Document:

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Ex-10.39

Form of the $500,000 in Convertible Promissory Notes
issued by the Company in December 1999

                                  EXHIBIT 10.39

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
TRANSFERED 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 (THE "NOTE") IS SUBJECT TO TRANSFERABILITY
RESTRICTIONS PURSUANT TO SECTION 4 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 4 SHALL BE NULL AND VOID.

                               TELEGEN CORPORATION

                           Convertible Promissory Note

US $___________                                            San Mateo, California
                                                           December __, 1999

        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) US $____________ (the "Face
Value") plus (ii) simple interest on the unpaid balance at the time such
interest is due. Interest on the unpaid balance of the Face Value shall accrue
at the rate of Fifteen Percent (15%) per annum and shall be payable with the
Face Value on the date on which the Face Value is payable. Payment of all
amounts due to Holder hereunder shall be made by wire transfer to Holder in
accordance with written instructions given to the Company.

        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:

1.      REPAYMENT OBLIGATION

        (a)     REPAYMENT. The Company shall be required to repay the Face Value
and any accrued but unpaid interest on this Note in full on the date which is
the earlier of: (i) one (1) year from the date hereof or (ii) the effective date
under a plan of reorganization (the "Plan") that is confirmed in Chapter 11 Case
No 98-34876-DM-11, entitled IN RE TELEGEN CORPORATION (the "Chapter 11 Case"),
presently pending in the United States Bankruptcy Court for the Northern
District of California (the "Court"). The Company shall not be entitled to
prepay any portion of the Face Value or interest at any time before this Note is
due in full, except with the written approval of the Holder and authorization by
the Court.

        (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.

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2.      CONVERSION

        (a)     CONVERSION. Upon confirmation of a Plan by the Court, the Holder
shall have the option, in lieu of repayment in cash, to convert, in whole or in
part, all or any portion of the outstanding principal amount or interest on the
Note (a "Portion") to the Company's post-reorganization common stock by (i)
surrender of this Note, together with (ii) an executed Notice of Conversion,
substantially in the form of EXHIBIT A attached hereto, at the Company's
Principal Executive Office. The number of shares of Common Stock into which any
Portion may be converted shall be determined by multiplying the price per share
of the Company's last prior offering of its common stock by Eighty Percent (80%)
(the "Conversion Price") and dividing the Portion by the Conversion Price. No
fractional shares or scrip representing fractions of shares will be issued on
conversion, and the number of shares issued shall be founded up 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 Holder elects to convert under
Section 2(a) above. 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 the Holder, or such persons as the Holder may designate, and delivered to
the Holder's registered address, a certificate or certificates for the total
number of Shares to which the Holder shall be entitled on such conversion.
The Company will use its best efforts to cause such Shares to be issued in
exchange for an administrative expense in the Chapter 11 Case, within the
meaning of 11 U. S. C. Section 1145(a)(1)(A).

3.      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 1840
Gateway Drive, Suite 200, San Mateo, California 94404, attention: Chief
Executive Officer, telephone (650) 261-9400, facsimile (650) 261-9468. 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 or registered or certified mail or (ii) upon
delivery, if sent by courier or personal delivery.

4.      TRANSFERABILITY. With respect to any offer, sale or other disposition of
this Note or any portion thereof, the Holder will give written notice to the
Company prior thereto, describing briefly the manner of the proposed
disposition, 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 with any federal or state law
then in effect or necessary compliance with any other transferability
restrictions resulting 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 this Note. Subject to compliance with applicable state and federal
law and the terms of the notice delivered to the Company, the Holder may
transfer this Note or any portion thereof only by surrendering it to the Company
with a duly executed Assignment Form, substantially in the form attached hereto
as EXHIBIT B, whereupon the Company will cancel such Note and execute and
deliver one or more new Notes in the names and amounts specified in such
instrument and, if the Holder's entire interest in such Note is not being
assigned, in the name of the Holder for the balance of such interest, unless
otherwise specified in the Assignment Form. If a determination has been made
pursuant to this Section 4 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 the
Note not in compliance with this Section 4 shall be null and void.

5.      ASSIGNMENT. The rights and obligations of the Company and the Holder
shall be binding upon and benefit to the successors, assigns, heirs,
administrators, and transferees of the parties. The Company may not assign its
rights and obligations hereunder without the written consent of the Holder and
the approval of the Court.

6.      AMENDMENT. This Note may not be modified or amended except by the
written agreement of the parties and the approval of the Court.

7.      INTEGRATION: NO SHAREHOLDER RIGHTS. This Note constitutes the full and
entire understanding and agreement between the parties hereto with regard to the
subject matter hereof, and supersedes any prior or contemporaneous

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understandings, agreements or representations between them that relate to the
subject matter hereof. Nothing contained in this Convertible Promissory 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.

8.      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.

9.      COURT APPROVAL. This Note is subject to approval by the Court in the
Chapter 11 Case and shall not be legally binding upon the Holder or the Company
until and unless approved by the Court.

        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:   __________________________
      Jessica L. Stevens
      President/CEO

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                                    EXHIBIT A

                             NOTICE OF EXERCISE FORM

    (To be executed only upon partial or full conversion of the attached Note
         pursuant to the terms and conditions of Section 2 of the Note)

        The undersigned registered Holder of the attached Note hereby
irrevocably converts $__________ of Face Value and interest thereon to Common
Stock of Telegen Corporation at the Conversion Price and on the terms and
conditions specified in the attached Note.

The undersigned requests that a certificate (or certificates in denominations of
shares) for the shares of Common Stock of Telegen Corporation hereby be issued
in the name of and delivered to (circle one) (a) the undersigned or (b)
_________________________________________ whose address is
__________________________________ and, if such shares of Common Stock shall not
include all the shares of Common Stock issuable as provided in the attached
Note, that a new Note of like tenor for the number of shares of Common Stock of
Telegen Corporation not being purchased hereunder be issued in the name of and
delivered to (circle one) (a) the undersigned or (b) _________________ whose
address is______________________.

Dated________________

By:

--------------------------------
(Signature of Registered Holder)

Title:

--------------------------------

NOTICE:         The signature on this Notice of Exercise must correspond with
                the name as written upon the face of the attached Note in every
                particular, without alteration or enlargement or any change
                whatever.

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                                    EXHIBIT B

                                 ASSIGNMENT FORM

          (To be executed only upon the assignment of the attached Note
         pursuant to the terms and conditions of Section 4 of the Note)

        FOR VALUE RECEIVED, the undersigned registered Holder of the attached
Note hereby sells, assigns and transfers unto ________________________________,
whose address is ______________________________________________________________
all of the rights of the undersigned under the attached Note, with respect to US
$_________ of indebtedness of Telegen Corporation and, if the entire Note is
not being transferred, then a new Note of like tenor for the amount of
indebtedness of Telegen Corporation not being transferred hereunder shall be
issued in the name of and delivered to the undersigned, and does hereby
irrevocably constitute and appoint _________________________________ attorney
to register such transfer on the books of Telegen Corporation maintained for
the purpose, with full power of substitution in the premises.

Dated________________

By:

--------------------------------
(Signature of Registered Holder)

Title:

--------------------------------

NOTICE:         The signature to this Assignment must correspond with the name
                as written upon the face of the attached Note in every
                particular, without alteration or enlargement or any change
                whatever.<PAGE>

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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