Exhibit 10.49—Rescission Offer dated December __, 2000 addressed to Subscribers to the 2000 Tranche A Offering

EXHIBIT 10.49

RESCISSION OFFER TO 2000 TRANCHE A OFFERING SUBSCRIBERS

        1.  On June 30, 2000 Telegen Corporation (“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 Securities, LTD. (“Merchant”) and Pacific West Securities, Inc. (“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.  On December 14, 2000, Telegen, Merchant, and Pacific amended 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 such subscriber’s funds held in Escrow from the date of the investment: (i) shall be paid in cash to the such subscriber upon the closing of this offering, or (ii) shall be refunded to such subscriber 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