Document:

Warrant Certificate No. 2000-000

WARRANT TO PURCHASE _______ SHARES OF COMMON STOCK

SGI INTERNATIONAL INCORPORATED UNDER THE LAWS OF THE STATE OF UTAH

"The securities represented by this Certificate have not been registered under
the Securities Act of 1933 or any state securities law and may not be sold,
exchanged, hypothecated or transferred in any manner except in compliance with
Paragraph 4 hereof."

1. Grant of Warrant. This certifies that, effective July 11, 2000, __________,
the registered holder hereof (the "Warrantholder"), is entitled to purchase from
SGI International, a Utah corporation (the "Company"), at any time during the
Exercise Period as defined in Paragraph 2 hereof, at the purchase price per
Share of $0.22 (the "Warrant Price"), the number of shares of common stock, no
par value, of the Company set forth above (the "Shares"), subject to the terms
and conditions set forth herein.

2. Exercise of Warrant. The Warrant evidenced hereby may be exercised on or
after the earlier of (i) a date one (1) year from the date of grant, or (ii)
upon the effective state and federal registration of the common shares
underlying the warrant, in whole or in part, by presentation of this Warrant
certificate with the Warrant Exercise Form attached as Exhibit A-1 hereto, duly
executed and simultaneous payment of the Warrant Price at the principal office
of the Company. The "Exercise Period" shall be the earlier of the period of time
commencing on registration of the underlying shares with the State of California
and the SEC or one year after the date this Warrant is executed by Company and
ending on December 31, 2005.

3. Legend on Shares. Each certificate for Shares issued upon exercise of the
Warrant shall bear the following legend, unless, at the time of exercise, such
Shares are subject to a currently effective Registration Statement under the
Securities Act of 1933 (the "Act"):

"The securities represented by this Certificate have not been registered under
the Securities Act of 1933 or any state securities law and may not be sold,
exchanged, hypothecated or transferred in any manner except in compliance with
Paragraph 4 of the Warrant pursuant to which they were issued."

Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a Registration Statement under the Act)
shall also bear the above legend, unless Warrantholder furnishes an opinion of
legal counsel acceptable to Company, that the securities represented thereby
need no longer be subject to such restriction.

This Warrant and the Common Stock underlying its exercise, are restricted and
there is no agreement that either will be registered under the Securities Act of
1933. However, the Common Stock underlying the exercise of this Warrant shall be
included in the next Registration Statement filed by Company with the SEC,
and/or in the next Form S-8 filed by Company with the SEC.

4. Restrictions on Transfer; Registration Rights. By acceptance of this Warrant,
the Warrantholder agrees that prior to making any disposition of the Warrant,
the Warrantholder shall give written notice to the Company describing briefly
the manner in which any such proposed disposition is to be made; and no such
disposition shall be made unless Warrantholder provides Company with an opinion
of legal counsel acceptable to Company that a Registration Statement or other
notification or post-effective amendment thereto under the Act is not required
with respect to such disposition, or unless such a Registration Statement has
been filed by the Company with, and declared effective, if necessary, by the
Securities and Exchange Commission.

5. Reservation of Shares Issuable on Exercise of Warrants. The Company will at
all times reserve and keep available out of its authorized Shares, solely for
issuance upon exercise of this Warrant and other similar Warrants, such number
of Shares as from time to time shall be issuable upon the exercise of this and
all other similar Warrants at the time outstanding.

6. Warrantholder Not a Shareholder. The Warrantholder, as such, shall not be
entitled by reason of this Warrant to any rights of a shareholder of the
Company.

7. Notices. Any notice pursuant to this Warrant shall be in writing and shall
be deemed to have been duly given if delivered or mailed, by certified mail,
return receipt requested:

(a) If to Warrantholder, addressed to it at its address as set forth in the
Warrant Register maintained by the Company;

(b) If to the Company, addressed to it at 1200 Prospect Street, #325, La Jolla,
California 92037, attention: Investor Relations.

Warrantholder and/or Company may from time to time change the address to which
notices are to be delivered or mailed hereunder, by giving notice to the other
in accordance herewith.

8. Successors. The provisions of this Warrant are by and for the benefit of the
Company and Warrantholder and their respective heirs and/or successors
hereunder.

9. Applicable Law. This Warrant shall be deemed to be a contract made under the
laws of the State of California and for all purposes shall be construed in
accordance with the laws of said State.

10. Third Party Beneficiaries. The provisions of this Warrant shall be for the
sole and exclusive benefit of Company and Warrantholder, and nothing herein
shall be construed to give to any person or corporation other than Company and
Warrantholder, and their heirs, any legal or equitable right, remedy or claim,
under this Agreement.

11. Investment Intent of Warrantholder. Notwithstanding anything herein to the
contrary, this Warrant is issued subject to the following conditions: (i) that
the Warrant has been acquired for the account of Warrantholder and not with a
view to, or for sale in connection with, any distribution thereof; (ii) that
Warrantholder will forthwith execute and deliver to Company an Investment Letter
reciting and confirming the substance of clause (i) hereof; and (iii) that
Company may unilaterally cancel this Warrant upon the failure of Warrantholder
to execute and deliver any document requested by Company within thirty (30) days
of a written request to do so.

SGI INTERNATIONAL

By:
(Authorized Officer)FIFTH AMENDMENT
                                       TO
  AMENDED AND RESTATED ACQUISITION AGREEMENT AMONG SGI INTERNATIONAL, BLUEGRASS
               COAL DEVELOPMENT COMPANY AND AMERICOAL DEVELOPMENT
                                     COMPANY

This Fifth Amendment to the Amended and Restated Acquisition Agreement
Among SGI International, Bluegrass Coal Development Company And Americoal
Development Company (the "Fifth Amendment"), is entered into by and between SGI
International ("SGI"), Bluegrass Coal Development Company ("Bluegrass") and
Americoal Development Company ("Americoal") effective as of October 31, 2000
(the "Effective Date"). The Fifth Amendment amends in certain particulars the
Amended and Restated Acquisition Agreement Among SGI International, Bluegrass
Coal Development Company And Americoal Development Company (the "Acquisition
Agreement") that was entered into effective December 9, 1999. Bluegrass and
Americoal are hereafter referred to collectively as "Sellers".

RECITALS

A. The Acquisition Agreement originally provided Sellers with certain rights
and privileges in the event that certain conditions had not been satisfied by
March 31, 2000; and,

B. SGI has not satisfied all of the conditions that were required to be
fulfilled by March 31, 2000, but has made significant progress toward their
being satisfied and the First Amendment extended that March 31 date to June 30,
2000 and the Second Amendment extended the date to September 30, 2000.

C. A Third Amendment provided that Brown, Todd & Heyburn PLLC would act as
Escrow Agent in place of the prior escrow agent.

D. A Fourth Amendment extended the term of the Acquisition Agreement through
October 31, 2000.

E. Based on progress since June 30, it is the expectation of SGI and Sellers
that those conditions can be satisfied if an additional extension is granted
SGI from October 31, 2000 to November 30, 2000 in order to allow certain
parties interested in purchasing the ENCOAL plant from SGI and making
modifications thereto to complete due diligence and negotiations, which are
close to completion;

F. It is therefore the intent of the parties hereto to amend the March 31, 2000
date (as extended to June 30 by the First Amendment, to September 30 by the
Second Amendment, and to October 31 by the Fourth Amendment) contained in the
Acquisition Agreement, and Exhibits thereto, such that the "March 31, 2000"
date shall be restated to be "November 30, 2000" with all other terms and
conditions of the Acquisition Agreement to remain in full force and effect,
subject to the performance by SGI and Sellers of the terms and conditions of
this Fifth Amendment.

                                    AGREEMENT

NOW THEREFORE, in consideration of the covenants and conditions of this Fifth
Amendment the parties do hereby agree as follows:

1. Extension. SGI and Sellers hereby agree that in consideration of the premises
contained herein and for other good and valuable consideration and in order to
provide SGI with an extension of time to satisfy certain terms and conditions of
the Acquisition Agreement, as amended by the First Amendment, Second Amendment,
Third Amendment, and Fourth Amendment, it shall be amended as follows:

The date "March 31, 2000", referred to in the Acquisition Agreement in Sections
3.1.1(c), 3.1.1(d), 3.1.2, 7.3, and 11.3(b) is hereby amended and replaced with
the date "November 30, 2000."

2. Note Amendment . The date "March 31, 2000" appears in the Secured Non-
Recourse Promissory Note dated December 9, 1999 referenced in a draft depicted
as Exhibit 3.1D to the Acquisition Agreement. The parties hereby agree that the
original Promissory Note (the "Note") of December 9, 1999 for the Principal Sum
of $193,078 is hereby amended as follows: The date "March 31, 2000" as it
appears in the Note is hereby amended and restated to be November 30, 2000, and
any and all amounts due and payable under the Note are now due and payable on
November 30, 2000. To the extent that the date "March 31, 2000" as previously
amended by the Fourth Amendment to October 31, 2000, appears elsewhere in the
Acquisition Agreement or in instruments that were originally referenced as
exhibits to the Acquisition Agreement then that date shall also be amended and
restated to be "November 30, 2000" in the executed original instruments.

3. Bond Costs. This extension of time provided herein is granted on the further
condition that SGI pay the cost for coverage through November 30, 2000 of the
bond obtained by Sellers pursuant to the Facility Use and Indemnity Agreement
dated December 11, 1998. The costs for the bond for $10,000,000 are
approximately $4,167 for the period November 1, 2000 through November 30, 2000.
Therefore, SGI shall reimburse Bluegrass for the premium for such bond by paying
it the sum of $4,167 shall be paid to Bluegrass on November1, 2000. Therefore,
SGI shall reimburse Bluegrass for the premium for such bond by paying it the
same of $4,167, which sum shall be paid to Bluegrass on November 13, 2000.

4. Consideration for Future Extensions. SGI is not currently required to pay
Bluegrass any monetary sum for the extension being provided for in this Fifth
Amendment. Notwithstanding the foregoing, Bluegrass shall require SGI to pay
Bluegrass a monetary sum to be negotiated between the parties for any further
extensions or amendments to the Acquisition Agreement.

5. Release. SGI and Bluegrass ("the Parties") represent that the Parties
negotiated and executed the Acquisition Agreement Among SGI International,
Bluegrass Coal Development Company, And Wyoming Coal Technology, Inc., dated
April 22, 1999, the Acquisition Agreement and each amendment thereto
(collectively the "Agreements") in good faith. SGI and Bluegrass release one
another from any and all claims, including but not limited to claims for
bargaining in bad faith, which arose out of the Agreements and any actions taken
thereunder prior to the date of this Fifth Amendment. Notwithstanding the above,
nothing herein shall in any way excuse or release either party from performing
all of its obligations under and pursuant to all of the terms and conditions of
the Agreements, which remain in full force and effect.

6. No Other Amendments. Except as stated herein, no other term or condition of
the Acquisition Agreement or Exhibits thereto shall be amended and all other
terms and conditions contained in the Acquisition Agreement shall continue in
full force and effect.

IN WITNESS WHEREOF the parties have executed this Fifth Amendment by
their duly authorized signatories as of the day and year first written above.

SGI INTERNATIONAL, INC.                 BLUEGRASS COAL DEVELOPMENT CO.

By:  /S/ James W. Mahler                By:  /S/ Art Thomas
Title:  Executive Vice President        Title: Attorney in Fact

AMERICOAL DEVELOPMENT CO.

By:  Art Thomas
Title:  Attorney in Fact

To the extent the rights of Wyoming Coal Technology ("WCT") and AEI
Resources ("AEI") are affected by this Fifth Amendment, WCT and AEI represent
that they have each reviewed this Fifth Amendment and consent to the terms and
conditions set forth herein.

WYOMING COAL TECHNOLOGY, INC.               AEI RESOURCES, INC.

By:     /S/  Art Thomas                     By:  /S/ Art Thomas
Title:  Attorney in Fact                    Title:  Attorney in Fact

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