PROMISSORY NOTE
$________ Dated:
SECTION ONE
TERMS OF NOTE
FOR VALUE RECEIVED, SGI INTERNATIONAL, OTC Bulletin Board symbol "SGII"
(the "Debtor"), of 1200 Prospect Street, Suite 325, La Jolla, California 92037
promises to pay to the order of _______ (hereinafter "Holder"), the principal
sum of _________ ($_______) Dollars with interest thereon at the rate of nine
percent (9%) per annum. Both the principal and interest thereon shall be due and
payable one (1) year from the date of this Promissory Note. The principal and
interest shall be paid by issuing Holder ______________________(_________)
shares of restricted common stock of Debtor, if available, or if unavailable for
any reason, Holder will be paid in cash. Debtor shall be in default hereunder
only after Holder gives fifteen (15) 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 not permitted.
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
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 SEVEN
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 EIGHT
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
exceeds 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. 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.
SECTION NINE
REGISTRATION RIGHTS
Debtor agrees that the common stock underlying this Promissory Note shall be
granted "piggyback" registration rights as set forth herein, unless otherwise
tradable under Rule 144 of the Securities Act of 1933. Both Debtor and Holder
by its acceptance, acknowledge that in accordance with Rule 144 (3) (ii) the
one year holding period for securities acquired through the conversion or
surrender of another security, in this case common stock in payment of the
promissory note, shall be deemed to have been acquired at the same time as the
securities surrendered for conversion. Debtor shall be obligated to Holder as
follows: During the life of the promissory Note, whenever Debtor proposes to
file with the SEC a Registration Statement (other than (i) S-8 registering
solely securities issued pursuant to an employee benefit plan or, (ii) a
transaction subject to rule 145 promulgated under the Act), it shall include in
such filing all common shares issuable upon payment of this Promissory Note. If
such Registration Statement relates to an underwritten offering, and if the
managing underwriter for said offering advises Debtor in writing that the
inclusion of all or any portion of such shares would be detrimental to said
offering, then the shares shall not be included in the Registration Statement.
In the event that the underwriter concludes that a portion of such securities
shall be included in the offering or the registration statement and would not be
detrimental thereto, and such portion is less than the amount requested for
inclusion, then the amount to be included shall be prorated among the requesting
security holders of Debtor possessing similar registration rights.
SGI INTERNATIONAL (Debtor)
By
Authorized Signatory
