Document:

PACIFIC
ETHANOL, INC.

2016
STOCK INCENTIVE PLAN

 

ARTICLE
ONE

GENERAL PROVISIONS

 

I.Purpose
of the Plan.

 

This
2016 Stock Incentive Plan is intended to promote the interests of Pacific Ethanol, Inc. by providing eligible persons in the Corporation’s
service with the opportunity to acquire a proprietary or economic interest, or otherwise increase their proprietary or economic
interest, in the Corporation as an incentive for them to remain in such service and render superior performance during such service.
Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the attached Appendix.

 

II.Structure
of the Plan.

 

A.The
Plan is divided into two equity-based incentive programs:

 

	 	●	the
    Discretionary Grant Program, under which eligible persons may, at the discretion of the Plan Administrator, be granted options
    to purchase shares of common stock or stock appreciation rights tied to the value of such common stock; and
	 	 	 
	 	●	the
    Stock Issuance Program, under which eligible persons may be issued shares of common stock pursuant to restricted stock or
    restricted stock unit awards or other stock-based awards, made by and at the discretion of the Plan Administrator, that vest
    upon the completion of a designated service period and/or the attainment of pre-established performance milestones, or under
    which shares of common stock may be issued through direct purchase or as a bonus for services rendered to the Corporation
    (or any Parent or Subsidiary).

 

B.The
provisions of Articles One and Four shall apply to all equity programs under the Plan and shall govern the interests of
all persons under the Plan.

 

III.Administration
of the Plan.

 

A.The
Compensation Committee shall have sole and exclusive authority to administer the Discretionary Grant and Stock Issuance Programs,
provided, however, that the Board may retain, reassume or exercise from time to time the power to administer those programs with
respect to all persons. However, any discretionary Awards to members of the Compensation Committee must be authorized and approved
by a disinterested majority of the Board.

 

B.The
Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of
the Discretionary Grant and Stock Issuance Programs and to make such determinations under, and issue such interpretations of,
the provisions of those programs and any outstanding Awards thereunder as it may deem necessary or advisable. Decisions of the
Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who
have an interest in the Discretionary Grant and Stock Issuance Programs under its jurisdiction or any Award thereunder.

 

C.Service
on the Compensation Committee shall constitute service as a Board member, and members of each such committee shall accordingly
be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Compensation
Committee shall be liable for any act or omission made in good faith with respect to the Plan or any Award under the Plan.

 

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IV.Eligibility.

 

A.The
persons eligible to participate in the Discretionary Grant and Stock Issuance Programs are as follows:

 

(i)Employees;

 

(ii)non-employee
members of the Board or the board of directors of any Parent or Subsidiary; and

 

(iii)Consultants.

 

B.The
Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority to determine
(i) with respect to Awards made under the Discretionary Grant Program, which eligible persons are to receive such Awards, the
time or times when those Awards are to be made, the number of shares to be covered by each such Award, the status of any awarded
option as either an Incentive Option or a Non-Statutory Option, the exercise price per share in effect for each Award (subject
to the limitations set forth in Article Two), the time or times when each Award is to vest and become exercisable and the
maximum term for which the Award is to remain outstanding, and (ii) with respect to Awards under the Stock Issuance Program, which
eligible persons are to receive such Awards, the time or times when the Awards are to be made, the number of shares subject to
each such Award, the vesting schedule (if any) applicable to the shares subject to such Award, and the cash consideration (if
any) payable for such shares.

 

C.The
Plan Administrator shall have the absolute discretion to grant options or stock appreciation rights in accordance with the Discretionary
Grant Program and to effect stock issuances or other stock-based awards in accordance with the Stock Issuance Program.

 

V.Stock
Subject to the Plan.

 

A.The
stock issuable under the Plan shall be shares of authorized but unissued or reacquired common stock, including shares repurchased
by the Corporation on the open market. Subject to any additional shares authorized by the vote of the Board and approved by the
stockholders, the number of shares of common stock reserved for issuance over the term of the Plan shall not exceed 1,150,000
shares. Any or all of the shares of common stock reserved for issuance under the Plan shall be authorized for issuance pursuant
to Incentive Options or other Awards.

 

B.No
one person participating in the Plan may be granted Awards of common stock having a Fair Market Value on the applicable grant
date(s) of more than One Million Dollars ($1,000,000) in the aggregate per calendar year.

 

C.Shares
of common stock subject to outstanding Awards under the Plan shall in no event become eligible for reissuance under the Plan,
whether as a result of expiration or termination of an Award, cancellation or repurchase of unvested shares, tender of shares
in connection with a net/cashless exercise program, withholding of shares to cover withholding taxes, or otherwise.

 

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D.If
any change is made to the common stock by reason of any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding common stock as a class without the Corporation’s receipt of
consideration, appropriate adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the maximum number and/or class of securities for which any one person may be granted Awards under
the Plan per calendar year, (iii) the number and/or class of securities and the exercise or base price per share (or any other
cash consideration payable per share) in effect under each outstanding Award under the Discretionary Grant Program, and (iv) the
number and/or class of securities subject to each outstanding Award under the Stock Issuance Program and the cash consideration
(if any) payable per share thereunder. To the extent such adjustments are to be made to outstanding Awards, those adjustments
shall be effected in a manner that shall preclude the enlargement or dilution of rights and benefits under those Awards. The adjustments
determined by the Plan Administrator shall be final, binding and conclusive.

 

VI.Clawback
Policy.

 

The
Plan Administrator shall, notwithstanding anything to the contrary contained in any Award document or in any employment or other
agreement, have full power and authority to modify or terminate any vested or unvested Award or require repayment to the Corporation
of the net proceeds received by a participant arising from any Award, to apply the Corporation’s Policy for Recoupment of
Incentive Compensation dated March 25, 2011, as such policy may be amended by the Corporation from time to time, or any successor
“clawback” or similar policy adopted by the Corporation, including any such policy or policy changes mandated by or
implemented pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act or the applicable listing requirements or
rules and regulations of The NASDAQ Capital Market, if applicable, and any other stock exchange or other market on which common
stock is then quoted or listed for trading.

 

ARTICLE
TWO

DISCRETIONARY GRANT PROGRAM

 

I.Option
Terms.

 

Each
option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each
such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be
subject to the provisions of the Plan applicable to such options.

 

A.Exercise
Price.

 

1.The
exercise price per share shall be fixed by the Plan Administrator but shall not be less than 85% of the Fair Market Value per
share of common stock on the option grant date.

 

2.The
exercise price shall become immediately due upon exercise of the option and shall be payable in one or more of the following forms
that the Plan Administrator may deem appropriate in each individual instance:

 

(i)cash
or check made payable to the Corporation;

 

(ii)shares
of common stock valued at Fair Market Value on the Exercise Date and held for the period (if any) necessary to avoid any additional
charges to the Corporation’s earnings for financial reporting purposes; or

 

(iii)to
the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee
shall concurrently provide irrevocable instructions to (a) a brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable federal, state and local income and employment taxes required
to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm to complete the sale.

 

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Except
to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.

 

B.Exercise
and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option. However, no option
shall have a term in excess of ten years measured from the option grant date.

 

C.Effect
of Termination of Service.

 

1.The
following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:

 

(i)Any
option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such period
of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option or as
otherwise specifically authorized by the Plan Administrator in its sole discretion pursuant to an express written agreement with
Optionee, but no such option shall be exercisable after the expiration of the option term.

 

(ii)Any
option held by the Optionee at the time of death and exercisable in whole or in part at that time may be subsequently exercised
by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant
to the Optionee’s will or the laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries of
that option.

 

(iii)During
the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested
shares for which that option is at the time exercisable. No additional shares shall vest under the option following the Optionee’s
cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator in its sole discretion pursuant
to an express written agreement with Optionee. Upon the expiration of the applicable exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be outstanding for any shares for which the option has
not been exercised.

 

2.The
Plan Administrator shall have complete discretion, exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

 

(i)extend
the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the
limited exercise period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the expiration of the option term, and/or

 

(ii)permit
the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested
shares of common stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also
with respect to one or more additional installments in which the Optionee would have vested had the Optionee continued in Service.

 

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D.Stockholder
Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until
such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares.

 

E.Repurchase
Rights. The Plan Administrator shall have the discretion to grant options that are exercisable for unvested shares of
common stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase,
at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall
be established by the Plan Administrator and set forth in the document evidencing such repurchase right.

 

F.Transferability
of Options. The transferability of options granted under the Plan shall be governed by the following provisions:

 

(i)Incentive
Options. During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not
be assignable or transferable other than by will or the laws of inheritance following the Optionee’s death.

 

(ii)Non-Statutory
Options. Non-Statutory Options shall be subject to the same limitation on transfer as Incentive Options, except that the
Plan Administrator may structure one or more Non-Statutory Options so that the option may be assigned in whole or in part during
the Optionee’s lifetime to one or more Family Members of the Optionee or to a trust established exclusively for the Optionee
and/or one or more such Family Members, to the extent such assignment is in connection with the Optionee’s estate plan or
pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary
interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in
effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.

 

(iii)Beneficiary
Designations. Notwithstanding the foregoing, the Optionee may designate one or more persons as the beneficiary or beneficiaries
of his or her outstanding options under this Article Two (whether Incentive Options or Non-Statutory Options), and those
options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the
Optionee’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject
to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation)
the limited time period during which the option may be exercised following the Optionee’s death.

 

II.Incentive
Options.

 

The
terms specified below, together with any additions, deletions or changes thereto imposed from time to time pursuant to the provisions
of the Code governing Incentive Options, shall be applicable to all Incentive Options. Except as modified by the provisions of
this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options
that are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this
Section II.

 

A.Eligibility.
Incentive Options may only be granted to Employees.

 

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B.Exercise
Price. The exercise price per share shall not be less than 100% of the Fair Market Value per share of common stock on
the option grant date.

 

C.Dollar
Limitation. The aggregate Fair Market Value of the shares of common stock (determined as of the respective date or dates
of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or
any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two or more such options which become
exercisable for the first time in the same calendar year, then for purposes of the foregoing limitation on the exercisability
of those options as Incentive Options, such options shall be deemed to become first exercisable in that calendar year on the basis
of the chronological order in which they were granted, except to the extent otherwise provided under applicable law or regulation.

 

D.10%
Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per
share shall not be less than 110% of the Fair Market Value per share of common stock on the option grant date, and the option
term shall not exceed five years measured from the option grant date.

 

III.Stock
Appreciation Rights.

 

A.Authority.
The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant stock appreciation rights
in accordance with this Section III to selected Optionees or other individuals eligible to receive option grants under
the Discretionary Grant Program.

 

B.Types.
Three types of stock appreciation rights shall be authorized for issuance under this Section III: (i) tandem stock appreciation
rights (“Tandem Rights”), (ii) standalone stock appreciation rights (“Standalone Rights”)
and (iii) limited stock appreciation rights (“Limited Rights”).

 

C.Tandem
Rights. The following terms and conditions shall govern the grant and exercise of Tandem Rights.

 

1.One
or more Optionees may be granted a Tandem Right, exercisable upon such terms and conditions as the Plan Administrator may establish,
to elect between the exercise of the underlying stock option for shares of common stock or the surrender of that option in exchange
for a distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender
date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion
thereof) over (ii) the aggregate exercise price payable for such vested shares.

 

2.No
such option surrender shall be effective unless it is approved by the Plan Administrator, either at the time of the actual option
surrender or at any earlier time. If the surrender is so approved, then the distribution to which the Optionee shall accordingly
become entitled under this Section III may be made in shares of common stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.

 

3.If
the surrender of an option is not approved by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee
had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at
any time prior to the later of (i) five business days after the receipt of the rejection notice or (ii) the last day on which
the option is otherwise exercisable in accordance with the terms of the instrument evidencing such option, but in no event may
such rights be exercised more than ten years after the date of the option grant.

 

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D.Standalone
Rights. The following terms and conditions shall govern the grant and exercise of Standalone Rights under this Article
Two:

 

1.One
or more individuals eligible to participate in the Discretionary Grant Program may be granted a Standalone Right not tied to any
underlying option under this Discretionary Grant Program. The Standalone Right shall relate to a specified number of shares of
common stock and shall be exercisable upon such terms and conditions as the Plan Administrator may establish. In no event, however,
may the Standalone Right have a maximum term in excess of ten years measured from the grant date. Upon exercise of the Standalone
Right, the holder shall be entitled to receive a distribution from the Corporation in an amount equal to the excess of (i) the
aggregate Fair Market Value (on the exercise date) of the shares of common stock underlying the exercised right over (ii) the
aggregate base price in effect for those shares.

 

2.The
number of shares of common stock underlying each Standalone Right and the base price in effect for those shares shall be determined
by the Plan Administrator in its sole discretion at the time the Standalone Right is granted. In no event, however, may the base
price per share be less than the Fair Market Value per underlying share of common stock on the grant date.

 

3.Standalone
Rights shall be subject to the same transferability restrictions applicable to Non-Statutory Options and may not be transferred
during the holder’s lifetime, except to one or more Family Members of the holder or to a trust established exclusively for
the holder and/or such Family Members, to the extent such assignment is in connection with the holder’s estate plan or pursuant
to a domestic relations order covering the Standalone Right as marital property. In addition, one or more beneficiaries may be
designated for an outstanding Standalone Right in accordance with substantially the same terms and provisions as set forth in
Section I.F of this Article Two.

 

4.The
distribution with respect to an exercised Standalone Right may be made in shares of common stock valued at Fair Market Value on
the exercise date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.

 

5.The
holder of a Standalone Right shall have no stockholder rights with respect to the shares subject to the Standalone Right unless
and until such person shall have exercised the Standalone Right and become a holder of record of shares of common stock issued
upon the exercise of such Standalone Right.

 

E.Limited
Rights. The following terms and conditions shall govern the grant and exercise of Limited Rights under this Article
Two:

 

1.One
or more Section 16 Insiders may, in the Plan Administrator’s sole discretion, be granted Limited Rights with respect to
their outstanding options under this Article Two.

 

2.Upon
the occurrence of a Hostile Take-Over, the Section 16 Insider shall have the unconditional right (exercisable for a 30-day period
following such Hostile Take-Over) to surrender each option with such a Limited Right to the Corporation. The Section 16 Insider
shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the Take-Over
Price of the number of shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion
thereof) over (ii) the aggregate exercise price payable for those vested shares. Such cash distribution shall be made within five
days following the option surrender date.

 

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3.The
Plan Administrator shall pre-approve, at the time such Limited Right is granted, the subsequent exercise of that right in accordance
with the terms of the grant and the provisions of this Section III. No additional approval of the Plan Administrator or
the Board shall be required at the time of the actual option surrender and cash distribution. Any unsurrendered portion of the
option shall continue to remain outstanding and become exercisable in accordance with the terms of the instrument evidencing such
grant.

 

F.Post-Service
Exercise. The provisions governing the exercise of Tandem, Standalone and Limited Stock Appreciation Rights following
the cessation of the recipient’s Service or the recipient’s death shall be substantially the same as those set forth
in Section I.C of this Article Two for the options granted under the Discretionary Grant Program.

 

IV.Change
in Control/ Hostile Take-Over.

 

A.No
Award outstanding under the Discretionary Grant Program at the time of a Change in Control shall vest and become exercisable on
an accelerated basis if and to the extent that: (i) such Award is, in connection with the Change in Control, assumed by the successor
corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control
transaction, (ii) such Award is replaced with a cash retention program of the successor corporation that preserves the spread
existing at the time of the Change in Control on the shares of common stock as to which the Award is not otherwise at that time
vested and exercisable and provides for subsequent payout of that spread in accordance with the same exercise/vesting schedule
applicable to those shares, or (iii) the acceleration of such Award is subject to other limitations imposed by the Plan Administrator.
However, if none of the foregoing conditions are satisfied, each Award outstanding under the Discretionary Grant Program at the
time of the Change in Control but not otherwise vested and exercisable as to all the shares at the time subject to that Award
shall automatically accelerate so that each such Award shall, immediately prior to the effective date of the Change in Control,
vest and become exercisable as to all the shares of common stock at the time subject to that Award and may be exercised as to
any or all of those shares as fully vested shares of common stock.

 

B.All
outstanding repurchase rights under the Discretionary Grant Program shall also terminate automatically, and the shares of common
stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the
extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continue in full
force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator.

 

C.Immediately
following the consummation of the Change in Control, all outstanding Awards under the Discretionary Grant Program shall terminate
and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise expressly
continued in full force and effect pursuant to the terms of the Change in Control transaction.

 

D.Each
option that is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted,
immediately after such Change in Control, to apply to the number and class of securities that would have been issuable to the
Optionee in consummation of such Change in Control had the option been exercised immediately prior to such Change in Control.
In the event outstanding Standalone Rights are to be assumed in connection with a Change in Control transaction or otherwise continued
in effect, the shares of common stock underlying each such Standalone Right shall be adjusted immediately after such Change in
Control to apply to the number and class of securities into which those shares of common stock would have been converted in consummation
of such Change in Control had those shares actually been outstanding at that time. Appropriate adjustments to reflect such Change
in Control shall also be made to (i) the exercise price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same, (ii) the base price per share in effect under each outstanding
Standalone Right, provided the aggregate base price shall remain the same, (iii) the maximum number and/or class of securities
available for issuance over the remaining term of the Plan, and (iv) the maximum number and/or class of securities for which any
one person may be granted Awards under the Plan per calendar year. To the extent the actual holders of the Corporation’s
outstanding common stock receive cash consideration for their common stock in consummation of the Change in Control, the successor
corporation may, in connection with the assumption or continuation of the outstanding Awards under the Discretionary Grant Program,
substitute, for the securities underlying those assumed Awards, one or more shares of its own common stock with a fair market
value equivalent to the cash consideration paid per share of common stock in such Change in Control transaction.

 

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E.The
Plan Administrator shall have full power and authority to structure one or more outstanding Awards under the Discretionary Grant
Program so that those Awards shall immediately vest and become exercisable as to all of the shares at the time subject to those
Awards in the event the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a designated
period (not to exceed 18 months) following the effective date of any Change in Control or a Hostile Take-Over in which those Awards
do not otherwise vest on an accelerated basis. Any Awards so accelerated shall remain exercisable as to fully vested shares until
the expiration or sooner termination of their term. In addition, the Plan Administrator may structure one or more of the Corporation’s
repurchase rights under the Discretionary Grant Program so that those rights shall immediately terminate with respect to any shares
held by the Optionee at the time of his or her Involuntary Termination, and the shares subject to those terminated repurchase
rights shall accordingly vest in full at that time.

 

F.The
portion of any Incentive Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the federal
tax laws.

 

G.Awards
outstanding under the Discretionary Grant Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or
any part of its business or assets.

 

ARTICLE
THREE

STOCK ISSUANCE PROGRAM

 

I.Stock
Issuance Terms.

 

A.Issuances.
Shares of common stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening
option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement that complies with the terms specified
below. Shares of common stock may also be issued under the Stock Issuance Program pursuant to restricted stock awards or restricted
stock units, awarded by and at the discretion of the Plan Administrator, that entitle the recipients to receive the shares underlying
those awards or units upon the attainment of designated performance goals and/or the satisfaction of specified Service requirements
or upon the expiration of a designated time period following the vesting of those awards or units.

 

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B.Issue
Price.

 

1.The
price per share at which shares of common stock may be issued under the Stock Issuance Program shall be fixed by the Plan Administrator,
but shall not be less than 100% of the Fair Market Value per share of common stock on the issuance date.

 

2.Shares
of common stock may be issued under the Stock Issuance Program for any of the following items of consideration that the Plan Administrator
may deem appropriate in each individual instance:

 

(i)cash
or check made payable to the Corporation;

 

(ii)past
services rendered to the Corporation (or any Parent or Subsidiary); or

 

(iii)any
other valid form of consideration permissible under the Delaware Corporations Code at the time such shares are issued.

 

C.Vesting
Provisions.

 

1.Shares
of common stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the Participant’s period of Service and/or upon attainment
of specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of common stock issued
under the Stock Issuance Program shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement.
Shares of common stock may also be issued under the Stock Issuance Program pursuant to restricted stock awards or restricted stock
units that entitle the recipients to receive the shares underlying those awards and/or units upon the attainment of designated
performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following
the vesting of those awards or units, including (without limitation) a deferred distribution date following the termination of
the Participant’s Service.

 

2.The
Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more
Awards under the Stock Issuance Program so that the shares of common stock subject to those Awards shall vest (or vest and become
issuable) upon the achievement of certain pre-established corporate performance goals based on one or more of the following criteria:
(i) return on total stockholders’ equity; (ii) net income per share of common stock; (iii) net income or operating income;
(iv) earnings before interest, taxes, depreciation, amortization and stock-compensation costs, or operating income before depreciation
and amortization; (v) sales or revenue targets; (vi) return on assets, capital or investment; (vii) cash flow; (viii) market share;
(ix) cost reduction goals; (x) budget comparisons; (xi) implementation or completion of projects or processes strategic or critical
to the Corporation’s business operations; (xii) measures of customer satisfaction; (xiii) any combination of, or a specified
increase in, any of the foregoing; and (xiv) the formation of joint ventures, research and development collaborations, marketing
or customer service collaborations, or the completion of other corporate transactions intended to enhance the Corporation’s
revenue or profitability or expand its customer base; provided, however, that for purposes of items (ii), (iii) and (vii) above,
the Plan Administrator may, at the time the Awards are made, specify certain adjustments to such items as reported in accordance
with generally accepted accounting principles in the U.S. (“GAAP”), which will exclude from the calculation
of those performance goals one or more of the following: certain charges related to acquisitions, stock-based compensation, employer
payroll tax expense on certain stock option exercises, settlement costs, restructuring costs, gains or losses on strategic investments,
non-operating gains or losses, certain other non-cash charges, valuation allowance on deferred tax assets, and the related income
tax effects, purchases of property and equipment, and any extraordinary non-recurring items as described in Accounting Principles
Board Opinion No. 30 or its successor, provided that such adjustments are in conformity with those reported by the Corporation
on a non-GAAP basis. In addition, such performance goals may be based upon the attainment of specified levels of the Corporation’s
performance under one or more of the measures described above relative to the performance of other entities and may also be based
on the performance of any of the Corporation’s business groups or divisions thereof or any Parent or Subsidiary. Performance
goals may include a minimum threshold level of performance below which no award will be earned, levels of performance at which
specified portions of an award will be earned, and a maximum level of performance at which an award will be fully earned. The
Plan Administrator may provide that, if the actual level of attainment for any performance objective is between two specified
levels, the amount of the award attributable to that performance objective shall be interpolated on a straight-line basis.

 

    	 	10	 

     

    

 

3.Any
new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) that
the Participant may have the right to receive with respect to the Participant’s unvested shares of common stock by reason
of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding common stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the
same vesting requirements applicable to the Participant’s unvested shares of common stock and (ii) such escrow arrangements
as the Plan Administrator shall deem appropriate.

 

4.The
Participant shall have full stockholder rights with respect to any shares of common stock issued to the Participant under the
Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant
shall have the right to vote such shares and to receive any regular cash dividends paid on such shares. The Participant shall
not have any stockholder rights with respect to the shares of common stock subject to a restricted stock unit award until that
award vests and the shares of common stock are actually issued thereunder. However, dividend-equivalent units may be paid or credited,
either in cash or in actual or phantom shares of common stock, on outstanding restricted stock unit or restricted stock awards,
subject to such terms and conditions as the Plan Administrator may deem appropriate.

 

5.Should
the Participant cease to remain in Service while holding one or more unvested shares of common stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect to one or more such unvested shares of common stock,
then except as set forth in Section I.C.6 of this Article Three, those shares shall be immediately surrendered to
the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To
the extent the surrendered shares were previously issued to the Participant for consideration paid in cash, cash equivalent or
otherwise, the Corporation shall repay to the Participant the same amount and form of consideration as the Participant paid for
the surrendered shares.

 

6.The
Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of common stock that
would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives
applicable to those shares. Any such waiver shall result in the immediate vesting of the Participant’s interest in the shares
of common stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s
cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements
tied to the attainment of performance objectives may be waived with respect to shares that were intended at the time of issuance
to qualify as performance-based compensation under Code Section 162(m), except in the event of the Participant’s Involuntary
Termination or as otherwise provided in Section II.E of this Article Three.

 

    	 	11	 

     

    

 

7.Outstanding
restricted stock awards or restricted stock units under the Stock Issuance Program shall automatically terminate, and no shares
of common stock shall actually be issued in satisfaction of those awards or units, if the performance goals or Service requirements
established for such awards or units are not attained or satisfied. The Plan Administrator, however, shall have the discretionary
authority to issue vested shares of common stock under one or more outstanding restricted stock awards or restricted stock units
as to which the designated performance goals or Service requirements have not been attained or satisfied. However, no vesting
requirements tied to the attainment of performance goals may be waived with respect to awards or units which were at the time
of grant intended to qualify as performance-based compensation under Code Section 162(m), except in the event of the Participant’s
Involuntary Termination or as otherwise provided in Section II.E of this Article Three.

 

II.Change
in Control/ Hostile Take-Over.

 

A.All
of the Corporation’s outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all
the shares of common stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control,
except to the extent (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) or otherwise
continued in full force and effect pursuant to the express terms of the Change in Control transaction or (ii) such accelerated
vesting is precluded by other limitations imposed in the Stock Issuance Agreement.

 

B.Each
outstanding Award under the Stock Issuance Program that is assumed in connection with a Change in Control or otherwise continued
in effect shall be adjusted immediately after the consummation of that Change in Control to apply to the number and class of securities
into which the shares of common stock subject to the Award immediately prior to the Change in Control would have been converted
in consummation of such Change in Control had those shares actually been outstanding at that time, and appropriate adjustments
shall also be made to the cash consideration (if any) payable per share thereunder, provided the aggregate amount of such consideration
shall remain the same. If any such Award is not so assumed or otherwise continued in effect or replaced with a cash retention
program which preserves the Fair Market Value of the shares underlying the Award at the time of the Change in Control and provides
for the subsequent payout of that value in accordance with the vesting schedule in effect for the Award at the time of such Change
in Control, such Award shall vest, and the shares of common stock subject to that Award shall be issued as fully-vested shares,
immediately prior to the consummation of the Change in Control.

 

C.The
Plan Administrator shall have full power and authority to structure one or more outstanding Awards under the Stock Issuance Program
so that the shares of common stock subject to those Awards shall immediately vest (or vest and become issuable) as to all of the
shares at the time subject to those Awards in the event the Participant’s Service is subsequently terminated by reason of
an Involuntary Termination within a designated period (not to exceed 18 months) following the effective date of any Change in
Control or a Hostile Take-Over in which those Awards do not otherwise vest on an accelerated basis. In addition, the Plan Administrator
may structure one or more of the Corporation’s repurchase rights under the Stock Issuance Program so that those rights shall
immediately terminate with respect to any shares held by the Participant at the time of his or her Involuntary Termination, and
the shares subject to those terminated repurchase rights shall accordingly vest in full at that time.

 

    	 	12	 

     

    

 

D.The
Plan Administrator’s authority under Paragraph C of this Section II shall also extend to any Award intended to qualify
as performance-based compensation under Code Section 162(m), even though the automatic vesting of those Awards pursuant to Paragraph
C of this Section II may result in their loss of performance-based status under Code Section 162(m).

 

E.Awards
outstanding under the Stock Issuance Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or
any part of its business or assets.

 

ARTICLE
FOUR

MISCELLANEOUS

 

I.Tax
Withholding.

 

A.The
Corporation’s obligation to deliver shares of common stock upon the issuance, exercise or vesting of Awards under the Plan
shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements.

 

B.Subject
to applicable laws, rules and regulations and policies of the Corporation, the Plan Administrator may, in its discretion, provide
any or all Optionees or Participants to whom Awards are made under the Plan with the right to utilize any or all of the following
methods to satisfy all or part of the Withholding Taxes to which those holders may become subject in connection with the issuance,
exercise or vesting of those Awards.

 

(i)Stock
Withholding: The election to have the Corporation withhold, from the shares of common stock otherwise issuable upon the
issuance, exercise or vesting of those Awards a portion of those shares with an aggregate Fair Market Value equal to the percentage
of the Withholding Taxes (not to exceed 100%) designated by the Optionee or Participant and make a cash payment equal to such
Fair Market Value directly to the appropriate taxing authorities on such individual’s behalf.

 

(ii)Stock
Delivery: The election to deliver to the Corporation, at the time the Award is issued, exercised or vests, one or more
shares of common stock previously acquired by such the Optionee or Participant (other than in connection with the issuance, exercise
or vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes
(not to exceed 100%) designated by such holder. The shares of common stock so delivered shall not be added to the shares of common
stock authorized for issuance under the Plan.

 

(iii)Sale
and Remittance: The election to deliver to the Corporation, to the extent the Award is issued or exercised for vested
shares, through a special sale and remittance procedure pursuant to which the Optionee or Participant shall concurrently provide
irrevocable instructions to a brokerage firm to effect the immediate sale of the purchased or issued shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to cover the Withholding Taxes required to be withheld
by the Corporation by reason of such issuance, exercise or vesting.

 

II.Share
Escrow/Legends.

 

Unvested
shares issued under the Plan may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the
Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

 

    	 	13	 

     

    

 

III.Effective
Date and Term of the Plan.

 

A.The
Plan was adopted by the Board on March 25, 2016, subject to stockholder approval within twelve months after that date. Should
stockholder approval not be obtained within such period, the Plan will be terminated.

 

B.The
Plan shall become effective on the Plan Effective Date. Awards may be granted under the Discretionary Grant Program and the Stock
Issuance Program at any time on or after the Plan Effective Date.

 

C.The
Plan shall terminate upon the earliest to occur of (i) March 25, 2017, if stockholder approval of the Plan has not been obtained
on or prior to that date, (ii) March 25, 2026, (iii) the date on which all shares available for issuance under the Plan shall
have been issued as fully-vested shares, (iv) the termination of all outstanding Awards in connection with a Change in Control,
or (v) such other date as the Board in its sole discretion terminates the Plan. If the Plan terminates on March 25, 2026 or on
such other date as the Board terminates the Plan, then all Awards outstanding at that time shall continue to have force and effect
in accordance with the provisions of the documents evidencing such Awards.

 

IV.Amendment,
Suspension or Termination of the Plan.

 

The
Board may suspend or terminate the Plan at any time, without notice, and in its sole discretion. The Board shall have complete
and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification
shall materially impair the rights and obligations with respect to Awards at the time outstanding under the Plan unless the Optionee
or the Participant consents to such amendment or modification. In addition, stockholder approval will be required for any amendment
to the Plan that (i) materially increases the number of shares of common stock available for issuance under the Plan, (ii) materially
expands the class of individuals eligible to receive option grants or other awards under the Plan, (iii) materially increases
the benefits accruing to the Optionees and Participants under the Plan or materially reduces the price at which shares of common
stock may be issued or purchased under the Plan, (iv) materially extends the term of the Plan, (v) expands the types of awards
available for issuance under the Plan or (vi) is required under applicable laws, rules or regulations to be approved by stockholders.

 

V.Use
of Proceeds.

 

Any
cash proceeds received by the Corporation from the sale of shares of common stock under the Plan shall be used for general corporate
purposes.

 

VI.Regulatory
Approvals.

 

A.The
implementation of the Plan, the grant of any Award and the issuance of shares of common stock in connection with the issuance,
exercise or vesting of any Award made under the Plan shall be subject to the Corporation’s procurement of all approvals
and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the shares
of common stock issuable pursuant to those Awards.

 

B.No
shares of common stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of federal and state securities laws, including the filing and effectiveness of the Form S-8
registration statement for the shares of common stock issuable under the Plan, and all applicable listing requirements of The
NASDAQ Capital Market, if applicable, and any other stock exchange or other market on which common stock is then quoted or listed
for trading.

 

    	 	14	 

     

    

 

VII.No
Employment/Service Rights.

 

Nothing
in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining
such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s
Service at any time for any reason, with or without cause.

 

VIII.Non-Exclusivity
of the Plan. 

 

Nothing
contained in the Plan is intended to amend, modify, or rescind any previously approved compensation plans, programs or options
entered into by the Corporation. This Plan shall be construed to be in addition to and independent of any and all other arrangements.
Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Corporation for approval
shall be construed as creating any limitations on the power or authority of the Board to adopt, with or without stockholder approval,
such additional or other compensation arrangements as the Board may from time to time deem desirable.

 

IX.Governing
Law. 

 

All
questions and obligations under the Plan and agreements issued pursuant to the Plan shall be construed and enforced in accordance
with the laws of the State of Delaware.

 

X.Information
to Optionees and Participants. 

 

Optionees
and Participants under the Plan who do not otherwise have access to financial statements of the Corporation will receive the Corporation’s
financial statements at least annually.

 

    	 	15	 

     

    

 

APPENDIX

 

The
following definitions shall be in effect under the Plan:

 

A.“Award”
means any of the following stock or stock-based awards authorized for issuance or grant under the Plan: stock option, stock appreciation
right, direct stock issuance, restricted stock or restricted stock unit award or other stock-based award.

 

B.“Board”
means the Corporation’s board of directors.

 

C.“Change
in Control” shall be deemed to have occurred if, in a single transaction or series of related transactions:

 

(i)any
person (as such term is used in Section 13(d) and 14(d) of the 1934 Act, or persons acting as a group, other than a trustee or
fiduciary holding securities under an employment benefit program, is or becomes a “beneficial owner” (as defined in
Rule 13-3 under the 1934 Act), directly or indirectly of securities of the Corporation representing 51% or more of the combined
voting power of the Corporation, or

 

(ii)there
is a merger, consolidation, or other business combination transaction of the Corporation with or into another corporation, entity
or person, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of the Corporation
outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being
converted into shares of voting capital stock of the surviving entity) a majority of the total voting power represented by the
shares of voting capital stock of the Corporation (or surviving entity) outstanding immediately after such transaction, or

 

(iii)all
or substantially all of the Corporation’s assets are sold.

 

D.“Code”
means the Internal Revenue Code of 1986, as amended.

 

E.“common
stock” means the Corporation’s common stock, $0.001 par value per share.

 

F.“Compensation
Committee” means a committee of the Board comprised solely of two or more Eligible Directors who are appointed by the
Board to administer the Discretionary Grant and Stock Issuance Programs, who are “outside directors” within the meaning
of Section 162(m) of the Code and who are “non-employee directors” within the meaning of Rule 16b-3(b)(3)(i).

 

G.“Consultant”
means a consultant or other independent advisor who is under written contract with the Corporation (or any Parent or Subsidiary)
to provide consulting or advisory services to the Corporation (or any Parent or Subsidiary) and whose securities issued pursuant
to the Plan could be registered on Form S-8.

 

H.“Corporation”
means Pacific Ethanol, Inc., a Delaware corporation, and any corporate successor to all or substantially all of the assets or
voting stock of Pacific Ethanol, Inc. that shall by appropriate action adopt the Plan.

 

I.“Discretionary
Grant Program” means the discretionary grant program in effect under Article Two of the Plan pursuant to which
stock options and stock appreciation rights may be granted to one or more eligible individuals.

 

    	 	16	 

     

    

 

J.“Eligible
Director” means a Board member who is not, at the time of such determination, an employee of the Corporation (or any
Parent or Subsidiary).

 

K.“Employee”
means an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and method of performance.

 

L.“Exercise
Date” means the date on which the Corporation shall have received written notice of the option exercise.

 

M.“Fair
Market Value” per share of common stock on any relevant date shall be determined in accordance with the following provisions:

 

(i)If
the common stock is at the time traded on The NASDAQ Capital Market, then the Fair Market Value shall be the closing selling price
per share of common stock at the close of regular hours trading (i.e., before after- hours trading begins) on The NASDAQ Capital
Market on the date in question, as such price is reported by the National Association of Securities Dealers. If there is no closing
selling price for the common stock on the date in question, then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.

 

(ii)If
the common stock is not traded on The NASDAQ Capital Market but is at the time listed or quoted on any other market or exchange,
then the Fair Market Value shall be the closing selling price per share of common stock at the close of regular hours trading
(i.e., before after-hours trading begins) on the date in question on the market or exchange determined by the Plan Administrator
to be the primary market for the common stock, as such price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the common stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such quotation exists.

 

(iii)In
the absence of an established market for the common stock, the Fair Market Value shall be determined in good faith by the Plan
Administrator.

 

In
addition, with respect to any Incentive Option, the Fair Market Value shall be determined in a manner consistent with any regulations
issued by the Secretary of the Treasury for the purpose of determining fair market value of securities subject to an Incentive
Option plan under the Code.

 

N.“Family
Member” means, with respect to a particular Optionee or Participant, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law
or sister-in-law, including adoptive relationships.

 

O.“Hostile
Take-Over” means either of the following events effecting a change in control or ownership of the Corporation:

 

(i)the
acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than 50% of the total combined voting power of the Corporation’s
outstanding securities pursuant to a tender or exchange offer made directly to the Corporation’s stockholders that the Board
does not recommend such stockholders to accept, or

 

    	 	17	 

     

    

 

(ii)a
change in the composition of the Board over a period of 36 consecutive months or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership, to be composed of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the
Board approved such election or nomination.

 

P.
”Incentive Option” means an option that satisfies the requirements of Code Section 422.

 

Q.“Involuntary
Termination” means the termination of the Service of any individual that occurs by reason of:

 

(i)if
such individual is providing services to the Corporation pursuant to a written contract that defines “cause” or “misconduct”
or similar reasons such individual could be dismissed or discharged by the Corporation, then such individual’s involuntary
dismissal or discharge by the Corporation other than for any of such reasons and other than for Misconduct shall be an Involuntary
Termination;

 

(ii)if
such individual is not providing services to the Corporation pursuant to a written contract that defines “cause” or
“misconduct” or similar reasons such individual could be dismissed or discharged by the Corporation, then such individual’s
involuntary dismissal or discharge by the Corporation for reasons other than Misconduct shall be an Involuntary Termination;

 

(iii)if
such individual is providing services to the Corporation pursuant to a written contract that defines “good reason”
or similar reasons such individual could voluntarily resign, then such individual’s voluntary resignation for any of such
reasons shall be an Involuntary Termination; or

 

(iv)if
such individual is providing services to the Corporation pursuant to a written contract that does not define “good reason”
or similar reasons such individual could voluntarily resign, then such individual’s voluntary resignation following (A)
a change in his or her position with the Corporation that materially reduces his or her duties and responsibilities or the level
of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits
and target bonus under any corporate-performance based bonus or incentive programs) by more than 15% or (C) a relocation of such
individual’s place of employment by more than 50 miles, provided and only if such change, reduction or relocation is effected
by the Corporation without the individual’s consent, shall be an Involuntary Termination.

 

R.“Misconduct”
means the commission of: any act of fraud, embezzlement or dishonesty by the Optionee or Participant; any unauthorized use or
disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary); any illegal
or improper conduct or intentional misconduct, gross negligence or recklessness by such person that has adversely affected or,
in the determination of the Plan Administrator, is likely to adversely affect, the business, reputation, goodwill or affairs of
the Corporation (or any Parent or Subsidiary) in a material manner; any conduct that provides a basis for the Corporation to terminate
for “cause,” “misconduct” or similar reasons the written contract pursuant to which the Optionee or Participant
is providing Services to the Corporation; resignation by the Optionee or Participant on fewer than 30 days’ prior written
notice and in violation of an agreement to remain in Service of the Corporation, in anticipation of a termination for “cause,”
“misconduct” or similar reasons under the agreement, or in lieu of a formal discharge for “cause,” “misconduct”
or similar reasons. The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent
or Subsidiary) to discharge or dismiss any Optionee, Participant or other person in the Service of the Corporation (or any Parent
or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan,
to constitute grounds for termination for Misconduct.

 

    	 	18	 

     

    

 

S.“1934
Act” means the Securities Exchange Act of 1934, as amended.

 

T.“Non-Statutory
Option” means an option not intended to satisfy the requirements of Code Section 422.

 

U.“Optionee”
means any person to whom an option is granted under the Discretionary Grant Program.

 

V.“Parent”
means any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided
each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

W.“Participant”
means any person who is issued shares of common stock or restricted stock units or other stock-based awards under the Stock Issuance
Program.

 

X.“Permanent
Disability” or “Permanently Disabled” means the inability of the Optionee or the Participant to engage
in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve months or more.

 

Y.“Plan”
means the Corporation’s 2016 Stock Incentive Plan, as set forth in this document.

 

Z.“Plan
Administrator” means the particular entity, whether the Compensation Committee or the Board, which is authorized to
administer the Discretionary Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the
extent such entity is carrying out its administrative functions under those programs with respect to the persons then subject
to its jurisdiction.

 

AA.“Plan
Effective Date” means the date that stockholder approval of the Plan is obtained in accordance with Section III.A.
of Article Four.

 

BB.“Section
16 Insider” means an officer or director of the Corporation subject to the short-swing profit liability provisions of
Section 16 of the 1934 Act.

 

CC.“Service”
means the performance of services for the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee,
an Eligible Director or a Consultant, except to the extent otherwise specifically provided in the documents evidencing the Award
made to such person. For purposes of the Plan, an Optionee or Participant shall be deemed to cease Service immediately upon the
occurrence of the either of the following events: (i) the Optionee or Participant no longer performs services in any of the foregoing
capacities for the Corporation or any Parent or Subsidiary or (ii) the entity for which the Optionee or Participant is performing
such services ceases to remain a Parent or Subsidiary of the Corporation, even though the Optionee or Participant may subsequently
continue to perform services for that entity.

 

DD.“Stock
Issuance Agreement” means the agreement entered into by the Corporation and the Participant at the time of issuance
of shares of common stock under the Stock Issuance Program.

 

    	 	19	 

     

    

 

EE.“Stock
Issuance Program” means the stock issuance program in effect under Article Three of the Plan.

 

FF.“Subsidiary”
means any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

GG.“Take-Over
Price” means the greater of (i) the Fair Market Value per share of common stock on the date the option is surrendered
to the Corporation in connection with a Hostile Take-Over or, if applicable, (ii) the highest reported price per share of common
stock paid by the tender offeror in effecting such Hostile Take-Over through the acquisition of such common stock. However, if
the surrendered option is an Incentive Option, the Take-Over Price shall not exceed the clause (i) price per share.

 

HH.“10%
Stockholder” means the owner of stock (as determined under Code Section 424(d)) possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).

 

II.“Withholding
Taxes” means the federal, state and local income and employment taxes to which the Optionee or Participant may become
subject in connection with the issuance, exercise or vesting of the Award made to him or her under the Plan.

 

    	 	20Exhibit

Exhibit 10.1           

SEPARATION AGREEMENT AND MUTUAL GENERAL RELEASE
THIS SEPARATION AGREEMENT AND MUTUAL GENERAL RELEASE (this “Agreement”) is dated as of April 30th, 2016 and entered into by and between Jay Itzkowitz, for himself and his heirs, successors and assigns (collectively, “Employee”), and Global Eagle Entertainment Inc., a Delaware corporation (the “Company”) and its affiliates.  Together, Employee and Company shall be referred to, individually, as a “party,” and, collectively, as the “parties.”
RECITALS

A.Employee has served as an employee of the Company or one of its affiliates.

B.On April 30th, 2016 (the “Termination Date”), Employee’s employment by the Company will end by mutual agreement and Employee has received all wages, salary, commissions and other benefits owed to him by the Company as of that date.

C.The parties desire the full, amicable and final resolution of any and all claims that either party may have or claim to have against the other, on the conditions set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the adequacy and receipt of which are hereby expressly acknowledged, each of the parties hereto, intending to be legally bound, agrees as follows:
1.No Admission of Liability.  The parties agree that this Agreement, and performance of the acts required by it, do not constitute an admission of liability, culpability, negligence, or wrongdoing on the part of anyone, and will not be construed for any purpose as an admission of liability, culpability, negligence, or wrongdoing by any party.  The parties specifically acknowledge and agree that each party denies any liability for any matter released hereunder.

2.          Termination Benefits.  Notwithstanding the terms of the Employment Agreement, Employee shall be entitled to the following compensation and benefits (collectively, “Termination Benefits”), and no other compensation or benefits:

		
	•
	Following the effective date of this Agreement (as described below), Employee shall be paid twelve (12) months of base salary (for a total amount of $310,000.00), which amount shall be paid over the twelve (12) month period following the effective date of this Agreement (as described below) on the Company’s normal payroll dates and by direct deposit to the same account as currently used, less applicable withholdings and payroll taxes.

		
	•
	Following the effective date of this Agreement (as described below), Employee shall be provided with up to twelve (12) months of subsidized COBRA benefits coverage should Employee elect to enroll in this benefit. 

		
	•
	Following the effective date of this Agreement (as described below) Employee shall be provided with one (1) month of outplacement services by Knightsbridge or another third party selected by the Company.

		
	•
	Following the effective date of this Agreement (as described below), the exercise period upon termination of employment for employee’s currently vested stock options currently set at three (3) months from the date of such termination shall be extended to a period of twelve (12) months 

from the Termination Date; provided, however, that any such options shall be exercisable only to the extent the Employee was entitled to exercise such option on the Termination Date.  

3.          Release of Claims by Employee. In consideration for the promises set forth above, including without limitation the Termination Benefits, Employee, for himself and his heirs, successors and assigns, does hereby waive, release, acquit and forever discharge the Company and each of its current, former, and future parent corporations, subsidiaries, affiliates, employee benefit plans, and related entities or corporations, and their past and present officers, directors, shareholders, employees, creditors, fiduciaries, agents, employees, partners, attorneys, representatives, promoters, heirs, predecessors, successors, and assigns (each a “Company Released Party”), from any and all claims, actions, charges, complaints, grievances and causes of action (hereinafter collectively referred to as “Employee Claims”), of whatever nature, whether known or unknown, which exist or may exist on Employee’s behalf against each Company Released Party as of the date of this Agreement, including but not limited to any and all Employee Claims arising out of or relating to the offer of employment to Employee, Employee’s employment with the Company, or the termination of that employment.  Employee understands and agree that he is waiving any and all rights he may have had, now has, or in the future may have, to pursue any and all remedies available to him under any employment-related cause of action, including without limitation, any and all claims under his Employment Agreement, tort claims, contract claims, fiduciary duty claims, wage claims, bonus claims, commission claims, wrongful termination claims, public policy claims, retaliation claims, statutory claims, California Labor Code claims, personal injury claims, emotional distress claims, invasion of privacy claims, defamation claims, fraud claims, quantum meruit claims, and any and all claims arising under any federal, state or other governmental statute, law, regulation or ordinance covering employment, conditions of employment (including wage and hour laws) and/or discrimination in employment, including but not limited to, all as amended, the United States Constitution, the Constitution of the State of California, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967 (the “ADEA”), the Americans with Disabilities Act of 1990, the employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act, the Older Workers Benefit Protection Act, the Family and Medical Leave Act, the California Family Rights Act, and the California Fair Employment and Housing Act, including race, color, religious creed, national origin, ancestry, physical or mental disability, medical condition, family care leave, marital status, sex, sexual orientation, age and any harassment or retaliation. Notwithstanding the foregoing, Employee is not hereby releasing the Company from any of the following claims (collectively, the “Excluded Claims”): (a) any rights or claims for indemnification Employee may have pursuant to any written indemnification agreement with the Company to which Employee is a party, the charter or bylaws of the Company, or under applicable law; (b) any rights which cannot be waived as a matter of law; or (c) any claims arising from the breach of this Agreement.  In addition, nothing in this Agreement prevents Employee from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor, or the California Department of Fair Employment and Housing, except that Employee hereby waives any right to any monetary benefits in connection with any such claim, charge or proceeding.  Employee hereby represents and warrants that, other than the Excluded Claims, Employee is not aware of any claims Employee has or might have against any Company Released Party.
                         4.          Release of Claims by Company. In consideration of the obligations of the Employee set forth in this Agreement, for the release of claims by the Employee and for other good and valuable consideration, the Company, on its own behalf and on behalf of its predecessors, successors, assigns, subsidiaries, members, managers, officers, employees, representatives, attorneys, insurers and agents, hereby covenant not to sue and hereby release and discharge the Employee, his heirs, executors, administrators, successors, assigns, dependents, descendants, attorneys, insurers and agents (each an “Employee Released Party”), from any and all claims, actions, charges, complaints, grievances and causes of action (collectively, the Company Claims”) that any Company Released Party has or may in the future have against any Employee Released Party, or which might or could have been, might or could be (in the past, now or hereafter) asserted with respect to any Employee Released Party and any and all dealings and disputes between the parties, including but not limited to any and all Company Claims arising out of or relating to the Employee’s Employment with the Company or their affiliates or termination of that employment. 
5.          Waiver Of Unknown Claims.  Each party acknowledges that he or it may hereafter discover claims or facts in addition to or different from those that he or it now knows or believes to exist with respect to the subject matter of the releases contained in this Agreement and which, if known or suspected at the time of executing 

this Agreement, might have materially affected him or its release or its decision to enter into this Agreement.  Nevertheless, each party waives any right, claim, or cause of action that might arise as a result of such different or additional claims or facts. In particular, and without limiting the foregoing, the parties acknowledge that they have read and understand Section 1542 of the California Civil Code which reads as follows:
“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release which if known by him or her must have materially affected him or her settlement with the debtor.”
The parties hereby expressly waive and relinquish all rights and benefits under that provision of California law and any law of any jurisdiction of similar effect with respect to their release of any claims hereunder. In that regard, the parties agree that the releases set forth in this section shall be and remain in effect in all respects as complete general releases as to the matters released.
6.          Acknowledgement of Waiver of Claims Under ADEA.  Employee acknowledges that he is waiving and releasing any rights he may have under the ADEA and that this Agreement is knowing and voluntary.  Employee acknowledges that the consideration given for this Agreement and the general release set forth herein is in addition to anything of value to which Employee was already entitled.  Employee further acknowledges that he has been advised by this writing that:
(a)Employee should consult with an attorney prior to executing this Agreement;

(b)Employee has up to twenty-one (21) days within which to consider this Agreement and seven (7) days following his execution of this Agreement to revoke it as set forth in Section 21;

(c)This Agreement shall not be effective until the revocation period has expired; and

(d)Nothing in this Agreement precludes him from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs for doing so, unless specifically authorized by federal law.

7.          Ownership of Claims.  Employee represents and warrants that he is the sole and lawful owner of all rights, title and interest in and to all released matters, claims and demands referred to herein.  Employee further represents and warrants that there has been no assignment or other transfer of any interest in any such matters, claims or demands which Employee may have against the Company.

8.          Return of Company Property.  Company will allow Employee to retain the current MacBook Air and iphone 6 (including the applicable phone number) issued to him following a complete back up by the Company.  Except as otherwise set forth in this Agreement, Employee agrees that, prior to and as a condition of receiving the benefits set forth in this Agreement, Employee will return all Company property in his possession, custody, or control, including, without limitation, Employee’s computer with the data files, including, without limitation, communications and documents, thereon completely intact as of immediately prior to the end of Employee’s employment with the Company, and, without limiting the generality of the foregoing, the storage drives on such devices shall not have been reformatted or erased.  Further, Employee will provide the Company all passwords and passcodes with respect to any Company material stored on any Company property that was in Employee’s possession or control during Employee’s employment with the Company, including access to any online storage repositories utilized in the course of employment, and copies of any Company material stored on any non-Company electronic and/or online storage repositories under the control of Employee, all in the form utilized by Employee during his employment. 
9.          Proprietary Information.  Employee acknowledges that due to the position he has occupied and the responsibilities he has had at Company, he has received confidential information concerning Company’s procedures, customers, sales, prices, contracts, and the like. Employee acknowledges and agrees that if he previously 

executed any proprietary rights, non-disclosure or similar agreement with the Company or any of its affiliates, he shall remain bound by the obligations of such agreements.  
10.          Confidentiality.  Employee understands and agrees that this Agreement, and the matters discussed in negotiating its terms, are entirely confidential.  It is therefore expressly understood and agreed by Employee that he will not reveal, discuss, publish or in any way communicate any of the terms, amount or fact of this Agreement to any person, organization or other entity, except to his immediate family members and professional representatives, all of whom shall be informed of and agree to be bound by this confidentiality clause (unless already bound by an equivalent obligation of confidentiality) before any such disclosure
11.          Non-Disparagement and Reference.  Employee agrees that he will not in any way, either directly or indirectly, disparage the Company or any other Company Released Party (or any of their respective employees, officers, directors, or agents), including, without limitation, by conduct or communication; provided that you may respond accurately and fully to any question, inquiry or request for information when required by legal process.  Company agrees that it will, if requested by Employee in connection with any future employment, provide a positive reference letter.
12.          Termination of Agreements.  Except as set forth herein, including the extension of the exercise time period set forth in Employee’s stock option agreements with the Company, and with respect to any agreements containing obligations of Employee to preserve and protect the confidential information of the Company and its affiliates, containing obligations of Employee to assign intellectual property to the Company and its affiliates, and containing any non-competition and non-solicitation obligations of Employee (including, but, not limited to, such provisions in Attachment A to Employee’s Offer Letter dated October 1, 2013), this Agreement supersedes and replaces all other previous agreements between Employee and the Company and its affiliates, whether express or implied, oral or written, (collectively, “Prior Agreements”).  Except with respect to the foregoing, all Prior Agreements are terminated and no party to them has any continuing rights or obligations under any such agreement.
13.            Cooperation in Litigation.  Employee agrees that he will (i) provide reasonable assistance and cooperation to the Company in activities related to the prosecution or defense of any pending or future lawsuits, arbitrations, and other proceedings or claims involving the Company (“Company Litigation”); (ii) make himself available to the Company, at the cost of the Company, on reasonable notice in a manner that is not unduly burdensome to the Employee or to his potential future employer and without the need for issuance of any subpoena or similar process to testify in any Company Litigation; (iii) refrain from providing any information related to any Company Litigation or potential Company Litigation to any non-Company representative until he shall (A) have first obtained written consent of the Company or (B) be required to provide such information pursuant to legal process; and (iv) if required by legal process to provide sworn testimony in any Company Litigation, consult with and permit Company-designated legal counsel to be present for such testimony, the costs of such designated counsel to be solely the responsibility of the Company.  If sworn testimony of the Employee is required by legal process in any Company Litigation, Employee shall confine his testimony to items about which he has knowledge, rather than speculation or opinion testimony, unless otherwise directed by legal process.  The parties hereto agree that the provisions of this paragraph are not applicable to any proceeding involving any alleged breach of this Agreement.
14.          Indemnification and D&O Insurance Coverage. Employee will continue to be covered in full under the terms of the “Form of Indemnity Agreement” attached hereto as Exhibit A (the “Indemnity Agreement”) and in particularly those provisions relating to an Officer of the Company as covered therein. The Company agrees that Employee is and will remain a covered “Officer” for purposes of the Indemnity Agreement. In addition, the Company covenants that it will keep D&O insurance coverage in place for the Employee. The Corporation agrees that nothing contained in this Letter Agreement releases or otherwise impacts the Employee’s rights pursuant to the Company’s Directors and Officers liability insurance policies, including but not limited to the Company’s  ‘Side A Difference in Conditions’ (‘DIC’) policies (collectively, the “D&O Policies”). The D&O Policies will continue to provide the Employee coverage pursuant to their respective terms and conditions for any claim that potentially involves the Employee or the Employee’s actions undertaken during his employment with the Company. Should Employee require legal representation pursuant to the Company’s indemnification obligations, Employee will have the right to approve the counsel provided by the Company pursuant to its indemnification obligations and Employee will have the 

right to counsel who bills at rates similar to those charged by counsel retained on behalf of other senior officers of the Company in any similar matter. The Company reaffirms its obligations under the Indemnity Policy to advance all fees and expenses in connection with any legal representation provided pursuant to the Indemnity Agreement.
15.          Press Release.  Should the Company wish to issue a press release or any formal form of communication regarding the Employee’s separation from the Company, such press release or other form of communication shall be to the mutual satisfaction of the Company and the Employee
16.          Voluntary Execution.  Employee hereby acknowledges that he has read and understands this Agreement and that he signs this Agreement voluntarily and without coercion.  Employee further acknowledges that he has been advised by the Company to obtain independent legal advice regarding the matters contained in this Agreement.  Employee further acknowledges that the waivers he has made in this Agreement are knowing, conscious and voluntary and are made with full appreciation that he is forever foreclosed from pursuing any of the rights waived.
17.          Severability.  Employee agrees that if any provision of the release given by him under this Agreement is found to be unenforceable or illegal, it will not affect the enforceability of the remaining provisions and the courts may enforce all remaining provisions to the extent permitted by law.
18.          Successors And Assigns.  It is expressly understood and agreed by Employee that this Agreement and all of its terms shall be binding upon the parties’ respective representatives, heirs, executors, administrators, successors and assigns, and inures to the benefit of each of the Company’s current, former, and future corporate parents, subsidiaries, related entities, affiliates, employee benefit plans, and related entities or corporations and their past and present officers, directors, shareholders, creditors, fiduciaries, agents, employees, partners, attorneys, representatives, promoters, heirs, predecessors, successors, and assigns.
19.          Integration.  This Agreement (including the Recitals hereto) constitutes a single, integrated, written contract, expressing the entire agreement between the parties; provided, however, that nothing in this Agreement is intended to or shall be construed to limit, impair or terminate any obligation of Employee pursuant to any restrictive covenants under the Prior Agreements, as provided in Section 13 of this Agreement.  In this regard, Employee represents and warrants that he is not relying on any promises or representations which do not appear written herein.  Employee acknowledges and agrees that he enters into this Agreement based upon his own judgment and not in reliance upon any representations or promises made by the Company or anyone acting on behalf of the Company, other than those contained within this Agreement.  The parties further agree that if any of the facts or matters upon which they now rely in making this Agreement hereafter prove to be otherwise, this Agreement will nonetheless remain in full force and effect.  Employee and Company further understand and agree that the Agreement can be amended or modified only by a written agreement, signed by all of the parties hereto.
21.          Time Periods.  Employee acknowledges that he has been given twenty-one (21) days to consider this Agreement.  If Employee elects to sign this Agreement before that time period expires, Employee will do so knowingly and voluntarily.  Employee understands that he has up to seven (7) days after executing and delivering this Agreement to rescind this agreement by notifying Zant Chapelo at the Company (zant.chapelo@geemedia.com) of this fact in writing within the seven (7) day period.  The effective date of this Agreement will be at the end of the seven (7) day period if no revocation has been received.

IN WITNESS WHEREOF, the parties hereto have executed this Separation Agreement and General Release on the date first written above.
	
		
	 
	EMPLOYEE
Jay Itzkowitz
By:  /s/ Jay Itzkowitz

	 
	COMPANY

Global Eagle Entertainment Inc.

By:      /s/ Zant Chapelo

Name: Zant Chapelo

Title:   SVP Human Resources and Org Development

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