PROMISSORY NOTE

         $________                                      Dated:



                                   SECTION ONE

                                  TERMS OF NOTE

FOR VALUE RECEIVED, SGI INTERNATIONAL, OTC Bulletin Board symbol "SGII"
("the "Debtor"), of 1200 Prospect Street, Suite 325, La Jolla, CA 92037 promises
to pay to the order of _______ (hereinafter "Holder"), the principal sum of
_________($______) Dollars with interest hereon at the rate of nine percent (9%)
per annum, payable upon 30 days written demand but no sooner than on ________
in cash or at the option of Debtor, all principal and interest may be paid
by issuing Holder ______ shares of restricted stock of Debtor. Holder made the
original loan that is the subject of this Promissory Note to SGI International
on _____________. Debtor shall be in default hereunder only after Holder gives
five (5) days advance written notice to Debtor that it is in default, and Debtor
does not cure such default within this prescribed period.

                                   SECTION TWO
                               PREPAYMENT OF NOTE

Prepayment of the full principal balance, along with all unpaid interest, or
any portion of the principal balance, along with any portion thereof of unpaid
interest, is permitted at any time without penalty.

                                  SECTION THREE
                      EFFECT OF WAIVER OF RIGHTS BY HOLDER

Holder is not under any obligation to exercise any of his rights under this
note, and failure to exercise his rights under this note or to delay in
exercising any of his rights shall not be deemed a waiver of or in any manner
impair any of the rights of Holder.

                                  SECTION FOUR
                         CUMULATIVE RIGHTS AND REMEDIES

The rights and remedies of Holder specified in this note are cumulative and do
not exclude any other rights or remedies he may otherwise have.

                                  SECTION FIVE
                      ACCELERATION ON INSOLVENCY OF DEBTOR

If Debtor shall be adjudged bankrupt, or file a petition in bankruptcy, or have
a petition in bankruptcy filed against it, this note shall become due and
payable immediately without demand or notice.

                                   SECTION SIX
             WAIVER OF PRESENTMENT, PROTEST, AND NOTICE OF DISHONOR

Except as otherwise required herein, Debtor hereby waives all acts on the part
of Holder required in fixing the liability of the party, including among other
things presentment, notice of dishonor, protest, notice of protest, notice of
nonpayment, and any other notice.

                                  SECTION SEVEN
                                 CHOICE OF LAWS

This note shall be governed by and construed in accordance with the laws of
California in all respects, including matters of construction, validity and
performance.

                                  SECTION EIGHT
                               COSTS OF COLLECTION

Debtor shall pay on demand all costs of collection, including legal expenses
and attorney fees, incurred by Holder in enforcing this note on default.

                                  SECTION NINE
                                INTEREST CHARGES

If a law, which applies to this note and which sets the maximum interest amount,
is finally interpreted so that the interest in connection with this note exceed
the permitted limits, then: (1) any such interest shall be reduced by the
amount necessary to reduce the interest to the permitted limit; and (2) any
sums already collected (if any) from the Debtor which exceed the permitted
limits will be refunded to the Debtor. The note holder may choose to make this
refund by reducing the principal Debtor owes under this note or by making a
direct payment to the Debtor. If a refund reduces the principal, the reduction
will be treated as a partial payment.

Dated:
SGI INTERNATIONAL
By
Authorized Signatory