CTP Products B.V.
Veendam
Stolberweg 197, 9641
The Netherlands

31st October, 2007

Telegen Corporation
1840 Gateway Drive
Suite 200
San Mateo
CA 94404
United States of America

Re:
Settlement of Rent under Premises Lease Obligations

Dear Sir:

This Letter Agreement (the “Agreement”) sets forth the terms and conditions
agreed to by and between Telegen Corporation (“Telegen”), CTP Netherlands
(“CTP”) and Multidisplay s.r.o., a subsidiary of CTP (“Multidisplay”), in
connection with the following lease agreements: (1) that certain Agreement on
the Lease of Non-Residential Premises entered into on October 31, 2007 by and
between Sendio s.r.o., a subsidiary of Telegen (“Sendio”), and Multidisplay (the
“Premises Lease”). The parties agree as follows:

1.    Assignment of Receivable to CTP. Multidisplay has duly and irrevocably
assigned to CTP all right, title and interest in and to all amounts owing,
including without limitation, for rent, taxes, levies or other fees or payments
of whatever nature (the “Receivables”) from Sendio to Multidisplay under the
Premises Lease for the period from November 1, 2007 through June 30, 2008 in the
amount of EUR 1,575,000. CTP is the sole owner of all rights with respect to the
Receivables, and no other person has any right or interest thereto. CTP shall
not assign, sell or otherwise transfer any right, title and interest in and to
the Receivables, or any part thereof, or allow any other person to assert any
right therein. CTP shall protect and defend Telegen and Sendio from all demands
or claims by or liabilities to any person with respect to the Receivables.

2.    Consent of Bank. Multidisplay has received and delivered to Telegen the
written consent of Bank IMMORENT-BANK GMBH, an Austrian limited liability
company, having registered office at 1060 Vienna, Windmühlgasse 22-24, Austria 
to the assignment of the Receivables from Multidisplay to CTP, which consent is
in full force and effect. A complete and correct copy of the signed consent is
attached to this Agreement as Exhibit A. Multidisplay and CTP represent and
warrant to Telegen that no consent, approval, filing or notice is required from
or with any other person, entity or governmental agency in connection with
consummation of the transactions contemplated by this Agreement, and that
consummation of the transactions contemplated by this Agreement will not cause a
default, breach or violation of or under any or agreement, instrument, document,
judgment, order, law, rule or regulation to which CTP, Multidisplay, or any of
their respective assets are bound. In addition, and without limiting the
foregoing, CTP and Multidisplay confirm that the assignment of the Receivables
and the transactions contemplated by this Agreement comply in all respects with
Section 196(a) of Act No. 513/1991 Col., as amended, of the Czech Commercial
Code.

3.    Issuance of Common Stock as Payment in Full on Receivables. As payment in
full on the Receivables, Telegen shall issue to CTP shares of its common stock
(the “Shares”) as set forth below, subject to Section 5 below. In no event shall
Telegen be required to make any cash payments to CTP on the Receivables.

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(a)    As advance payment in full for all Receivables due under the Premises
Lease for the period from November 1, 2007 through June 30, 2008, Telegen shall
issue to CTP 6,100,000 Shares, effective as of November 1, 2007.

(b)    Upon issuance of the 6,100,000 Shares to CTP pursuant to the terms in (a)
above of this Agreement, the respective Receivables shall be automatically and
irrevocably deemed cancelled, being fully paid.

4.    Representations and Warranties of CTP. In connection with the issuance of
the Shares, CTP represents and warrants to Telegen as follows:

(a)    It has knowledge of Telegen’s business, management, operations, financial
condition and prospects, and it has been furnished with or has had access to
such information as it requires to evaluate the merits and risks of the proposed
investment (including Telegen’s public filings available at www.sec.gov),
together with such additional information as is necessary to verify the accuracy
of the information supplied;

(b)    It is acquiring the Shares solely for its own account, for investment and
not with a view to resale or distribution of any part thereof, and it has no
present intention of selling, granting any participation in, or otherwise
distributing the same. It shall not have the right to assign this agreement or
any rights hereunder;

(c)    It is not a “U.S. Person” as defined in Regulation S promulgated under
the Securities Act of 1933, as amended (the “Securities Act”), that it is not
acting as a fiduciary for a “U.S. Person,” that the acquisition of the Shares
originated by CTP outside of the United States, and that its principal place of
business is in Humpolec, Czech Republic.

(d)    It acknowledges that the Shares are considered “restricted securities”
under applicable U.S. securities laws and may not be resold in the United States
and must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. In
particular, CTP is aware of the restrictions and limitations on resale of the
Shares into the United States or to a U.S. Person pursuant to the provisions of
Regulation S.

5.    Forfeiture. In the event that Multidisplay breaches any provision of the
Premises Lease at any time prior to June 30, 2008 or CTP or Multidisplay
breaches any of its respective covenants, representations or warranties
contained in this Agreement, CTP shall forfeit all right, title and interest in
and to all of the Shares. In addition, in the event that Multidisplay terminates
the Premises Lease at any time prior to June 30, 2008, CTP shall forfeit all
right, title and interest in and to all of the applicable Shares issued for such
respective period, determined in Sections 2 (a) above. Upon such breach or
termination, CTP shall immediately return all Shares to Telegen, and Telegen
shall have the right to cancel such Shares with immediate effect. To facilitate
such cancellation and transfer of the Shares to Telegen, CTP hereby executes and
delivers to Telegen the blank stock powers, substantially in the form attached
to this Agreement as Exhibit B. Without limiting the foregoing, CTP hereby
irrevocably constitutes and appoints Telegen as CTP’s attorney-in-fact and agent
to execute with respect to such Shares all documents or instrument of
assignment, transfer or cancellation necessary or appropriate to transfer and
cancel on the books and records of Telegen such Shares and complete any
transaction herein contemplated. This power of attorney granted to Telegen is a
special and limited power of attorney coupled with an interest, is irrevocable
(to the maximum extent permitted by law), shall be binding on CTP’s successors
and assigns and is limited to those matters herein set forth. In addition, until
July 1, 2008, CTP shall not, voluntarily or involuntarily, directly or
indirectly, sell, transfer, assign, pledge or otherwise dispose of, or mortgage,
pledge, hypothecate or otherwise encumber, or permit or suffer any encumbrance,
foreclosure or attachment of, all or any part of the Shares, and any purported
sale, transfer, assignment, pledge or encumbrance shall be null and void and of
no force or effect whatsoever.

6.    Governing Law. This Agreement shall be interpreted in accordance with the
laws of the State of Washington in the United States without giving effect to
its conflict of laws principles. The substantially prevailing party in any suit
or proceeding shall be entitled to reimbursement for its reasonable costs and
attorneys’ fees incurred.

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7.    No Assignment. Neither CTP nor Multidisplay may assign, delegate or
transfer, by merger, operation of law or otherwise, any of its respective rights
or obligations under this Agreement without the prior written consent of
Telegen.

8.    Entire Agreement. This Agreement represents and contains the entire
understanding between the parties in connection with the subject matter of this
Agreement. The Agreement shall not be modified or varied except by a written
instrument signed by the parties. All prior written or oral agreements,
understanding or representations between CTP and Telegen with respect to the
subject matter hereof are merged into and superseded by this Agreement.

Please acknowledge your agreement with the foregoing by signing in the space
indicated below and returning it to me.

Very truly yours,
 
CTP Products BV
 
 
By:  /s/ Eltje Maas

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Name:
Title:
 
Multidisplay s.r.o.
 
 
By:  /s/ Mr. vos

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Name:
Title:

ACCEPTED and AGREED to this
31st day of October, 2007.
 
/s/ Duncan Troy

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Duncan Troy
Chairman, Telegen Corporation

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EXHIBIT A to Letter Agreement
 
IMMORENT-BANK GMBH CONSENT
 
 

 

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EXHIBIT B to Letter Agreement
 
ASSIGNMENT SEPARATE FROM CERTIFICATE
 
FOR VALUE RECEIVED, the undersigned, CTP Netherlands hereby sells, assigns, and
transfers unto Telegen Corporation, a California corporation (the “Company”), a
total of 6,100,000 shares of Company common stock standing in the undersigned’s
name on the books of the Company, such shares being represented by Certificate
No(s). __________ and does hereby irrevocably constitute and appoint the
Company, and its Chairman and Chief Executive Officer, and any one of them
acting alone, as attorney-in-fact to transfer the shares on the books of the
Company with full power of substitution in the premises.

EXECUTED this ___ day of November, 2007.

CTP Netherlands
 
 
By:

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Name:
Title:
 
 

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