NEITHER
      THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
      OR EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
      THE
      ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
      UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
      REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES
      LAWS
      OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

    


    AMERICAN
      ETHANOL, INC.

    


    WARRANT
      TO PURCHASE SERIES B PREFERRED STOCK

    


    
      	
              Warrant
                Number:

            	
              WB
                - 

            
	 	 
	
              Warrant
                Holder:

            	
              ____________________
                or its assigns

            
	 	 
	
              Warrant
                Shares:

            	
              Shares
                of the Company’s Series B Preferred Stock 

            
	 	 
	
              Number
                of Shares:

            	
              _____________________
                (______),
                subject to adjustment as provided herein

            
	 	 
	
              Warrant
                Exercise Price:

            	
              _________
                (_____)
                per share of Series B Preferred Stock, subject to adjustment as provided
                herein

            
	 	 
	
              Issue
                Date:

            	 
	 	 
	
              Expiration
                Date:

            	 


    

    


    THIS
      WARRANT CERTIFIES THAT, for value received, the receipt and adequacy of which
      is
      hereby acknowledged, ____________ or
      its assignees (the “Holder”), is entitled to subscribe for and purchase, subject
      to the provisions and upon the terms and conditions hereinafter set forth,
      the
      number of fully paid and nonassessable shares of Series B Preferred Stock,
      $0.001 par value (subject to adjustments from time to time as specified in
      Section 4 hereof, the “Warrant Stock”) of American Ethanol, Inc., a Nevada
      corporation (the “Company”), at the initial exercise price per share of Warrant
      Stock (subject to adjustments from time to time, as specified in Section 4
      hereof) (the “Warrant Exercise Price”) all as set forth above. 

    


    1. Term
      and Expiration.
      The
      purchase right represented by this Warrant is exercisable, in whole or in part,
      at any time and from time to time from the Issue Date through the Expiration
      Date.

    


    2. Method
      of Exercise; Cash Payment; Issuance of New Warrant.
      Subject
      to Section 1, the purchase right represented by this Warrant may be exercised
      by
      the Holder hereof, in whole or in part and from time to time, at the election
      of
      the Holder hereof, by:

    


    (a) the
      surrender of this Warrant (with the notice of exercise substantially in the
      form
      attached hereto as Exhibit A
      (the
“Notice of Exercise”) duly completed and executed) at the principal executive
      offices of the Company and accompanied by payment to the Company, by (i)
      certified or bank check acceptable to the Company, or (ii) by wire transfer
      to
      an account designated by the Company, or any combination of
      (i) and (ii), of an amount equal to the then applicable Warrant Exercise Price
      multiplied by the number of shares of Warrant Stock then being purchased,


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (b) or
      exercise of the right provided for in Section 10 hereof, together with the
      surrender of this Warrant (with the Notice of Exercise duly completed and
      executed) at the principal executive offices of the Company.

    


    (c) The
      Warrant Stock so purchased shall be deemed to be issued to the Holder as of
      the
      close of business on the date on which this Warrant shall have been surrendered
      (or evidence of loss, theft or destruction thereof and security or indemnity
      satisfactory to the Company), the Warrant Exercise Price shall have been paid
      and the completed Notice of Exercise shall have been delivered. At such time
      the
      person or persons in whose name or names any certificate for Warrant Stock
      shall
      be issuable upon such exercise shall be deemed to have become the Holder or
      holders or record thereof. In the event of any exercise of the rights
      represented by this Warrant, certificates for the shares of Warrant Stock so
      purchased shall be delivered to the Holder hereof (or as such Holder (upon
      payment by such Holder of any applicable transfer taxes) may direct) as soon
      as
      possible and in any event within ten (10) business days after such exercise
      and,
      unless this Warrant has been fully exercised or expired, a new warrant having
      the same terms as this Warrant and representing the remaining portion of such
      shares, if any, with respect to which this Warrant shall not then have been
      exercised shall also be issued to the Holder hereof (or as such Holder (upon
      payment by such Holder of any applicable transfer taxes) may direct) as soon
      as
      possible and in any event within such 10-day period.

    


    (d) Each
      share of Warrant Stock issuable upon exercise of this Warrant shall, upon
      payment of the Warrant Exercise Price therefor, be duly authorized, validly
      issued, fully paid and nonassessable and free from all liens and charges with
      respect to the issuance thereof.

    


    (e) The
      Company shall not close its books against the transfer of this Warrant or of
      any
      share of Warrant Stock issued or issuable upon the exercise of this Warrant
      in
      any manner which interferes with the timely exercise of this Warrant.


    


    (f) The
      Company shall take all such actions as may be reasonably necessary to insure
      that all such shares of Warrant Stock may be so issued without violation of
      any
      applicable law or governmental regulation.

    


    3. Reservation
      of Shares.
      During
      the period within which the rights represented by this Warrant may be exercised,
      the Company will at all times have authorized, and reserved for the purpose
      of
      the issuance upon exercise of the purchase rights evidenced by this Warrant
      a
      sufficient number of shares of its capital stock to provide for the exercise
      of
      the rights represented by this Warrant. If the shares of Warrant Stock issuable
      by reason of exercise of this Warrant are convertible into or exchangeable
      for
      any other stock or securities of the Company, the Company shall, at the Holder's
      option and upon surrender of this Warrant by such holder as provided above,
      together with any notice, statement or payment required to effect such
      conversion or exchange of Warrant Stock, deliver to such holder (or such other
      Person specified by such holder) a certificate or certificates representing
      the
      stock or securities into which the shares of Warrant Stock issuable by reason
      of
      such conversion are convertible or exchangeable, registered in such name or
      names and in such denomination or denominations as such holder has
      specified.

    


    4. Adjustment
      of Warrant Exercise Price and Warrant Stock.
      The
      number and kind of securities purchasable upon the exercise of this Warrant
      and
      the Warrant Exercise Price shall be subject to adjustment to the nearest whole
      share (one-half and greater being rounded upward) and nearest cent (one-half
      cent and greater being rounded upward) from time to time upon the occurrence
      of
      certain events, as follows. Each of the adjustments provided by the
      subsections below shall be deemed separate adjustments and any adjustment
      of this Warrant pursuant to one subsection of this Section 4 shall
      preclude additional adjustments for the same event or transaction by the
      remaining subsections. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a) Reorganization,
      Consolidation, Merger, Etc.
      In case
      at any time or from time to time, the Company shall (a) effect a reorganization,
      (b) consolidate with or merge into any other person or (c) transfer all or
      substantially all of its properties or assets to any other person under any
      plan
      or arrangement contemplating the dissolution of the Company, then, in each
      such
      case, as a condition to the consummation of such a transaction, proper and
      adequate provision shall be made by the Company whereby the Holder of this
      Warrant, on the exercise hereof, at any time after the consummation of such
      reorganization, consolidation or merger or the effective date of such
      dissolution, as the case may be, shall receive, in lieu of the Warrant Stock
      issuable on such exercise prior to such consummation or such effective date,
      the
      stock and other securities and property (including cash) to which such Holder
      would have been entitled upon such consummation or in connection with such
      dissolution, as the case may be, if such Holder had so exercised this Warrant,
      immediately prior thereto, all subject to further adjustment thereafter as
      provided in this Section 4.

    


    (b) Reclassification.
      In case
      of any reclassification or change of securities of the class issuable upon
      exercise of this Warrant (other than a change in par value, or from par value
      to
      no par value, or from no par value to par value, or as a result of a subdivision
      or combination) into the same or a different number or class of securities,
      the
      Company shall duly execute and deliver to the holder of this Warrant a new
      warrant (in form and substance reasonably satisfactory to the Holder of this
      Warrant), so that the Holder of this Warrant shall thereafter be entitled to
      receive upon exercise of this Warrant, at a total purchase price not to exceed
      that payable upon the exercise of the unexercised portion of this Warrant,
      and
      in lieu of the shares of Warrant Stock theretofore issuable upon exercise of
      this Warrant, the kind and amount of shares of stock, other securities, money
      and property receivable upon such reclassification or change by a holder of
      the
      number of shares then purchasable under this Warrant. The Company or the
      surviving entity shall deliver such new warrant as soon as possible and in
      any
      event within ten (10) business days after such reclassification or change.
      Such
      new warrant shall provide for adjustments that shall be as nearly equivalent
      as
      may be practicable to the adjustments provided for in this Section 4. The
      provisions of this subparagraph (b) shall similarly apply to successive
      reclassifications or changes.

    


    (c) Stock
      Splits or Combination of Shares.
      If the
      Company at any time while this Warrant remains outstanding and unexpired shall
      subdivide (by stock split) or combine (by reverse stock split) its outstanding
      shares of capital stock into which this Warrant is then exercisable, the Warrant
      Exercise Price shall be proportionately adjusted in the case of a subdivision
      or
      a combination, effective at the close of business on the date the subdivision
      or
      combination becomes effective and the number of shares of Warrant Stock issuable
      upon exercise of this Warrant shall be proportionately adjusted in the case
      of a
      subdivision or a combination, and in each case to the nearest whole share,
      effective at the close of business on the date the subdivision or combination
      becomes effective. The provisions of this subparagraph (c) shall similarly
      apply
      to successive subdivisions or combinations of outstanding shares of capital
      stock into which this Warrant is exercisable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d) Stock
      Dividends and Other Distributions.
      If the
      Company at any time while this Warrant is outstanding and unexpired shall (i)
      pay a dividend with respect to Warrant Stock payable in Warrant Stock, then
      (A)
      the Warrant Exercise Price shall be adjusted, from and after the date of
      determination of stockholders entitled to receive such dividend or distribution
      (the “Record Date”), to that price determined by multiplying the Warrant
      Exercise Price in effect immediately prior to such date of determination by
      a
      fraction (1) the numerator of which shall be the total number of shares of
      Warrant Stock outstanding immediately prior to such dividend or distribution,
      and (2) the denominator of which shall be the total number of shares of Warrant
      Stock outstanding immediately after such dividend or distribution and (B) the
      number of shares of Warrant Stock issuable upon exercise of this Warrant shall
      be proportionately adjusted, to the nearest whole share, from and after the
      Record Date by multiplying the number of shares of Warrant Stock purchasable
      hereunder immediately prior to such Record Date by a fraction (1) the numerator
      of which shall be the total number of shares of Warrant Stock outstanding
      immediately after such dividend or distribution, and (2) the denominator of
      which shall be the total number of shares of Warrant Stock outstanding
      immediately prior to such dividend or distribution; or (ii) make any other
      dividend or distribution with respect to Warrant Stock (except any distribution
      specifically provided for in Sections 4(b) and 4(c) above), then, in each such
      case, provision shall to this Warrant be made by the Company such that the
      Holder of this Warrant shall receive upon exercise of this Warrant (in addition
      to the number of shares of stock receivable upon exercise of this Warrant)
      a
      proportionate share of any such dividend or distribution (without payment of
      any
      additional consideration therefor) as though it were the holder of all share
      of
      Warrant Stock remaining issuable upon exercise of this Warrant as of the Record
      Date fixed for the determination of the stockholders of the Company entitled
      to
      receive such dividend or distribution. The provisions of this subparagraph
      (d)
      shall similarly apply to successive stock dividends and other distributions
      by
      the Company. If the Company shall take a record of the holders of its Warrant
      Stock for the purpose of entitling them to receive a dividend or other
      distribution (which results in an adjustment to the shares of Warrant Stock
      under the terms of this Warrant) and shall, thereafter, and before such dividend
      or distribution is paid or delivered to shareholders entitled thereto, legally
      abandon its plan to pay or deliver such dividend or distribution, then any
      adjustment made to the shares of Warrant Stock by reason of the taking of such
      record shall be reversed, and any subsequent adjustments, based thereon, shall
      be recomputed.

    


    (e) Number
      of Warrant Shares.
      Simultaneously with any adjustment to the Warrant Price pursuant to this Section
      4, 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 Warrant Price payable hereunder for the adjusted number
      of Warrant Shares shall be the same as the aggregate Warrant Price in effect
      immediately prior to such adjustment.

    


    5. No
      Impairment.
      The
      Company will not, by amendment of its articles of incorporation or through
      any
      consolidation, merger, reorganization, transfer of assets, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, but will at
      all
      times in good faith assist in the carrying out of all such terms and in the
      taking of all such action as may be necessary or appropriate in order to protect
      the rights of the Holder against impairment. Without limiting the generality
      of
      the foregoing, the Company (a) shall not permit the par value of any shares
      of
      stock receivable upon the exercise of this Warrant to exceed the amount payable
      therefor upon such exercise, (b) will take all such action as may be necessary
      or appropriate in order that the Company may validly and legally issue fully
      paid and nonassessable shares of stock, free from all taxes, liens, security
      interests, encumbrances, preemptive rights and charges on the exercise of the
      Warrants from time to time outstanding, other than any restrictions on transfer
      contained in this Warrant and under applicable state and federal securities
      laws, (c) will not take any action which results in any adjustment of the number
      of Warrant Shares if the total number of shares of Warrant Stock or other
      securities issuable after the action upon the exercise of all of the Warrants
      would exceed the total number of shares of Warrant Stock or other securities
      then authorized by the Company's articles of incorporation and available for
      the
      purpose of issue upon such exercise and (d) will at all times in good faith
      assist in the carrying out of all the provisions herein and in the taking of
      all
      such action as may be necessary or appropriate in order to protect the
      adjustment rights of the Holder against impairment.

    


    6. Notice
      of Adjustments.
      Whenever the Warrant Exercise Price or the number of shares of Warrant Stock
      purchasable hereunder shall be adjusted pursuant to Section 4 above, the Company
      shall issue a certificate signed by its Chief Financial Officer, setting forth,
      in reasonable detail, the event requiring the adjustment, the amount of the
      adjustment, the method by which such adjustment was calculated, and the Warrant
      Exercise Price and the number and kind of shares of Warrant Stock purchasable
      hereunder after giving effect to such adjustment, and shall cause copies of
      such
      certificate to be delivered to the Holder of this Warrant within five (5)
      business days after the occurrence of the event resulting in such adjustment
      at
      such Holder’s last known address in accordance with Section 12
      hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7. Fractional
      Shares.
      No
      fractional shares will be issued in connection with any exercise hereunder,
      but
      in lieu of such fractional shares the Company shall pay the Holder in cash
      or by
      check the amount determined by multiplying such fractional share by the fair
      market value of one share of Warrant Stock as determined in accordance with
      Section 10(c) below.

    


    8. Ownership;
      Transfer of Warrant or Warrant Stock.

    


    (a) Register;
      Registered Holder.
      The
      Company shall maintain at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to the holder hereof),
      a
      register for this Warrant, in which the Company shall record the name and
      address of the person in whose name this Warrant has been issued, as well as
      the
      name and address of each transferee. The Company may treat the person in whose
      name any Warrant is registered on the register as the owner and holder thereof
      for all purposes, notwithstanding any notice to the contrary, but in all events
      recognizing any transfers made in accordance with the terms of this
      Warrant.

    


    (b) Compliance
      with Securities Act of 1933.
      The
      Holder of this Warrant, by acceptance hereof, agrees that this Warrant, and
      the
      shares of Warrant Stock to be issued upon exercise hereof are being acquired
      for
      investment and that such holder will not offer, sell, transfer or otherwise
      dispose of this Warrant, or any such shares except under circumstances which
      will not result in a violation of the Securities Act and any applicable state
      securities laws. Upon exercise of this Warrant, unless the shares being acquired
      are registered under the Securities Act and any applicable state securities
      laws
      or an exemption from such registration is available, the Holder hereof shall
      confirm in writing that the shares so purchased are being acquired for
      investment and not with a view toward distribution or resale in violation of
      the
      Securities Act and shall confirm such other matters related thereto as may
      be
      reasonably requested by the Company. Holder further confirms that Holder is
      an
“accredited investor” (as defined under Rule 501 of Regulation D of the
      Securities Act). The shares of Warrant Stock issued upon exercise of this
      Warrant (unless registered under the Securities Act and any applicable state
      securities laws) shall be stamped or imprinted with a legend in substantially
      the following form:

    


    “NEITHER
      THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
      OR EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
      THE
      ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
      UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
      REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES
      LAWS
      OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

    


    Said
      legend shall be removed by the Company, upon the request of a Holder, at such
      time as the restrictions on the transfer of the applicable security shall have
      terminated.

    


    (c) Transferability
      of the Warrant.
      Subject
      to compliance with applicable federal and states securities laws, this Warrant
      and the shares of Warrant Stock issuable upon exercise of this Warrant may
      be
      transferred by the Holder hereof to accredited investors only (as defined under
      Rule 501 of Regulation D of the Securities Act”), in whole or in part and from
      time to time.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d) Method
      of Transfer.
      With
      respect to any offer, sale, transfer or other disposition of this Warrant or
      any
      shares of Warrant Stock acquired pursuant to the exercise of this Warrant prior
      to registration of such Warrant or shares, the Holder hereof shall prior to
      such
      offer, sale, transfer or other disposition:

    


    (i) surrender
      this Warrant at the principal executive offices of the Company or provide
      evidence reasonably satisfactory to the Company of the loss, theft or
      destruction of this Warrant and an indemnity agreement reasonable satisfactory
      to the Company,

    


    (ii) pay
      any
      applicable transfer taxes or establishing
      to the satisfaction of the Company that such taxes have been paid,

    


    (iii) deliver
      a
      written assignment to the Company in substantially the form attached hereto
      as
Exhibit
      B
      duly
      completed and executed prior to transfer, describing briefly the manner thereof,
      and

    


    (iv) deliver
      a
      written opinion of such Holder’s legal counsel, and/or other evidence, each in a
      form satisfactory to the Company, to the effect that such offer, sale, transfer
      or other disposition may be effected without registration or qualification
      to an
      accredited investor (under the Securities Act as then in effect and any
      applicable state securities law then in effect) of this Warrant or the shares
      of
      Warrant Stock.

    


    Promptly
      as practicable and no later than five business (5) days after receiving the
      items set forth above, the Company shall notify the Holder that it may sell,
      transfer or otherwise dispose of this Warrant or such shares, all in accordance
      with the terms of the notice delivered to the Company. Notwithstanding the
      foregoing, this Warrant or such shares may, as to such federal laws, be offered,
      sold or otherwise disposed of in accordance with Rule 144 under the
      Securities Act, provided that the Holder shall furnish such information as
      the
      Company may reasonably request to provide a reasonable assurance that the
      provisions of Rule 144 have been satisfied. Each certificate representing
      this Warrant or such shares thus transferred (except a transfer pursuant to
      Rule
      144 or an effective registration statement) shall bear a legend as to the
      applicable restrictions on transferability in order to ensure compliance with
      applicable federal and state securities laws, unless in the aforesaid opinion
      of
      counsel for the Holder, such legend is not required in order to ensure
      compliance with such laws. Upon
      any
      partial transfer of this Warrant, the Company will issue and deliver to such
      new
      holder a new
      warrant (in form and substance similar to this Warrant) with
      respect to the portion transferred and will issue and deliver to the Holder
      a
new
      warrant (in form and substance similar to this Warrant) with
      respect to the portion not transferred as
      soon
      as possible and in any event within ten (10) business days after such
      transfer.

    


    9. No
      Rights as Shareholders; Information.
      No
      holder of this Warrant, as such, prior to exercise hereof shall be entitled
      to
      vote or receive dividends or be deemed the holder of shares, nor shall anything
      contained herein be construed to confer upon the Holder of this Warrant, as
      such, any of the rights of a shareholder of the Company or any right to vote,
      give or withhold consent for any corporate action. for the election of directors
      or upon any matter submitted to shareholders at any meeting thereof, or to
      receive notice of meetings, or to receive dividends or subscription rights
      or
      otherwise until this Warrant shall have been exercised and the shares of Warrant
      Stock purchasable upon the exercise hereof shall have become deliverable, as
      provided herein. In addition, nothing contained in this Warrant shall be
      construed as imposing any liabilities on such holder to purchase any securities
      or as a stockholder of the Company, whether such liabilities are asserted by
      the
      Company or by creditors of the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    10. Right
      to Convert Warrant into Stock; Non-Cash Net Exercise.

    


    (a) Right
      to Convert.
      In
      addition to and without limiting the rights of the Holder under the terms of
      this Warrant, the Holder shall have the right to convert this Warrant or any
      portion thereof, (the “Net Exercise Right”) into shares of Warrant Stock as
      provided in this Section 10 at any time or from time to time during the term
      of
      this Warrant. Upon exercise of the Net Exercise Right with respect to a
      particular number of shares of Warrant Stock subject to this Warrant (the
“Converted Warrant Shares”), the Company shall deliver to the Holder (without
      payment by the Holder of any exercise price or any cash or other consideration)
      (X) that number of fully paid and nonassessable shares of Warrant Stock equal
      to
      the (Y) Converted Warrant Shares multiplied by the quotient obtained by dividing
      the result of (B) fair market value of one share of Warrant Stock less (A)
      the
      Warrant Exercise Price per share by (B) the fair market value of one share
      of
      Warrant Stock all on the Conversion Date (as herein defined).

    


    Expressed
      as a formula such conversion shall be computed as follows:

     

    
      	
               X
                 =  

            	
              (B-A)
                

              B

            	
               Y


    

    


    
      	
            	Where:	
               X
                =
                the number of shares of Warrant Stock that may 
                be
                  issued to
                  holder

              

            


    

    


    Y
      = the
      number of shares of Warrant Stock that are being surrendered pursuant to this
      Net Exercise Right (i.e., the Converted Warrant Shares)

    


    A
      = the
      Warrant Exercise Price per share

    


    B
      = the
      fair market value of one share of Warrant Stock

    


    No
      fractional shares shall be issuable upon exercise of the Net Exercise Right,
      and, if the number of shares of Warrant Stock issued or to be issued determined
      in accordance with the foregoing formula is other than a whole number, the
      Company shall pay to the Holder an amount in cash equal to the fair market
      value
      of the resulting fractional share on the Conversion Date (as hereinafter
      defined). For purposes of this Section 10, shares issued pursuant to the Net
      Exercise Right shall be treated as if they were issued upon the exercise of
      this
      Warrant.

    


    (b) Method
      of Exercise.
      The Net
      Exercise Right may be exercised by the Holder by the surrender of this Warrant
      at the principal office of the Company together with the notice of exercise
      substantially in the form attached hereto as Exhibit A duly completed and
      executed, specifying that the Holder thereby intends to exercise the Net
      Exercise Right and indicating the number of shares subject to this Warrant
      which
      are being surrendered (referred to in Section 10(a) hereof as the Converted
      Warrant Shares) in exercise of the Net Exercise Right. Such conversion shall
      be
      effective upon receipt by the Company of this Warrant together with the
      aforesaid written statement, or on such later date as is specified therein
      (the
“Conversion Date”).

    


    (c) Determination
      of Fair Market Value.
      For
      purposes of this Section 10, “fair market value” of one share of Warrant Stock
      shall be: (i) if the Warrant Stock is then listed on a national stock exchange,
      the closing sale price of one share of Warrant Stock on such exchange on the
      last trading day prior to the Conversion Date; (ii) if the Warrant Stock is
      then
      quoted on The Nasdaq Stock Market, Inc. (“Nasdaq”), the National Association of
      Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin Board”) or such
      similar exchange or association, the closing sale price of one share of Warrant
      Stock on Nasdaq, the Bulletin Board or such other exchange or association on
      the
      last trading day prior to the Conversion Date or, if no such closing sale price
      is available, the average of the high bid and the low asked price quoted thereon
      on the last trading day prior to the Conversion Date; or (c) if the Warrant
      Stock is not then listed on a national stock exchange or quoted on Nasdaq,
      the
      Bulletin Board or such other exchange or association, the fair market value
      of
      one share of Warrant Stock as of the Conversion Date, shall be determined in
      good faith by the Board of Directors of the Company. If the Warrant Stock is
      not
      then listed on a national securities exchange, the Bulletin Board or such other
      exchange or association, the Board of Directors of the Company shall respond
      promptly, in writing, to an inquiry by the Holder prior to the exercise
      hereunder as to the fair market value of a share of Warrant Stock as determined
      by the Board of Directors of the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    11. Modification
      and Waiver; Effect of Amendment or Waiver.
      This
      Warrant and any provision hereof may be modified, amended, waived, discharged
      or
      terminated only by an instrument in writing, designated as an amendment to
      this
      Warrant and executed by a duly authorized officer of the Company and the Holder
      of this Warrant. Any waiver or amendment effected in accordance with this
      Section 11 shall be binding upon the Holder, each future holder of this
      Warrant or of any shares purchased under this Warrant (including securities
      into
      which such shares have been converted) and the Company.

    


    12. Notices.
      Any
      notice, request, communication or other document required or permitted to be
      given or delivered to the Holder hereof or the Company shall be delivered by
      personal delivery, or shall be sent by certified United States mail, first-class
      postage prepaid or by overnight delivery using a nationally recognized courier
      service, to each such holder at its address as shown on the books of the Company
      or to the Company at the address indicated on the signature page of this
      Warrant. All such notices, request, communications or other documents shall
      be
      deemed to have been received by the recipient (i) in the case of personal
      delivery, on the date of such delivery, (ii) in the case of delivery by a
      nationally recognized courier service, on the next business day subsequent
      to
      deposit with the courier and (iii) in the case of mailing, on the fourth
      business day following the date of deposit in the United States mails,
      first-class postage prepaid.

    


    13. Successors.
      The
      obligations of the Company relating to the shares of Warrant Stock issuable
      upon
      the exercise of this Warrant shall inure to the benefit of the successors and
      assigns of the Holder hereof and shall be binding upon any successor entity
      whether upon a Change of Control or sale of all or substantially all of the
      assets of the Company. Upon such event, the successor entity shall assume the
      obligations of this Warrant, and this Warrant (or any substitute warrant as
      provided hereinbefore) shall be exercisable for the securities, cash and
      property of the successor entity on the terms provided herein. As used in this
      Warrant, “Change of Control” shall mean a merger or consolidation of the Company
      with or into any other corporation or business entity, other than in the case
      of
      a merger or consolidation, where the holders of the Company’s voting securities
      as constituted immediately prior thereto continue to hold after such merger
      or
      consolidation at least fifty percent (50%) of the voting securities of the
      Company or surviving entity, as applicable, immediately after such merger or
      consolidation, including the public company merger.

    


    14. Lost
      Warrants or Stock Certificates.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant or any stock certificate and, in
      the
      case of any such loss, theft or destruction, upon receipt of a security or
      an
      indemnity agreement satisfactory to the Company, or in the case of any such
      mutilation upon surrender and cancellation of such mutilated Warrant or stock
      certificate, the Company will issue and deliver a new warrant (containing the
      same terms as this Warrant) or stock certificate, in lieu of the lost, stolen,
      destroyed or mutilated Warrant or stock certificate.

    


    15. Descriptive
      Headings.
      The
      descriptive headings of the several paragraphs of this Warrant are inserted
      for
      convenience only and do not constitute a part of this Warrant. The language
      in
      this Warrant shall be construed as to its fair meaning without regard to which
      party drafted this Warrant.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    16. Governing
      Law.
      This
      Warrant shall be construed and enforced in accordance with, and the rights
      of
      the parties shall be governed by, the laws of the State of California, without
      reference to principles governing choice or conflicts of laws.

    


    17. Severability.
      In the
      event that any one or more of the provisions contained in this Warrant shall
      for
      any reason be held to be invalid, illegal or unenforceable in any respect,
      such
      provision(s) shall be ineffective only to the extent of such invalidity,
      illegality or unenforceability, without invalidating the remainder of such
      provision or the remaining provisions of this Warrant and such invalidity,
      illegality or unenforceability shall not affect any other provision of this
      Warrant, which shall remain in full force and effect.

    


    18. Counterparts.
      This
      Warrant may be executed in two or more counterparts, each of which shall be
      an
      original, and all of which together shall constitute one
      instrument.

    


    19. Attorney's
      Fees.
      If any
      action at law or in equity is necessary to enforce or interpret the terms of
      this Warrant, the prevailing party in such dispute shall be entitled to collect
      its reasonable attorneys’ fees, costs and disbursements in addition to any other
      relief to which it may be entitled.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Warrant to be duly executed as of the issue
      date
      of this Warrant by its duly authorized officers.

    


    


    
      	 	
              AMERICAN
                ETHANOL, INC.

              A
                Nevada corporation

              


              


              


              By:                                                                                       
                

              Name:             
                 Eric
                McAfee, Executive Chairman

              


              Address:
                 10600
                N. De Anza Blvd., Suite 250, 

                                   
                Cupertino, CA 95014

            


    

    


    


    Accepted
      and Agreed:

    


    


    


    By:                                                                                       

    Name:

    Title:

    
      
        Address:
 

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    


    EXHIBIT
      A

    


    NOTICE
      OF EXERCISE

    


    To:
      American Ethanol, Inc. (the “Company”)

    


    20. The
      undersigned hereby:

    


    
      	 	o	
              elects
                to purchase __________ shares of Warrant Stock (as defined in the
                Warrant)
                of the Company pursuant to the terms of the attached Warrant, and
                tenders
                herewith payment of the purchase price of such shares in full;
                or

            


    

    


    
      	 	o	
              elects
                to exercise its net issuance rights pursuant to Section 11 of the
                attached
                Warrant with respect to __________ shares Warrant
                Stock.

            


    

    


    21. Please
      issue a certificate or certificates representing said shares in the name of
      the
      undersigned or in such other name or names as are specified below:

    


    _________________________________________

    (Name)

    


    _________________________________________

    (Address)

    


    _________________________________________

    (City,
      State)

    


    22. The
      undersigned represents that the aforesaid shares being acquired for the account
      of the undersigned for investment and not with a view to, or for resale in
      connection with, the distribution thereof and that the undersigned has no
      present intention of distributing or reselling such shares, all except as in
      compliance with applicable securities laws.

    


    _______________

    (Date)

     

     

    
      	 	
              
                

              

              (Signature)

              


              Signature
                must be guaranteed by a commercial bank or trust company or a member
                firm
                of a major stock exchange if shares of Warrant Stock are to be issued,
                or
                securities are to be delivered, other than to or in the name of the
                registered holder of this Warrant.

            


    

    


    NOTICE:
      Signature must correspond in all respects with the name as written upon the
      face
      of the Warrant in every particular without alteration or any change
      whatever.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    EXHIBIT
      B

    


    FORM
      OF ASSIGNMENT

    


    


    FOR
      VALUE
      RECEIVED, the undersigned holder of the attached Warrant hereby sells, assigns
      and transfers unto ____________________ whose address is
      _______________________________________ and whose taxpayer identification number
      is _________________ the undersigned’s right, title and interest in and to the
      Warrant issued by American Ethanol, Inc., a Nevada corporation (the “Company”)
      to purchase _______ shares of the Company’s stock, and does hereby irrevocably
      constitute and appoint __________________________ attorney to transfer said
      Warrant on the books of the Company with full power of substitution in the
      premises.

    


    In
      connection with such sale, assignment, transfer or other disposition of this
      Warrant, the undersigned hereby confirms that:

    


    
      	 	o	
              such
                sale, transfer or other disposition may be effected without registration
                or qualification (under the Securities Act of 1933 as then in effect
                and
                any applicable state securities law then in effect) of this Warrant
                or the
                securities issuable thereunder and has attached hereto a written
                opinion
                of such Holder’s counsel to that effect;
                or

            


    

    


    
      	 	o	
              such
                sale, transfer or other disposition has been registered under the
                Securities Act of 1933, as amended, and registered and/or qualified
                under
                all applicable state securities
                laws.

            


    

    


    


    _______________

    (Date)

    
       

       

      
        	 	
                
                  

                

                (Signature)

                 

                
                  Signature
                    must correspond in all respects with the name as written upon
                    the face of
                    the Warrant in every particular without alteration or any change
                    whatever.