99-D DEBENTURE

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE
BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE, OR UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED,
RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO
REGISTRATION OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.

        No._________                                US $______________

                              SGI International

          99-D 12% CONVERTIBLE DEBENTURE DUE SEPTEMBER 30, 2001

THIS DEBENTURE is one of a duly authorized issue of $3,590,000.00 in Debentures
of SGI International, a corporation organized and existing under the laws of
Utah (the "Company") designated as the Series 99-D 12% Convertible Debentures
(the "99-D Debentures"), due on September 30, 2001.

FOR VALUE RECEIVED, the Company promises to pay to_____________________________,
the registered holder hereof (the "Holder"), the principal sum of ($_________)
Dollars on September 30, 2001, (the "Maturity Date") and to pay interest on
the principal sum outstanding from time to time in arrears as provided herein
quarterly, beginning on October 1, 1999, at the rate of 12% per annum accruing
from the date of initial issuance. Accrual of interest shall commence on the
first such business day to occur after the date hereof until payment in full
of the principal sum has been made or other consideration paid in accordance
with Paragraph 5. Subject to the provisions of paragraph 5 below, the
principal of, and interest on, this 99-D Debenture is convertible on or after
November 15, 1999, (the "Conversion Date") as described in the August 27,
1999, Private Placement Memorandum (the "Memorandum" or "Exchange Offering")in
whole or in part at the option of the Holder, into shares of Common Stock of
the Company. The Company will pay the principal of, and interest upon, this 99-D
Debenture on the Maturity Date, less any amounts converted or required by law to
be deducted, to the Holder of this 99-D Debenture, and addressed to such Holder.
The forwarding of such check or other consideration in accordance with Paragraph
5 shall constitute a full payment of principal and interest hereunder and shall
satisfy and discharge the liability for principal and interest on this Debenture
to the extent of the sum represented by such check plus any amounts so deducted.

This 99-D Debenture is subject to the following additional provisions:

1. The 99-D Debentures are exchangeable for an equal aggregate principal amount
of Debentures of different authorized denominations, as requested by the Holder
surrendering the same. No service charge will be made for such registration or
transfer or exchange.

2. Interest will be paid in cash on a quarterly basis.

3. The Company shall be entitled to withhold from all payments of principal of,
and interest on, this Debenture any amounts required to be withheld under the
applicable provisions of the United States income tax laws or other applicable
laws at the time of such payments, and Holder shall execute and deliver all
required documentation in connection therewith.

4. This 99-D Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this 99-D Debenture, the Company may require, prior to issuance of a
new Debenture in the name of such other person, that it receive reasonable
transfer documentation including legal opinions that the issuance of the 99-D
Debenture in such other name does not and will not cause a violation of the Act
or any applicable state or foreign securities laws. Prior to due presentment for
transfer of this 99-D Debenture, the Company and any agent of the Company may
treat the person in whose name this 99-D Debenture is duly registered on the
Company's Debenture Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this 99-D
Debenture be overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

5. The Holder of this 99-D Debenture is entitled, at its option, to convert at
any time commencing on the Conversion Date, the principal amount of this 99-D
Debenture, and any and all interest payable thereon, provided that the principal
amount is at least US $5,000 (unless if at the time of such election to convert
the aggregate principal amount of all Debentures registered to the Holder is
less than Five Thousand Dollars (US $5,000), than the whole amount thereof). The
99-D Debenture will, at the option of the Holder, be convertible at any time
after the Conversion Date, in whole or in part into the number of shares of SGI
International common stock ("Common Stock") determined by dividing the face
amount of the Debenture or any part thereof in an amount of $5,000 or more, and
all interest payable thereon, by the greater of: (i) the average of the closing
bid price of the Company's Common Stock for the ten (10) business days prior to
the Conversion Notice Date or (ii) one dollar ($1.00) per share. The date (the
"Conversion Notice Date") on which notice of conversion is given shall be deemed
to be the date on which the Company receives the conversion notice (the "Notice
of Conversion") duly executed, provided the original Debenture is received by
the Company within five (5) business days thereafter. In the event the original
Debenture is not received within such five (5) business days, the Notice of
Conversion, at the Company's option, may be considered void. Facsimile delivery
of the Notice of Conversion shall be accepted by the Company at facsimile number
(858) 551-0247; Attn: Controller. In the event that the Debenture is not
converted by Holder by September 30, 2001, then SGI International shall on
September 30, 2001, pay the full amount owing under the 99-D Debenture, which
shall be the face amount plus all accrued and unpaid interest payable thereon,
less any amount converted into Common Stock. Conversion shall be effectuated by
surrendering the 99-D Debentures to be converted to SGI International at 1200
Prospect, Suite 325, La Jolla, California 92037, with the form of conversion
notice attached hereto as Exhibit A, executed by the Holder of the 99-D
Debenture evidencing such Holder's intention to convert this Debenture (as above
provided) hereof, and accompanied, if required by the Company, by proper
assignment hereof in blank. No fraction of shares or certificates representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share. Certificates representing
Common Stock issued upon conversion, will be delivered within five (5) days or
as soon as practicable from the date the notice of conversion and the original
Debenture, is delivered to the Company. No payment or adjustment shall be made
upon conversion with respect to any interest accrued on any Debenture guaranteed
for conversion prior to an interest payment date or to any dividend on the
Common Stock delivered upon conversion. (Such notice shall be effective when
mailed to last known address on date mailed.)

6. Company may prepay this Debenture, in whole or in part, at any time without
incurring any penalty for such prepayment. After Company gives Holder written
notice of its intent to repay by depositing such notice with the U.S.Post
Office, postage prepaid, Holder may not thereafter convert any part of this
Debenture. No provision of this 99-D Debenture, except as is specifically
described in Paragraph 5, shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, and interest on,
this 99-D Debenture at the time, place, and rate, and in the coin or currency,
herein prescribed. This 99-D Debenture and all other debentures now or hereafter
issued of similar terms are direct obligations of the Company.

7. No recourse shall be had for the payment of the principal of, or the interest
on, this 99-D Debenture, or for any claim based hereon, or otherwise in respect
hereof, against any incorporator, shareholder, officer or director, as such,
past, present or future, of the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

8. If the Company merges or consolidates with another corporation or sells or
transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the 99-D Debenture may thereafter
be converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a Holder of the number of shares of Common
Stock into which this 99-D Debenture might have been converted immediately
before such merger, consolidation, sale or transfer, subject to adjustments
which shall be as nearly equivalent as may be practicable. In the event of any
proposed merger, consolidation or sale or transfer of all or substantially all
of the assets of the Company (a "Sale"), the Holder hereof shall have the right,
but not the obligation, to convert by delivering a Notice of Conversion to the
Company within only a fifteen (15) day period of receipt of notice of such Sale
from the Company.

9. The Holder of the 99-D Debenture, by acceptance hereof, agrees that this 99-D
Debenture is being acquired for investment and that, notwithstanding any other
provision of this 99-D Debenture, such Holder will not offer, sell or otherwise
dispose of this 99-D Debenture or the Shares of Common Stock issuable upon
conversion thereof, except under circumstances which will not result in a
violation of the Act or any applicable state Blue Sky or foreign laws or similar
laws relating to the sale of securities.

10. This 99-D Debenture shall be governed by and construed in accordance with
the laws of the State of Utah. Each of the parties consents to either the
exclusive jurisdiction of the federal courts whose districts encompass any part
of the City of San Diego or the exclusive jurisdiction of state courts of the
State of California sitting in the City of San Diego in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
coveniens, to the bringing of any such proceeding in such jurisdiction.

11. The occurrence of the following, which is not cured within a period of ten
(10) days after receipt of written notice from Holder, shall constitute an
"Event of Default":

a. The Company shall fail to make any payment due under this 99-D Debenture and
the same shall continue for a period of more than thirty (30) days; or

b. The Company shall make (1) an assignment for the benefit of creditors or
commence proceedings for its dissolution; or (2) apply for or consent to the
appointment of a trustee, liquidator or receiver for its or for a substantial
part of its property or business; or

c. A trustee, liquidator or receiver shall be appointed for the Company or for a
substantial part of its property or business without its consent and shall not
be discharged within sixty (60) days after such appointment; or

d. Bankruptcy, reorganization, insolvency or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Company and, if instituted against
the Company, shall not be dismissed within ninety (90) days after such
institution or the Company shall by any action or answer approve of, consent to,
or acquiesce in any such proceedings or admit the material allegations of, or
default in answering a petition filed in any such proceeding; or

In the Event of Default or at any time thereafter, and in each and every such
case, unless such Event of Default shall have been waived in writing by the
Holder at the option of the Holder and in the Holder's sole discretion, the
Holder may consider this 99-D Debenture immediately due and payable, without
presentment, demand, protest or notice of any kinds, all of which are hereby
expressly waived, anything herein or in any note or other instruments contained
to the contrary notwithstanding, and the Holder may immediately enforce any and
all of the Holder's rights and remedies provided herein or any other rights or
remedies afforded by law.

12. Nothing contained in this 99-D Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
by an officer thereunto duly authorized.

Dated: __________________, 1999

SGI INTERNATIONAL

By:_______________________________________
Michael L. Rose, President and CEO