EXHIBIT 10.22

                               TELEGEN CORPORATION

                                 EXCHANGE OFFER


I.       GENERAL UNDERSTANDINGS.

         1.  Eligibility.  This Exchange Offer Agreement is being made available
by Telegen  Corporation,  a California  corporation  (the  "Company") to certain
holders of the Company's unregistered Common Stock (each a "Holder") as of March
___, 1998.  Each Holder  desiring to enter into this Exchange Offer must execute
this Agreement and provide a complete address on the last page hereof.

         2.  Exchange  Terms.  Any  eligible  Holder,   at  its  election,   may
voluntarily enter into this Exchange Offer and deliver to the Company either (i)
its original unregistered Stock Certificate (the "Stock Certificate") evidencing
that the Stock  Certificate  is being  cancelled or (ii) Lost Stock  Certificate
Affidavit substantially in the form attached hereto as Exhibit A indicating that
the Stock Certificate being cancelled cannot be located,  and shall receive from
the Company a (x) Convertible  Subordinated Promissory Note substantially in the
form attached hereto as Exhibit B, evidencing indebtedness in an amount equal to
the number of shares being surrendered multiplied by the average of the five day
closing  prices of the Common Stock as reported on the OTC Bulletin  Board prior
to March 17, 1998, and (y) the Registration described in Article III below.

II.      REPRESENTATIONS AND WARRANTIES.

         In connection with the issuance of the Note and the common stock of the
Company (the "Common  Stock"),  if any,  issuable  upon  conversion of the Note,
Holder hereby represents and warrants as follows:

         1.  Acquired  Entirely  for Own  Account.  Holder's  execution  of this
Agreement  confirms  that the Note or any  Common  Stock  will be  acquired  for
investment for Holder's own account,  not as a nominee or agent,  and not with a
view to the resale or distribution  of any part thereof,  and that Holder has no
present  intention  of selling,  granting  any  participation  in, or  otherwise
distributing  the same. By executing the Agreement,  Holder  further  represents
that it does  not  presently  have  any  contract,  undertaking,  agreement,  or
arrangement with any person to sell,  transfer,  or grant  participation to such
person or to any third  person,  with  respect to any portion of the Note or any
Common Stock.






<PAGE>



         2.  Qualified  Investor.  Holder  represents and warrants that it is an
"Accredited  Investor"  as that  term is  defined  in  Rule  501(a)  promulgated
pursuant to the  Securities  Act of 1933,  as amended (the  "Act").  Holder also
represents and warrants that it either has a  pre-existing  business or personal
relationship with Telegen Corporation, a California corporation (the "Company"),
or any of its officers,  directors,  or controlling persons, or by reason of the
Holder's  business  or  financial   experience  or  the  business  or  financial
experience of the Holder's  professional  advisors who are unaffiliated with and
who  are not  compensated  by the  Company,  directly  or  indirectly  could  be
reasonably  assumed to have the  capacity to evaluate the merits and risks of an
investment  in the Company and to protect the  undersigned's  own  interests  in
connection with these transactions.

         3. Disclosure of Information.  Holder understands that the Company is a
public  reporting  Company  under  the 1934 Act and  that it is  current  in its
reporting  requirements  and that such  reports  represent  all the  information
Holder  considers  necessary or appropriate for deciding  whether to acquire the
Note,  and  that in  particular,  the  Holder  has been  furnished  with and has
carefully  read the  Company's  Annual Report on Form 10-K dated March 31, 1997,
amended on April 9 and April 30,  1997,  the Proxy  Statement  delivered  to the
Company's  Shareholders dated July 9, 1997,  Quarterly Report on Form 10-Q dated
May 15, 1997,  the  Quarterly  Report on Form 10-Q dated  August 14,  1997,  the
Quarterly  Report on Form 10-Q dated November 14, 1997,  Current Reports on Form
8-K dated January 15, 1997 (amended March 14, 1997),  January 21, 1997, February
7, 1997,  March 25, 1997,  May 9, 1997, May 19, 1997,  July 8, 1997,  August 11,
1997, August 19, 1997,  October 15, 1997,  January 15, 1998, the Company's press
releases on October 31, 1997 and January 6, 1998, and  disclosure  regarding the
risk factors relating to the Company, attached hereto as Exhibit C. [needs to be
updated]

         4.  Investment  Experience.  Holder is an  investor  in  securities  of
companies in the development  stage and acknowledges that it is able to fend for
itself,  can bear the economic  risk of its  investment,  and has  directly,  or
indirectly  through  its agents,  advisors or other  persons on which it relies,
such  knowledge  and  experience  in  financial  or business  matters that it is
capable  of  evaluating  the merits  and risks of the  investment  in the Stock.
Holder also  represents  it has not been  organized for the purpose of acquiring
the Note.

         5. Restricted  Securities.  Holder  understands  that the Note, and any
Common  Stock  issued upon  conversion  of the Note,  will be  characterized  as
"restricted  securities" under the federal  securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that  under such laws and  applicable  regulations  the Note,  or any Common
Stock issued upon  conversion of the Note,  may be resold  without  registration
under the Act only in certain limited circumstances.







                                        2

<PAGE>



         6. Further Limitations on Disposition.  Without in any way limiting the
representations  set  forth  above,  Holder  further  agrees  not  to  make  any
disposition  of all or any portion of the Note,  or any common stock issued upon
conversion of the Note, unless and until:

                  (i) There is then in effect a Registration Statement under the
Act  covering  such  proposed  disposition  and  such  disposition  is  made  in
accordance with such Registration Statement; or

                  (ii)  (a)  Holder  shall  have  notified  the  Company  of the
proposed  disposition  and shall  have  furnished  the  Company  with a detailed
statement of the  circumstances  surrounding the proposed  disposition,  and (b)
Holder shall have  furnished the Company with an opinion of counsel,  reasonably
satisfactory to the Company, that such disposition will not require registration
under the Act.

         7.  Responsibility for Tax Consequences.  Holder has had an opportunity
to review the  federal,  state,  local,  and  foreign tax  consequences  of this
investment  (including any tax consequences that may result now or in the future
under recently  enacted tax  legislation) and has had the opportunity to consult
with its tax advisors, if any, regarding such consequences.  Holder acknowledges
that it is not relying on any  statements or  representations  of the Company or
any of its agents in regard to such tax consequences and understands that Holder
(and not the Company)  shall be  responsible  for his own tax liability that may
arise as a result of this investment.  Holder  acknowledges that the Company has
no obligation in regard to the future  conduct of its business to act or refrain
from acting in any manner,  regardless  of the loss of any tax benefit to Holder
in  connection  with the  purchase,  ownership,  or sale of the Note,  which may
result from such action or inaction.

         8. Legends. It is understood that the Note and any securities issued in
respect thereof or exchange therefor may bear the following legend and any other
legend which is required by law or that the Company deems advisable:

         "THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933.  THEY MAY NOT BE SOLD,  OFFERED FOR SALE,  PLEDGED OR  HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR AN OPINION OF COUNSEL  REASONABLY  SATISFACTORY  TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."










                                        3

<PAGE>



III.     REGISTRATION RIGHTS.

         The Company hereby grants to Holder registration rights as follows: the
Company shall prepare and file as soon as practicable,  a Registration Statement
on Form S-3 or any other Form that is available to the Company at that time (the
"Registration  Statement")  covering  the  issuance  of the  Common  Stock  upon
conversion of the Note.  The Company  further  agrees to use its best efforts to
cause the Registration  Statement to be declared effective by the Securities and
Exchange Commission after its filing. The Company shall pay all expenses of such
registration and shall maintain the effectiveness of such Registration Statement
for so long as the Common  Stock  issued upon  conversion  of the Note cannot be
freely resold pursuant to Rule 144.

IV.      MISCELLANEOUS.

         1. Neither this Exchange Offer Agreement nor any provision hereof shall
be waived,  modified,  changed,  discharged,  terminated,  revoked, or canceled,
except by an instrument in writing effecting the same signed by the Company.

         2.  Failure of the Company to exercise  any right or remedy  under this
Exchange  Offer  Agreement  or any other  agreement  between the Company and the
undersigned,  or otherwise,  or delay by the Company in exercising such right or
remedy,  will not operate as a waiver thereof.  No waiver by the Company will be
effective unless and until it is in writing and signed by the Company.

         3. This  Exchange  Offer  Agreement  shall be enforced,  governed,  and
construed  in  all  respects  in  accordance  with  the  laws  of the  State  of
California,  and shall be binding upon Holder,  Holder's  heirs,  estate,  legal
representatives,  successors  and  assigns and shall inure to the benefit of the
Company,  its  successors,  and  assigns.  Any  provision  hereof that may prove
invalid  or  unenforceable  under any law  shall  not  affect  the  validity  or
enforceability of any other provision hereof.

         4. This Exchange  Offer  Agreement and the Note  constitute  the entire
agreement  between the parties  hereto with respect to the subject matter hereof
and supersede in their entirety all prior undertakings of the Company and Holder
with respect to the subject matter hereof,  and may be amended only by a writing
executed by both parties hereto.

         5. This Exchange Offer Agreement may be signed in counterparts, each of
which  shall be  deemed  an  original,  but all of which  taken  together  shall
constitute one and the same instrument.







                                        4

<PAGE>



         IN WITNESS  WHEREOF,  the Company and Holder have caused this  Exchange
Offer  Agreement  to be  signed  by their  respective  officers  thereunto  duly
authorized and this Exchange Offer Agreement shall be deemed effective as of the
date first above written.


THE COMPANY


By:  _______________________________________________
       Fred Y. Kashkooli, Chief Executive Officer


HOLDER:


_________________________________________


By:______________________________________


Name:____________________________________


Title:_____________________________________


HOLDER'S ADDRESS:                   ______________________________


                                    ______________________________


                                    ______________________________


                                        5

<PAGE>


                                                                       Exhibit A

                        LOST STOCK CERTIFICATE AFFIDAVIT


         The      undersigned      holder     of     the      Common      Stock,
_____________________________  (the "Holder"), is holder of the Company's Common
Stock   certificate    #_______________    (the    "Certificate")    issued   on
_______________,  19____  for  _____________  shares of Common  Stock of Telegen
Corporation, a California corporation (the "Company").

         Holder hereby certifies that said Certificate is lost and cannot, after
diligent search, be found and agrees that in the event it is found,  Holder will
forthwith deliver it to the Company.

         The Holder  further  certifies  that said  Certificate  shall be deemed
surrendered for cancellation  from the date hereof and releases said corporation
from any and all liability thereunder, except as herein provided.

         The Holder  agrees to defend and  indemnify  the  Company  and hold the
Company harmless from any damage or loss caused by or in any way relating to the
loss of said Certificate, or the issuance of a new Certificate.

         The  Holder   further   certifies  that  Holder  has  not  assigned  or
transferred said Certificate or any rights thereunder to any person.

         The Holder hereby  authorizes any officer of the Company to issue a new
Certificate  exercisable for  _______________  shares of Common Stock to replace
said lost Certificate.



_________________________________________
Print Name


_________________________________________
Signature


_________________________________________
Date


<PAGE>
                                                                       Exhibit B


                FORM OF CONVERTIBLE SUBORDINATED PROMISSORY NOTE


THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"). THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR
TRANSFERRED  UNLESS (I) A REGISTRATION  STATEMENT UNDER THE SECURITIES ACT IS IN
EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.

THIS  CONVERTIBLE  PROMISSORY  NOTE IS SUBJECT TO  TRANSFERABILITY  RESTRICTIONS
PURSUANT TO SECTION 7 HEREIN AND SHALL NOT BE  TRANSFERRED BY THE COMPANY UNLESS
THE HOLDER HEREOF COMPLIES  THEREWITH.  ANY ATTEMPTED TRANSFER OF SECURITIES NOT
IN COMPLIANCE WITH SUCH SECTION 7 SHALL BE NULL AND VOID.

[Any  additional  restrictive  legends  endorsed  on Common  Stock  certificates
tendered for this Note.]

                               TELEGEN CORPORATION

                    Convertible Subordinated Promissory Note

$_________________                                      Redwood City, California
                                                                 March ___, 1998


         FOR VALUE  RECEIVED,  TELEGEN  CORPORATION,  a  California  corporation
(together with its successors and assigns,  the  "Company"),  promises to pay to
the order of ______________,  ______________ (the "Holder"),  (i) an amount (the
"Face  Value") of  ($)___________  which is equal to the average of the five day
closing  prices of the  Company's  Common  Stock as reported on the OTC Bulletin
Board prior to March 17, 1998 (the "Conversion  Price") multiplied by the number
of shares of Common Stock being  surrendered by the Holder for this  Convertible
Promissory  Note (the "Note") plus (ii) simple interest on the unpaid balance at
the time such  interest  is due.  Interest  on this Note shall be paid at a rate
equal to Six Percent  (6%) per annum and shall be payable one year from the date
hereof.  Payment of all amounts due hereunder shall be made, (x) by check or (y)
in stock, if the Holder consents in writing, at the Conversion Price.

         This Note is issued  pursuant to the Common Stock  Exchange Offer dated
as of March __, 1998 (the "Agreement"), between the Company and the Holder.

         The  following  is a  statement  of the  rights of the  Holder  and the
conditions to which this Note is subject,  to which the Holder, by acceptance of
this Note, hereby agrees:



<PAGE>



         1.       Repayment Obligation.

                  (a)  Repayment.  The  Company  shall be  required to repay all
principal  and any  outstanding  interest on this Note in full one (1) year from
the date hereof (the "Repayment  Obligation").  The Company shall be entitled to
prepay any portion of the  principal or interest at any time before this Note is
due in full, after giving the Holder fifteen (15) days written notice.

                  (b)  Adjustment in Note's Face Value.  Upon any  prepayment by
the Company of this Note,  the Company will on its books and records  reduce the
face value of this Note and send notice of such change to the Holder hereof.  To
the extent the Note 's face value is greater  than zero on the  Company's  books
and records, the Company will upon request by the Holder hereof,  deliver, a new
Note of like tenor in the principal amount remaining on such Note.

         2.       Conversion.

                  (a) Conversion.  Holder shall have the right to convert at any
time, in whole or in part, any portion of  outstanding  principal or interest on
the Note (a "Portion") to the  Company's  Common Stock.  The number of shares of
Common  Stock into which any Portion may be  converted  shall be  determined  by
dividing  the  dollar  amount  of  such  Portion  by the  Conversion  Price.  No
fractional  shares or scrip  representing  fractions of shares will be issued on
conversion,  and the  number of shares  issuable  shall be  rounded  down to the
nearest  whole  share.  The  shares of Common  Stock  issued  or  issuable  upon
conversion of this Note are referred to herein as the "Shares."

                  (b) Issuance of Securities on  Conversion.  Conversion of this
Note,  in whole or in part,  shall occur if the Company  elects to prepay all or
part of its  Repayment  Obligations  in stock or if the Holder elects to convert
under Section 2(a) above. Upon any such conversion, the Holder shall execute any
documents  deemed  reasonably  necessary  by the Company to effect the issue and
sale of the capital  stock to be received by the Holder upon  conversion of this
Note. As soon as practicable  after  conversion of all or part of this Note, the
Company at its expense will cause to be issued,  in the name of and delivered to
the Holder at the Holder's  registered  address, a certificate for the number of
shares of the  Company's  capital stock to which the Holder shall be entitled on
such  conversion.  Such certificate will bear such legends as may be required by
applicable state and federal securities laws in the opinion of legal counsel for
the Company.

         3.       Restrictions on Transfer.

                  (a) Legends.  Each certificate  representing the Shares may be
endorsed with the following legends, and the Holder may not make any transfer of
any of the Shares  without first  complying  with the  restrictions  on transfer
described in all such legends:

                           (i) The 1933  Securities  Act legend set forth on the
face of this Note.

                           (ii) Any other legends  required by applicable  state
securities laws.

                                       -2-

<PAGE>



                           (iii)  Any  other   restrictive   legends  which  may
currently exist or the shares of
Common Stock being surrendered for this Note.

The Company  need not register a transfer of any Shares,  and may also  instruct
its  transfer  agent not to register  the  transfer of such  Shares,  unless the
conditions specified in this Section 3 are satisfied.

                  (b)      Removal of Legend and Transfer Restrictions.

                           (i) Any legend endorsed on a certificate  pursuant to
Section  3(a)(i) and any stop transfer  instructions  with respect to the Shares
evidenced  by such  certificate  shall be removed and the Company  shall issue a
certificate  without  such  legend to the  holder  thereof  if such  Shares  are
registered  upon issuance  under the  Securities  Act, and if such legend may be
properly  removed under the terms of Rule 144  promulgated  under the Securities
Act, or if such holder  provides the Company with an opinion of counsel for such
holder reasonably  satisfactory to legal counsel for the Company,  to the effect
that a  sale,  transfer  or  assignment  of  such  shares  may be  made  without
registration.

                           (ii) Any legend endorsed on a certificate pursuant to
Section 3(a)(ii) and the stop transfer  instructions  with respect to the Shares
evidenced by such certificate shall be removed upon receipt by the Company of an
order of the appropriate state securities authority authorizing such removal.

                           (iii) Any legend  endorsed on a certificate  pursuant
to Section  3(a)(iii)  and the stop  transfer  instructions  with respect to the
Shares  evidenced  by such  certificate  shall be  removed by the  Company  upon
written  request  by  a  holder  thereof   demonstrating  that  such  legend  is
inapplicable at such time.

         4.  Prepayment.  The Company may prepay this Note, in whole or in part,
in accordance with Section 1(a) herein.

         5.       Events of Default; Acceleration.

                  (a) So long as this  Note  is  unpaid,  each of the  following
events will constitute an "Event of Default":

                           (i)  default  in  the  payment  of the  principal  or
interest  of this Note as and when the same  shall  become  due and  payable  at
maturity,  by  declaration or otherwise,  and  continuance of such default for a
period of 30 days; or

                           (ii) an involuntary case or other proceeding shall be
commenced  against  the Company  seeking  liquidation,  reorganization  or other
relief  with  respect  to it or  its  debts  under  any  applicable  bankruptcy,
insolvency  or other  similar  law now or  hereafter  in effect,  or seeking the
appointment   of  a  receiver,   liquidator,   assignee,   custodian,   trustee,
sequestrator (or similar official) of

                                       -3-

<PAGE>



the Company or for any  substantial  part of the  property of the Company or the
winding  up or  liquidation  of the  affairs  of the  Company,  and such case or
proceeding  shall remain unstayed and undismissed for a period of 60 days, or an
order for  relief  shall be  entered  against  the  Company  under  the  federal
bankruptcy laws as now or hereafter in effect; or

                           (iii) the Company  shall  commence a  voluntary  case
under  any  applicable  bankruptcy,  insolvency  or  other  similar  law  now or
hereafter  in  effect,  or  consent  to the entry of an order  for  relief in an
involuntary  case under any such law,  or consent to the  appointment  or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Company or for any substantial part of the property
of the Company, or the Company shall make any general assignment for the benefit
of  creditors,  or shall fail  generally  to pay its debts as they come due,  or
shall take any corporate action to authorize any of the foregoing; or

                           (iv) failure on the part of the Company to observe or
perform  any of the  covenants  contained  in this Note (other than a failure to
make a payment  specified  in clause  (i)  above)  or in the  Agreement  and the
continuance of such failure for a period of 60 days following  receipt of notice
from the  Holder  specifying  such  covenant  and the  nature  of the  Company's
non-performance.

                  (b) If an Event of Default shall occur, then the Holder may by
notice to the  Company  (a  "Default  Notice"),  so long as the Event of Default
exists,  declare the unpaid principal and accrued interest, if any, of this Note
immediately due and payable without further  presentment,  demand,  protest,  or
notice, all of which are hereby waived.

         6. Notices. Any notice,  request, or other  communications  required or
permitted hereunder shall be in writing and shall deemed to have been duly given
if sent by  facsimile,  or mailed  by  registered  or  certified  mail,  postage
prepaid, or by recognized overnight courier or personal delivery,  addressed (a)
if to the Holder,  to it at the last known address appearing on the books of the
Company  maintained  for such  purpose,  or (b) if to the Company,  to it at 101
Saginaw  Drive,  Redwood City,  California  94063,  attention:  Chief  Executive
Officer, telephone (650) 261- 9400, facsimile (650) 261-9468, with a copy (which
will not constitute notice) to Thomas C. DeFilipps, Esq.,Wilson Sonsini Goodrich
& Rosati,  650 Page Mill Road,  Palo Alto,  California  94304,  telephone  (650)
493-9300,  facsimile  (650)  493-6811.  Any party  hereto may by notice so given
change its address for future notice hereunder.  All such notices will be deemed
to have been given (i) upon confirmation of delivery, if sent by facsimile, (ii)
three days after  deposit in the U.S.  mails (as  determined by reference to the
postmark),  if sent by mail,  or (iii)  upon  delivery,  if sent by  courier  or
personal delivery.

         7.   Transferability.   With  respect  to  any  offer,  sale  or  other
disposition of any of this Note or the Shares (collectively,  the "Securities"),
the Holder will give written  notice to the Company  prior  thereto,  describing
briefly the manner thereof,  and, if requested by the Company, a written opinion
of  the  Holder's  counsel  to  the  effect  that  such  offer,  sale  or  other
distribution  may be effected without  registration or  qualification  under any
federal or state law then in effect or necessary

                                       -4-

<PAGE>



compliance  with any  other  transferability  restrictions  relating  thereto  .
Promptly upon receiving such written notice and reasonably satisfactory opinion,
if so  requested,  the  Company,  as promptly as  practicable,  shall notify the
Holder that the Holder may sell or otherwise dispose of such Securities. Subject
to compliance with applicable  state and federal law and the terms of the notice
delivered  to the  Company,  the Holder may  transfer  such  Securities  only by
surrendering  them to the Company with a duly executed  instrument of assignment
in form  satisfactory  to the Company and funds  sufficient  to pay any transfer
tax,  whereupon the Company will cancel such  Securities and execute and deliver
one or more new Securities in the names and amounts specified in such instrument
and, if the Holder's  entire  interest in such Securities is not being assigned,
in the name of the Holder for the balance of such interest. Any Note issued upon
transfer  of this Note  shall bear the  legends  on the face of this  Note.  All
certificates  representing  Shares  delivered upon transfer of Securities  shall
bear the  legends  required  by  Section  3. If a  determination  has been  made
pursuant  to this  Section 7 that the  opinion of counsel  for the Holder is not
reasonably  satisfactory to the Company,  the Company shall so notify the Holder
promptly  after such  determination  has been made.  Any  attempted  transfer of
Securities not in compliance with this Section 7 shall be null and void.

         8.  Subordination.  The  indebtedness  evidenced by this Note is hereby
expressly  subordinated  to  all  existing  indebtedness  of  the  Company  (the
"Indebtedness"), in right of payment and in liquidation. No payment of principal
or  interest  shall be made on this Note as long as the Company is in default of
any of the  Indebtedness.  In  liquidation,  any  payment  of the Note  shall be
subrogated to any and all payments on the Indebtedness.  In addition, no payment
shall be made in respect  of the  principal  or  interest  on the Note,  if such
payment  would  result  directly  in an event of  default  with  respect  to the
Indebtedness.

         9. Assignment. The rights and obligations of the Company and the Holder
shall  be  binding   upon  and   benefit   the   successors,   assigns,   heirs,
administrators, and transferees of the parties. The Holder may assign his rights
and  obligations  hereunder  subject  to  Sections  3 and 7 of this  Note.  This
provision  shall in no way affect the  restrictions  on  transfer  contained  in
Sections 3 and 7 of this Note.

         10.  Amendment  and Waiver.  The rights of the Holder may be amended or
waived upon the written consent of the Company and the Holder.

         11.  Integration:  No Shareholder  Rights.  The Agreement and this Note
constitute the full and entire  understanding  and agreement between the parties
hereto and thereto with regard to the subject  matter  hereof and  thereof,  and
supersede   any  prior  or   contemporaneous   understandings,   agreements   or
representations  between  them  that  relate  to the  subject  matter  hereof or
thereof.  Nothing  contained in this Note shall be construed as conferring  upon
the  Holder or any other  person  the right to vote or to  consent or to receive
notice as a shareholder in respect of meetings of shareholders  for the election
of directors of the Company or any other  matters or any rights  whatsoever as a
shareholder  of the Company;  and no  dividends or interest  shall be payable or
accrued in respect of this Note or the interest represented hereby or the Shares
obtainable  hereunder  until,  and only to the extent that, this Note shall have
been converted.

                                       -5-

<PAGE>



         12.  California  Law. This Note and the  obligations of the Company and
the Holder  hereunder  shall be governed by and construed in accordance with the
laws of the State of California,  as such laws are applied to contracts  between
California   residents  entered  into  and  to  be  performed   entirely  within
California.

         IN WITNESS WHEREOF,  the Company has caused this Note to be executed by
its duly authorized representative on the date first above written.

                                          TELEGEN CORPORATION


                                          By: __________________________________


                                          Title: _______________________________



                                       -6-