Exhibit 10.50—Rescission Letter Agreement dated December __, 2000 by and among the Company, Merchant Securities, LTD. and Pacific West Securities, Inc. regarding the 2000 Tranche A Offering

EXHIBIT 10.50

RESCISSION LETTER REGARDING 2000 TRANCHE A OFFERING

LETTER AGREEMENT

        This Letter Agreement, dated as of December 14, 2000, is made by and among Telegen Corporation (“Telegen”), Merchant Securities, LTD. (“Merchant”), and Pacific
West Securities, Inc. (“Pacific”) as follows:

        1.  On June 30, 2000 Telegen completed an offering (the “Offering”) of up to 1,000,000 shares of its common stock, no par value (the “Shares”), at a
per share offering price of $10.00, pursuant to Regulation D of the Securities Act of 1933, as amended (the “Act”), whereby Merchant and Pacific acted as placement agents for such Offering pursuant to the terms and conditions of those certain
Placement Agent Agreements, dated as of ________ and ______, respectively. The proceeds of the Offering are currently being held in escrow (the “Escrow”) by the Bank of Scotland, pursuant to the terms of an escrow agreement.

        2.  Pursuant to the terms of the Offering, Telegen is required to satisfy the following two conditions prior to the proceeds being released from Escrow:

              (a)  Approval of the United States Bankruptcy Court for the Northern District of California (the “Court”) of Telegen’s
Plan of Reorganization (the “Plan”), on or before June 30, 2000; and 

              (b)  Cause a registration statement covering the Shares to be declared effective with the U.S. Securities and Exchange Commission
(“SEC”) no more than 180 days after the confirmation of the Plan.

              In the event that either of these conditions has not been met, the Offering proceeds are required to be promptly returned to the respective
subscriber without interest thereon or deduction therefrom.

        3.  The parties hereto acknowledge and agree that, although the Court ordered the confirmation of the Plan on June 28, 2000, Telegen will be unable to cause a
registration statement covering the Shares to be declared effective with the SEC no more than 180 days after the confirmation of the Plan.

        4.  The parties hereto hereby amend the terms and conditions of the Offering as follows:

              (a)  The per share offering price is reduced from US$10.00 per share to US$5.00 per share of common stock, causing the number of
shares of common stock subscribed to by each subscriber to increase by a factor of 2 (rounded up to the next whole share);

              (b)  All interest earned on the funds held in Escrow from the date of the deposit:  (i) shall be paid in cash to Merchant Securities
upon the closing of this offering, or (ii) shall be refunded to Merchant Securities promptly, if Telegen fails to satisfy all conditions herein for the release of the Offering proceeds from Escrow and the Offering is terminated;

              (c)  On or before December 22, 2000, Telegen shall have filed with the SEC:




        (i)  a registration statement to register the Shares for public sale, pursuant to the Act,




        (ii)  its Annual Reports for fiscal years ended December 31, 1998 and 1999, respectively, on Form 10-K or 10-KSB, pursuant to the Securities Exchange Act of
1934, as amended (the “Exchange Act”),




        (iii)  its Quarterly Reports for the fiscal quarters ended March 31, 2000, June 30, 2000, and September 30, 2000, respectively, on Form 10-Q or
10-QSB, pursuant to the Exchange Act, and 




        (iv)  its Current Reports on Form 8-K, pursuant to the Exchange Act;

              (d)  On or before April 30, 2001, the registration statement as filed with the SEC to register the Shares for public sale shall have
been declared effective;

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              (e)  Provided that each of the forgoing filings has occurred as set forth above and upon the effective date of the Registration
Statement, which shall occur on or before April 30, 2001, all of the money held in Escrow, less the interest, shall be released to Telegen. If any of the foregoing filings has not been made as set forth above or if the registration statement has not been
declared effective on or before April 30, 2001, all of the Offering proceeds held in Escrow shall be returned to the subscribers including the interest set forth in Section 4(b) herein;

              (f)  Telegen shall use its best efforts to cause its common stock to be quoted on the OTC Bulletin Board on or before January 9, 2001;
 and

              (g)  Telegen acknowledges that it is currently “in registration” (i.e., it is in the process of preparing and filing
a registration statement with the SEC), has entered what is commonly referred to as the “quiet period” pursuant to the U.S. securities laws, and therefore is subject to the “gun jumping” regulations of the SEC. Nonetheless, Telegen
believes that it is important to its business to attend the CES trade show in January 2001. Telegen shall use its good faith efforts to comply with the “gun jumping” regulations, and shall engage U.S. securities counsel to advise it in its
efforts to comply with such regulations. Furthermore, Telegen shall engage U.S. securities counsel to accompany Telegen’s officers at the CES trade show in order to provide on-site advice to assist Telegen in its good faith efforts to comply with the
“gun
jumping” regulations.

        5.  For a period of 30 days following the Extension Date, Merchant and Pacific jointly shall have a right of first refusal to act as placement agents on behalf of
Telegen for up to 50% of Telegen’s next offering of securities, and shall charge placement agent fees substantially equivalent to those rates set forth in the above-referenced placement agent agreements. Such right of first refusal shall be allocated
between Merchant and Pacific based upon the proportionate amount of Offering proceeds raised by such party.

        6.  On or before December 18, 2000, the parties hereto shall cause a Rescission Offer, substantially in the form attached hereto as Exhibit A, to be given to each
subscriber of the Offering, which shall allow such subscriber the opportunity to rescind its subscription of the Shares as specifically set forth in such Rescission Offer.

        7.  The parties hereto hereby acknowledge and agree that they will at any time, and from time to time, promptly execute and deliver all further instruments, documents,
and agreements, as well as all amendments or modifications thereof, and shall take all further actions that are reasonably necessary in order fully to effectuate the purpose of this Letter Agreement and the Rescission Offer.

        IN WITNESS WHEREOF, the undersigned have executed or caused a duly authorized officer or representative to execute the Letter Agreement, all as of the date first above written.


	TELEGEN CORPORATION


	 	 	MERCHANT SECURITIES, LTD



	/s/ WILLIAM M. SWAYNE	 	 	
	
	 	 	

	William M. Swayne, II
President	 	 	Nick Edmonstone 
Managing Director



	PACIFIC WEST SECURITIES, INC.


	 	 	



		 	 	
	
	 	 	
	Lorretta Elderkin
President	 	 	




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EXHIBIT A

RESCISSION OFFER



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