formula (a "CASHLESS EXERCISE"):

                           Net Number = (A X B) - (A X C)
                                        -----------------

                                                B

                  For purposes of the foregoing formula:

                  A= the total  number  of shares  with  respect  to which  this
                  Warrant is then being exercised.

                  B= as  applicable:  (i) the  Closing  Sale Price of the Common
                  Stock on the Trading Day immediately preceding the date of the
                  applicable Exercise Notice if such Exercise Notice is (1) both
                  executed  and  delivered  pursuant to Section 1(a) hereof on a
                  day  that  is  not a  Trading  Day or (2)  both  executed  and
                  delivered  pursuant  to Section  1(a)  hereof on a Trading Day
                  prior to the opening of "regular trading hours" (as defined in
                  Rule  600(b)(64)  of  Regulation  NMS  promulgated  under  the
                  federal  securities  laws) on such  Trading  Day,  or (ii) the
                  Closing  Sale  Price  of the  Common  Stock on the date of the
                  applicable Exercise Notice if the date of such Exercise Notice
                  is a Trading Day and such Exercise Notice is both executed and
                  delivered  pursuant to Section 1(a) hereof during such Trading
                  Day.

                  C= the  Exercise  Price  then in  effect  for  the  applicable
                  Warrant Shares at the time of such exercise.

         (d) DISPUTES.  In the case of a dispute as to the  determination of the
Exercise Price or the arithmetic  calculation of the number of Warrant Shares to
be issued pursuant to the terms hereof,  the Company shall promptly issue to the
Holder the number of Warrant  Shares  that are not  disputed  and  resolve  such
dispute in accordance with this Warrant.

2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and number of Warrant Shares  issuable upon exercise of this Warrant are subject
to adjustment from time to time as set forth in this Section 2.

         (a) STOCK DIVIDENDS AND SPLITS.  If during the term of this Warrant the
Company (i) pays a stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any class of capital
stock that is payable in shares of Common Stock,  (ii)  subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
then outstanding  shares of Common Stock into a larger number of shares or (iii)
combines (by combination,  reverse stock split or otherwise) one or more classes
of its then outstanding  shares of Common Stock into a smaller number of shares,
then in each such case the Exercise  Price shall be  multiplied by a fraction of
which the  numerator  shall be the number of shares of Common Stock  outstanding

                                      -3-
<PAGE>

immediately  before such event and of which the denominator  shall be the number
of shares  of  Common  Stock  outstanding  immediately  after  such  event.  Any
adjustment made pursuant to clause (i) of this paragraph shall become  effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution,  and any adjustment pursuant to clause
(ii) or (iii) of this paragraph  shall become  effective  immediately  after the
effective date of such  subdivision or  combination.  If any event  requiring an
adjustment  under this paragraph occurs during the period that an Exercise Price
is calculated  hereunder,  then the  calculation of such Exercise Price shall be
adjusted appropriately to reflect such event.

         (b) NUMBER OF WARRANT SHARES. Simultaneously with any adjustment to the
Exercise  Price  pursuant  to  paragraph  (a) of this  Section  2, the number of
Warrant  Shares that may be purchased  upon  exercise of this  Warrant  shall be
increased  or  decreased  proportionately,  so that  after such  adjustment  the
aggregate  Exercise Price payable  hereunder for the adjusted  number of Warrant
Shares shall be the same as the aggregate  Exercise Price in effect  immediately
prior  to  such  adjustment  (without  regard  to any  limitations  on  exercise
contained herein).

         (c) CALCULATIONS.  All calculations  under this Section 2 shall be made
by  rounding  to the  nearest  cent  or  the  nearest  1/100th  of a  share,  as
applicable.  The number of shares of Common Stock  outstanding at any given time
shall not include shares owned or held by or for the account of the Company.

3.  NONCIRCUMVENTION.  The Company hereby  covenants and agrees that the Company
will not, by amendment of its Articles of  Incorporation,  Bylaws or through any
reorganization,   transfer   of  assets,   consolidation,   merger,   scheme  of
arrangement,  dissolution,  issue or sale of securities,  or any other voluntary
action,  intentionally  avoid or seek to avoid the  observance or performance of
any of the terms of this Warrant,  and will at all times in good faith carry out
all the  provisions  of this  Warrant  and take all action as may be required to
protect the rights of the Holder.

4. WARRANT  HOLDER NOT DEEMED A  STOCKHOLDER.  Except as otherwise  specifically
provided herein, the Holder, solely in its capacity as a holder of this Warrant,
shall not be  entitled to vote or receive  dividends  or be deemed the holder of
share capital of the Company for any purpose,  nor shall  anything  contained in
this Warrant be  construed to confer upon the Holder,  solely in its capacity as
the Holder of this Warrant, any of the rights of a stockholder of the Company or
any right to vote, give or withhold consent to any corporate action (whether any
reorganization,  issue  of  stock,  reclassification  of  stock,  consolidation,
merger, conveyance or otherwise),  receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant  Shares  which it is then  entitled to receive  upon the due exercise of
this Warrant. In addition,  nothing contained in this Warrant shall be construed
as imposing  any  liabilities  on the Holder to purchase  any  securities  (upon
exercise of this  Warrant or  otherwise)  or as a  stockholder  of the  Company,
whether  such  liabilities  are  asserted by the Company or by  creditors of the
Company.

5. REISSUANCE OF WARRANTS.

         (a)  TRANSFER OF WARRANT.  If this  Warrant is to be  transferred,  the
Holder shall  surrender this Warrant to the Company,  whereupon the Company will
forthwith  issue  and  deliver  upon  the  order of the  Holder  a new  Warrant,
registered  as the Holder may  request,  representing  the right to purchase the

                                      -4-
<PAGE>

number of Warrant  Shares being  transferred by the Holder and, if less than the
total  number  of  Warrant  Shares  then   underlying   this  Warrant  is  being
transferred,  a new Warrant  representing  the right to  purchase  the number of
Warrant Shares not being transferred.

         (b) LOST, STOLEN OR MUTILATED  WARRANT.  Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft,  destruction
or  mutilation  of this  Warrant  (as to which a written  certification  and the
indemnification  contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction,  of any  indemnification  undertaking by the
Holder to the  Company in  customary  and  reasonable  form and,  in the case of
mutilation,  upon surrender and cancellation of this Warrant,  the Company shall
execute  and  deliver  to the  Holder a new  Warrant  representing  the right to
purchase the Warrant Shares then underlying this Warrant.

         (c) EXCHANGEABLE FOR MULTIPLE  WARRANTS.  This Warrant is exchangeable,
upon the surrender  hereof by the Holder at the principal office of the Company,
for a new  Warrant  or  Warrants  representing  in the  aggregate  the  right to
purchase the number of Warrant  Shares then  underlying  this Warrant,  and each
such new  Warrant  will  represent  the right to purchase  such  portion of such
Warrant  Shares as is  designated  by the Holder at the time of such  surrender;
provided,  however,  no warrants for fractional  shares of Common Stock shall be
given.

         (d) ISSUANCE OF NEW WARRANTS. Whenever the Company is required to issue
a new Warrant pursuant to the terms of this Warrant,  such new Warrant (i) shall
be of like tenor with this Warrant,  (ii) shall  represent,  as indicated on the
face of such new  Warrant,  the  right  to  purchase  the  Warrant  Shares  then
underlying  this Warrant (or in the case of a new Warrant being issued  pursuant
to Section 5(a) or Section  5(c),  the Warrant  Shares  designated by the Holder
which,  when added to the number of shares of Common Stock  underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then  underlying  this Warrant),  (iii) shall have an issuance
date,  as  indicated  on the face of such new  Warrant  which is the same as the
Issuance  Date,  and (iv) shall  have the same  rights  and  conditions  as this
Warrant.

6. AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of
this  Warrant  may be  amended  and the  Company  may  take  any  action  herein
prohibited,  or omit to perform any act herein  required to be  performed by it,
only if the Company has  obtained the written  consent of the Holder.  No waiver
shall  be  effective  unless  it is  in  writing  and  signed  by an  authorized
representative of the waiving party.

7.  SEVERABILITY.  If any  provision  of this  Warrant is  prohibited  by law or
otherwise  determined  to be invalid or  unenforceable  by a court of  competent
jurisdiction,  the  provision  that would  otherwise be  prohibited,  invalid or
unenforceable  shall be deemed  amended to apply to the broadest  extent that it
would be valid and enforceable,  and the invalidity or  unenforceability of such
provision  shall not affect the  validity of the  remaining  provisions  of this
Warrant so long as this  Warrant as so modified  continues  to express,  without
material change, the original intentions of the parties as to the subject matter
hereof  and  the  prohibited  nature,  invalidity  or  unenforceability  of  the
provision(s)   in  question  does  not   substantially   impair  the  respective
expectations  or  reciprocal   obligations  of  the  parties  or  the  practical
realization of the benefits that would  otherwise be conferred upon the parties.
The parties will endeavor in good faith  negotiations to replace the prohibited,
invalid or unenforceable  provision(s) with a valid provision(s),  the effect of
which  comes  as  close  as  possible  to that  of the  prohibited,  invalid  or
unenforceable provision(s).

8.  GOVERNING  LAW. This Warrant shall be governed by and construed and enforced
in accordance  with, and all questions  concerning the  construction,  validity,
interpretation  and  performance  of this  Warrant  shall be  governed  by,  the
internal laws of the State of California, without giving effect to any choice of
law or conflict of law  provision or rule (whether of the State of California or
any other  jurisdictions)  that would cause the  application  of the laws of any
jurisdictions other than the State of California. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the County of Los Angeles,  State of  California,  for the  adjudication  of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein,  and hereby  irrevocably  waives,  and agrees not to

                                      -5-
<PAGE>

assert in any suit,  action or  proceeding,  any claim that it is not personally
subject  to the  jurisdiction  of any such  court,  that  such  suit,  action or
proceeding is brought in an  inconvenient  forum or that the venue of such suit,
action or proceeding is improper.

9. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by
the Company and the Holder and shall not be construed  against any Person as the
drafter  hereof.  The headings of this Warrant are for  convenience of reference
and shall not form part of, or affect the interpretation of, this Warrant.

10. DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the
Exercise  Price,  the Closing Sale Price, or fair market value or the arithmetic
calculation  of the  Warrant  Shares  (as the case may be),  the  Company or the
Holder  (as the  case  may be)  shall  submit  the  disputed  determinations  or
arithmetic  calculations  (as the case may be) via  facsimile (i) within two (2)
Business Days after receipt of the applicable notice giving rise to such dispute
to the Company or the Holder (as the case may be) or (ii) if no notice gave rise
to such  dispute,  at any time  after the Holder  learned  of the  circumstances
giving rise to such  dispute.  If the Holder and the Company are unable to agree
upon such  determination  or  calculation  (as the case may be) of the  Exercise
Price,  the Closing  Sale Price,  or fair market  value or the number of Warrant
Shares  (as the case may be) within  three (3)  Business  Days of such  disputed
determination  or arithmetic  calculation  being submitted to the Company or the
Holder (as the case may be),  then the Company  shall,  within two (2)  Business
Days submit via facsimile (a) the disputed  determination of the Exercise Price,
the  Closing  Sale  Price,  or fair  market  value  (as the  case  may be) to an
independent,  reputable  investment  bank  selected  by the  Company  or (b) the
disputed  arithmetic   calculation  of  the  Warrant  Shares  to  the  Company's
independent,  outside accountant.  The investment bank or the accountant (as the
case may be) will perform the  determinations  or calculations  (as the case may
be) and notify the  Company and the Holder of the results no later than ten (10)
Business  Days  from  the  time it  receives  such  disputed  determinations  or
calculations  (as the case may  be).  Such  investment  bank's  or  accountant's
determination  or  calculation  (as the case may be) shall be  binding  upon all
parties  absent  demonstrable  error,  and the charges for such services will be
paid equally by the Holder and the Company.

11. REMEDIES.  The remedies  provided in this Warrant shall be cumulative and in
addition to all other remedies available under this Warrant, at law or in equity
(including a decree of specific performance and/or other injunctive relief).

                                      -6-
<PAGE>

12. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall
have the following meanings:

         (a) "BLOOMBERG" means Bloomberg, L.P.

         (b) "BUSINESS DAY" means any day other than  Saturday,  Sunday or other
day on which  commercial  banks in The City of Los  Angeles  are  authorized  or
required by law to remain closed.

         (c) "CLOSING  SALE PRICE" means,  for any security as of any date,  the
last closing trade price for such security on the Principal  Market, as reported
by Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price,  then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal  securities exchange or trading
market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as
reported by Bloomberg,  or if the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such  security  as  reported  by  Bloomberg,  or, if no last trade  price is
reported for such  security by  Bloomberg,  the average of the ask prices of any
market  makers for such security as reported in the "pink sheets" by Pink Sheets
LLC (formerly the National  Quotation  Bureau,  Inc.). If the Closing Sale Price
cannot be calculated for a security on a particular date on any of the foregoing
bases,  the Closing  Sale Price of such  security on such date shall be the fair
market  value as mutually  determined  by the  Company  and the  Holder.  If the
Company  and the Holder are unable to agree upon the fair  market  value of such
security,  then such dispute shall be resolved in accordance with the procedures
in Section 10. All such determinations  shall be appropriately  adjusted for any
stock  dividend,  stock split,  stock  combination or other similar  transaction
during such period.

         (d) "COMMON STOCK" means (i) the Company's  shares of common stock,  no
par value per share,  and (ii) any capital  stock into which such  common  stock
shall have been changed or any share capital  resulting from a  reclassification
of such common stock.

         (e)  "EXPIRATION   DATE"  means  the  date  that  is  the  fifth  (5th)
anniversary  of the  Issuance  Date or, if such date falls on a day other than a
Business Day or on which trading does not take place on the Principal  Market (a
"HOLIDAY"), the next date that is not a Holiday.

         (f)  "PERSON"  means an  individual,  a limited  liability  company,  a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization,  any other  entity or a  government  or any  department  or agency
thereof.

         (g) "PRINCIPAL MARKET" means the OTC Bulletin Board.

         (h) "TRADING  DAY" means any day on which the Common Stock is traded on
the Principal  Market,  or, if the Principal Market is not the principal trading
market  for the Common  Stock,  then on the  principal  securities  exchange  or
securities  market on which  the  Common  Stock is then  traded,  provided  that
"Trading  Day" shall not include any day on which the Common  Stock is scheduled
to trade on such  exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended  from trading during the final hour of trading on such

                                      -7-
<PAGE>

exchange or market (or if such  exchange or market does not designate in advance
the closing  time of trading on such  exchange  or market,  then during the hour
ending at 4:00:00 p.m.,  New York time) unless such day is otherwise  designated
as a Trading Day in writing by the Holder.

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

                                            IMAGING3, INC.

                                            By:/s/ Dean Janes
                                            ---------------------------------
                                            Name:  Dean Janes
                                            Title: Chief Executive Officer

                                      -8-
<PAGE>

                                                                       EXHIBIT A
                                 EXERCISE NOTICE
            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                        WARRANT TO PURCHASE COMMON STOCK
                                 IMAGING3, INC.

         The  undersigned   holder  hereby   exercises  the  right  to  purchase
_________________  of the shares of Common Stock ("WARRANT SHARES") of Imaging3,
Inc., a California  corporation  (the  "COMPANY"),  evidenced by Warrant No. One
(the "WARRANT").  Capitalized  terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant.

         1. FORM OF  EXERCISE  PRICE.  The Holder  intends  that  payment of the
Exercise Price shall be made as:

            ____________   a "CASH EXERCISE" with respect to _________________
                           Warrant Shares; and/or

            ____________   a "CASHLESS EXERCISE" with respect to _____________
                           Warrant Shares.

         In the event  that the  Holder has  elected a  Cashless  Exercise  with
respect to some or all of the Warrant Shares to be issued pursuant  hereto,  the
Holder hereby represents and warrants that (i) this Exercise Notice was executed
by the Holder at __________ [a.m.][p.m.] on the date set forth below and (ii) if
applicable,  the Bid Price as of such time of execution of this Exercise  Notice
was $________.

         2. PAYMENT OF EXERCISE  PRICE. In the event that the Holder has elected
a Cash Exercise  with respect to some or all of the Warrant  Shares to be issued
pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.

         3. DELIVERY OF WARRANT SHARES.  The Company shall deliver to Holder, or
its  designee  or  agent  as  specified  below,  __________  Warrant  Shares  in
accordance with the terms of the Warrant.  Delivery shall be made to Holder,  or
for its benefit, to the following address:

                                            -----------------------

                                            -----------------------

                                            -----------------------

                                            -----------------------

Date:
        ------------------ ---, ------

--------------------------------------
   Name of Registered Holder

By:
         -----------------------------
         Name:
         Title:

<PAGE>

                                                                       EXHIBIT B

                                 ACKNOWLEDGMENT

         The Company hereby acknowledges this Exercise Notice and hereby directs
______________  to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated _________,  20__, from the
Company and acknowledged and agreed to by _______________.

                                            IMAGING3, INC.

                                            By:
                                            ------------------------------------
                                            Name:  Dean Janes
                                            Title:  Chief Executive Officer

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