<SEC-DOCUMENT>0001019687-12-002458.txt : 20120719
<SEC-HEADER>0001019687-12-002458.hdr.sgml : 20120719
<ACCEPTANCE-DATETIME>20120719162520
ACCESSION NUMBER:		0001019687-12-002458
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20120713
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20120719
DATE AS OF CHANGE:		20120719

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Pacific Ethanol, Inc.
		CENTRAL INDEX KEY:			0000778164
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL ORGANIC CHEMICALS [2860]
		IRS NUMBER:				412170618
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-21467
		FILM NUMBER:		12970221

	BUSINESS ADDRESS:	
		STREET 1:		400 CAPITOL MALL, SUITE 2060
		CITY:			SACRAMENTO
		STATE:			CA
		ZIP:			95814
		BUSINESS PHONE:		916-403-2123

	MAIL ADDRESS:	
		STREET 1:		400 CAPITOL MALL, SUITE 2060
		CITY:			SACRAMENTO
		STATE:			CA
		ZIP:			95814

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ACCESSITY CORP
		DATE OF NAME CHANGE:	20030627

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DRIVERSSHIELD COM CORP
		DATE OF NAME CHANGE:	20001115

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FIRST PRIORITY GROUP INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>paceth_8k-071312.htm
<DESCRIPTION>CURRENT REPORT ON FORM 8-K
<TEXT>
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<P STYLE="margin-top: 0; text-align: center; margin-bottom: 0"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CURRENT REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>PURSUANT TO SECTION 13 OR 15(d) OF</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>THE SECURITIES EXCHANGE ACT OF 1934</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; font-size: 10pt; text-align: center">Date of Report (Date of earliest event reported)</TD>
    <TD STYLE="width: 50%; border-bottom: black 1.5pt solid; font-size: 10pt; font-weight: bold; text-align: center">July 13, 2012</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-bottom: black 1.5pt solid; font-size: 10pt; font-weight: bold; text-align: center">PACIFIC ETHANOL, INC.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: center">(Exact name of registrant as specified in its charter)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; font-size: 10pt; font-weight: bold; text-align: center">Delaware</TD>
    <TD STYLE="width: 2%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 32%; border-bottom: Black 1.5pt solid; font-size: 10pt; font-weight: bold; text-align: center">000-21467</TD>
    <TD STYLE="width: 2%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 32%; border-bottom: black 1.5pt solid; font-size: 10pt; font-weight: bold; text-align: center">41-2170618</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(State or other jurisdiction</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">of incorporation)</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: center">(Commission File Number)</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(IRS Employer</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Identification No.)</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="5">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 53%; border-bottom: black 1.5pt solid; font-size: 10pt; font-weight: bold; text-align: center">400 Capitol Mall, Suite 2060, Sacramento, CA</TD>
    <TD STYLE="width: 47%; border-bottom: black 1.5pt solid; font-size: 10pt; font-weight: bold; text-align: center">95814</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: center">(Address of principal executive offices)</TD>
    <TD STYLE="font-size: 10pt; text-align: center">(Zip Code)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 53%; font-size: 10pt">Registrant&rsquo;s telephone number, including area code:</TD>
    <TD STYLE="width: 47%; border-bottom: black 1.5pt solid; font-size: 10pt; font-weight: bold; text-align: center">(916) 403-2123</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><BR>
&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="font-size: 10pt; text-align: center">(Former name or former address, if changed since last report)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 12pt 0 0">Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (<I>see </I>General
Instruction A.2. below):</P>

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<TD STYLE="width: 17pt; text-align: left"><FONT STYLE="font-family: Wingdings 2">&#163;</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD>
</TR></TABLE>

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<TD STYLE="width: 17pt; text-align: left"><FONT STYLE="font-family: Wingdings 2">&#163;</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR></TABLE>

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<TD STYLE="width: 17pt; text-align: left"><FONT STYLE="font-family: Wingdings 2">&#163;</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))</TD>
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<TD STYLE="width: 17pt; text-align: left"><FONT STYLE="font-family: Wingdings 2">&#163;</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 120px; font-size: 10pt; font-weight: bold">Item 1.01.</TD>
    <TD STYLE="font-size: 10pt; font-weight: bold">Entry into a Material Definitive Agreement.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On June 27, 2012, Pacific Ethanol, Inc. (the
&ldquo;Company&rdquo;) entered into Agreements for Purchase and Sale of Units in New PE Holdco LLC (&ldquo;Agreements&rdquo;) dated
as of June 21, 2012 with various holders (&ldquo;Sellers&rdquo;) of ownership interests in New PE Holdco LLC. Under the terms of
the Agreements, the Company agreed to purchase from the Sellers an aggregate of approximately 33% of the outstanding ownership
interests in New PE Holdco LLC for approximately $20.0 million, payable at least $10.0 million in cash and the balance in principal
amount of Senior Unsecured Notes (&ldquo;Notes&rdquo;) issued to the Sellers. The Sellers are Credit Suisse Securities (USA) LLC,
Continental Casualty Company, Wexford Catalyst Investors LLC, Wexford Spectrum Investors LLC, Debello Investors LLC and Candlewood
Special Situations Fund L.P.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The acquisition of ownership interests in New
PE Holdco LLC closed on July 13, 2012, increasing the Company&rsquo;s ownership in New PE Holdco LLC to 67.025%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The terms of the Agreements and the Notes were
briefly described in a Current Report on Form 8-K filed by the Company on June 27, 2012 (the &ldquo;Initial Form 8-K&rdquo;). The
description of the terms of the Agreements and the Notes in the Initial Form 8-K is incorporated herein by reference, which is
qualified in its entirety to the full text of those documents, each of which is incorporated by reference or filed as an exhibit
to this Current Report on Form 8-K. Readers should review those documents for a complete understanding of the terms and conditions
of the acquisition of ownership interests in New PE Holdco LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 120px; font-size: 10pt; font-weight: bold">Item 2.01.</TD>
    <TD STYLE="font-size: 10pt; font-weight: bold">Completion of Acquisition or Disposition of Assets.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On July 13, 2012, the Company acquired from
the Sellers approximately 33% of the outstanding ownership interests in New PE Holdco LLC. New PE Holdco LLC owns four ethanol
production facilities located in Madera, California; Boardman, Oregon; Burley, Idaho; and Stockton, California. The description
of the acquisition of ownership interests in New PE Holdco LLC in Item 1.01 of this Current Report on Form 8-K is incorporated
in its entirety into this Item 2.01 by this reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 120px; font-size: 10pt; font-weight: bold">Item 2.03.</TD>
    <TD STYLE="font-size: 10pt; font-weight: bold">Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On July 13, 2012, the Company issued Notes to
the Sellers in the aggregate principal amount of $10.0 million in connection with the acquisition of ownership interests in New
PE Holdco LLC. The description of the acquisition of ownership interests in New PE Holdco LLC and the Notes in Item 1.01 of this
Current Report on Form 8-K is incorporated in its entirety into this Item 2.03 by this reference.</P>

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<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; font-weight: bold; width: 120px">Item 9.01.</TD>
    <TD STYLE="font-size: 10pt; font-weight: bold">Financial Statements and Exhibits.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 12pt 0 0 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; padding-right: 5.4pt; padding-left: 5.4pt">(a)</TD>
    <TD STYLE="width: 90%; padding-right: 5.4pt; padding-left: 5.4pt"><U>Financial statements of businesses acquired</U>.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Not applicable.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">(b)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt"><U>Pro forma financial information</U>.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Not applicable.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">(c)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt"><U>Shell company transactions</U>.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Not applicable.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">(d)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt"><U>Exhibits</U>.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 12pt 0 0 1in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="RIGHT" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; padding-right: 5.4pt; text-decoration: underline">Number</TD>
    <TD STYLE="width: 80%; padding-right: 5.4pt; text-decoration: underline">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt">10.1</TD>
    <TD STYLE="padding-right: 5.4pt">Form of Agreement for Purchase and Sale of Units in New PE Holdco LLC dated as of June 21, 2012 (1)(*)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt">10.2.</TD>
    <TD STYLE="padding-right: 5.4pt">Form of Senior Unsecured Note dated July 13, 2012 (2)(*)</TD></TR>
</TABLE><BR STYLE="clear: both">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="RIGHT" STYLE="width: 90%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; width: 10%; border-top: Black 1pt solid">(1)</TD>
    <TD STYLE="padding-right: 5.4pt; width: 80%">Filed as exhibit 10.1 to the Current Report on Form 8-K for June 27, 2012 as filed with the Securities and Exchange Commission on June 27, 2012.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt">(2)</TD>
    <TD STYLE="padding-right: 5.4pt">Filed herewith.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt">(*)</TD>
    <TD STYLE="padding-right: 5.4pt">All of the agreements filed as exhibits to this report contain representations and warranties made by the parties thereto. The assertions embodied in such representations and warranties are not necessarily assertions of fact, but a mechanism for the parties to allocate risk.&nbsp;&nbsp;Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts or for any other purpose at the time they were made or otherwise.</TD></TR>
</TABLE>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 12pt 0; text-indent: 0.5in">Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

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    <TD STYLE="width: 51%; padding-top: 12pt">Date:&nbsp;&nbsp;July 19, 2012</TD>
    <TD STYLE="width: 49%; padding-top: 12pt">PACIFIC ETHANOL, INC.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>By: <U>/S/ BRYON T. MCGREGOR</U></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-left: 15pt">Bryon T. McGregor</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-left: 15pt">Chief Financial Officer</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>EXHIBITS FILED WITH THIS REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 12pt 0 0">10.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Form of Senior Unsecured Note dated July 13, 2012</P>



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<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>2
<FILENAME>paceth_8k-ex1002.htm
<DESCRIPTION>FORM OF SENIOR UNSECURED NOTE
<TEXT>
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<P STYLE="margin: 0">Exhibit 10.2</P>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: white"><B>THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I)
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B)
AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.&nbsp;&nbsp;NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 8 HEREOF.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="background-color: white"><B>Pacific
Ethanol, Inc.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="background-color: white"><B>Senior
Unsecured Note</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

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    <TD STYLE="width: 50%; padding-right: 5.4pt; font-size: 10pt">Issuance Date:&nbsp;&nbsp;July 13, 2012</TD>
    <TD STYLE="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: right">$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white"><B>FOR VALUE RECEIVED, </B>Pacific
Ethanol, Inc., a Delaware corporation (the &ldquo;<B>Company</B>&rdquo;), hereby promises to pay to the order of [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
or its registered assigns (&ldquo;<B>Holder</B>&rdquo;) the amount set out above (as reduced pursuant to the terms hereof pursuant
to redemption or otherwise, the &ldquo;<B>Principal</B>&rdquo;) when due, whether upon the Maturity Date, acceleration, redemption
or otherwise (in each case in accordance with the terms hereof) and to pay interest (&ldquo;<B>Interest</B>&rdquo;) on any outstanding
Principal (as defined above) at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date
(the &ldquo;<B>Issuance Date</B>&rdquo;) until the same becomes due and payable, whether upon the Maturity Date, acceleration,
redemption or otherwise (in each case in accordance with the terms hereof). This Senior Unsecured Note (including all Senior Unsecured
Notes issued in exchange, transfer or replacement hereof, this &ldquo;<B>Note</B>&rdquo;) is one of an issue of Senior Unsecured
Notes issued pursuant to several substantially identical purchase agreements (including the Purchase Agreement (as defined below))
on the Issuance Date (collectively, the &ldquo;<B>Notes</B>&rdquo; and such other Senior Unsecured Notes, the &ldquo;<B>Other Notes</B>&rdquo;).
Certain capitalized terms used herein are defined in Section 19.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
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    <TD STYLE="text-align: left; width: 5%">1.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">PAYMENTS OF PRINCIPAL.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">1.1.&#9;<FONT STYLE="background-color: white">On
the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, all accrued and
unpaid Interest and accrued and all other unpaid amounts hereunder. Any such payment shall be applied pro rata to the Note and
the Other Notes in accordance with the respective Principal amounts thereof.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">1.2.&#9;<FONT STYLE="background-color: white">The
Company may, at its sole option, at any time prepay this Note, without premium or penalty, in whole or in part, on one Business
Day&rsquo;s prior written notice to the Holder, at a prepayment price equal to the amount of outstanding Principal so to be prepaid,
together with accrued and unpaid Interest on such Principal, if any, through the date of such prepayment. Any such payment shall
be applied pro rata to the Note and the Other Notes in accordance with the respective Principal amounts thereof.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">1.3.&#9;Until
such time as the outstanding balance of the Note and the Other Notes are paid in full, within three Business Days of the receipt
by the Company of any Net Cash Proceeds or any distributions to which the Company is entitled to with respect to Net Cash Proceeds
received by any Subsidiary arising from any (i) Asset Sale (other than Asset Sales made pursuant to Section 5.6), (ii) Equity
Issuance, (iii) Debt Issuance or (iv) Property Loss Event, the Company shall prepay the Note and the Other Notes, ratably in accordance
with their respective principal amounts, in an amount equal to 100% of such Net Cash Proceeds (or that amount necessary to pay
the Note and the Other Notes in full).</P>

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    <TD STYLE="text-align: left; width: 5%">2.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">INTEREST; INTEREST RATE.&nbsp;&nbsp;Interest on this Note shall accrue
at the Interest Rate and shall commence accruing on the Issuance Date and Interest shall be computed on the basis of a 360-day
year and twelve 30-day months and shall be payable in cash in arrears on the last day of each calendar month, beginning with July
31, 2012.&nbsp;&nbsp;From and after the occurrence and during the continuance of any Event of Default, the Interest Rate shall
automatically be increased to seven percent (7%), and shall be payable on demand. In the event that such Event of Default is subsequently
cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure, provided
that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue
to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such
cure of such Event of Default.</FONT></TD></TR>
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    <TD STYLE="text-align: left; width: 5%">3.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">RIGHTS UPON EVENT OF DEFAULT.</FONT></TD></TR>
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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">3.1.&#9;<FONT STYLE="background-color: white"><U>Event
of Default</U>.&nbsp;&nbsp;Each of the following events shall constitute an &ldquo;<B>Event of Default</B>&rdquo;:</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(a)&#9;<FONT STYLE="background-color: white">the
Company&rsquo;s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note
or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby
and thereby, except, in the case of a failure to pay Interest or other non-Principal amounts when and as due, in which case only
if such failure remains uncured for a period of at least five (5) days;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(b)&#9;<FONT STYLE="color: black; background-color: white">bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or
against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be
dismissed within sixty (60) days of their initiation;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(c)&#9;<FONT STYLE="color: black; background-color: white">the
commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign
law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part
of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance
of any such action or the taking of any action by any Person to commence a UCC foreclosure sale or any other similar action under
federal, state or foreign law or of any substantial part of the Company&rsquo;s property or any substantial part of any Subsidiary&rsquo;s
property;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(d)&#9;<FONT STYLE="color: black; background-color: white">the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or
insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;</FONT></P>

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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(e)&#9;<FONT STYLE="color: black; background-color: white">a
final judgment, judgments, any arbitration or mediation award or any settlement of any litigation or any other satisfaction of
any claim made by any Person pursuant to any litigation, as applicable, (each a &ldquo;<B>Judgment</B>&rdquo;, and collectively,
the &ldquo;<B>Judgments</B>&rdquo;) with respect to the payment of cash, securities and/or other assets with an aggregate fair
market value in excess of $2,000,000 are rendered against, agreed to or otherwise accepted by, the Company and/or any of its Subsidiaries
and which Judgments are not, within thirty (30) days after the entry thereof, bonded, discharged or stayed pending appeal, or
are not discharged within thirty (30) days after the expiration of such stay; provided, however, any Judgment which is covered
by insurance or an indemnity from a credit worthy party shall not be included in calculating the $2,000,000 amount set forth above
so long as the Company provides the Holder written evidence of such insurance coverage or indemnity (which evidence shall be reasonably
satisfactory to the Holder) to the effect that such Judgment is covered by insurance or an indemnity and the Company or such Subsidiary
(as the case may be) will receive the proceeds of such insurance or indemnity prior to the later of (i) thirty (30) days after
the issuance of such Judgment or (ii) any requirement to pay such Judgment;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(f)&#9;<FONT STYLE="color: black; background-color: white">the
Company and/or any Subsidiary, individually or in the aggregate, fails to pay, when due, or within any applicable grace period,
any payment with respect to any Indebtedness in excess of $2,000,000 due to any third party or is otherwise in breach or violation
of any agreement for monies owed or owing in an amount in excess of $2,000,000, which breach or violation permits the other party
thereto to declare a default or otherwise accelerate amounts due thereunder;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(g)&#9;<FONT STYLE="color: black; background-color: white">any
breach or failure in any respect by the Company to comply with any provision of Section 5 of this Note; <U>provided</U> that if
such breach or failure is not material or is otherwise inadvertent or unintentional, then no Event of Default shall occur unless
such breach or failure is not cured within thirty (30) days of written notice from the Required Holders to the Company;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(h)&#9;<FONT STYLE="color: black; background-color: white">any
Material Adverse Change occurs (other than with respect to any Excluded Events) and is not otherwise cured within thirty (30)
days of written notice thereof by the Required Holders;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(i)&#9;<FONT STYLE="color: black; background-color: white">any
provision of any Transaction Document (shall at any time for any reason (other than pursuant to the express terms thereof) cease
to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested
by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having
jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary
shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document to which
it is a party;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(j)&#9;<FONT STYLE="color: black; background-color: white">any
Change of Control or Fundamental Transaction occurs without the written consent of the Required Holders; or</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">(k)&#9;<FONT STYLE="color: black; background-color: white">any
Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">Upon the occurrence of an
Event of Default with respect to this Note or any Other Note, the Company shall promptly deliver written notice thereof via facsimile
and overnight courier (with next day delivery specified) (an &ldquo;<B>Event of Default Notice</B>&rdquo;) to the Holder.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: black; background-color: white">Notwithstanding
anything to the contrary set forth above or elsewhere herein, the following Indebtedness and obligations, and any defaults with
respect thereto, shall not constitute an Event of Default under this Note: (i) any payments contested by the Company and/or such
Subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate reserves have been set aside
for the payment thereof in accordance with GAAP and, with respect to any subsidiary, such default is otherwise resolved in a manner
which does not result in a Material Adverse Change; (ii) with respect to any Subsidiary, any default with respect to a non-recourse
obligation and such default does not otherwise result in a Material Adverse Change and (iii) any default with respect to any </FONT>p<FONT STYLE="background-color: white">reviously
accrued and unpaid dividends with respect to the Company&rsquo;s Series B Cumulative Convertible Preferred Stock outstanding as
of the Issuance Date</FONT>.</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">3.2.&#9;If
an Event of Default (other than an Event of Default specified in Section 3.1(b), (c) or (d) above) occurs, then the Holder may,
by written notice to the Company, declare this Note to be forthwith due and payable, as to Principal, Interest and any other amounts
due hereunder, whereupon this Note shall become forthwith due and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Company. If any Event of Default specified in Section 3.1(b), (c)
or (d) above occurs, the Principal of and accrued Interest on this Note shall automatically forthwith become due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Company.</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">3.3.&#9;If
any Event of Default occurs and is continuing, the Holder may pursue any available remedy to collect the payment of Principal,
Interest and any other amounts due under this Note or to enforce the performance of any provision of this Note. If an Event of
Default occurs and is continuing, the holder of this Note may proceed to protect and enforce its rights by an action at law, suit
in equity or other appropriate proceeding. No course of dealing and no delay on the part of the holder of this Note in exercising
any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder&rsquo;s rights, powers or remedies.
No right, power or remedy conferred by this Note upon the holder hereof shall be exclusive of any other right, power or remedy
referred to herein or now or hereafter available at law, in equity, by statute or otherwise.</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">4.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions
of this Note and take all action as may be required to protect the rights of the Holder of this Note.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">5.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">COVENANTS. Until all of the Notes have been redeemed or otherwise satisfied
in accordance with their terms:</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.1.&#9;<FONT STYLE="background-color: white"><U>Rank</U>.
All payments due under this Note (a) shall rank <I>pari passu</I> with all Other Notes and (b) shall be senior to all other Indebtedness
of the Company (excluding any other Permitted Indebtedness of the Company).</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.2.&#9;<FONT STYLE="background-color: white"><U>Incurrence
of Indebtedness</U>. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the
Other Notes and (ii) Permitted Indebtedness).</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.3.&#9;<FONT STYLE="background-color: white"><U>Existence
of Liens</U>. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow
or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
owned by the Company or any of its Subsidiaries (collectively, &ldquo;<B>Liens</B>&rdquo;) other than Permitted Liens.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.4.&#9;<FONT STYLE="background-color: white"><U>Restricted
Payments</U>. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem,
defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness
(other than Permitted Payments with respect to any Permitted Subsidiary Indebtedness), whether by way of payment in respect of
principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise made or,
after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii) an event
that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.5.&#9;<FONT STYLE="background-color: white"><U>Restriction
on Redemption and Cash Dividends</U>. Except for any Permitted Distributions or to otherwise effect the payment of Principal pursuant
to Section 1.3 above in accordance with the provisions of this Note, the Company shall not, and the Company shall cause each of
its Subsidiaries to not, directly or indirectly, redeem, repurchase or pay any cash dividend or distribution on any of its capital
stock without the prior express written consent of the Holder.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.6.&#9;<FONT STYLE="background-color: white"><U>Restriction
on Transfer of Assets</U>. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary owned
or hereafter acquired whether in a single transaction or a series of related transactions, other than (i) sales, leases, licenses,
assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries that are
in the ordinary course of their respective businesses and, after giving effect thereto, would not result in a Material Adverse
Change; provided that any Net Cash Proceeds with respect thereto are applied in accordance with Section 1.3 above, (ii) sales
of product, inventory or receivables in the ordinary course of business, (iii) Permitted Payments or (iv) the sale, leasing, licensing,
assignment, transfer, conveyance or other disposition of any assets or rights of any Subsidiary to the extent permitted under
the Kinergy Credit Facility or the Pacific Holding Credit Facility.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.7.&#9;<FONT STYLE="background-color: white"><U>Change
in Nature of Business</U>.&nbsp;The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, engage in any material line of business substantially different from those lines of business conducted by the Company
and each of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto.&nbsp;&nbsp;The
Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate
structure or purpose in any material respect.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.8.&#9;<FONT STYLE="background-color: white"><U>Preservation
of Existence, Etc</U>.&nbsp;&nbsp;The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and
preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain,
duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in
which the transaction of its business makes such qualification necessary.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.9.&#9;<FONT STYLE="color: black; background-color: white"><U>Maintenance
of Properties, Etc</U>. &nbsp;The Company shall maintain and preserve in all material respects, and cause each of its Subsidiaries
to maintain and preserve in all material respects, all of its properties which are necessary or useful in the proper conduct of
its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries
to comply, at all times with the provisions of all material leases to which it is a party as lessee or under which it occupies
property, so as to prevent any material loss or forfeiture thereof or thereunder.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">5.10.&#9;<FONT STYLE="color: black; background-color: white"><U>Maintenance
of Insurance</U>.&nbsp;&nbsp;The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible
and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent
and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and
business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect
thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">6.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">AMENDING THE TERMS OF THIS NOTE.&nbsp;&nbsp;No provision of this Note may
be modified or amended without the prior written consent of the Required Holders and the Company; provided, however (a) no such
modification or amendment shall, without the consent of the Holder hereunder, change the stated maturity date of this Note, or
reduce the principal amount hereof, or reduce the rate or extend the time of payment of any interest hereon, or reduce any amount
payable on redemption or prepayment hereof, or impair or affect the right of the Holder to receive payment of principal of, and
interest on, the Notes or to institute suit for payment thereof, or impair or affect the right of the Holder to receive any other
payment provided for under this Note and (b) the Holder hereunder may waive, reduce or excuse, or forbear from the exercise of
any rights and remedies with respect to, any Event of Default under this Note without notice to or the consent of any holder of
any of the Other Notes.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">7.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">TRANSFER. This Note may be offered, sold, assigned or transferred by the
Holder in whole but not in part, subject only to the provisions of the restrictive legend set forth at the top of the first page
of this Note; provided that, so long as no Event of Default has occurred and is continuing, any such sale, assignment or transfer
shall be subject to the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: left"><FONT STYLE="font-size: 10pt; background-color: white">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: left"><FONT STYLE="font-size: 10pt; background-color: white">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">8.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">REISSUANCE OF THIS NOTE.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">8.1.&#9;<FONT STYLE="background-color: white"><U>Transfer</U>.
If this Note is to be transferred as permitted under Section 7 above, the Holder shall surrender this Note to the Company, whereupon
the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 8.3), registered
as the Holder may request.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in; text-align: left">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">8.2.&#9;<FONT STYLE="color: black; background-color: white"><U>Lost,
Stolen or Mutilated Note</U>. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice
as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note (in accordance with Section 8.3) representing the outstanding Principal.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">8.3.&#9;<FONT STYLE="color: black; background-color: white"><U>Issuance
of New Notes</U>. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding,
(iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note,
(iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest on the Principal
and Interest of this Note, from the Issuance Date.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; margin-bottom: 0pt; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">9.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note
at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit
the Holder&rsquo;s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of
this Note.&nbsp;&nbsp;The Company covenants to the Holder that there shall be no characterization concerning this instrument other
than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like
(and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein,
be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition
to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without
any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested
by the Holder to enable the Holder to confirm the Company&rsquo;s compliance with the terms and conditions of this Note (including,
without limitation, compliance with Section 5).</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">10.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.&nbsp;&nbsp;If (a) this
Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding
or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there
occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors&rsquo; rights
and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement
or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation,
attorneys&rsquo; fees and disbursements.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in"><FONT STYLE="font-size: 10pt; background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">11.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; color: black; background-color: white">CONSTRUCTION; HEADINGS.&nbsp;&nbsp;This Note shall be deemed
to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings
of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Terms used
in this Note but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date
in such other Transaction Documents unless otherwise consented to in writing by the Holder.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in"><FONT STYLE="font-size: 10pt; color: black; background-color: white">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in"><FONT STYLE="font-size: 10pt; color: black; background-color: white">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">12.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; color: black; background-color: white">FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on
the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other
right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of
the waiving party.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">13.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; color: black; background-color: white">NOTICES; CURRENCY; PAYMENTS.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">13.1.&#9;<FONT STYLE="background-color: white"><U>Notices</U>.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 10(a) of the Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken
pursuant to this Note, including in reasonable detail a description of such action and the reason therefore.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">13.2.&#9;<FONT STYLE="background-color: white"><U>Currency</U>.&nbsp;&nbsp;All
principal, interest and other amounts owing under this Note that, in accordance with their terms, are paid in cash shall be paid
in U.S. dollars.&nbsp;&nbsp;&nbsp;All amounts denominated in other currencies shall be converted to the U.S. dollar equivalent
amount in accordance with the Exchange Rate on the date of calculation. &ldquo;<B>Exchange Rate</B>&rdquo; means, in relation
to any amount of currency to be converted into U.S. dollars pursuant to this Note, the U.S. dollar exchange rate as published
in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated
with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">13.3.&#9;<FONT STYLE="background-color: white"><U>Payments</U>.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set
forth herein, such payment shall be made in lawful money of the United States of America by wire transfer of immediately available
funds in accordance with the Holder&rsquo;s wire transfer instructions. Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business
Day.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">14.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance
with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute
material, non-public information relating to the Company or any of its Subsidiaries, the Company shall promptly and in accordance
and compliance with applicable law publicly disclose such material, non-public information on a Current Report on Form 8-K or
otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in
the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute
material, non-public information relating to the Company or its Subsidiaries.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">15.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">CANCELLATION. After all Principal, accrued Interest and other amounts at
any time owed on this Note have been paid in full (a) this Note shall automatically be deemed canceled without any action by or
notice to Holder or Company and (b) Holder shall promptly mark this Note as cancelled, shall promptly surrender this Note to the
Company and this Note shall not be reissued. </FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">16.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">WAIVER OF NOTICE.&nbsp;&nbsp;Except for the notices specifically required
by this Note or any other Transaction Document, to the extent permitted by applicable law, the Company hereby irrevocably waives
demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note and the Purchase Agreement.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 0">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">17.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; color: black; background-color: white">GOVERNING LAW.&nbsp;&nbsp;This Note shall be construed and
enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note
shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.&nbsp;&nbsp;Nothing contained herein shall be deemed to limit in any way any right to serve process in
any manner permitted by law.&nbsp;&nbsp;In the event that any provision of this Note is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law.&nbsp;&nbsp;Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company&rsquo;s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder.&nbsp;&nbsp;<B>THE COMPANY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.</B></FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">18.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">MAXIMUM PAYMENTS.&nbsp;&nbsp;Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.&nbsp;&nbsp;In
the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any
payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the
Company.</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: normal 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; width: 5%">19.</TD>
    <TD STYLE="text-align: left; width: 95%"><FONT STYLE="font-size: 10pt; background-color: white">CERTAIN DEFINITIONS.&nbsp;&nbsp;For purposes of this Note, the following
terms shall have the following meanings:</FONT></TD></TR>
</TABLE>


<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.1.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Asset
Sale</B>&rdquo; means any sale, transfer, lease, conveyance or other disposition of any asset or property.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.2.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Business
Day</B>&rdquo; means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.3.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Closing
Date</B>&rdquo; shall have the meaning set forth in the Purchase Agreement, which is the date the Company initially issued the
Notes pursuant to the Purchase Agreement.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.4.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Common
Stock</B>&rdquo; means (i)&nbsp;the Company&rsquo;s shares of common stock, $0.001 par value per share, and (ii) any capital stock
into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.5.&#9;&ldquo;<B>Contingent
Obligation</B>&rdquo; means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.6.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Debt
Issuance</B>&rdquo; means the incurrence of Indebtedness of the type specified in clauses (A) or (D) of the definition of
&ldquo;Indebtedness&rdquo; by the Company or any of it Subsidiaries.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; text-align: left">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.7.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Equity
Issuance</B>&rdquo; means the issuance or sale by the Company or any of its Subsidiaries any stock or other equity interests of
the Company or any of its Subsidiaries to any Person other than the Company.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.8.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Excluded
Events</B>&rdquo; means (i) changes in the national or world economy or financial markets as a whole, (ii) changes in general
economic conditions taken as a whole that affect the industries in which the Company and its Subsidiaries conduct their business,&nbsp;&nbsp;(iii)
acts of terrorism or war, including the engagement by the United States of America or any other country in hostilities, and whether
or not pursuant to the declaration of a national emergency or war, or any earthquakes, hurricanes or other natural disasters,
(iv) any financial statement impact of either the transactions contemplated by the Transaction Documents.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.9.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Fundamental
Transaction</B>&rdquo; means that (A) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation)
another Person or Persons, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties
or assets of the Company or any of its Subsidiaries to another Person, or (iii) allow another Person to make a purchase, tender
or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a securities purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such securities purchase agreement or other business combination), or
(v) reorganize, recapitalize or reclassify the Voting Stock of the Company or (B) any &ldquo;person&rdquo; or &ldquo;group&rdquo;
(as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the &ldquo;beneficial
owner&rdquo; (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate Voting Stock of
the Company.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.10.&#9;<FONT STYLE="background-color: white">&ldquo;<B>GAAP</B>&rdquo;
means United States generally accepted accounting principles, consistently applied.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left"><FONT STYLE="font-size: 10pt">19.11.&#9;&ldquo;<B>Indebtedness</B>&rdquo;
of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (including, without limitation, &ldquo;capital leases&rdquo; in accordance
with generally accepted accounting principles) (other than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement
which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified
as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, claim, lien, tax, right of first
refusal, encumbrance, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts
and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others
of the kinds referred to in clauses (A) through (G) above. The foregoing definition expressly excludes any p<FONT STYLE="background-color: white">reviously
accrued and unpaid dividends with respect to the Company&rsquo;s Series B Cumulative Convertible Preferred Stock</FONT></FONT>
<FONT STYLE="font-size: 10pt">outstanding as of the Issuance Date.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.12.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Interest
Rate</B>&rdquo; means five percent (5%) per annum, subject to adjustment as set forth in Section 2.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.13.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Kinergy
Credit Facility</B>&rdquo; means that certain credit facility as evidenced by, among other loan documents, that certain Loan and
Security Agreement dated as of July 28, 2008, by and between Kinergy Marketing, LLC as borrower thereunder and Wells Fargo Capital
Finance LLC (successor to Wachovia Capital Finance Corporation) as lender thereunder, as such credit facility may have been or
may be amended, restated or otherwise modified from time to time.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.14.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Material
Adverse Change</B>&rdquo; shall mean any set of circumstances or events which occur, arise or otherwise take place from and after
the Issuance Date which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity
or enforceability of this Note or any other Transaction Document, (b) is or could reasonably be expected to be material and adverse
to the business properties, assets, financial condition, results of operations or prospects of the Company or the Company and
any of Subsidiaries on a collective basis, (c) impairs materially or could reasonably be expected to impair materially the ability
of the Company to duly and punctually pay or perform any its obligations under this Note or any other Transaction Document, or
(d) materially impairs or could reasonably be expected to materially impair the ability of Holder, to the extent permitted, to
enforce its legal rights and remedies pursuant to this Note or any other Transaction Document.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: justify">19.15.&#9;<FONT STYLE="background-color: white"><B>&ldquo;Maturity
Date</B>&rdquo; shall mean April 13, 2013.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.16.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Net
Cash Proceeds</B>&rdquo; means, as applicable, (a) with respect to any Asset Sale by the Company or any Subsidiary, the gross
cash proceeds received by the Company or any of its Subsidiaries therefrom less the sum of (i) all income taxes and other taxes
paid to, or reasonably expected to be paid to, a governmental authority as a result of such sale and any other fees and expenses
incurred in connection with such sale, (ii) the principal amount of, premium, if any, and interest on any Indebtedness secured
by a Lien on the asset (or a portion thereof) sold and (iii) the reasonable, ordinary and customary costs of such Asset Sale,
including without limitation, any third party fees, commissions, charges and expenses, including without limitation, any legal
fees and costs, sales commissions and escrow fees, costs and charges, (b) with respect to any Equity Issuance or Debt Issuance,
the gross cash proceeds received by the Company or any of its Subsidiaries therefrom less the sum of all legal, underwriting and
other fees and expenses incurred in connection therewith, (c) with respect to any Property Loss Event, the gross cash proceeds
received by the Company or any of its Subsidiaries therefrom less the sum of (i) all fees and expenses in connection therewith,
(ii) the principal amount of, premium, if any, and interest on any Indebtedness secured by a Lien on the asset (or portion thereof)
subject to such Property Loss Event, which Indebtedness is required to be repaid in connection therewith and incremental income
taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing
agreements), and (iii) that portion thereof used to repair or otherwise replace, or pay or reimburse any losses or expenses related
to, the property which is the subject of such Property Loss Event, (d) with respect to any of the foregoing events described in
clauses (a) through (c), the payment of any Permitted Payments and Permitted Distributions in connection therewith or from the
proceeds received as a result thereof.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left"><FONT STYLE="background-color: white">&nbsp;</FONT>19.17.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Pacific
Holding Credit Facility</B>&rdquo; means that certain credit facility as evidenced by, among other loan documents, that certain
Amended and Restated Credit Agreement dated as of August 1, 2011 among Pacific Ethanol Holding Co. LLC, a Delaware limited liability
company, as a borrower thereunder and as agent for borrowers thereunder, and co-borrowers Pacific Ethanol Madera LLC, a Delaware
limited liability company, Pacific Ethanol Columbia, LLC, a Delaware limited liability company, Pacific Ethanol Stockton, LLC,
a Delaware limited liability company, and Pacific Ethanol Magic Valley, LLC, a Delaware limited liability company, each of the
lenders thereunder who are from time to time signatories thereto, Wells Fargo Bank, N.A., as administrative agent and collateral
agent for such lenders and such other parties thereto as identified therein, as such credit facility may have been or may be amended,
restated or otherwise modified from time to time.</FONT></P>

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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.18.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Permitted
Distributions</B>&rdquo; the distribution, payment or transfer of funds or other assets or interests by the Company or any Subsidiary
(a) dividends by Subsidiaries of the Company to the Company or other Subsidiaries of the Company, (b) current quarterly dividends
required to be paid by Company with respect to the Company&rsquo;s Series B Cumulative Convertible Preferred Stock pursuant to
the organizational documents of the Company as in effect as of the Issuance Date on the Company and (c) to the extent that payment
thereof could not reasonably be expected to have a Material Adverse Change, payment of previously accrued and unpaid dividends
with respect to the Company&rsquo;s Series B Cumulative Convertible Preferred Stock outstanding as of the Issuance Date.</FONT></P>

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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.19.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Permitted
Indebtedness</B>&rdquo; means (i) Indebtedness evidenced by this Note and the Other Notes; (ii) Permitted Subsidiary Indebtedness,
(iii) any Indebtedness secured by a Permitted Lien, (iii) Indebtedness incurred by the Company that is made expressly subordinate
in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement acceptable to the Holder and
approved by the Holder in writing, and which Indebtedness does not provide at any time for (1) the payment, prepayment, repayment,
repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after
the Maturity Date or later and (2) total interest and fees at a rate in excess of ten percent (10%) per annum (collectively, the
&ldquo;<B>Subordinated Indebtedness</B>&rdquo;), (v) Indebtedness&nbsp;existing on the Issuance Date; provided, that the principal
amount&nbsp;of such Indebtedness is&nbsp;not increased by more than five percent (5%) in the aggregate, the terms of such Indebtedness&nbsp;are
not modified to impose more burdensome terms upon the Company or any of its Subsidiaries&nbsp;and the terms&nbsp;of such Indebtedness
are not materially changed in any manner that adversely affects the Holder or any of the Buyers and (vi) any Contingent Liability
with respect to the Kinergy Credit Facility or otherwise required to be incurred by the Company in order for any of its Subsidiaries
to obtain any bonds or letters of credit required in connection with the continued operation of such Subsidiary&rsquo;s business;
provided that such Contingent Liability shall not exceed $750,000 in the aggregate at any time.</FONT></P>

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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.20.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Permitted
Liens</B>&rdquo; means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course
of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen&rsquo;s liens, mechanics&rsquo; liens and other similar liens, arising in the ordinary course of business
with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings,
(iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price
of such equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or
(B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired
and improvements thereon, and the proceeds of such equipment, in either case, with respect to indebtedness in an aggregate amount
not to exceed $2,000,000, (v) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured
by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited
to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced
does not increase, and (vi) any Lien securing Permitted Subsidiary Indebtedness.</FONT></P>

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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.21.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Permitted
Payments</B>&rdquo; means any payments, distributions or transfers with respect to (i) any Permitted Indebtedness (in the case
of Subordinated Indebtedness, to the extent permitted by the relevant subordination or intercreditor agreement) and (ii) any Permitted
Distributions.</FONT></P>

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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.22.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Permitted
Subsidiary Indebtedness</B>&rdquo;<B>&nbsp;</B>means (i) any Indebtedness with respect to the Pacific Holding Credit Facility,
(ii) any Indebtedness permitted under the Pacific Holding Credit Facility, (iii) any Indebtedness with respect to Kinergy Credit
Facility Agreement; provided, however, that the aggregate outstanding amount of such Indebtedness does not at any time exceed
$40 million and (v) any Indebtedness permitted under the Kinergy Credit Facility. For purposes of this definition, the term &ldquo;Indebtedness
shall include, but not be limited to, the principal of (and premium, if any), interest on, and all fees and other amounts (including,
without limitation, any reasonable out-of-pocket costs, enforcement expenses (including reasonable out-of-pocket legal fees and
disbursements), collateral protection expenses and other reimbursement or indemnity obligations relating thereto).</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.23.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Person</B>&rdquo;
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.24.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Property
Loss Event</B>&rdquo; means (a) any loss of or damage to property of the Company or its Subsidiaries that results in the receipt
by such Person of proceeds of insurance or (b) any taking of property of the Company or any of its Subsidiaries that results in
the receipt by such Person of a compensation payment in respect thereof.</FONT></P>

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<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.25.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Purchase
Agreement</B>&rdquo; means each Agreement for Purchase and Sale of Units in New PE Holdco LLC, dated as of the Issuance Date,
by and among the Company and Holder, as may be amended, restated or otherwise modified from time to time.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.26.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Required
Holders</B>&rdquo; means the holders of Notes representing at least 75% of the aggregate principal amount of the Notes then outstanding
(excluding any Notes held by the Company or any of its Subsidiaries).</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.27.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Subsidiary</B>&rdquo;
means any Person in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity
or similar interest of such Person or (II) controls or operates all or any part of the business, operations or administration
of such Person; provided that, for purposes of this Note, the term &ldquo;Subsidiary&rdquo; shall expressly exclude Pacific Ethanol
Holding Co. LLC, a Delaware limited liability company, Pacific Ethanol Madera LLC, a Delaware limited liability company, Pacific
Ethanol Columbia, LLC, a Delaware limited liability company, Pacific Ethanol Stockton, LLC, a Delaware limited liability company,
and Pacific Ethanol Magic Valley, LLC, a Delaware limited liability company.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.28.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Transaction
Documents</B>&rdquo; means this Note, the Other Notes and each Purchase Agreement, together with any amendments, restatements,
extensions or other modification thereto.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0pt; text-indent: 44pt; text-align: left">19.29.&#9;<FONT STYLE="background-color: white">&ldquo;<B>Voting
Stock</B>&rdquo; of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof
have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers
or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have
or might have voting power by reason of the happening of any contingency).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="background-color: white">[<I>signature
page follows</I>]</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">IN WITNESS WHEREOF, the Company
has caused this Note to be duly executed as of the first date set forth above.</FONT></P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">PACIFIC ETHANOL, INC.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">By: _______________________</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="padding-left: 19.35pt; font-size: 10pt">Name: Bryon T. McGregor</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="padding-left: 19.35pt; font-size: 10pt">Title: Chief Financial Officer</TD></TR>
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