Exhibit 10.85


 


NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS 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. THIS SECURITY AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 


THE
NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 1(a) OF THIS WARRANT.


 


PACIFIC ETHANOL, INC.


 


Series A Warrant To Purchase
Common Stock


 


Warrant No.: A-1


 


Date of Issuance: October 28, 2020 (“Issuance
Date”)


 


PACIFIC ETHANOL, INC.,
a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, cvi investments, inc., 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 date six (6) months after the date hereof (the “Exercisability Date”),
but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), 8,900,493 (subject to adjustment as provided
herein) fully paid and non-assessable shares of Common Stock (as defined below) (the “Warrant Shares”, and such
number of Warrant Shares, the “Warrant Number”). Except as otherwise defined herein, capitalized terms in this
Warrant shall have the meanings set forth in Section 19.


 






     


     


    

 


This Warrant is one
of the Warrants to Purchase Common Stock (the “SPA Warrants”) issued pursuant to Section 1 of that certain
Securities Purchase Agreement, dated as of October 26, 2020 (the “Subscription Date”), by and among the Company
and the investors (the “Buyers”) referred to therein, as amended from time to time (the “Securities
Purchase Agreement”).


 


1.
EXERCISE OF WARRANT.


 


(a) Mechanics of
Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)),
this Warrant may be exercised by the Holder on any day on or after the Exercisability Date (an “Exercise Date”),
in whole or in part, by delivery (whether via facsimile, electronic mail 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 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(d)); provided, however, that upon thirty (30) days’ prior written notice
to the Holder, the Company may elect to require the Holder to make any portion of such future exercises pursuant to a Cashless
Exercise until such time as the Company provides another thirty (30) days’ prior written notice to the Holder requiring the
Holder to make any portion of such future exercises on a cash exercise basis, subject to the provisions of Section 1(d). 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 or
electronic mail 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”), which confirmation shall constitute
an instruction to the Transfer Agent to process such Exercise Notice in accordance with the terms herein. On or before the second
(2nd) Trading Day following the date on which the Company has received such Exercise Notice (or such earlier date as required pursuant
to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the
applicable Exercise Date), the Company shall (i) 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 (ii) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, upon the request of the Holder, issue and deliver (via reputable overnight
courier) to the address as specified in the Exercise Notice, a certificate, registered in the name of the Holder or its designee,
for the number of shares of Common Stock to which the Holder shall be 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 and upon surrender of this Warrant to
the Company by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than
two (2) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant
(in accordance with Section 7(d)) 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 transfer, stamp, issuance
and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable
with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except
in the case where an exercise of this Warrant is validly made pursuant to a Cashless Exercise, the Company’s failure to deliver
Warrant Shares to the Holder on or prior to the later of (A) two (2) Trading Days after receipt of the applicable Exercise Notice
(or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a
trade of such Warrant Shares initiated on the applicable Exercise Date) and (B) one (1) Trading Day after the Company’s receipt
of the Aggregate Exercise Price (or valid notice of a Cashless Exercise) (such later date, the “Share Delivery Date”)
shall not be deemed to be a breach of this Warrant. From the Issuance Date through and including the Expiration Date, the Company
shall maintain a transfer agent that participates in the DTC’s Fast Automated Securities Transfer Program.


 






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(b) Exercise Price.
For purposes of this Warrant, “Exercise Price” means $9.757, subject to adjustment as provided herein.


 


(c) Company’s
Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or prior to the Share
Delivery Date, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, to
issue and deliver to the Holder (or its designee) a certificate for the number of Warrant Shares to which the Holder is entitled
and register such Warrant Shares on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee with DTC for
such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant (as the case may
be) or (II) if a registration statement (or prospectus contained therein) covering the resale of the Warrant Shares that are the
subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not available for the resale of such Unavailable
Warrant Shares and the Company fails to promptly (x) so notify the Holder and (y) deliver the Warrant Shares electronically without
any restrictive legend by crediting such aggregate number of Warrant Shares 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 (the
event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together
with the event described in clause (I) above, a “Delivery Failure”), and if on or after such Share Delivery
Date the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale
by the Holder of all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder is entitled
to receive from the Company (a “Buy-In”), then, in addition to all other remedies available to the Holder, the
Company shall, within two (2) Business Days after the Holder’s request and in the Holder’s discretion, either (i) as
an indemnity for loss hereunder, pay cash to the Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without
limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point
the Company’s obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the
balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to which
the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant Shares) shall
terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing
such Warrant Shares or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the
number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and, as
an indemnity for loss hereunder, pay cash to the Holder in an amount equal to the excess (if any) of the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”) over the
product of (A) such number of Warrant Shares multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading
Day during the period commencing on the date of the applicable Exercise Notice and ending on the date of such issuance and payment
under this clause (ii) (the “Buy-In Payment Amount”). Nothing shall limit the Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common
Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Warrant as required pursuant to the
terms hereof. While this Warrant is outstanding, the Company shall cause its transfer agent to participate in the DTC Fast Automated
Securities Transfer Program. In addition to the foregoing rights, (i) if the Company fails to deliver the applicable number of
Warrant Shares upon an exercise pursuant to Section 1 by the applicable Share Delivery Date, then the Holder shall have the right
to rescind such exercise in whole or in part and retain and/or have the Company return, as the case may be, any portion of this
Warrant that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an exercise shall not affect
the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this Section
1(c) or otherwise, and (ii) if a registration statement covering the resale of the Warrant Shares that are subject to an Exercise
Notice is not available for the resale of such Exercise Notice Warrant Shares and the Holder has submitted an Exercise Notice prior
to receiving notice of the non-availability of such registration statement and the Company has not already delivered the Warrant
Shares underlying such Exercise Notice electronically without any restrictive legend by crediting such aggregate number of Warrant
Shares 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, the Holder shall have the option, by delivery of notice to the Company,
to (x) rescind such Exercise Notice in whole or in part and retain or have returned, as the case may be, any portion of this Warrant
that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an Exercise Notice shall not affect
the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this Section
1(c) or otherwise, and/or (y) switch some or all of such Exercise Notice from a cash exercise to a Cashless Exercise.


 






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(d) Cashless Exercise.
Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if at the time of exercise hereof
a registration statement covering the resale of the Warrant Shares is not effective (or the prospectus contained therein is not
available for use) for the issuance of all of the Warrant Shares, then the Holder may, in its 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 Warrant
Shares determined according to the following formula (a “Cashless Exercise”):


 


	Net Number =	(A x B) - (A x C)	 
	 	D	 
	 	 	 
	For purposes of the foregoing formula:	 



   


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


 


B = the quotient of (x) the sum
of the VWAP of the Common Stock of each of the ten (10) Trading Days ending at the close of business on the Principal Market immediately
prior to the time of exercise as set forth in the applicable Exercise Notice, divided by (y) ten (10).


 


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


 


D = 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, (ii) the Bid
Price of the Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if such Exercise Notice
is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter pursuant
to Section 1(a) hereof, or (iii) 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 after the close of “regular trading hours” on such Trading Day.


 


If the Warrant Shares
are issued in a Cashless Exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the
Warrant Shares take on the registered characteristics of the Warrants being exercised. For purposes of Rule 144(d) promulgated
under the 1933 Act, as in effect on the Subscription Date, it is intended that the Warrant Shares issued in a Cashless Exercise
shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced,
on the date this Warrant was originally issued pursuant to the Securities Purchase Agreement.


 






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(e) 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 Section 15.


 


(f) Limitations
on Exercises. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have the right
to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise shall be null
and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the
shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the
number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially
owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion
of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or
warrants, including other SPA Warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation
on conversion or exercise analogous to the limitation contained in this Section 1(f)(i). For purposes of this Section 1(f)(i),
beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number
of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding the Maximum Percentage,
the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case
may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent,
if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”).
If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding shares of Common Stock
is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing of the number of shares
of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the Holder’s beneficial
ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum Percentage, the Holder must notify the Company
of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice (the number of shares by which such purchase
is reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the Company shall return to
the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time, upon the written or oral
request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail to the
Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that
the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the Holder and the other Attribution
Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares
of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder’s
and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”)
shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer
the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the
Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares. Upon delivery of a written notice
to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first (61st)
day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified
in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the
other Attribution Parties and not to any other holder of SPA Warrants that is not an Attribution Party of the Holder. For purposes
of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall
not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1)
of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability
of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(f)(i) to the
extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended
beneficial ownership limitation contained in this Section 1(f)(i) or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder
of this Warrant.


 






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(g) Reservation
of Shares.


 


(i) Required
Reserve Amount. So long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance under
this Warrant a number of shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as shall
be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the SPA Warrants then outstanding
(without regard to any limitations on exercise) (the “Required Reserve Amount”); provided that at no time shall
the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally in connection
with any exercise or redemption of SPA Warrants or such other event covered by Section 2(a) below. The Required Reserve Amount
(including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders
of the SPA Warrants based on number of shares of Common Stock issuable upon exercise of SPA Warrants held by each holder on the
Closing Date (without regard to any limitations on exercise) or increase in the number of reserved shares, as the case may be (the
“Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s
SPA Warrants, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares
of Common Stock reserved and allocated to any Person which ceases to hold any SPA Warrants shall be allocated to the remaining
holders of SPA Warrants, pro rata based on the number of shares of Common Stock issuable upon exercise of the SPA Warrants then
held by such holders (without regard to any limitations on exercise).


 






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(ii) Insufficient
Authorized Shares. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time while any of the SPA
Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares of Common Stock
to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”), then the Company
shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for all the SPA Warrants then outstanding. Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that
they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon an exercise of
this Warrant due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued
shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization Failure Shares”),
in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation
of such portion of this Warrant exercisable into such Authorization Failure Shares at a price equal to the sum of (i) the product
of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day
during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Authorization
Failure Shares to the Company and ending on the date of such issuance and payment under this Section 1(f); and (ii) to the extent
the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions and other out-of-pocket expenses,
if any, of the Holder incurred in connection therewith.


 






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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. Without limiting any provision of Section 2(b) or Section 4, if the Company, at any time on or after
the Subscription Date, (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 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) [Intentionally
Omitted]


 


(c) [Intentionally
Omitted]


 


(d) Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2(a), 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).


 


(e) Other Events.
In the event that the Company (or any Subsidiary (as defined in the Securities Purchase Agreement)) shall take any action to which
the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or
if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise
Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment
pursuant to this Section 2(d) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately protecting its
interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith,
upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination
shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.


 


(f) 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, and the disposition of any such shares shall be considered an issuance or sale of Common
Stock.


 






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(g) Voluntary Adjustment
By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of this
Warrant, with the prior written consent of the holders of a majority of the SPA Warrants then outstanding, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.


 


3.
RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company
shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares
of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other
securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time
after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant,
including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate
in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the
Holder shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent
of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time
or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no
such limitation).


 


4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.


 


(a) Purchase Rights.
In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of
shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on
exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided,
however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the
Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate
in such Purchase Right to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares
of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase
Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto
would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder
shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent
Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).


 






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(b) Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless (i)  the Successor Entity
assumes in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 4(b)
pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental
Transaction, including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable
for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and
with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the
relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock,
such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction) and (ii) the Successor Entity
(including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible
Market. Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.
Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall
be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction, in lieu of
the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3
and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor Entity (including its
Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction
had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations
on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding the foregoing,
and without limiting Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company
to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition to and
not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which
holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares
of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder
will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash,
assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities,
cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would
have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant). Provision
made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.


 






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(c) Black Scholes
Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered
at any time commencing on the earliest to occur of (x) the public disclosure of any Fundamental Transaction, (y) the consummation
of any Fundamental Transaction and (z) the Holder first becoming aware of any Fundamental Transaction through the date that is
ninety (90) days after the public disclosure of the consummation of such Fundamental Transaction by the Company pursuant to a Current
Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from
the Holder on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes Value. Payment of such
amounts shall be made by the Company (or at the Company’s direction) to the Holder on or prior to the later of (x) the second
(2nd) Trading Day after the date of such request and (y) the date of consummation of such Fundamental Transaction.


 


(d) Application.
The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events
and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations
on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage,
applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)).


 


5.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its certificate
of incorporation, bylaws or other organizational documents or through any reorganization, transfer of assets, consolidation, merger,
scheme of arrangement, dissolution, issuance 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, 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. Without limiting the generality of
the foregoing, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the exercise of
this Warrant above the Exercise Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of
this Warrant. Notwithstanding anything herein to the contrary, if after the one hundred eighty (180) calendar day anniversary
of the Issuance Date, the Holder is not permitted to exercise this Warrant in full for any reason (other than pursuant to restrictions
set forth in Section 1(f) hereof), the Company shall use its best efforts to promptly remedy such failure, including, without
limitation, obtaining such consents or approvals as necessary to permit such exercise into shares of Common Stock.


 






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6.
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. Notwithstanding this Section 6, the Company shall provide the Holder with copies
of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.


 


7.
REISSUANCE OF WARRANTS.


 


(a) Transfer of
Warrant. If this Warrant is to be transferred pursuant to the terms of the Securities Purchase Agreement, 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 (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the 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 (in accordance with Section 7(d)) to the Holder 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 (in accordance with Section 7(d)) representing the right to purchase the Warrant
Shares then underlying this Warrant.


 






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(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 (in accordance with Section 7(d)) 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 7(a)
or Section 7(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.


 


8.
NOTICES. (a) General. Whenever notice is required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in writing, (i) if delivered (a) from within the domestic United States, by first-class registered
or certified airmail, or nationally recognized overnight express courier, postage prepaid, electronic mail or by facsimile or
(b) from outside the United States, by International Federal Express, electronic mail or facsimile, and (ii) will be deemed given
(A) if delivered by first-class registered or certified mail domestic, three (3) Business Days after so mailed, (B) if delivered
by nationally recognized overnight carrier, one (1) Business Day after so mailed, (C) if delivered by International Federal Express,
two (2) Business Days after so mailed and (D) if delivered by electronic mail, when sent (provided that such sent email is kept
on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated
message from the recipient's email server that such e-mail could not be delivered to such recipient) and (E) if delivered by facsimile,
upon electronic confirmation of receipt of such facsimile, and will be delivered and addressed as follows:


 


		(i)	if to the Company, to:



 


Pacific Ethanol, Inc.

400 Capitol Mall, Suite 2060

Sacramento, CA 95814

Attention: General Counsel

Fax: (916) 446-3937

E-Mail: cwright@pacificethanol.com


 


		(ii)	if to the Holder, at such address or other contact information
delivered by the Holder to Company or as is on the books and records of the Company.



 






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(b) Required Notices.
The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant (other than the issuance
of shares of Common Stock upon exercise in accordance with the terms hereof), including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder
(i) immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail,
and certifying, the calculation of such adjustment(s), (ii) at least ten Trading Days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other
property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder, and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental
Transaction. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC pursuant to a Current Report
on Form 8-K. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise Notice shall
be definitive and may not be disputed or challenged by the Company.


 


9.
DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice
in accordance with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such
notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall
on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly disclose
such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that
a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate
to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and
in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice
from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material,
non-public information relating to the Company or any of its Subsidiaries.


 


10.
ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or
agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided
by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure
agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the
absence of such an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any
securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity,
and may disclose any such information to any third party.


 






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11.
AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f))
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.


 


12.
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).


 


13.
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 New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State
of New York. The Company 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 to the Company at its principal executive office and agrees that such service
shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, 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 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. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize
on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 






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14.
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.


 


15.
DISPUTE RESOLUTION.


 


(a) Submission to
Dispute Resolution.


 


(i) In the
case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Consideration Value, Black
Scholes Value or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including,
without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may
be) shall submit the dispute to the other party via facsimile or electronic mail (A) if by the Company, within two (2) Business
Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder
learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute
relating to such Exercise Price, such Closing Sale Price, such Bid Price, such Black Scholes Consideration Value Black Scholes
Value or such fair market value or such arithmetic calculation of the number of Warrant Shares (as the case may be), at any time
after the second (2nd) Business Day following such initial notice by the Company or the Holder (as the case may be)
of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an independent,
reputable investment bank to resolve such dispute.


 


(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 15 and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following
the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the
Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute
Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other
support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on
the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company
nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection
with such dispute (other than the Required Dispute Documentation).


 






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(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and
the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees
and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.


 


(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between the Company
and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501, et seq. of the New
York Civil Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for an order to compel
arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 15, (ii) the terms of this Warrant
shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall
be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines
are required to be made by such investment bank in connection with its resolution of such dispute.


 


16.
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. 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), and nothing herein shall limit the right of the Holder to pursue actual
and consequential damages for any failure by the Company to comply with the terms of this Warrant. The Company covenants to the
Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set
forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts
to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available
remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court
of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other
security. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable
the Holder to confirm the Company’s compliance with the terms and conditions of this Warrant (including, without limitation,
compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon the exercise
of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.


 






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17.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed
in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the holder
otherwise takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs
any bankruptcy, reorganization, receivership of the company or other proceedings affecting company creditors’ rights and
involving a claim under this Warrant, then the Company shall pay the costs incurred by the Holder for such collection, enforcement
or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation,
attorneys’ fees and disbursements. 


 


18.
TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.


 


19.
CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:


 


(a) “1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.


 


(b) “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.


 


(c) [Intentionally
Omitted]


 


(d) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that “control” of a Person means the
power directly or indirectly either to vote 10% or more of the shares having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.


 


(e) [Intentionally
Omitted]


 


(f) “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by
the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any
of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.


 






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(g) “Bid Price”
means, for any security as of the particular time of determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or
trading market for such security, the bid price of such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the
bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg
as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination,
the average of the bid prices of any market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid Price cannot be calculated for a security as
of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination
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 15.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.


 


(h) “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the
case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such
Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for
a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date
of issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv)
an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of
such Option, Convertible Security or Adjustment Right (as the case may be).


 


(i) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s
request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing
Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable
Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day
of the Holder’s request pursuant to Section 4(c) and (2) the sum of the price per share being offered in cash in the applicable
Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable Fundamental Transaction
(if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c),
(iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining
term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c) and (2) the remaining term of this
Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the date of the Holder’s request
pursuant to Section 4(c) if such request is prior to the date of the consummation of the applicable Fundamental Transaction,
(iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from
the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following the earliest to occur of (A) the public disclosure of the applicable Fundamental Transaction, (B) the consummation of
the applicable Fundamental Transaction and (C) the date on which the Holder first became aware of the applicable Fundamental Transaction.


 






    19


     


    

 


(j) “Bloomberg”
means Bloomberg, L.P.


 


(k) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.


 


(l) “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 OTC Markets Group Inc.
(formerly Pink Sheets LLC). 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 15. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar transaction during such period.


 


(m) “Common
Stock” means (i) the Company’s shares of common stock, $0.001 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.


 


(n) [Intentionally
Omitted]


 


(o) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market,
the Nasdaq Capital Market, or the Principal Market.


 


(p) “Expiration
Date” means the date that is the eighteen (18) month 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.


 






    20


     


    

 


(q) “Fundamental
Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of
the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be
subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934
Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company
shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow
any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of
the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.


 


(r) “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.


 






    21


     


    

 


(s) “Options”
means any rights, warrants or options to subscribe for or purchase Ordinary Shares or Convertible Securities.


 


(t) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.


 


(u) “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.


 


(v) “Principal
Market” means The Nasdaq Capital Market.


 


(w) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.


 


(x) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.


 


(y) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction
shall have been entered into.


 


(z) “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock,
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 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 or (y) with respect to all determinations other than price determinations relating to the Common Stock,
any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.


 


(aa) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m.,
New York time, as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or,
if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the
electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New
York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such
security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot
be calculated for such security on such date on any of the foregoing bases, the VWAP 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 15.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.


 


[signature page follows]


 




    22


     


    

 


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.


 


	 	PACIFIC ETHANOL, INC.
	 	 	 	 
	 	By:	/s/ Michael D. Kandris
	 	 	Name: 	Michael D. Kandris
	 	 	Title:	President and CEO


 




     


     


    

 


EXHIBIT A


 


EXERCISE
NOTICE


 


TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK


 


PACIFIC
ETHANOL, INC.


 


The undersigned holder
hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of
Pacific Ethanol, Inc., a Delaware corporation (the “Company”), evidenced by Warrant to Purchase Common Stock
No. A-1 (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 Aggregate 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 $________.


 


		☐	If this Exercise Notice is being delivered after the
Alternate Exercise Eligibility Date, check here if Holder is electing to use the following Alternate Exercise Price in this exercise:____________.



 


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, as follows:


 


		☐	Check here if requesting delivery as a certificate to
the following name and to the following address:



 


	Issue to:	 
	 	 
	 	 


 






     


     


    

 


		☐	Check here if requesting delivery by Deposit/Withdrawal
at Custodian as follows:



 


	DTC Participant:	 
	DTC Number:	 
	Account Number:	 
	 	 
	 	 	 


 


	Date: _____________ __,
	 
	Name of Registered Holder


 


	By:	 	 
	 	Name: 	 	 
	 	Title:	 	 


 


	 	Tax ID:____________________________
	 	Facsimile:__________________________
	 	E-mail Address:_____________________


 




     


     


    

 


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 _________, 201_, from the Company and acknowledged
and agreed to by _______________.


 


	 	PACIFIC ETHANOL, INC.
	 	 	 	 
	 	By:	 
	 	 	Name:  	Michael D. Kandris
	 	 	Title: 	President and CEO