Document:

Exhibit
10.2

 

THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO AN EXEMPTION. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 8 HEREOF.

 

Pacific
Ethanol, Inc.

 

Amended
and Restated Senior Secured Note

 

Note No.:
[●]

 

	Issuance
    Date: December 22, 2019	$[●]

 

FOR
VALUE RECEIVED, Pacific Ethanol, Inc., a Delaware corporation (the “Company”), hereby promises to pay to
the order of [●] or its registered assigns (“Holder”) the amount set out above (as reduced pursuant to
the terms hereof pursuant to redemption or otherwise, the “Principal”) when due, whether upon the Maturity
Date, acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”)
on any outstanding Principal (as defined above) at the applicable Interest Rate (as defined below) from the date set out above
as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity
Date, acceleration, redemption or otherwise (in each case in accordance with the terms hereof). This Amended and Restated Senior
Secured Note (including all Amended and Restated Senior Secured Notes issued in exchange, transfer or replacement hereof, this
“Note”) is one of an issue of Amended and Restated Senior Secured Notes issued pursuant to that certain Note
Amendment Agreement (as defined below) (collectively, the “Notes”) which Notes amend and restate in their entirety
the Company’s Existing Notes (as defined below) as of the Amendment Date (as defined below). Certain capitalized terms used
herein are defined in Section 19.

 

THE
OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY (a) A SECURITY AGREEMENT DATED AS OF DECEMBER 15, 2016 AND AMENDED ON JUNE 30,
2017 (AS FURTHER AMENDED FROM TIME TO TIME, THE “SECURITY AGREEMENT”) AND EXECUTED BY THE COMPANY FOR THE BENEFIT
OF THE HOLDER, AND (b) THE OTHER COLLATERAL DOCUMENTS. ADDITIONAL RIGHTS OF THE HOLDER ARE SET FORTH IN THE SECURITY AGREEMENT
AND THE OTHER COLLATERAL DOCUMENTS. 

 

     

     

    

 

1.
PAYMENTS OF PRINCIPAL.

 

1.1 Scheduled
Payments. On March 31, June 30, September 30 and December 31 of each calendar year, commencing September 30, 2020, the Company
shall pay to the Holder an amount in cash equal to (A) x [(B)/(C)] where (A) equals $5,000,000, (B) equals the Principal amount
of this Note and (C) equals the aggregate Principal amount of all Notes (“Scheduled Principal Payments”).

 

1.2 Mandatory
Prepayments. (a) The foregoing notwithstanding, the Company shall prepay the Principal to the Holder within five (5) Business
Days after the closing of any Sale in the amounts and proportions contemplated in the Intercreditor Agreement, which shall reflect
the preferences and allocations set forth in Section 2.8(a) of the CoBank ICP Credit Agreement (as in effect on the date hereof
without giving effect to any subsequent amendment or supplement thereto); or on the same basis as the foregoing in the event a
Sale occurs prior to the signing of the Intercreditor Agreement.

 

(b) The
foregoing notwithstanding, the Company shall prepay the Principal to the Holder within five (5) Business Days after, by using
excess proceeds from, the refinancing of (i) a portion of the CoBank Debt in the same manner as sales proceeds are treated under
Section 1.2(a) above; and (ii) all of the CoBank Debt in an amount equal to fifty percent (50%) of any excess proceeds from such
refinancing.

 

All
mandatory prepayments so made shall be applied to the Scheduled Principal Payments in the direct order of maturity. Each mandatory
prepayment shall be paid together with accrued and unpaid Interest on such Principal.

 

1.3 Voluntary
Prepayments. The Company may, at its sole option, at any time prior to the Maturity Date, prepay this Note, in whole or in
part, on one (1) Business Day’s prior written notice to the Holder, at a prepayment price equal to 102% of the amount of
outstanding Principal so to be prepaid, together with accrued and unpaid Interest on such Principal, if any, through the date
of such prepayment (collectively, the “Prepayment Premium”). For the avoidance of doubt, neither the Scheduled
Principal Payments nor any mandatory prepayment shall be subject to the Prepayment Premium.

 

1.4 Payment
on Maturity Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding
Principal, together with all accrued and unpaid Interest and accrued and all other unpaid amounts hereunder.

 

1.5 Pro
Rata Application. Any principal payments made pursuant to this Section 1 shall be applied pro rata to all of the
Notes in accordance with the respective Principal amounts thereof.

 

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2. PAYMENTS
OF INTEREST; INTEREST RATE. Interest on this Note shall accrue at the applicable Interest Rate and shall commence accruing
on the Issuance Date and Interest shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable
in cash to the record Holder in arrears on March 15, June 15, September 15 and December 15 of each calendar year and ending on
the repayment of the Note. All Interest paid with the respect to Holder’s Existing Note (which this Note amends and restates)
prior to the Amendment Date shall be credited for purposes of determining the Interest due under this Note and all accrued and
unpaid Interest outstanding under the Holder’s Existing Note immediately prior to the Amendment Date shall be accrued and
unpaid Interest outstanding under this Note as of the Amendment Date. From and after the occurrence and during the continuance
of any Event of Default, the applicable Interest Rate shall automatically be increased by two percent (2%) per annum above the
Interest Rate otherwise applicable in accordance with the terms hereof, and all such interest shall be payable on demand. In the
event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be
effective as of the date of such cure, provided that the Interest as calculated and unpaid at such increased rate during
the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such
Event of Default through and including the date of such cure of such Event of Default. Any payments made pursuant to this Section
2 shall be applied pro rata to the Notes in accordance with the respective Principal amounts thereof.

 

3. RIGHTS
UPON EVENT OF DEFAULT.

 

3.1 Event
of Default. Each of the following events shall constitute an “Event of Default”:

 

(a) (i)
the Company’s failure to pay to the Holder on the Maturity Date all amounts then due and owing under the Note, including
the outstanding Principal, all accrued but unpaid Interest and any other amounts which are then due and owing in accordance herewith,
or (ii) the Company’s failure to pay to the Holder any amount of Principal, Interest and any other amounts required to be
paid hereunder as and when due hereunder and such failure remains uncured for a period of five (5) days;

 

(b) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or
against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be
dismissed within sixty (60) days of their initiation;

 

(c) the
commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign
law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part
of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance
of any such action or the taking of any action by any Person to commence a UCC foreclosure sale or any other similar action under
federal, state or foreign law or of any substantial part of the Company’s property or any substantial part of any Subsidiary’s
property;

 

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(d) the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of
a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary
as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment
or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a
decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding
up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such
other decree, order, judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;

 

(e) a
final judgment, judgments, any arbitration or mediation award or any settlement of any litigation or any other satisfaction of
any claim made by any Person pursuant to any litigation, as applicable, (each a “Judgment”, and collectively,
the “Judgments”) with respect to the payment of cash, securities and/or other assets with an aggregate fair
market value in excess of $2,000,000 are rendered against, agreed to or otherwise accepted by, the Company and/or any of its Subsidiaries
and which Judgments are not, within thirty (30) days after the entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within thirty (30) days after the expiration of such stay; provided, however, that any
Judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $2,000,000
amount set forth above so long as the Company provides the Holder written evidence of such insurance coverage or indemnity (which
evidence shall be reasonably satisfactory to the Holder) to the effect that such Judgment is covered by insurance or an indemnity
and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity prior to the
later of (i) thirty (30) days after the issuance of such Judgment or (ii) any requirement to pay such Judgment;

 

(f) the
Company and/or any Subsidiary, individually or in the aggregate, fails to pay, when due, or within any applicable grace period,
any payment with respect to any Indebtedness in excess of $2,000,000 due to any third party or is otherwise in breach or violation
of any agreement for monies owed or owing in an amount in excess of $2,000,000, which breach or violation results in the acceleration
of amounts due thereunder or permits the other party thereto to accelerate amounts due thereunder;

 

(g) (i)
any breach or failure in any respect by the Company to comply with any provision of Section 5.14 of this Note, or (ii) any breach
or failure in any respect by the Company to comply with any provision of this Note or any other Transaction Document for thirty
(30) days after delivery to the Company of notice of such breach or failure by or on behalf of a Secured Party (as defined
in the Security Agreement) or the Agent (as defined in the Security Agreement) or thirty (30) days after an officer of the Company
has knowledge of such breach or failure, unless such default is capable of cure but cannot be cured within such time frame and
the Company is using best efforts to cure the same in a timely manner;

 

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(h) any
Material Adverse Change occurs (other than any Excluded Event) and is not otherwise cured within thirty (30) days of written
notice thereof by the Required Holders;

 

(i) any
provision of any Transaction Document (shall at any time for any reason (other than pursuant to the express terms thereof) ceases
to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested
by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having
jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary
shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document to which
it is a party, or any Lien created by the Security Agreement ceases to be enforceable and of the same effect and priority purported
to be created thereby, other than as expressly permitted thereunder or thereunder;

 

(j) any
Fundamental Transaction occurs without the prior written consent of the Required Holders;

 

(k) any
Event of Default (as defined in the Security Agreement) occurs with respect to the Security Agreement;

 

(l) any
Event of Default (as defined in any of the other Notes) occurs;

 

(m) a
Default (as defined in the Waiver Agreement) occurs under the Waiver Agreement;

 

(n) any
representation, warranty, certification or other statement of fact made or deemed made by or on behalf of the Company herein or
in any other Transaction Document proves to have been false or misleading in any material respect on or as of the date made or
deemed made; or

 

(o) any
Subordinated Indebtedness ceases for any reason to be validly subordinated to the Indebtedness evidenced by this Note, or the
Company, any Subsidiary or any holder thereof (or its trustee or agent) so asserts.

 

Upon
the occurrence of an Event of Default with respect to any Note, the Company shall promptly deliver written notice thereof via
facsimile, electronic mail and overnight courier (with next day delivery specified) (an “Event of Default Notice”)
to the Holder.

 

Notwithstanding
anything to the contrary set forth above or elsewhere herein, the following Indebtedness and obligations, and any defaults with
respect thereto, shall not constitute an Event of Default under Section 3.1(f) above: (i) any payments contested
by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate
reserves have been set aside for the payment thereof in accordance with GAAP and, with respect to any subsidiary, such default
is otherwise resolved in a manner which does not result in a Material Adverse Change; and (ii) with respect to any Subsidiary,
any default with respect to a non-recourse obligation and such default does not otherwise result in a Material Adverse Change.

 

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3.2 If
an Event of Default (other than an Event of Default specified in Section 3.1(b), (c) or (d) above) occurs, then
the Holder may, by written notice to the Company, declare this Note to be forthwith due and payable, as to Principal, Interest,
the Prepayment Premium and any other amounts due hereunder, whereupon this Note shall become forthwith due and payable, without
presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company. If any Event
of Default specified in Section 3.1(b), (c) or (d) above occurs, the Principal of, accrued Interest, Prepayment Premium,
and all other amounts on this Note and any other amounts due hereunder shall automatically forthwith become due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Company.

 

3.3 If
any Event of Default occurs and is continuing, the Holder may pursue any available remedy to collect the payment of Principal,
Interest, the Prepayment Premium, and any other amounts due under this Note or to enforce the performance of any provision of
this Note. If an Event of Default occurs and is continuing, the holder of this Note may proceed to protect and enforce its rights
by an action at law, suit in equity or other appropriate proceeding. No course of dealing and no delay on the part of the holder
of this Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s
rights, powers or remedies. No right, power or remedy conferred by this Note upon the holder hereof shall be exclusive of any
other right, power or remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.

 

3.4 Without
limiting the generality of the foregoing, it is understood and agreed that, if the Notes are accelerated or otherwise become due
prior to the Maturity Date, in each case, in respect of any Event of Default (including, but not limited to, upon the occurrence
of a bankruptcy or insolvency event (including the acceleration of claims by operation of law)), the Prepayment Premium shall
constitute part of the obligations due with respect to this Note, in view of the impracticability and extreme difficulty of ascertaining
actual damages and by mutual agreement of the Company and the Holder as to a reasonable calculation of the Holder’s lost
profits and damages as a result thereof. Any Prepayment Premium shall be presumed to be the liquidated damages sustained by the
Holder as the result of the repayment, and the Company agrees that it is reasonable under the circumstances currently existing.
The Prepayment Premium shall also be payable in the event this Note is satisfied or released by foreclosure (whether or not by
power of judicial proceeding), deed in lieu of foreclosure, court order or by any other means. THE COMPANY EXPRESSLY WAIVES (TO
THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT
THE COLLECTION OF THE FOREGOING PREPAYMENT PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION. The Company expressly agrees (to
the fullest extent it may lawfully do so) that: (A) the Prepayment Premium is reasonable and is the product of an arm’s-length
transaction between sophisticated business people, ably represented by counsel; (B) the Prepayment Premium shall be payable notwithstanding
the then prevailing market rates at the time payment is made; (C) no portion of the Prepayment Premium represents unmatured interest
within the meaning of 11 U.S.C. §502(b)(2); (D) there has been a course of conduct between the Holder and the Company giving
specific consideration in this transaction for such agreement to pay the Prepayment Premium; and (E) the Company shall be estopped
hereafter from claiming differently than as agreed to in this paragraph. The Company expressly acknowledges that its agreement
to pay the Prepayment Premium to Holders as herein described is a material inducement to the Holder to enter into or otherwise
accept this Note.

 

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

 

5. COVENANTS.
Until all of the Notes have been redeemed or otherwise satisfied in accordance with their terms:

 

5.1 Rank.
All payments due under this Note (a) shall rank pari passu with all other Notes and (b) shall be senior
to all other Indebtedness of the Company (excluding any other Permitted Indebtedness of the Company).

 

5.2 Incurrence
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries and Excluded Subsidiaries
to not, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness
evidenced by the Notes and (ii) Permitted Indebtedness).

 

5.3 Existence
of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries and Excluded Subsidiaries to
not, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance
upon or in any property or assets owned by the Company or any of its Subsidiaries or Excluded Subsidiaries (collectively, “Liens”)
other than Permitted Liens.

 

5.4 Restricted
Payments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or
in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any
Indebtedness (other than Permitted Payments with respect to any Permitted Indebtedness), whether by way of payment in respect
of principal of (or premium, if any) or interest on, such Indebtedness, if at the time such payment is due or is otherwise made
or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or
(ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and
is continuing.

 

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5.5 Restriction
on Redemption and Dividends. Except for any Permitted Distributions, the Company shall not, and the Company shall cause
each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or pay any dividend or distribution of cash or other
assets on any of its capital stock (excluding any Common Stock stock split applicable to all common stockholders) without the
prior express written consent of the Required Holders.

 

5.6 Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, sell, lease, license, assign, transfer, convey or otherwise dispose of any assets or rights of the Company or any
Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than (i) sales,
leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries
that are in the ordinary course of their respective businesses and conducted as an arms-length, good faith transaction with a
third party, and, after giving effect thereto, would not result in a Material Adverse Change, (ii) sales of product, inventory
or receivables in the ordinary course of business and conducted as an arms-length, good faith transaction with a third party,
(iii) Permitted Payments, or (iv) any Sale.

 

5.7 Change
in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, engage in any material line of business substantially different from those lines of business conducted by the Company
and each of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto. The Company shall
not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure
or purpose in any material respect.

 

5.8 Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve,
its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.

 

5.9 Maintenance
of Properties, Etc. The Company shall maintain and preserve in all material respects, and cause each of its Subsidiaries
to maintain and preserve in all material respects, all of its properties which are necessary or useful in the proper conduct of
its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries
to comply, at all times with the provisions of all material leases to which it is a party as lessee or under which it occupies
property, so as to prevent any material loss or forfeiture thereof or thereunder.

 

5.10 Maintenance
of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible
and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent
and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and
business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect
thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.

 

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5.11 Investments
in Subsidiaries. Except for any Permitted Investments, the Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, lend money or credit (by way of guarantee or otherwise) or make advances to any Excluded Subsidiary.

 

5.12 Delivery
of Financial Statements; Information. If the Company is no longer required to file with the Securities and Exchange Commission
(the “SEC”) quarterly and annual reports, including financial information that would be required to be contained
in a filing with the SEC on Forms 10-Q and 10-K, so long as any Principal or Interest is outstanding under this Note, the Company
shall furnish to the Holder such reports within the timeframe it would be required to file them with the SEC in substantially
the form as would be required to be filed with the SEC if it were required to do so. The Company shall furnish such other information
respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of the Company and
its subsidiaries as the Holder may reasonably request.

 

5.13 Transactions
with Affiliates. The Company shall not, and the Company shall cause each of its Subsidiaries not to, directly or indirectly,
enter into or be a party to any transaction, including any purchase, sale, lease, exchange or transfer of property, the rendering
of any service or the payment of any management, advisory or similar fees, with any Affiliate unless such transaction is on fair
and reasonable terms and conditions no less favorable to Company or the relevant Subsidiary, as the case may be, than those that
would have been obtained in a comparable transaction on an arm’s length basis from an unrelated Person.

 

5.14 Modification
of Certain Documents; Organizational Form. The Company shall not permit (i)(a) the organizational documents of the Company,
including the Certificate of Designations, to be amended or modified in any way (including, without limitation, permitting dividends
or distributions with respect to the capital stock of the Company or conflicting with the terms of the Waiver Agreement), but
excluding any forward or reverse Common Stock stock split applicable to all common stockholders, or (b) the Waiver Agreement to
be amended or modified in any way.

 

5.15 Waiver
Agreement. Use commercially reasonable efforts to have all holders of Series B Stock execute the Waiver Agreement which shall,
in any event, be executed by the required holders of Series B Stock on or prior to December 31, 2019.

 

5.16 Post-Closing
Obligations. Within 30 days after the Issuance Date, the Company shall deliver to the Holder the following documents, each
in form and substance reasonably satisfactory to the Holder: (i) the Collateral Documents with respect to the Western Assets,
in each case providing for a first-priority, secured and perfected Lien on all of the Western Assets in favor of the Holder; (ii)
the Collateral Documents with respect to all other collateral of CoBank (as defined and described in the CoBank Debt Documents)
in the assets of the Company and its Subsidiaries, (iii) the Intercreditor Agreement, and (iv) any related amendments required
to the Notes or the other Transaction Documents as reasonably determined by the Holder.

 

5.17 Sales
of Western Assets. Without the prior written consent of the Required Holders, the Company shall not, and shall not permit
any Subsidiary to, effectuate a Sale of any Western Asset. Holder shall not unreasonably withhold, condition or delay its consent
to any such Sale, and Holder hereby agrees to reasonably cooperate with the Company and its Subsidiaries and the proposed purchaser
with respect to any Sale of any Western Asset.

 

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6. AMENDING
THE TERMS OF THIS NOTE. No provision of this Note may be modified or amended without the prior written consent of the Required
Holders and the Company and upon such due modification or amendment, such modification or amendment shall apply to all of the
Notes; provided, however, that (a) no such modification or amendment shall, without the consent of the Holder
hereunder, change the stated maturity date of this Note, or reduce the principal amount hereof, or reduce the rate or extend the
time of payment of any interest hereon, or reduce any amount payable on redemption or prepayment hereof, impair or affect the
right of the Holder to receive payment of principal of, and interest on, the Notes or to institute suit for payment thereof, or
impair or affect the right of the Holder to receive any other payment provided for under this Note, or change the definition of
Required Holders, or change the pro rata sharing provisions of this Note and (b) the Holder hereunder may waive, reduce or
excuse, or forbear from the exercise of any rights and remedies with respect to, any Event of Default under this Note without
notice to or the consent of any holder of any of the Notes.

 

7. TRANSFER.
This Note may be offered, sold, assigned or transferred by the Holder in whole or in part, subject only to the provisions of the
restrictive legend set forth at the top of the first page of this Note; provided that, so long as no Event of Default has
occurred and is continuing, any such sale, assignment or transfer shall be subject to the prior written consent of the Company,
which consent shall not be unreasonably withheld, delayed or conditioned; provided, further, that any partial offer,
sale, assignment or transfer of this Note shall be in a principal amount not less than $500,000.

 

8. REISSUANCE
OF THIS NOTE.

 

8.1 Transfer.
If this Note is to be transferred as permitted under Section 7 above, the Holder shall surrender this Note to the
Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 8.3),
registered as the Holder may request.

 

8.2 Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note (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 Note,
the Company shall execute and deliver to the Holder a new Note (in accordance with Section 8.3) representing the outstanding
Principal.

 

8.3 Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note
(i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding, (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as
the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent
accrued and unpaid Interest on the Principal and Interest of this Note, from the Issuance Date.

 

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9. REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note 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 Holder’s right to pursue
actual and consequential damages for any failure by the Company to comply with the terms of this Note or any other Transaction
Document. 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, conversion 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 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 Note (including,
without limitation, compliance with Section 5).

 

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

 

11. CONSTRUCTION;
HEADINGS; RESTATEMENT.

 

11.1 Construction;
Headings. This Note 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 Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings
ascribed to such terms on the Issuance Date in such other Transaction Documents unless otherwise consented to in writing by the
Holder.

 

11.2 Restatement.
This Note amends, restates and supersedes the Existing Note(s) previously issued in favor of the Holder, with the obligations
under the Existing Note(s) of the Holder being deemed continuing obligations amended and restated in their entirety by this Note.
This Note shall not be deemed to be a novation of the obligations under any Existing Note.

 

12. FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party.

 

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13. NOTICES;
CURRENCY; PAYMENTS.

 

13.1 Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 6.5 of the Note Amendment Agreement. The Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore.

 

13.2 Currency.
All principal, interest and other amounts owing under this Note that, in accordance with the terms hereof, are paid in cash shall
be paid in U.S. dollars. All amounts denominated in other currencies shall be converted to the U.S. dollar equivalent
amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation
to any amount of currency to be converted into U.S. dollars pursuant to this Note, the U.S. dollar exchange rate as
published in The Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an
amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period
of time).

 

13.3 Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set
forth herein, such payment shall be made in lawful money of the United States of America by wire transfer of immediately available
funds in accordance with the Holder’s wire transfer instructions. Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business
Day, with interest accruing until paid.

 

14. DISCLOSURE.

 

14.1 In
connection with information that is either required or permitted to be disclosed to the Holder in such Holder’s capacity
as the holder of this Note, on the date such information is to be disclosed, the Company may provide the Holder with such information;
provided either that (i) such information does not contain Non-Public Information, or (ii) if such information does contain
Non-Public Information, such information is Consented Information (as defined below).

 

14.2 If
any such information to be disclosed contains Non-Public Information, the Company shall provide to the Holder a written notice
(which notice shall, for the avoidance of doubt, not contain or constitute Non-Public Information), containing the following information:
(A) a statement as to whether the information is required to be disclosed under the terms of this Note, (B) if the information
is not so required to be disclosed, a statement that the Company or other applicable Person desires voluntarily to disclose such
information, (C) a general description of such information (which description shall not include, and shall not constitute,
Non-Public Information), (D) a statement as to whether the Holder is required or permitted to take some specific action as
a lender under this Note, (E) a statement that such information contains Non-Public Information, and (F) a statement
seeking the consent of the Holder to receive such Non-Public Information. Within two (2) Business Days of the date of the notice
contemplated in the preceding sentence, the Holder shall advise the Company in writing whether it consents to the receipt of such
Non-Public Information (any information for which such consent is provided, “Consented Information”).

 

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14.3 In
the event any Non-Public Information is provided to the Holder by the Company, the Company shall promptly and in compliance with
applicable law publicly disclose such Non-Public Information on a Current Report on Form 8-K or otherwise, within four (4) Business
Days of (or such other period of time as may be expressly agreed to in writing by the Investor and the Company in connection with
such disclosure) the disclosure thereof to the Holder (provided that the Company shall provide the Holder a draft of each
such Form 8-K at least two (2) Business Days prior to filing thereof). If the Company fails to disclose any Non-Public Information
in accordance with the immediately preceding sentence, the Holder may publicly disclose such information by issuing a press release
containing such information, or otherwise, within one Business Day of providing Notice to the Company of such intended disclosure.
The Holder shall have no liability to the Company, any of its Subsidiaries, or any of its or their respective officers, directors,
employees, stockholders or agents, for any such disclosure.

 

14.4 In
no event shall the Company intentionally provide the Holder with any Non-Public Information without the prior written consent
of the Holder. In the absence of any written notice that information provided by the Company contains Non-Public Information,
the Holder may presume that such information (including the notice of such information) does not constitute Non-Public Information.

 

15. CANCELLATION.
After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid in full (a) this Note
shall automatically be deemed canceled without any action by or notice to Holder or Company and (b) the Holder shall promptly
mark this Note as cancelled, shall promptly surrender this Note to the Company and this Note shall not be reissued.

 

16. WAIVER
OF NOTICE. Except for the notices specifically required by this Note or any other Transaction Document, to the extent permitted
by applicable law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Additional Purchase Agreement.

 

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17. GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note 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. In the event that any provision of this Note is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be
deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING
OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

18. MAXIMUM
PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges
in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed
by the Company to the Holder and thus refunded to the Company.

 

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

 

19.1 “Additional
Notes” means those certain Senior Secured Notes in the aggregate original principal amount of $13,948,078 issued pursuant
to the Additional Purchase Agreement on June 26, 2017, which Senior Secured Notes are being replaced by this Note and the other
Notes.

 

19.2 “Additional
Purchase Agreement” means the Note Purchase Agreement, dated as of June 30, 2017, by and among the Company and the “Investors”
(as defined therein) as amended, restated or otherwise modified from time to time.

 

19.3 “Amendment
Date” means the effective date of the Note Amendment Agreement.

 

19.4 “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.

 

19.5 “Certificate
of Designations” means the Company’s Certificate of Designations, Powers, Preferences, and Rights of the Series
B Cumulative Convertible Preferred Stock.

 

19.6 “CoBank”
means CoBank, ACB, a federally-chartered instrumentality of the United States.

 

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19.7 “CoBank
Debt” means all indebtedness for borrowed money and all obligations of the Company and its Subsidiaries, including for
the payment of principal, interest, fees, expenses, indemnities, premium, and any other amounts due under (i) the CoBank ICP Credit
Agreement (the “ICP Debt”), and (ii) the CoBank Pekin Credit Agreement (the “Pekin Debt”).

 

19.8 “CoBank
Debt Documents” means all loan, security, and guarantee documents entered into among the Company and its Subsidiaries
and CoBank pursuant to (i) that certain Credit Agreement dated as of September 15, 2017 between Illinois Corn Processing, LLC,
Compeer Financial, PCA, as lender, and CoBank, as cash management provider and agent (the “CoBank ICP Credit Agreement”);
and (ii) that certain Credit Agreement dated as of December 15, 2016 among Pacific Ethanol Pekin, LLC, as the borrower, Compeer
Financial, PCA, as the lender, and CoBank, ACB, as the agent, each such document as further amended, restated or modified in its
entirety and in effect on the date hereof (“CoBank Pekin Credit Agreement”).

 

19.9 “Collateral
Documents” mean all documents, filings, certificates, and other agreements which grant the Holder, or its agent, a security
interest to secure the obligations owing under this Note.

 

19.10 “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.

 

19.11 “Contingent
Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto.

 

19.12 “Excluded
Events” means (i) changes in the national or world economy or financial markets as a whole, (ii) changes in
general economic conditions taken as a whole that affect the industries in which the Company and its Subsidiaries conduct their
business, (iii) acts of terrorism or war, including the engagement by the United States of America or any other country in
hostilities, and whether or not pursuant to the declaration of a national emergency or war, or any earthquakes, hurricanes or
other natural disasters, and (iv) any financial statement impact of the transactions contemplated by the Transaction Documents.

 

19.13 “Excluded
Subsidiaries” means Kinergy Marketing LLC, Pacific Ag. Products, LLC, Pacific Ethanol Development, LLC, Pacific Ethanol
Central, LLC, Pacific Ethanol Pekin, Inc., Pacific Ethanol Canton, LLC, Pacific Ethanol Aurora West, LLC, Pacific Ethanol Aurora
East, LLC and Pacific Aurora, LLC and each of their respective direct and indirect subsidiaries.

 

19.14 “Existing
Notes” means collectively, the Initial Notes, the Additional Notes and the PIK Notes previously issued and outstanding
as of immediately prior to the restatement thereof by the issuance of the Notes.

 

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19.15 “Fundamental
Transaction” means that (A) excluding a Sale not prohibited by the Intercreditor Agreement, the Company or any
of its Subsidiaries shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or
into (whether or not the Company or any of its Subsidiaries is the surviving corporation) another Person or Persons, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of
its Subsidiaries to another Person, or (iii) allow another 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 (iv) consummate a securities purchase or business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other
Person acquires more than the 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 securities purchase agreement or other business combination), or (v) reorganize, recapitalize
or reclassify the Voting Stock of the Company or (B) any “person” or “group” (as these terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate Voting Stock of the Company.

 

19.16 “GAAP”
means United States generally accepted accounting principles, consistently applied.

 

19.17 “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken
or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases”
in accordance with generally accepted accounting principles) (other than trade payables entered into in the ordinary course of
business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property
or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under
any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for
the periods covered thereby, is classified as a capital lease, (G) all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any equity interests in such Person or any other Person or any warrants, rights
or options to acquire such equity interests, valued, in the case of redeemable preferred interests, at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid dividends, (H) all indebtedness referred to in clauses (A)
through (G) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any mortgage, claim, lien, tax, right of first refusal, encumbrance, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person
which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (I) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (H) above.

 

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19.18 “Initial
Notes” means those certain Senior Secured Notes in the aggregate original principal amount of $55,000,000 issued pursuant
to the Initial Purchase Agreement on December 15, 2016.

 

19.19 “Initial
Purchase Agreement” means the Note Purchase Agreement, dated as of December 12, 2016, by and among the Company and each
“Investor” (as defined therein) as amended, restated or otherwise modified from time to time.

 

19.20 “Intercreditor
Agreement” means that certain Intercreditor Agreement to be entered into among the Holder, other Noteholders as defined
in the Note Amendment Agreement, CoBank, and acknowledged and agreed by the Company, as contemplated by Section 5.16.

 

19.21 “Interest
Rate” means a rate per annum equal to 15%. The “Interest Rate” shall in all cases be subject to adjustment
as set forth in Section 2.

 

19.22 “Material
Adverse Change” means any set of circumstances or events which occur, arise or otherwise take place from and after the
Issuance Date which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity
or enforceability of this Note or any other Transaction Document, (b) is or could reasonably be expected to be material and
adverse to the business properties, assets, financial condition, results of operations or prospects of the Company or the Company
and any of Subsidiaries on a collective basis, (c) impairs materially or could reasonably be expected to impair materially
the ability of the Company to duly and punctually pay or perform any its obligations under this Note or any other Transaction
Document, or (d) materially impairs or could reasonably be expected to materially impair the ability of Holder or, in the
case of the Security Agreement, the Agent (as defined therein), to the extent permitted, to enforce its legal rights and remedies
pursuant to this Note or any other Transaction Document.

 

19.23 “Maturity
Date” shall mean December 15, 2021.

 

19.24 “Non-Public
Information” means material, non-public information relating to the Company.

 

19.25 “Note
Amendment Agreement” means the Senior Secured Note Amendment Agreement, dated as of December 22, 2019, by and among
the Company, the Holder and the other holders of Existing Notes, as amended, restated or otherwise modified from time to time.

 

19.26 “Permitted
Distributions” means (a) dividends by Subsidiaries of the Company to the Company or other Subsidiaries of the Company,
and (b) current quarterly dividends in an amount not to exceed the lesser of (i) fifteen percent (15%) of the amount otherwise
required to be paid by the Company with respect to the Company’s Series B Cumulative Convertible Preferred Stock (the
“Series B Stock”) pursuant to the Certificate of Designations and any other organizational documents of the
Company in effect on the Issuance Date, or (ii) the amount required to be paid to all holders of the Series B Stock who did not
execute the Waiver Agreement; provided, that Company may accrue, but not pay, current quarterly dividends with respect
to the Series B Stock held by holders who executed the Waiver Agreement. For the avoidance of doubt, to the extent that payment
thereof is in the form of Common Stock, payment of previously accrued and unpaid dividends with respect to the Company’s
Series B Cumulative Convertible Preferred Stock outstanding as of the Issuance Date shall be deemed to be “Permitted
Distributions”.

 

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19.27 “Permitted
Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes; (ii) Indebtedness of any
Excluded Subsidiary, (iii) any Indebtedness secured by a Permitted Lien (other than Indebtedness referred to in clause (iv) of
the definition of “Permitted Lien”), (iv) Indebtedness incurred by the Company that is made expressly subordinate
in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement acceptable to the Holder and
approved by the Holder in writing, and which Indebtedness does not provide at any time for (1) the payment, prepayment, repayment,
repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days
after the Maturity Date or later and (2) total interest and fees at a rate in excess of ten percent (10%) per annum
(collectively, the “Subordinated Indebtedness”); provided, that in the aggregate outstanding at any
time, such Subordinated Indebtedness does not exceed $30,000,000, (v) Indebtedness of the Company or any of its Subsidiaries
and Excluded Subsidiaries existing on the Issuance Date (including up to the full stated current amount that may be available
under any revolving credit facility existing as of the Issuance Date), and (vi) such other trade and operating Indebtedness
incurred in the ordinary course of business by the Company (including any of the Company’s Subsidiaries and Excluded Subsidiaries),
including without limitation, unsecured trade debt, financing with respect to the acquisition or lease of equipment and financing
of insurance premiums; provided that in the aggregate outstanding at any time, such Indebtedness does not exceed the greater
of $2,000,000 or three-quarters of one percent (0.75%) of total assets as reported in the Company’s most recent publicly
filed Form 10-K or 10-Q reports. Notwithstanding the foregoing, additional Indebtedness of any Excluded Subsidiary (excluding
Kinergy Marketing, LLC, Pacific Ag. Products, LLC and Pacific Ethanol Development, LLC) incurred after the Issuance Date, except
pursuant to an arms-length, good faith refinancing in full of either the ICP Debt or the Pekin Debt, or both, shall not constitute
Permitted Indebtedness (except up to the full stated amount that may be available under any revolving credit facility existing
as of the Issuance Date, which shall be Permitted Indebtedness).

 

19.28 “Permitted
Investments” means (i) investments existing on the date hereof, and (ii) additional investments in the Excluded Subsidiaries
that in the aggregate outstanding at any time do not exceed $20,000,000 to the extent the Company in good faith determines that
such investments are necessary to ensure the Excluded Subsidiaries have sufficient funds to operate and pay their respective debts
and obligations as and when due. Any reinvestment by the Company of any proceeds of any Sale (after payment of the applicable
required mandatory prepayment with respect to such Sale) shall be permitted and included in the calculation of the foregoing investment
limitation; provided, that (a) if an event constituting an Event of Default has occurred and is continuing or (B) an event
that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing, the
Company shall not be permitted to make such additional investments under clause (ii). For the avoidance of doubt, an investment
of Sale proceeds in any Excluded Subsidiary necessary to effectuate the allocation of Sale proceeds contemplated in Section 1.2
shall be excluded from the calculation of the foregoing investment limitation.

 

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19.29 “Permitted
Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary
course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created
by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary
course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by
appropriate proceedings, (iv) Liens securing financing obtained in the ordinary course of the Company’s operations, including
financing with respect to the acquisition or lease of equipment and financing of insurance premiums; provided, that (A)
such Liens are solely upon and confined solely to the equipment, unearned insurance premiums or other asset or assets being acquired
by such financing and (B) in the aggregate, the Indebtedness secured by such liens does not exceed the greater of $2,000,000 or
three-quarters of one percent (0.75%) of total assets as reported in the Company’s most recent publicly filed Form 10-K or 10-Q
reports, (v) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens
of the type described in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited
to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced
does not increase, (vi) any existing Lien on the assets or properties of the Excluded Subsidiaries, (vii) any additional
Lien on the assets or properties of any Excluded Subsidiary (excluding Kinergy Marketing, LLC, Pacific Ag. Products, LLC and Pacific
Ethanol Development, LLC, which are covered below) pursuant to an arms-length, good faith refinancing in full of either the ICP
Debt or the Pekin Debt, or both, (viii) any second-priority Lien of CoBank on the assets or properties of the Western Assets,
subject to the terms of the Intercreditor Agreement; and (ix) any additional Lien on the assets or properties of Kinergy Marketing,
LLC, Pacific Ag. Products, LLC or Pacific Ethanol Development, LLC.

 

19.30 “Permitted
Payments” means any payments, distributions or transfers with respect to (i) any Permitted Indebtedness (in the
case of Subordinated Indebtedness, to the extent permitted by the relevant subordination or intercreditor agreement) and (ii) any
Permitted Distributions.

 

19.31 “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.

 

19.32 “PIK
Notes” means those certain Senior Secured Notes in the aggregate principal amount of $1,185,177.53 issued pursuant to
the Senior Secured Note Amendment Agreement No. 1 on December 16, 2019.

 

19.33 “Required
Holders” means the holders of Notes representing at least 66 2/3% of the aggregate principal amount of the Notes then
outstanding (excluding any Notes held by the Company or any of its Subsidiaries).

 

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19.34 “Sale”
means (i) the sale of an ownership interest in or any assets of PEC (whether an ownership sale or an asset sale by any of its
Subsidiaries, including Illinois Corn Processing, LLC, a Delaware limited liability company and Pacific Aurora, LLC, a Delaware
limited liability company, and including any net cash proceeds from any seller carryback note in connection with any such sale);
and (ii) any sale of the facilities owned directly or indirectly by PE Op Co., a Delaware corporation, and/or Pacific Ethanol
West, LLC, a Delaware limited liability company (the “Western Assets”) (including any ownership interests therein
of the Company or any of its Subsidiaries).

 

19.35 “Senior
Secured Note Amendment Agreement No. 1” means the Senior Secured Note Amendment Agreement No. 1, dated as of December
16, 2019, by and among the Company and each “Noteholder” (as defined therein) as amended, restated or otherwise modified
from time to time.

 

19.36 “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; provided that, for purposes of this Note, the term “Subsidiary” shall expressly exclude the
Excluded Subsidiaries.

 

19.37 “Transaction
Documents” means the Notes, the Security Agreement, the Collateral Documents and the Note Amendment Agreement, together
with any amendments, restatements, extensions or other modifications thereto.

 

19.38 “Voting
Stock” means voting equity interests.

 

19.39 “Waiver
Agreement” means that certain Letter Agreement to be entered into by and among certain holders of the Series B preferred
stock and the Company on or prior to December 31, 2019 in a form reasonably satisfactory to Holder.

 

[signature
page follows]

 

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IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the first date set forth above.

 

	 	PACIFIC
    ETHANOL, INC.

	 	 	       
	 	By:	                
	 	 	Name: 	Bryon T. McGregor
	 	 	Title:	Chief Financial OfficerExhibit 10.3

 

NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS WARRANT NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

PACIFIC
ETHANOL, INC.

 

Warrant
To Purchase Common Stock

 

Warrant
No.: [●]

Number
of Shares of Common Stock: [●]

Date
of Issuance: December 22, 2019 (“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, [NOTEHOLDER], the registered holder hereof or its permitted assigns
(the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise
Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase
Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or
after the date six (6) months after the date hereof (the “Exercisability Date”), but not after 11:59 p.m. New
York time, on the Expiration Date (as defined below), [●] ([●]) fully paid 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 several Warrants to Purchase Common Stock (collectively,
the “Warrants”) issued pursuant to that certain Senior Secured Note Amendment Agreement, dated as of December
22, 2019, by and among the Company, the Holder and the other parties thereto, as amended, restated or otherwise modified from
time to time (the “Note Amendment Agreement”).

 

     

     

    

 

1. EXERCISE
OF WARRANT.

 

(a) Mechanics
of Exercise. Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after
the Exercisability Date, but before 11:59 p.m. New York time, on the Expiration Date, in whole or in part, by delivery 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 two (2) days following the Exercise Notice, the Holder shall make payment to the Company of an
amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised
(the “Aggregate Exercise Price”) in cash or by wire transfer of immediately available funds, which amount the
Company shall first use to prepay any outstanding principal balance due under that certain Amended and Restated Senior Secured
Note dated as set forth therein issued by the Company in favor of the original Holder of this Warrant (the “Amended Note”),
provided that the Holder continues to hold the Amended Note, within two (2) Business Days following receipt of the Aggregate Exercise
Price or, if such Amended Note is not then held by the Holder, then on a pro rata basis to the holders of the Amended Notes (as
defined under the Amendment Agreement) under that certain Secured Note Amendment Agreement (the “Amendment Agreement”)
dated as set forth therein between the Company and the noteholders party thereto, until all amounts owing thereunder shall have
been paid, and thereafter, for general corporate purposes. The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder, nor shall any ink-original signature or medallion guarantee (or other type of guarantee
or notarization) with respect to any Exercise Notice be required. Execution and delivery of the Exercise Notice with respect to
less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant Shares. On or before the first (1st) Business Day
following the date on which the Company has received the Exercise Notice, the Company shall transmit by facsimile or electronic
mail an acknowledgment of confirmation of receipt of the Exercise Notice 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 the Exercise Notice (the “Share Delivery Date”), the Company shall (X) provided that the
Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program and the Warrant Shares are otherwise DTC-eligible, upon the request of the Holder, credit such aggregate number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account
with DTC through its Deposit Withdrawal At Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Exercise Notice,
a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares
of Common Stock to which the Holder is entitled pursuant to such exercise. The Company shall be responsible for all fees and expenses
of the Transfer Agent and all fees and expenses with respect to the issuance of Warrant Shares via DTC, if any. Upon delivery
of the 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 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 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 to the nearest whole number. The Company shall pay any and
all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding
anything to the contrary herein, the Company’s failure to deliver Warrant Shares to the Holder shall not be deemed to be
a breach of this Warrant if the Company has not received the Aggregate Exercise Price pursuant to the requirements of this Section
1(a). The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms and subject to the
conditions hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce
the same, or any setoff, counterclaim, recoupment, limitation or termination.

 

    2

     

    

 

(b) Exercise
Price. For purposes of this Warrant, “Exercise Price” means $1.00, 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 on
or before the Share Delivery Date in compliance with the terms of this Section 1, 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, and if on or after the Share Delivery Date the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common
Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then
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 (the “Buy-In Price”), at
which point the Company’s obligation to 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 Warrant Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate
or certificates representing such Warrant Shares 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, times (B) the Closing Price on the Trading Day immediately
preceding the date of the Exercise Notice. Nothing herein shall limit the Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon the exercise
of this Warrant as required pursuant to the terms hereof.

 

(d) Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant
Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares
that are not disputed and resolve such dispute in accordance with Section 13.

 

    3

     

    

 

(e) Insufficient
Authorized Shares. If at any time from and after the Issuance Date and while any of the 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 Warrants at least 100% of the maximum number of shares of Common Stock as shall from time to time
be necessary to effect the exercise of all of the Warrants then outstanding (without regard to any limitations on exercise) (the
“Required Reserve Amount”) (an “Authorized Share Failure”), then the Company shall immediately
deliver a notice to the Holder specifying the number of shares unavailable to satisfy its obligations under this Warrant and shall
take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for the 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 “Authorized Share Failure Deadline”),
and assuming such Authorized Share Failure still exists, 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 upon any exercise of this Warrant at any time from and after the Authorized Share
Failure Deadline, the Company does not have sufficient authorized shares to deliver in satisfaction of such exercise, then unless
the Holder elects to void such exercise, the Company shall pay to the Holder within three (3) Trading Days of the applicable exercise,
cash in an amount equal to the product of (i) the number of Warrant Shares that the Company is unable to deliver pursuant hereto
and (ii) the Black Scholes Value.

 

2. ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. Without limiting any provision of Section 4, if the Company, at any
time on or after the Issuance Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common
Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common
Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes
of its then outstanding shares of Common Stock into a smaller number of shares (a “Stock Combination Event”),
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. Simultaneously with any adjustment to the Exercise Price pursuant to this paragraph, 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). 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.

 

    4

     

    

 

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 securities (other
than stock or securities in which an adjustment is being made pursuant to Section 2), property or options, evidence of
indebtedness or other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement
or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in
each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof) 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.

 

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) 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.

 

    5

     

    

 

(b) Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes
in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 4(b),
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 with the same effect as if such Successor Entity had been named as the Company herein.
Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall
be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction, in lieu
of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections
3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) prior to the applicable Fundamental Transaction, such shares of publicly traded
common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled
to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the
applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance
with the provisions of this Warrant. Notwithstanding the foregoing, 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 (without regard
to any limitations on the exercise of this Warrant), 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. Notwithstanding the foregoing, in the event of a Fundamental Transaction,
at the request of the Holder (which may be required by the Company if the Successor Entity is not publicly traded) delivered before
the ninetieth (90th) day after such Fundamental Transaction, the Company (or the Successor Entity) shall purchase this
Warrant from the Holder by paying to the Holder, within five (5) Business Days after such request (or, if later, on the effective
date of the Fundamental Transaction), cash in an amount equal to the Black Scholes Value of the remaining unexercised portion
of this Warrant on the date of such Fundamental Transaction.

 

    6

     

    

 

(c) 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.

 

5. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, 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
nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as this Warrant is 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 this Warrant, 100% of the number of shares of Common Stock issuable upon exercise of
this Warrant 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 such Person’s
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
such Person’s 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 such Person is then entitled to receive upon the due exercise
of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities
are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the
Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously
with the giving thereof to the stockholders.

 

7. REISSUANCE
OF WARRANTS.

 

(a) Transfer
of Warrant. If this Warrant is to be transferred, 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.

 

    7

     

    

 

(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, and, in the case of loss, theft or destruction, of any indemnification undertaking
by the Holder to the Company in customary 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, that no Warrants
for fractional shares of Common Stock shall be given.

 

(d) Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section
7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common
Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same
as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

8. NOTICES.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered
via facsimile or email at the facsimile number or email address specified in this Section prior to 6:30 p.m. (New York City time)
on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via
facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later
than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally
recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The
addresses, facsimile numbers and email addresses for such notices and communications are those as may be designated by the Holder
and the Company prior to the Issuance Date, and in writing hereafter, in the same manner, by any such Person. 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) immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth
in reasonable detail, and certifying, the calculation of such adjustment(s) 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 or (B) 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. 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 Securities and Exchange Commission
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, provided that the Exercise Notice
is duly delivered within the period commencing on the Exercisability Date and ending on the Expiration Date.

 

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

 

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).

 

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. The Company hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth
in the Note Amendment Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral
or other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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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.

 

13. DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Exercise Price, the Closing Price, the VWAP or fair market
value or the arithmetic calculation of the Warrant Shares (as the case may be), the Company or the Holder (as the case may be)
shall submit the disputed determinations or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Business
Days after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii)
if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute.
If the Holder and the Company are unable to agree upon such determination or calculation (as the case may be) of the Exercise
Price, the Closing Price, the VWAP 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 Price, the VWAP or fair market value (as the case may be) to an independent, reputable investment bank selected
by the Holder or (b) the disputed arithmetic calculation of the 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.

 

    10

     

    

 

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 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 or designee 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) “1934
Act” means the Securities Exchange Act of 1934, as amended.

 

(b) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s
request, 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, in the event of an Authorized Share Failure, the VWAP on the exercise
date, or, in the event of a Fundamental Transaction, the VWAP on the Trading Day immediately preceding the consummation of the
applicable Fundamental Transaction, (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s
request, (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 and (2) the remaining term of this Warrant as of the
date of consummation of the applicable Fundamental Transaction or as of the date of the Holder’s request pursuant to Section
4(b), if such request is prior to the date of the consummation of the applicable Fundamental Transaction, (iv) an expected
volatility equal to the greater of 90% 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 earlier to occur of the public disclosure or consummation
of the applicable Fundamental Transaction and (v) a 0% cost of borrow.

 

    11

     

    

 

(c) “Bloomberg”
means Bloomberg, L.P.

 

(d) “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.

 

(e) “Closing
Price” means, for any date, the closing price per share of the Common Stock for such date (or the nearest preceding
date) on the primary Eligible Market or exchange or quotation system on which the Common Stock is then listed or quoted.

 

(f) “Common
Stock” means (i) the Company’s shares of voting 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.

 

(g) “Convertible
Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common
Stock.

 

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

 

(i) “Expiration
Date” means the date that is the three (3) year anniversary of the Issuance Date, 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.

 

(j) “Fundamental
Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related
transactions, including through Subsidiaries, affiliates or otherwise (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 (5) reorganize, recapitalize or reclassify the Common Stock, 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.

 

    12

     

    

 

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

 

(l) “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.

 

(m) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
and a government or any department or agency thereof.

 

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

 

(o) “Rule
144” means Rule 144 promulgated by the Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, as may be amended from time to time, or any similar rule or regulation hereafter adopted by the Securities Exchange Commission
having substantially the same effect as such rule.

 

(p) “Subsidiary”
means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly
owned by such Person.

 

(q) “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.

 

(r) “Trading
Day” means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market, (b) if
the Common Stock is not then listed or quoted and traded on any Eligible Market, then a day on which trading occurs on The NASDAQ
Capital Market (or any successor thereto), or (c) if trading ceases to occur on The NASDAQ Capital Market (or any successor thereto),
any Business Day.

 

(s) “Trading
Market” means the Principal Market or any other Eligible Market, or any national securities exchange, market or trading
or quotation facility on which the Common Stock is then listed or quoted.

 

(t) “Transaction
Documents” has the meaning given to such term in the Amended Note.

 

    13

     

    

 

(u) “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).

 

(v) “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. 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.

 

17. MANDATORY
EXERCISE. If at any time on or after the Exercisability Date the VWAP of the Company’s Common Stock for the trailing
five (5) Trading Day period is at least $1.50 (as adjusted for stock splits, stock combinations and the like occurring from and
after the Issuance Date) (the “Mandatory Exercise Eligibility Date”), then the Company shall have the right
to require the Holder to exercise all, but not less than all, of this Warrant for all of the then-remaining Warrant Shares in
accordance with this Section 17 (a “Mandatory Exercise”). The Company may exercise its right to require
exercise under this Section 17 by delivering, not later than the first (1st) Trading Day immediately following
the Mandatory Exercise Eligibility Date, a written notice thereof by facsimile or email, or by the second (2nd) Trading
Day immediately following the Mandatory Exercise Eligibility Date, a written notice thereof by overnight courier to the Holder
in the form attached hereto as Exhibit B (the “Mandatory Exercise Notice,” and the date the Holder receives
such notice by facsimile or email, or if later by overnight courier, is referred to as the “Mandatory Exercise Notice
Date”). The Mandatory Exercise Notice shall be irrevocable. The Mandatory Exercise Notice shall (a) state the Trading
Day selected for the Mandatory Exercise in accordance with this Section 17, which Trading Day shall be at least five (5)
Trading Days but not more than fifteen (15) Trading Days following the Mandatory Exercise Notice Date (the “Mandatory
Exercise Date”) and (b) state the number of shares of Common Stock to be issued to the Holder on the Mandatory Exercise
Date. Any portion of this Warrant exercised by the Holder after the Mandatory Exercise Notice Date shall reduce the number of
Warrant Shares for which this Warrant is required to be exercised on the Mandatory Exercise Date. If the Company has elected a
Mandatory Exercise, the mechanics of exercise set forth in Section 1(a) shall apply, to the extent applicable, as if the
Company had received from the Holder on the Mandatory Exercise Date an Exercise Notice with respect to all of the then-remaining
Warrant Shares. Notwithstanding anything to the contrary contained herein, if the Holder fails to pay the Company the Aggregate
Exercise Price in cash or by wire transfer of immediately available funds within two (2) Business Days following the Mandatory
Exercise Date, then, if the Holder continues to hold the Amended Note, the Company shall have the right to automatically reduce
the outstanding principal balance due under the Amended Note by the amount of the Aggregate Exercise Price and issue to the Holder
all of the then-remaining Warrant Shares, in accordance with the mechanics of exercise set forth in Section 1(a), to the
extent applicable, as if the Company had received from the Holder on such date an Exercise Notice with respect to all of the then-remaining
Warrant Shares.

 

[signature
page follows]

 

    14

     

    

 

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

 

	 	Pacific Ethanol, Inc.
	 	 	 
	 	By:	 
	 	Name:	Neil M. Koehler
	 	Title:	President and Chief Executive Officer
	 	 	 
	 	[Holder]
	 	 	 
	 	By:	 
	 	Name: 	 
	 	Title:	 
	 	 	 
	 	Address: 	 
	 	 	 
	 	Facsimile: 	 
	 	Email:	 

 

[Signature Page to Warrant]

 

     

     

    

 

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 (the “Holder”) hereby exercises the right to purchase _________________ shares of Common
Stock (“Warrant Shares”) of PACIFIC ETHANOL, INC., a
Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Payment
of Exercise Price. The Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.

 

2. Delivery
of Warrant Shares. The Company shall deliver to the Holder __________ Warrant Shares in accordance with the terms of the Warrant.
Delivery shall be made to the Holder, or for its benefit, to the following address:

 

_______________________

 

_______________________

 

Date:
_______________ __, ______

 

	 	 	 	 
	Name of Registered Holder	 
	 	 	 	 
	By:	 	   	 
	 	Name: 	   	 
	 	Title: 	 	 

 

     

     

    

 

ACKNOWLEDGMENT

 

The
Company hereby acknowledges this Exercise Notice and hereby directs American Stock Transfer & Trust Co., LLC 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 American Stock Transfer & Trust Co., LLC.

 	 	PACIFIC ETHANOL, INC
	 	 	 	 
	 	By:	 	 
	 	 	Name: 	 
	 	 	Title: 	 

 

     

     

    

 

EXHIBIT
B

 

MANDATORY
EXERCISE NOTICE

TO
BE EXECUTED BY PACIFIC ETHANOL, INC. TO CAUSE THE EXERCISE OF THIS

WARRANT
TO PURCHASE COMMON STOCK

 

Pacific
Ethanol, Inc., a Delaware corporation (the “Company”), hereby exercises its right to require the below-named
holder (the “Holder”) to purchase _________________ shares of Common Stock (“Warrant Shares”)
of the Company evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms
used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Payment
of Exercise Price. The Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.

 

2. Delivery
of Warrant Shares. The Company shall deliver to the Holder __________ Warrant Shares in accordance with the terms of the Warrant.
Delivery shall be made to the Holder, or for its benefit, to the following address:

 

_______________________

 

_______________________

 

Date:
_______________ __, ______

 

	 	 	 	 
	Name of Registered Holder	 
	 	 	 	 
	PACIFIC ETHANOL, INC.	 
	 	 	 	 
	By:	 	 	 
	 	Name: 	     	 
	 	Title: 	 	 

 

     

     

    

 

ACKNOWLEDGMENT

 

The
Company hereby acknowledges this Mandatory Exercise Notice and hereby directs American Stock Transfer & Trust Co., LLC 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 American Stock Transfer & Trust Co., LLC.

 

	 	PACIFIC ETHANOL, INC
	 	 	 	 
	 	By:	 	 
	 	 	Name: 	     
	 	 	Title:

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