Exhibit 10.2
 

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
 
PACIFIC ETHANOL, INC.

 
WARRANT
Warrant No. W7-___
Dated:  May ___, 2008

 
Pacific Ethanol, Inc., a Delaware corporation (the “Company”), hereby certifies
that, for value received, _______________ or his registered assigns (the
“Holder”), is entitled to purchase from the Company up to a total of __________
shares of common stock, $.001 par value per share (the “Common Stock”), of the
Company (each such share, a “Warrant Share” and all such shares, the “Warrant
Shares”) at an exercise price equal to $7.00 per share (as adjusted from time to
time as provided in Section 8, the “Exercise Price”), subject to the terms and
conditions contained herein. This Warrant (this “Warrant”) is issued in
connection with the purchase by _______________ of shares of the Company’s
Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”)
pursuant to the terms and conditions of that certain Securities Purchase
Agreement dated May ___, 2008 between the Company and _______________ (the
“Purchase Agreement”).  Capitalized terms not otherwise defined herein shall
have their respective meanings as set forth in the Purchase Agreement.
 
1. Registration of Warrant.  The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
 
2. Registration of Transfers.  The Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of this Warrant,
with the Form of Assignment attached hereto duly completed and signed, to the
Company at its address specified herein.  Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder.  The acceptance of the New Warrant
by the transferee thereof shall be deemed the acceptance by such transferee of
all of the rights and obligations of a holder of a Warrant.
 
 
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3. Exercise and Duration of Warrants.
 
(a) This Warrant shall be exercisable by the registered Holder from time to time
during the term commencing on the date that is six (6) months and one (1) day
from the date hereof and ending on the date that is ten (10) years from the date
hereof (the “Expiration Date”). At 5:00 P.M., California time on the Expiration
Date, the portion of this Warrant not exercised prior thereto shall be and
become void and of no value.
 
(b) A Holder may exercise this Warrant by delivering to the Company (i) an
exercise notice, in the form attached hereto (the “Exercise Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares as to which this Warrant is being exercised,
and the date such items are delivered to the Company (as determined in
accordance with the notice provisions hereof) is an “Exercise Date.”  The Holder
shall not be required to deliver the original Warrant in order to effect an
exercise hereunder.  Execution and delivery of the Exercise Notice shall have
the same effect as cancellation of the original Warrant and issuance of a New
Warrant evidencing the right to purchase the remaining number of Warrant Shares.
 
4. Delivery of Warrant Shares.
 
(a) Upon exercise of this Warrant, the Company shall promptly (but in no event
later than five (5) Business Days after the Exercise Date) issue or cause to be
issued and cause to be delivered to or upon the written order of the Holder and
in such name or names as the Holder may designate, a certificate for the Warrant
Shares issuable upon such exercise.  For purposes of this Warrant, “Business
Day” means any day other than Saturday, Sunday or other day on which commercial
banks in the State of California are authorized or required by law to remain
closed.  The Holder, or any person so designated by the Holder to receive
Warrant Shares, shall be deemed to have become holder of record of such Warrant
Shares as of the Exercise Date.  It is acknowledged and agreed that certificates
evidencing such Warrant Shares may bear a restrictive legend in substantially
the following form:
 
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
 
 
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(b) This Warrant is exercisable, either in its entirety or, from time to time,
for a portion of the number of Warrant Shares.  Upon surrender of this Warrant
following one or more partial exercises, the Company shall issue or cause to be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.
 
5. Charges, Taxes and Expenses.  Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder.  The Holder
shall be responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
 
6. Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable bond or indemnity, if requested.  Applicants for a New Warrant under
such circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe.
 
7. Reservation of Warrant Shares.  The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (after giving
effect to the adjustments and restrictions of Section 8, if any). The Company
covenants that all Warrant Shares so issuable and deliverable shall, upon the
due exercise of this Warrant, and upon issuance of such Warrant Shares and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued and fully paid and nonassessable.
 
8. Certain Adjustments.  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 8.
 
(a) Stock Dividends and Splits.  If the Company, at any time while this Warrant
is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes
a distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, or (iii) combines 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 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 subsection 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 subsection shall become
effective immediately after the effective date of such subdivision or
combination.
 
 
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(b) Number of Warrant Shares.  Simultaneously with any adjustment to the
Exercise Price pursuant to subsection (a) of this Section 8, the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
adjusted 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.
 
(c) Reclassification, Reorganization and Consolidation.  In case of any merger,
consolidation, share exchange, reclassification, reorganization, or change in
the capital stock of the Company (other than as a result of a subdivision,
combination, or stock dividend provided for in Section 8(a) above) (each, a
“Change of Control”), then the Company shall make appropriate provisions so that
the Holder of this Warrant shall have the right at any time prior to the
expiration of this Warrant to purchase, at a total price equal to that payable
upon the exercise of this Warrant, the kind and amount of shares of stock and
other securities and property receivable in connection with such Change of
Control by a holder of the same number of Warrant Shares as were purchasable by
the Holder of this Warrant immediately prior to such Change of Control.  In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Holder of this Warrant so that the provisions hereof shall
thereafter be applicable with respect to any shares of stock or other securities
and property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the purchase price per share payable hereunder, provided the
aggregate purchase price shall remain the same.  The Company will use
commercially best efforts, upon the consummation of any such Change of Control,
to ensure that the successor entity, if any (if other than the Company),
resulting from such Change of Control agrees by written instrument, executed and
mailed or delivered to the registered Holder hereof at the last address of such
Holder appearing on the books of the Company, to assume the obligations of the
Company under this Warrant.
 
(d) Calculations.  All calculations under this Section 8 shall be made 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, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
 
(e) Notice of Adjustment.  When any adjustment is required to be made in the
number or kind of shares purchasable upon exercise of this Warrant, or in the
Exercise Price, the Company shall promptly notify the Holder of such event and
of the number of Warrant Shares or other securities or property thereafter
purchasable upon exercise of this Warrant.
 
9. Payment of Exercise Price.  The Holder shall pay the Exercise Price in
immediately available funds.
 
 
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10. Fractional Shares.  The Company shall not be required to issue or cause to
be issued fractional Warrant Shares on the exercise of this Warrant.  If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable upon exercise of this Warrant, the number of Warrant Shares to be
issued will be rounded up to the nearest whole share.
 
11. Notices.  Any and all notices or other communications or deliveries
hereunder (including without limitation any Exercise Notice) shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified below prior to 5:00 p.m. (California time) on a
Business Day, (ii) the next Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified below on a day that is not a Business Day or later than 5:00 p.m.
(California time) on any Business Day, (iii) the Business Day following the date
of mailing, if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be
given.  The address and facsimile number for such notices or communications
shall be as follows:
 
 
If to the Company:
Pacific Ethanol, Inc.

 
400 Capitol Mall, Suite 2060

 
Sacramento, California 95814

 
Fax (916) 446-3937

 
Attn:  Chief Financial Officer

 
AND

 
Attn: General Counsel

 
 
If to Holder:
_______________________

 
_______________________

 
Fax (___) ___-____

 
or such other address or facsimile number as either party may designate to the
other party hereto in accordance with the aforesaid procedure. Each party shall
provide notice to the other party of any change in address or facsimile number.
 
12. Warrant Agent.  The Company shall serve as warrant agent under this
Warrant.  Upon thirty (30) days’ prior notice to the Holder, the Company may
appoint a new warrant agent.  Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any consolidation
to which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or stockholders services business shall
be a successor warrant agent under this Warrant without any further act.  Any
such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder's last address as shown on the Warrant Register.
 
 
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13. Miscellaneous.
 
(a) Subject to the restrictions on transfer set forth on the first page hereof,
this Warrant may be assigned by the Holder.  This Warrant may not be assigned by
the Company except to a successor.  This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns.  Subject to the preceding sentence, nothing in this Warrant shall be
construed to give to any person other than the Company and the Holder any legal
or equitable right, remedy or cause of action under this Warrant.  This Warrant
may be amended only in writing signed by the Company and the Holder and their
successors and assigns.
 
(b) The Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment.
 
(c) Governing Law; Venue; Waiver Of Jury Trial.  ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF CALIFORNIA.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE COUNTY OF FRESNO,
CALIFORNIA, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS),
AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO 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 IMPROPER.  EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS
BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF
VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF
DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS
AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED
TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW.  THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
 
(d) The headings herein are for convenience only, do not constitute a part of
this Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
 
 
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(e) In case any one or more of the provisions of this Warrant shall be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
 
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above.
 

       
 
 
By: _______________________________________       Name:
_____________________________________      
Title: ______________________________________          

 
 
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FORM OF EXERCISE NOTICE
 
 
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
 
To:           PACIFIC ETHANOL, INC.
 
The undersigned is the Holder of Warrant No. W7-___ (the “Warrant”) issued by
Pacific Ethanol, Inc., a Delaware corporation (the “Company”).  Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.
 
1.  
The Warrant is currently exercisable to purchase a total of __________ Warrant
Shares.

 
2.  
The undersigned Holder hereby exercises its right to purchase __________ Warrant
Shares pursuant to the Warrant.

 
3.  
The Holder shall pay the sum of $__________ to the Company in accordance with
the terms of the Warrant.

 
4.  
Pursuant to this exercise, the Company shall deliver to the holder __________
Warrant Shares in accordance with the terms of the Warrant.

 
5.  
Following this exercise, the Warrant shall be exercisable to purchase a total of
__________ Warrant Shares.

 
Dated: _____________________
Name of Holder:
          (Print) _________________________________           By:
___________________________________   Name: _________________________________  
Title: __________________________________      
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant)
   

 
 
 
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FORM OF ASSIGNMENT
 
[To be completed and signed only upon transfer of Warrant]
 
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
__________ the right represented by the within Warrant to purchase __________
shares of Common Stock of Pacific Ethanol, Inc. to which the within Warrant
relates and appoints __________ attorney to transfer said right on the books of
Pacific Ethanol, Inc. with full power of substitution in the premises.
 
Dated: ___________, ____
   _____________________________________            By:
___________________________________    
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant)
           Print: __________________________________            Address of
transferee:            ______________________________________    
 ______________________________________      Fax: (__)
_______________________________      Attn: _________________________________    
       In the presence of:            ______________________________________    
       Print: _________________________________

 
 
 
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