Exhibit 10.3


 


[FORM OF SERIES [A][B]
WARRANT]


 


PACIFIC ETHANOL, INC.


 


Series
[A][B] Warrant To Purchase Common Stock


 


Series [A][B] Warrant No.: [A][B]-            


Date of Issuance: [           ], 2013 (“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, [CAPITAL VENTURES INTERNATIONAL][OTHER
BUYERS], 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 first anniversary of the [INSERT IN SERIES A WARRANT:
Issuance Date][INSERT IN SERIES B WARRANT: Series B Closing Date (as defined in the Securities Purchase Agreement (as defined
below))] (the “Initial Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date
(as defined below), [______________]1 (subject to adjustment as provided herein) fully paid and nonassessable shares
of Common Stock (as defined below) (the “Warrant Shares”). Except as otherwise defined herein, capitalized
terms in this Warrant shall have the meanings set forth in Section 16. This Warrant is one of the Warrants to Purchase Common
Stock (the “SPA Warrants”) issued pursuant to (i) Section 1 of that certain Securities Purchase Agreement,
dated as of [ , 2013] (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”) and (ii) the
Company’s Registration Statement on Form S-3 (File number 333-180731) (the “Registration Statement”).


 


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 Initial Exercisability
Date, in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto as
Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. Within
one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount
equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this
Warrant was so exercised (the “Aggregate Exercise Price”) in 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)). The Holder shall not be required to deliver the original of this Warrant in order to effect
an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have
the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the right to purchase
the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Warrant Shares
shall have the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares in accordance with
the terms hereof. On or before the first (1st) Trading Day following the date on which the Company has received an Exercise
Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of such Exercise Notice, in the form
attached hereto as Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer Agent”).
On or before the third (3rd) Trading Day following the date on which the Company has received such Exercise Notice,
the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock
to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC
through its Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver to the Holder or, at the Holder’s instruction pursuant to the Exercise Notice,
the Holder’s agent or designee, in each case, sent by reputable overnight courier to the address as specified in the applicable
Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee (as
indicated in the applicable Exercise Notice), for the number of shares of Common Stock to which the Holder is entitled pursuant
to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant
Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares
(as the case may be). If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number
of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired
upon an exercise, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than three
(3) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (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 taxes and fees which 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 (as defined in Section 1(d)), the
Company’s failure to deliver Warrant Shares to the Holder on or prior to the second (2nd) Trading Day after the Company’s
receipt of the Aggregate Exercise Price shall not be deemed to be a breach of this Warrant.


 


 






1 Insert pro-rata share of
amount equal to 75% of the quotient of (x) $[INSERT IN SERIES A WARANTS: 6][INSERT IN SERIES B WARRANTS: 8] million,
divided by (y) 110% of the Closing Bid Price as of the close of business immediately prior to the time of
execution of the Securities Purchase Agreement (as adjusted for any stock splits, stock dividends, recapitalizations
and similar events)


 






    	1



    	 



    

 


(b)              
Exercise Price. For purposes of this Warrant, “Exercise Price” means $0.52, 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,
to issue to the Holder within the later of (i) three (3) Trading Days after receipt of the applicable Exercise Notice and (ii)
two (2) Trading Days after the Company’s receipt of the Aggregate Exercise Price (or valid notice of a Cashless Exercise)
(such later date, the “Share Delivery Deadline”), a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s
balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise
of this Warrant (as the case may be) (a “Delivery Failure”), and if on or after such Share Delivery Deadline
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, or a sale of a number of shares of Common Stock equal
to all or any portion of the number of shares of Common Stock, issuable upon such exercise that the Holder so anticipated receiving
from the Company, then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business
Days after the Holder’s request and in the Holder’s discretion, either (i) 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 or credit
the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its
obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit
the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Common Stock 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 immediately
preceding the date of such issuance and payment under this clause (ii).


 


(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 is not effective (or the prospectus contained therein is not available
for use) for the issuance by the Company to the Holder 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 shares of Common Stock determined according to the following formula (a “Cashless Exercise”):


 









    	2



    	 



    

 


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 =	the VWAP of the Common Stock at the close of business on the Principal Market on the date of the delivery of the applicable Exercise Notice.







 


(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 13.


 


(f)               
Limitations on Exercises.


 


(i)                
Beneficial Ownership. Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not
be exercisable by the Holder hereof to the extent (but only to the extent) that after giving effect to such exercise the Holder
(together with any of its affiliates) would beneficially own in excess of  9.99% (the “Maximum Percentage”)
of the Common Stock. To the extent the above limitation applies, the determination of whether this Warrant shall be exercisable
(vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of
which such securities shall be convertible, exercisable or exchangeable (as the case may be, as among all such securities owned
by the Holder) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the
Company for conversion, exercise or exchange (as the case may be). 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. For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including,
without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d)
of the 1934 Act (as defined in the Securities Purchase Agreement) and the rules and regulations promulgated thereunder. The provisions
of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct
this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership
limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage
limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Warrant. The holders of Common
Stock shall be third party beneficiaries of this paragraph and the Company may not waive this paragraph without the consent of
holders of a majority of its Common Stock. 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 to the Holder the number of shares of Common Stock then outstanding,
including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including,
without limitation, pursuant to this Warrant or securities issued pursuant to the Securities Purchase Agreement. By written notice
to the Company, any Holder may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified
in such notice; provided that (i) any such increase will not be effective until the 61st day after such notice is delivered to
the Company, and (ii) any such increase or decrease will apply only to the Holder sending such notice and not to any other holder
of SPA Warrants.


 






    	3



    	 



    

 


(ii)              
Principal Market Regulation. The Company shall not issue any shares of Common Stock upon the exercise of this Warrant
if the issuance of such shares of Common Stock (taken together with the issuance of such shares upon the exercise of the SPA Warrants
and the conversion of the Notes or otherwise pursuant to the terms of the Notes) would exceed the aggregate number of shares of
Common Stock which the Company may issue upon exercise or conversion (as the case may be) of the Warrants and the Notes without
breaching the Company’s obligations under the rules or regulations of the Principal Market (the number of shares which may
be issued without violating such rules and regulations, the “Exchange Cap”), except that such limitation shall
not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the
Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder or (C)
obtain a waiver from the Principal Market of the applicable rules of such Principal Market for the issuance of shares of Common
Stock in excess of such amount. Until such approval or such written opinion is obtained, no Buyer shall be issued in the aggregate,
upon conversion or exercise (as the case may be) of any Notes or any of the Warrants, shares of Common Stock in an amount greater
than the product of (i) the Exchange Cap as of the Issuance Date multiplied by (ii) the quotient of (1) the original principal
amount of Notes issued to such Buyer pursuant to the Securities Purchase Agreement on the Series A Closing Date (as defined in
the Securities Purchase Agreement) divided by (2) the aggregate original principal amount of all Notes issued to the Buyers pursuant
to the Securities Purchase Agreement on the Series A Closing Date (with respect to each Buyer, the “Exchange Cap Allocation”).
In the event that any Buyer shall sell or otherwise transfer any of such Buyer’s Warrants, the transferee shall be allocated
a pro rata portion of such Buyer’s Exchange Cap Allocation with respect to such portion of such Warrants so transferred,
and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation
so allocated to such transferee. Upon conversion and exercise in full of a holder’s Notes and Warrants, the difference
(if any) between such holder’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder
upon such holder's conversion in full of such Notes and such holder’s exercise in full of such Warrants shall be allocated
to the respective Exchange Cap Allocations of the remaining holders of Notes and Warrants on a pro rata basis in proportion to
the shares of Common Stock underlying the Notes and Warrants then held by each such holder. In the event that the Company is prohibited
from issuing any shares of Common Stock pursuant to this Section 1(f)(ii) (the “Exchange Cap Shares”), in lieu
of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash to the Holder in exchange for the
cancellation of such portion of this Warrant exercisable into such Exchange Cap Shares at a price equal to the sum of (x) the product
of (A) such number of Exchange Cap Shares and (B) 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 Exchange Cap Shares to
the Company and ending on the date immediately preceding the date of such payment under this Section 1(f)(ii) and (y) 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 Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.


 






    	4



    	 



    

 


(g)              
Insufficient Authorized Shares. From and after the Initial Exercisability Date, the Company shall at all times keep
reserved for issuance under this Warrant a number of shares of Common Stock at least equal to the maximum number of shares of Common
Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock hereunder (without regard
to any limitation otherwise contained herein with respect to the number of shares of Common Stock that may be acquirable upon exercise
of this Warrant). From and after the Initial Exercisability Date, if, notwithstanding the foregoing, 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 for issuance upon exercise of the SPA Warrants at least a number of
shares of Common Stock (the “Required Reserve Amount”) equal to the number of shares of Common Stock as shall
from time to time be necessary to effect the exercise of all of the SPA Warrants then outstanding (an “Authorized Share
Failure”), then the Company shall immediately take all action reasonably 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 ninety (90) 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 reasonable
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 Authorized 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 immediately preceding the date of
such issuance and payment under this Section 1(g) 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 brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.


 


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 date of the Securities Purchase Agreement, (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.


 






    	5



    	 



    

 


(b)              
Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the date of the Securities Purchase
Agreement, the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares
of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but
excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share (the “New
Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such issue or sale or deemed
issuance or sale (such Exercise Price then in effect is referred to as the “Applicable Price”) (the foregoing
a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall
be reduced to an amount equal to the product of (A) the Exercise Price in effect immediately prior
to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying
the Exercise Price in effect immediately prior to such Dilutive Issuance and the number of Common Stock Deemed Outstanding immediately
prior to such Dilutive Issuance plus (II) the net consideration, if any, received by the Company upon such Dilutive Issuance (as
determined and, if applicable, adjusted, pursuant to Section 2(b)(iv) below), by (2) the product derived by multiplying (I) the
Exercise Price in effect immediately prior to such Dilutive Issuance by (II) the sum of (x) the number of Common Stock Deemed
Outstanding immediately prior to such Dilutive Issuance and (y) the number of shares of Common Stock issued (or deemed issued in
such Dilutive Issuance pursuant to Sections 2(b)(i) and 2(b)(ii) below, regardless of whether such Options or Convertible Securities
are actually convertible or exercisable at such time, but excluding any shares of Common Stock issued (or deemed issued pursuant
to Sections 2(b)(i) and 2(b)(ii) below) under any Secondary Security (as defined below), if any). For all purposes of the
foregoing (including, without limitation, determining the adjusted Exercise Price and consideration per share under this Section 2(b)),
the following shall be applicable:


 


(i)                
Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option
for such price per share. For purposes of this Section 2(b)(i), the “lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such
Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise
of such Option and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon
the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise
of any such Option minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the
granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price
shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.


 


(ii)              
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the
lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less
than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 2(b)(ii)2(b)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion,
exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security
and upon conversion, exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all
amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible
Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible
Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the
actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has
been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated below, no further adjustment
of the Exercise Price shall be made by reason of such issue or sale.


 






    	6



    	 



    

 


(iii)            
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the
additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases
or decreases at any time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise
Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 2(b)(iii), if the terms of any Option or Convertible Security that was outstanding
as of the date of issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b)
shall be made if such adjustment would result in an increase of the Exercise Price then in effect.


 


(iv)            
Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued
in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as reasonably determined
in good faith by the Holder, the “Primary Security”, and such Option, Convertible Security, and/or Adjustment
Right, each a “Secondary Security”), together comprising one integrated transaction, the Primary Security issued
or sold in such integrated transaction shall be deemed to have been issued for consideration equal to the difference of (A) the
aggregate consideration received by the Company to purchase such Primary Security and each such Option (as applicable) and/or Convertible
Security (as applicable) and/or Adjustment Right (as applicable), minus (B) the product of (x) the sum of the Black Scholes Consideration
Value of each such Option and/or Convertible Security (as applicable) and/or Adjustment Right (as applicable) on a per share basis
multiplied by (y) the aggregate number of shares of Common Stock issued or issuable pursuant to such Option and/or Convertible
Security (as applicable) and/or Adjustment Right (as applicable). If any shares of Common Stock, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the
Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any
shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash (for the purpose
of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation
of the Black Scholes Consideration Value), the amount of such consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration
received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5)
Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity (for the purpose
of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation
of the Black Scholes Consideration Value), the amount of consideration therefor will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than cash or publicly traded securities (for the purpose
of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation
of the Black Scholes Consideration Value) will be determined jointly by the Company and the Holder. If such parties are unable
to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”),
the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following
such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of
such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall
be borne by the Company.


 






    	7



    	 



    

 


(v)              
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will
be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase
(as the case may be).


 


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


 


(d)              
Holder's Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In
addition to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells
any Options or Convertible Securities (other than the Notes) (any such securities, "Variable Price Securities")
after the Subscription Date that are convertible into or exchangeable or exercisable for shares of Common Stock at a price which
varies or may vary with the market price of the Common Shares, including by way of one or more reset(s) to a fixed price, but exclusive
of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and
similar transactions) (each of the formulations for such variable price being herein referred to as, the "Variable Price"),
the Company shall provide written notice thereof via facsimile and overnight courier to the Holder on the date of issuance of such
Convertible Securities or Options. From and after the date the Company issues any such Convertible Securities or Options with a
Variable Price, the Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price
for the Exercise Price upon exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this
Warrant that solely for purposes of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then
in effect. The Holder's election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder
to rely on a Variable Price for any future exercises of this Warrant.


 


(e)               
Other Events. In the event that the Company (or any Subsidiary) 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(e)
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 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 issue
or sale of Common Stock.


 






    	8



    	 



    

 


(g)              
Adjustment. If immediately following the close of business on the Initial Exercisability Date (the “Adjustment
Time”), the Exercise Price then in effect exceeds the Adjusted Market Price (the “Adjusted Exercise Price”),
the Exercise Price hereunder shall be reset to the Adjusted Exercise Price as of the Adjustment Time.


 


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 or options 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 on exercise hereof, 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, to the extent that the Holder’s right to participate in any such Distributions would result in the Holder
exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (or
the beneficial ownership of any such shares of Common Stock as a result of such Distribution to such extent) and such Distribution
to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Maximum Percentage).


 







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 shares 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 on exercise hereof, 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, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Maximum Percentage).


 






    	9



    	 



    

 


(b)              
Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor
Entity (if different than the Company) assumes in writing all of the obligations of the Company under this Warrant and the other
Transaction Documents (as defined in the Securities Purchase Agreement) in accordance with the provisions of this Section 4(b)
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). 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 and the other Transaction Documents 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 and the other Transaction Documents 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 (if different from the Company)
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 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.


 






    	10



    	 



    

 


(c)               
Black Scholes Redemption. 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 Change of Control,
(y) the consummation of any Change of Control and (z) the Holder first becoming aware of any Change of Control through the date
that is ninety (90) days after the public disclosure of the consummation of such Change of Control 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.


 


(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 (as defined in the Securities Purchase Agreement), Bylaws (as
defined in the Securities Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, 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, 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 (i) 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, (ii) 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,
and (iii) shall, so long as any of the SPA Warrants are outstanding, take all action necessary to reserve and keep available out
of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, the
maximum number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the SPA Warrants then
outstanding (without regard to any limitations on exercise).







 





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.







 










 






    	11



    	 



    

 


7.                 
REISSUANCE OF WARRANTS.


 


(a)               
Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company,
whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (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.


 


(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.


 






    	12



    	 



    

 


8.                 
NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such
notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Warrant, 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) promptly 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) and (ii) at least fifteen (15) 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 (as defined in the Securities
Purchase Agreement) 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.                 
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.


 


10.             
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



    	 



    

 


11.             
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 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 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.


 


12.             
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. Terms used in this Warrant but defined in the other
Transaction Documents shall have the meanings ascribed to such terms on the Series A Closing Date in such other Transaction Documents
unless otherwise consented to in writing by the Holder.


 


13.             
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise Price, the Closing Bid
Price, the Closing Sale Price or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may
be), the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the
case may be) via facsimile (i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute
to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Holder
learned of the circumstances giving rise to such dispute (including, without limitation, as to whether any issuance or sale or
deemed issuance or sale was an issuance or sale or deemed issuance or sale of Excluded Securities). If the Holder and the Company
are unable to agree upon such determination or calculation (as the case may be) of the Exercise Price, the Closing Sale Price or
fair market value or the number of Warrant Shares (as the case may be) within three (3) Business Days of such disputed determination
or arithmetic calculation being submitted to the Company or the Holder (as the case may be), then the Company shall, within two
(2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price, the Closing Bid Price, the Closing
Sale Price or fair market value (as the case may be) to an independent, reputable investment bank selected by the Company and approved
by the Holder or (b) the disputed arithmetic calculation of the number of Warrant Shares to the Company’s independent, outside
accountant. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations
or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10) Business Days
from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s
determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error.


 






    	14



    	 



    

 


14.             
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 and the other Transaction Documents,
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 an injunction restraining any breach, without the necessity of showing economic loss and without
any bond or other security being required. 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.


 


15.             
TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.


 


16.             
CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:


 


(a)               
“Adjusted Market Price” means 115% of the Market Price (as defined in the Notes) on the Initial Exercisability
Date.


 


(b)              
“Adjustment Right” means any right granted with respect to any securities issued in connection with,
or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 2) of shares of Common Stock
(other than rights of the type described in Section 3 and 4 hereof) that could result in a decrease in the net consideration
received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement
rights, cash adjustment or other similar rights).


 


(c)               
“Approved Stock Plan” means any employee benefit plan (including the Company’s 2006 Stock Incentive
Plan) which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which
shares of Common Stock and standard options to purchase Common Stock may be issued to any employee, officer or director for services
provided to the Company in their capacity as such.


 






    	15



    	 



    

 


(d)              
“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 75% 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).


 


(e)               
“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 sum of the price
per share being offered in cash in the applicable Change of Control (if any) plus the value of the non-cash consideration being
offered in the applicable Change of Control (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 Change of Control
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 Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 75% 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 (x) the public disclosure of the applicable Change of Control, (y) the
consummation of the applicable Change of Control and (z) the date on which the Holder first became aware of the applicable Change
of Control.


 


(f)               
“Bloomberg” means Bloomberg, L.P.


 


(g)              
“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.


 


(h)              
“Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any
of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization
or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to
hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of
the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification,
or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company
or any of its Subsidiaries or (iv) the sale (whether by merger, asset sale or otherwise) of any one Plant (as defined in the Notes)
of the Company or any of its Subsidiaries.


 






    	16



    	 



    

 


(i)                
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date,
the last closing bid price and last closing trade price, respectively, 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 bid price
or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior
to 4:00:00 p.m., New York City time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, 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 do
not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively,
is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, 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
Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the
Closing Bid Price or the Closing Sale Price (as the case may be) 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 13. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such
period.


 


(j)                
“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.


 


(k)              
“Common Stock Deemed Outstanding” means, at any given time, the number of
shares of Common Stock actually outstanding at such time, but excluding any shares of Common Stock owned or held by or for the
account of the Company.


 


(l)                
“Convertible Securities” means any stock or other security (other than Options) that is at any time and
under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any shares of Common Stock.


 


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


 






    	17



    	 



    

 


(n)              
“Excluded Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued
to directors, officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined above),
provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after
the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more than 5% of the Common Stock issued and outstanding
immediately prior to the date hereof and (B) the exercise price of any such options is not lowered, none of such options are amended
to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially
changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise
of, or in satisfaction of interest or dividends accrued in accordance with the terms of, the Company’s Series B Cumulative
Convertible Preferred Stock or any other Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the conversion price
of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) is not lowered (except pursuant to terms in effect as of the Subscription Date), none of
such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that
are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions
of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers;
(iii) the issuance of the Notes, (iv) the issuance of the SPA Warrants, (v) the shares of Common Stock issuable upon conversion
of the Notes or otherwise pursuant to the terms of the Notes, and (vi) the shares of Common Stock issuable upon exercise of the
SPA Warrants.


 


(o)              
“Expiration Date” means the date that is [INSERT IN SERIES A WARRANT: the first anniversary of the Initial
Exercisability Date][INSERT IN SERIES B WARRANT: the earlier of (z) the Trading Day immediately following the Series B Closing
Expiration Date and (y) the first anniversary of the Initial Exercisability 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.


 


(p)              
“Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly,
in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries
is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all
or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase,
tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination),
or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d)
of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by
issued and outstanding Voting Stock of the Company.


 






    	18



    	 



    

 


(q)              
“Notes” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include
all notes issued in exchange therefor or replacement thereof.


 


(r)                
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.


 


(s)               
“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.


 


(t)                
“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.


 


(u)              
“Principal Market” means the Nasdaq Capital Market.


 


(v)              
“Subsidiary” means any Person in which the Company, directly or indirectly, (i) owns any of the outstanding
capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business,
operations or administration of such Person, and all of the foregoing.


 


(w)            
“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.


 


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


 






    	19



    	 



    

 


(y)              
“Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which
the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of
directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or
classes shall have or might have voting power by reason of the happening of any contingency).


 


(z)               
“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 9:30:01 a.m., New
York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function
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 9:30:01 a.m., New York time, and ending at 4:00:00
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 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 13.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.


 


[signature page follows]


 


 


 


 


 


 


 






    	20



    	 



    

 


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:_________________________________


Name:


Title:


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






    	21



    	 



    

 


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. _______ (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective
meanings set forth in the Warrant.


 


1.Form of Exercise
Price. The Holder intends that payment of the Exercise Price shall be made as:


 


		____________	a “Cash Exercise” with respect to _________________ Warrant Shares; and/or



 


		____________	a “Cashless Exercise” with respect to _______________ Warrant Shares.



 


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


 


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


 


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


 


	
        ___________________________________

        ___________________________________

        ___________________________________

        ___________________________________

        



 


	
        Date: _____________ __, 

         

        ___________________________________

        Name of Registered Holder

         

	 
	By:_________________________________

Name: 

Title:





 






    	22



    	 



    

 


EXHIBIT B


 


ACKNOWLEDGMENT


 


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


 


 


Pacific
Ethanol, Inc.


 


 By:_________________________________


Name:


Title:


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


23