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Ex-10.40
Form of Warrant issued to Jessica L. Stevens on June 30, 2000


                                  EXHIBIT 10.40


THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR STATE SECURITIES OR BLUE SKY LAWS AND MAY
NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE,
DIRECTLY OR INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF
THE CORPORATION, WITHOUT REGISTRATION OF SUCH SECURITIES OR AN EXEMPTION FROM
SUCH REGISTRATION UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

Warrant No. N105

                               TELEGEN CORPORATION

                          COMMON STOCK PURCHASE WARRANT

                            VOID AFTER JUNE 30, 2005

        1.      NUMBER AND PRICE OF SHARES SUBJECT TO WARRANT. Subject to the
                terms and conditions set forth herein, Jessica L. Stevens
                ("Holder") is entitled to purchase from TELEGEN CORPORATION, a
                California corporation (the "Company"), at any time after July
                1, 2000 and on or before the date of termination of this Warrant
                provided for in Section 2 hereof, up to 1,000,000 shares of
                fully paid and non-assessable Common Stock of the Company (the
                "Warrant Stock"), for a per-share purchase price of $1.75 (the
                "Warrant Price").

        2.      TERMINATION. This Warrant (and the right to purchase securities
                upon exercise hereof) shall terminate on June 30, 2005.

        3.      NO ADJUSTMENTS. No adjustment on account of dividends or
                interest on Warrant Stock will be made upon the exercise hereof.

        4.      NO FRACTIONAL SHARES. No fractional shares of Warrant Stock will
                be issued in connection with any subscription hereunder. In lieu
                of any fractional shares which would otherwise be issuable, the
                Company shall pay cash equal to the product of such fraction
                multiplied by the fair market value of one share of Warrant
                Stock on the date of exercise, as determined in good faith by
                the Company's Board of Directors.

        5.      NO STOCKHOLDER. This Warrant shall not entitle its holder to any
                of the rights of a stockholder of the Company.

        6.      RESERVATION OF STOCK. The Company covenants that during the
                period this Warrant is exercisable, the Company will reserve
                from its authorized and unissued Common Stock a sufficient
                number of shares to provide for the issuance of Warrant Stock
                upon the exercise of this Warrant. The Company agrees that its
                issuance of this Warrant shall constitute full authority to its
                officers who are charged with the duty of executing stock
                certificates to execute and issue the necessary certificates for
                shares of Warrant Stock upon the exercise of this Warrant.

        7.      PROCEDURE FOR EXERCISE OF WARRANT. This Warrant may be exercised
                by the registered holder or its registered assigns, in whole or
                in part, by the surrender of this Warrant at the principal
                office of the Company, accompanied by payment in full of the
                Warrant Price in cash or by check. Upon partial exercise hereof,
                a new warrant or warrants containing the same date and
                provisions as this Warrant shall be issued by the Company to the
                registered holder for the number of shares of Warrant Stock with
                respect to which this Warrant shall not have been exercised. The
                holder may also exercise this Warrant in whole or in part in a
                "cashless" or "net-

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                issue" exercise of this Warrant. In such event, the holder will
                deliver this Warrant to the Company with a notice stating the
                number of shares to be delivered to the holder and the number of
                shares with respect to which the Warrant is being surrendered in
                payment of the aggregate Warrant Exercise Price for the shares
                to be delivered to the holder and for the shares as to which the
                Warrant is being surrendered for exercise. For purposes of this
                provision, all shares as to which the Warrant is surrendered
                will be valued at the Current Market Price. The notice
                accompanying the Warrant shall also set forth the number of
                shares remaining subject to the Warrant. "Fair Market Value"
                means the closing sale price or, if not available, then the
                closing bid price on a given trading day of the Company's Common
                Stock as reported on the Nasdaq SmallCap Market under the symbol
                TEGN or other national exchange, including the electronic
                bulletin board, the "pink sheets" or as determined by the
                Company's Board of Directors in good faith, as applicable. A
                Warrant shall be deemed to have been exercised immediately prior
                to the close of business on the date of its surrender for
                exercise as provided above, and the person entitled to receive
                the shares of Warrant Stock issuable upon such exercise shall be
                treated for all purposes as the holder of such shares of record
                as of the close of business on such date. As promptly as
                practicable on or after such date, the Company shall issue and
                deliver to the person or persons entitled to receive the same a
                certificate or certificates for the number of full shares of
                Warrant Stock issuable upon such exercise, together with cash in
                lieu of any fraction of a share as provided above.

        8.      ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
                kind of securities issuable upon the exercise of this Warrant
                shall be subject to adjustment from time to time and the Company
                agrees to provide notice upon the happening of certain events as
                follows:

                (a)     ADJUSTMENT FOR RECLASSIFICATION OR REORGANIZATION. In
                        case of any reclassification or change of the
                        outstanding Common Stock of the Company or of any
                        reorganization of the Company during the term of this
                        Warrant (other than a merger of the Company with and
                        into another corporation), then and in each such case
                        the Company shall give the holder of this Warrant at
                        least twenty (20) days notice of the proposed effective
                        date of such transaction, and the holder of this
                        Warrant, upon the exercise hereof at any time after the
                        consummation of such reclassification, change or
                        reorganization, shall be entitled to receive, in lieu of
                        the Warrant Stock receivable upon the exercise hereof
                        prior to such consummation, the stock or other
                        securities or property to which such holder would have
                        been entitled upon such consummation if such holder had
                        exercised this Warrant immediately prior thereto, all
                        subject to further adjustment as provided in this
                        Section 8. The terms of this Section 8 shall similarly
                        apply to successive reclassifications, changes or
                        reorganizations.

                (b)     STOCK SPLITS AND REVERSE STOCK SPLITS. If at any time
                        during the term of this Warrant the Company shall
                        subdivide its outstanding shares of Common Stock into a
                        greater number of shares, the Warrant Price in effect
                        immediately prior to such subdivision shall thereby be
                        proportionately reduced and the number of shares
                        receivable upon exercise of the Warrant shall thereby be
                        proportionately increased; and, conversely, if at any
                        time on or after the date hereof the outstanding number
                        of shares of Common Stock shall be combined into a
                        smaller number of shares, the Warrant Price in effect
                        immediately prior to such combination shall thereby be
                        proportionately increased and the number of shares
                        receivable upon exercise of this Warrant shall thereby
                        be proportionately decreased.

        9.      CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or the
                number or type of securities issuable upon exercise of this
                Warrant is adjusted, as herein provided, the Company shall
                promptly deliver to the record holder of this Warrant a
                certificate of an officer of the Company setting forth the
                nature of such adjustment and a brief statement of the facts
                requiring such adjustment.

        10.     NO DILUTION OR IMPAIRMENT. The Company covenants that it shall
                not, by amendment of its Articles of Incorporation or through
                any reorganization, consolidation, merger, transfer of assets,
                dissolution, issue or sale of securities or any other voluntary
                action, avoid or seek to avoid the observance or performance of
                any of the terms of this Warrant, but shall at all times in good
                faith assist in carrying out all those terms and in taking all
                actions necessary or appropriate to protect the rights of the
                holder of this Warrant against dilution or other impairment.
                Without limiting the generality of the above provision, the
                Company will take all necessary or

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                appropriate action in order that the Company may validly and
                legally issue fully paid and nonassessable shares upon the
                exercise of this Warrant.

        11.     TRANSFER OF WARRANT. This Warrant may not be transferred or
                assigned without the consent of the Company. The Warrant Stock
                may not be transferred or assigned, in whole or in part, by the
                holder hereof without compliance with applicable federal and
                state securities laws. The rights and obligations of the Company
                and the holders of this Warrant shall be binding upon and
                benefit the successors, assignors, heirs, administrators and
                transferees of the parties. Any transferee hereof agrees to be
                bound by the restrictions set forth herein.

        12.     COMPLIANCE WITH SECURITIES LAWS.

                (a)     The Holder represents and agrees that this Warrant (and
                        the Warrant Stock, if the Warrant is exercised), are
                        purchased only for investment, for the Holder's own
                        account, and without any present intention to sell or
                        distribute the Warrant or the Warrant Stock.

                (b)     The Holder of this Warrant acknowledges and agrees that
                        this Warrant and the Warrant Stock issuable upon
                        exercise of the Warrant (the "Securities") have not been
                        registered under the Securities Act and accordingly will
                        not be transferable except as permitted under the
                        various exemptions contained in the Securities Act, or
                        upon satisfaction of the registration requirements of
                        the Securities Act. Therefore, the Securities must be
                        held pursuant to Rule 144 of the Securities Act unless
                        they are subsequently registered under the Securities
                        Act or an exemption from such registration is available.
                        Holder understands that the certificate evidencing the
                        Securities will be imprinted with a legend which
                        prohibits the transfer of the Securities unless they are
                        registered or unless the Company receives an opinion of
                        counsel reasonably satisfactory to the Company that such
                        registration is not required. Holder is aware of the
                        provisions of Rule 144 under the Securities Act. Holder
                        understands that a stop transfer instruction will be in
                        effect with respect to transfer of Securities consistent
                        with the requirements of the securities laws.

        13.     PIGGYBACK REGISTRATION. The Warrant Stock will, at the request
                of the holder be included in any registration statement filed by
                the Company in connection with a public offering of common stock
                of the Company, subject to such reasonable limitations on the
                resale of the Warrant Stock as may be imposed by any underwriter
                engaged by the Company to conduct such public offering.

        14.     CONSIDERATION. This Warrant is being issued in consideration for
                the transfer by Holder of certain technology known as "Level 5"
                as follows:

                (a)     As set forth in the Plan of Reorganization of the
                        Company as confirmed by the U.S. Bankruptcy Court for
                        the Northern District of California on June 28, 2000;

                (b)     The agreement with respect to such assignment and
                        transfer including the transfer of any improvements in
                        such technology; and

                (c)     In accordance with resolutions of the Board of Directors
                        of the Company, duly adopted on June 30, 2000.

        15.     MISCELLANEOUS. This Warrant shall be governed by the laws of the
                State of California. The headings in this Warrant are for
                purposes of convenience and reference only, and shall not be
                deemed to constitute a part hereof. Neither this Warrant nor any
                term hereof may be changed, waived, discharged or terminated
                orally but only by an instrument in writing signed by the
                Company and the registered holder hereof. All notices and other
                communications from the Company to the holder of this Warrant
                shall be mailed by first-class registered or certified mail,
                postage prepaid, to the address furnished to the Company in
                writing by the last holder of this Warrant who shall have
                furnished an address to the Company in writing.

ISSUED this 1st day of July, 2000.


TELEGEN CORPORATION


By:    /S/ WILLIAM M. SWAYNE
    ------------------------------------
     William M. Swayne II
     President


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