Document:

TELENETICS CORPORATION
                            PLACEMENT AGENT AGREEMENT

                                                   Dated as of: October 31, 2000
May Davis Group, Inc.
One World Trade Center - Suite 8735
New York, New York, 10048

Ladies and Gentlemen:

         The undersigned, Telenetics Corporation, (the "Company"), hereby agrees
with May Davis Group, Inc. ("May Davis") and Butler Gonzalez LLP as follows:

         1. OFFERING. The Company hereby engages May Davis to act as its
exclusive placement agent in connection with that certain Securities Purchase
Agreement (the "Purchase Agreement"), dated the date hereof, between the Company
and the investor(s) named therein (the "Investors"), for the issuance and sale
by the Company (the "Offering") of the Company's Series A Convertible Preferred
Stock, no par value (the "Preferred Stock"), which is convertible into shares of
the Company's Common Stock (the "Common Stock"), for an aggregate purchase price
of up to $2,000,000. All capitalized terms used herein and not otherwise defined
shall have the same meaning ascribed to them as in the Purchase Agreement. The
Investor(s) will be granted certain registration rights with respect to the
Common Stock issuable upon conversion of the Preferred Stock, as more fully set
forth in the Registration Rights Agreement between the Company and the
Investor(s) dated the date hereof, and May Davis and Butler Gonzalez will be
granted warrants to purchase Common Stock of the Company and certain
registration rights as described herein. The documents to be executed and
delivered in connection with the Offering, including but not limited to this
Agreement, the Purchase Agreement, the Registration Rights Agreement, the escrow
agreement with First Union National Bank (the "Escrow Agreement"), the Placement
Agent's Warrants (as hereinafter defined) and the Placement Agent's Registration
Rights Agreement (as hereinafter defined), together with all of the Company's
SEC Documents, are referred to sometimes hereinafter collectively as the
"Offering Materials." The Company's Preferred Stock and the Placement Agent's
Warrants are sometimes referred to hereinafter collectively as the "Securities."
May Davis shall not be obligated to sell any Securities and this Offering by May
Davis shall be solely on a "best efforts basis."

         2. INFORMATION.

         A. Upon the occurrence of the Closing, the funds received in respect of
the shares of Preferred Stock purchased by the Investor(s) will be disbursed in
accordance with the terms of the Purchase Agreement, net of (i) the commission
payable to May Davis, equal to ten percent (10%) of the gross proceeds from the
sale of Preferred Stock pursuant to the Offering, and (ii) legal fees and other
expenses related thereto due to May Davis's counsel and the Escrow Agent.

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         B. In addition to the foregoing compensation, the Company shall issue
(i) to May Davis upon the execution of the Purchase Agreement a warrant in
substantially the form annexed hereto as Exhibit "A" to purchase 500,000 shares
of Common Stock at an exercise price per share of $3.00, and (ii) to Butler
Gonzalez a warrant in substantially the form attached hereto as Exhibit "B" to
purchase 15,000 shares of Common Stock at an exercise price per share of $3.00;
each warrant exercisable in part or in whole at any time by May Davis or Butler
Gonzalez, as applicable, at its discretion for a period of sixty (60) months
from the date hereof (collectively, the "Placement Agent's Warrants"). The
Placement Agent's Warrants shall be issued to the individuals and in the amounts
set forth on Schedule A attached hereto. May Davis and Butler Gonzalez shall be
entitled to certain demand registration rights with respect to the shares of
Common Stock issuable upon exercise of the Placement Agent's Warrants pursuant
to a registration rights agreement in substantially the same form annexed hereto
(the "Placement Agent's Registration Rights Agreement").

         3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MAY DAVIS.

         A. May Davis represents, warrants and covenants to the Company as
         follows:

                  (i) May Davis has the necessary power to enter into this
Agreement, the Placement Agent's Warrants, the Placement Agent's Registration
Rights Agreement, the Escrow Agreement and to consummate the transactions
contemplated hereby and thereby.

                  (ii) The execution and delivery by May Davis of this
Agreement, the Placement Agent's Warrants, the Placement Agent's Registration
Rights Agreement, the Escrow Agreement and the consummation of the transactions
contemplated herein and therein will not result in any violation of, or be in
conflict with, or constitute a default under, any agreement or instrument to
which May Davis is a party or by which May Davis or its properties are bound, or
any judgment, decree, order or, to May Davis's knowledge, any statute, rule or
regulation applicable to May Davis. This Agreement, the Placement Agent's
Warrants, the Placement Agent's Registration Rights Agreement and the Escrow
Agreement when executed and delivered by May Davis, will constitute the legal,
valid and binding obligations of May Davis, enforceable in accordance with their
respective terms, except to the extent that (a) the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject to general
principles of equity, or (c) the indemnification provisions hereof or thereof
may be held to be violative of public policy.

                  (iii) Upon receipt of an executed Purchase Agreement, a
Registration Rights Agreement and Escrow Agreement and the documents related
thereto, May Davis will, through the Escrow Agent, promptly forward copies of
the Purchase Agreement, Registration Rights Agreement and Escrow Agreement and
the documents related thereto to the Company or its counsel.

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                  (iv) May Davis will not deliver any documents related to the
Offering to any person it does not reasonably believe to be an Accredited
Investor as defined in Rule 501 (a) (3) of Regulation D of the 1933 Act.

                  (v) May Davis will not intentionally take any action that it
reasonably believes would cause the Offering to violate the provisions of the
1933 Act, the 1934 Act, the respective rules and regulations promulgated there
under (the "Rules and Regulations") or applicable "Blue Sky" laws of any state
or jurisdiction.

                  (vi) May Davis shall use all reasonable efforts to determine
(a) whether the Investor(s) is an Accredited Investor and (b) that any
information furnished by the Investor(s) is true and accurate. May Davis shall
have no obligation to insure that (x) any check, note, draft or other means of
payment for the Preferred Stock will be honored, paid or enforceable against the
Investor in accordance with its terms, or (y) subject to the performance of May
Davis' obligations and the accuracy of May Davis' representations and warranties
hereunder, (1) the Offering is exempt from the registration requirements of the
1933 Act or any applicable state "Blue Sky" law or (2) the Investor is an
Accredited Investor.

                  (vii) May Davis is a member of the National Association of
Securities Dealers, Inc., and is a broker-dealer registered as such under the
1934 Act and under the securities laws of the states in which the Securities
will be offered or sold by May Davis, unless an exemption for such state
registration is available to May Davis. May Davis is in compliance with all
material rules and regulations applicable to May Davis generally and applicable
to May Davis's participation in the Offering.

         4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         A. The Company represents and warrants to May Davis as follows:

                  (i) The execution, delivery and performance of each of this
Agreement, the Purchase Agreement, the Escrow Agreement, the Placement Agent's
Registration Rights Agreements, the Placement Agent's Warrants and the
Registration Rights Agreement executed with the Investor(s) has been or will be
duly and validly authorized by the Company and is, or with respect to this
Agreement, the Purchase Agreement, the Escrow Agreement, the Placement Agent's
Registration Rights Agreements, the Placement Agent's Warrants and the
Registration Rights Agreement executed with the Investor(s) will be, a valid and
binding agreement of the Company, enforceable in accordance with its respective
terms, except to the extent that (a) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles of equity
or (c) the indemnification provisions hereof or thereof may be held to be
violative of public policy. The Securities to be issued pursuant to the
transactions contemplated by this Agreement, the Purchase Agreement and the
Placement Agent's Warrants have been duly authorized and, when issued and paid
for in accordance with (x) this Agreement, the Purchase Agreement and the
Placement Agent's Warrants and the certificates/instruments representing such

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Securities, (y) will be valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except to the extent that
(1) the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect and
affecting the rights of creditors generally, and (2) the enforceability thereof
is subject to general principles of equity. All corporate action required to be
taken for the authorization, issuance and sale of the Securities has been duly
and validly taken by the Company.

                  (ii) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Purchase Agreement. The Company is not a
party to or bound by any instrument, agreement or other arrangement providing
for it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement and the agreements described herein and as
described in the Purchase Agreement. All issued and outstanding securities of
the Company, have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission or preemptive
rights with respect thereto and are not subject to personal liability solely by
reason of being security holders; and none of such securities was issued in
violation of the preemptive rights of any holders of any security of the
Company. The Company has 25,000,000 shares of authorized Common Stock, of which
16,058,813 will be issued and outstanding as of the date hereof.

                  (iii) The Preferred Stock to be issued in accordance with the
Purchase Agreement has been duly authorized and when issued and paid for in
accordance with this Agreement, the Purchase Agreement, the Placement Agent's
Warrants and the certificates/instruments representing such Preferred Stock will
be validly issued, fully-paid and non-assessable; the holders thereof will not
be subject to personal liability solely by reason of being such holders; such
securities are not and will not be subject to the preemptive rights of any
holder of any security of the Company.

                  (iv) The Company has good and marketable title to, or valid
and enforceable leasehold estates in, all items of real and personal property
necessary to conduct its business (including, without limitation any real or
personal property stated in the Offering Materials to be owned or leased by the
Company), free and clear of all liens, encumbrances, claims, security interests
and defects of any material nature whatsoever, other than those set forth in the
Offering Materials and liens for taxes not yet due and payable.

                  (v) There is no litigation or governmental proceeding pending
or, to the best of the Company's knowledge, threatened against, or involving the
properties or business of the Company, except as set forth in the Offering
Materials.

                  (vi) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
California. Except as set forth in the Offering Materials, the Company does not
own or control, directly or indirectly, an interest in any other corporation,
partnership, trust, joint venture or other business entity. The Company is duly
qualified or licensed and in good standing as a foreign corporation in each
jurisdiction in which the character of its operations requires such
qualification or licensing and where failure to so qualify would have a material
adverse effect on the Company. The Company has all requisite corporate power and

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authority, and all material and necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies (domestic and foreign) to conduct its businesses (and
proposed business) as described in the Offering Materials. Any disclosures in
the Offering Materials concerning the effects of foreign, federal, state and
local regulation on the Company's businesses as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact. The Company has all corporate power and authority to enter into
this Agreement, the Purchase Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Placement Agent's Warrants and the Placement Agent's
Registration Rights Agreement to carry out the provisions and conditions hereof
and thereof, and all consents, authorizations, approvals and orders required in
connection herewith and therewith have been obtained. No consent, authorization
or order of, and no filing with, any court, government agency or other body is
required by the Company for the issuance of the Securities or execution and
delivery of the Purchase Agreement, Registration Rights Agreement, the Escrow
Agreement, the Placement Agent's Warrants and the Placement Agent's Registration
Rights Agreement except for applicable federal and state securities laws. The
Company, since its inception, has not incurred any liability arising under or as
a result of the application of any of the provisions of the 1933 Act, the 1934
Act or the Rules and Regulations.

                  (vii) There has been no material adverse change in the
condition or prospects of the Company, financial or otherwise, from the latest
dates as of which such condition or prospects, respectively, are set forth in
the Offering Materials, and except for the Company's credit facility with Celtic
Capital, the outstanding debt, the property and the business of the Company
conform in all material respects to the descriptions thereof contained in the
Offering Materials.

                  (viii) Except as set forth in the Offering Materials, the
Company is not in breach of, or in default under, any term or provision of any
material indenture, mortgage, deed of trust, lease, note, loan or any other
material agreement or instrument evidencing an obligation for borrowed money, or
any other material agreement or instrument to which it is a party or by which it
or any of its properties may be bound or affected. The Company is not in
violation of any provision of its charter or by-laws or in violation of any
franchise, license, permit, judgment, decree or order, or in violation of any
material statute, rule or regulation. Neither the execution and delivery of this
Agreement, the Purchase Agreement, the Registration Rights Agreement, the Escrow
Agreement, the Placement Agent's Warrants, the Placement Agent's Registration
Rights Agreement nor the issuance and sale or delivery of the Securities, nor
the consummation of any of the transactions contemplated herein or in the
Purchase Agreement, the Registration Rights Agreement, the Escrow Agreement, the
Placement Agent's Warrants, or the Placement Agent's Registration Rights
Agreement, nor the compliance by the Company with the terms and provisions
hereof or thereof, has conflicted with or will conflict with, or has resulted in
or will result in a breach of, any of the terms and provisions of, or has
constituted or will constitute a default under, or has resulted in or will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or pursuant to the terms of any indenture,
mortgage, deed of trust, note, loan or Purchase Agreement or any other agreement
or instrument evidencing an obligation for borrowed money, or any other
agreement or instrument to which the Company may be bound or to which any of the
property or assets of the Company is subject except (a) where such default,
lien, charge or encumbrance would not have a material adverse effect on the
Company and (b) as described in the Offering Materials; nor will such action
result in any violation of the provisions of the charter or the by-laws of the
Company or, assuming the due performance by May Davis of its obligations
hereunder, any material statute or any material order, rule or regulation
applicable to the Company of any court or of any foreign, federal, state or
other regulatory authority or other government body having jurisdiction over the
Company.

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                  (ix) Subsequent to the dates as of which information is given
in the Offering Materials, and except as may otherwise be indicated or
contemplated herein or therein, the Company has not (a) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed money,
or (b) entered into any transaction other than in the ordinary course of
business, or (c) declared or paid any dividend or made any other distribution on
or in respect of its capital stock. Except as described in the Offering
Materials, and except for loans from its former CEO, the Company has no
outstanding obligations to any officer or director of the Company.

                  (x) There are no claims for services in the nature of a
finder's or origination fee with respect to the sale of the Preferred Stock or
any other arrangements, agreements or understandings that may affect May Davis'
compensation, as determined by the National Association of Securities Dealers,
Inc.

                  (xi) The Company owns or possesses, free and clear of all
liens or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses necessary to conduct its business (including, without limitation, any
such licenses or rights described in the Offering Materials as being owned or
possessed by the Company) and, except as set forth in the Offering Materials,
there is no claim or action by any person pertaining to, or proceeding, pending
or threatened, which challenges the exclusive rights of the Company with respect
to any trademarks, service marks, copyrights, service names, trade names,
patents, patent applications and licenses used in the conduct of the Company's
businesses (including, without limitation, any such licenses or rights described
in the Offering Materials as being owned or possessed by the Company) except any
claim or action that would not have a material adverse effect on the Company;
the Company's current products, services or processes do not infringe or will
not infringe on the patents currently held by any third party.

                  (xii) Except as described in the Offering Materials and except
for its arrangements with Motorola, the Company is not under any obligation to
pay royalties or fees of any kind whatsoever to any third party with respect to
any trademarks, service marks, copyrights, service names, trade names, patents,
patent applications, licenses or technology it has developed, uses, employs or
intends to use or employ, other than to their respective licensors.

                  (xiii) Subject to the performance by May Davis of its
obligations hereunder, the Purchase Agreement and the offer and sale of the
Securities comply, and will continue to comply, up to the Registration Period
(as defined in the Purchase Agreement) in all material respects with the
requirements of Rule 506 of Regulation D promulgated by the SEC pursuant to the
1933 Act and any other applicable federal and state laws, rules, regulations and
executive orders. Neither the Offering Materials nor any amendment or supplement
thereto nor any documents prepared by the Company in connection with the
Offering will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. All statements of material facts in the Offering Materials are
true and correct as of the date of the Offering Materials and will be true and
correct on the date of the Closing.

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                  (xiv) All material taxes which are due and payable from the
Company have been paid in full or adequate provision has been made for such
taxes on the books of the Company except for those taxes disputed in good faith.
The Company does not have any tax deficiency or claim outstanding assessed or
proposed against it.

                  (xv) None of the Company nor any of its officers, directors,
employees or agents, nor any other person acting on behalf of the Company, has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who is or may be in a position to
help or hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) which (A) might subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, or (B) if not given in the past, might have had a materially adverse
effect on the assets, business or operations of the Company as reflected in any
of the financial statements contained in the Offering Materials, or (C) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company in the future.

         5. CERTAIN COVENANTS AND AGREEMENTS OF THE COMPANY.

         The Company covenants and agrees at its expense and without any expense
to May Davis as follows:

         A. To advise May Davis of any material adverse change in the Company's
financial condition, prospects or business or of any development materially
affecting the Company or rendering untrue or misleading any material statement
in the Offering Materials occurring at any time as soon as the Company is either
informed or becomes aware thereof.

         B. To use its commercially reasonable efforts to cause the Common Stock
issuable upon conversion of the Preferred Stock in connection with the Purchase
Agreement and upon exercise of the Placement Agent's Warrants to be qualified or
registered for sale on terms consistent with those stated in the Registration
Rights Agreement and the Placement Agent's Registration Rights Agreement,
respectively, and under the securities laws of such jurisdictions as May Davis
and the Investor(s) shall reasonably request, provided that such states and
jurisdictions do not require the Company to qualify as a foreign corporation.
Qualification, registration and exemption charges and fees shall be at the sole
cost and expense of the Company.

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         C. Upon written request, to provide to each holder of Securities copies
of all quarterly financial statements and audited annual financial statements
prepared by or on behalf of the Company, other reports prepared by or on behalf
of the Company for public disclosure and all documents delivered to the
Company's shareholders.

         D. To deliver, during the Registration Period, to May Davis, upon May
Davis' written request, in the manner provided in Section 10(B) of this
Agreement, (i) within forty five (45) days after the close of each fiscal
quarter, a statement of its income for each such quarterly period, and its
balance sheet and a statement of changes in stockholders' equity as of the end
of such quarterly period, all in reasonable detail, certified by its principal
financial or accounting officer; (ii) within ninety (90) days after the close of
each fiscal year, its balance sheet as of the close of such fiscal year,
together with a statement of income, a statement of changes in stockholders'
equity and a statement of cash flow for such fiscal year, such balance sheet,
statement of income, statement of changes in stockholders' equity and statement
of cash flow to be in reasonable detail and accompanied by a copy of the
certificate or report thereon of independent auditors if audited financial
statements are prepared; and (iii) a copy of all documents, reports and
information furnished to its shareholders at the time that such documents,
reports and information are furnished to its shareholders.

         E. To comply with the terms of the Purchase Agreement, the Registration
Rights Agreement, the Escrow Agreement, the Placement Agent's Warrants and the
Placement Agent's Registration Rights Agreement.

         F. To keep available out of its authorized Common Stock solely for the
purpose of issuance upon the exercise of the Placement Agent's Warrant, such
number of shares of Common Stock as shall then be issuable upon the exercise or
conversion thereof.

         G. To issue to May Davis, or May Davis' designee, upon the execution of
the Purchase Agreement, the Placement Agent Warrants to purchase 500,000 shares
of Common Stock in the form substantially as annexed hereto.

         H. To ensure that any transactions between or among the Company, or any
of its officers, directors and affiliates be on terms and conditions that are no
less favorable to the Company than the terms and conditions that would be
available in an "arm's length" transaction with an independent third party.

         6. INDEMNIFICATION.

                  A. The Company hereby agrees that it will indemnify and hold
May Davis and each officer, director, shareholder, employee or representative of
May Davis, and each person controlling, controlled by or under common control
with May Davis (collectively, the "May Davis Indemnified Parties") within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the SEC's
Rules and Regulations promulgated there under (the "Rules and Regulations"),
harmless from and against any and all loss, claim, damage, liability, cost or
expense whatsoever (including, but not limited to, any and all reasonable legal
fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or proceeding,
including any inquiry or investigation, commenced or threatened, or any claim

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whatsoever or in appearing or preparing for appearance as a witness in any
action, suit or proceeding, including any inquiry, investigation or pretrial
proceeding such as a deposition) to which any of May Davis Indemnified Parties
becomes subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) any untrue statement of a material fact contained in
(a) Section 4 of this Agreement, (b) the Offering Materials (except those
written statements relating to May Davis given by an indemnified person for
inclusion therein), (c) any application or other document or written
communication executed by the Company or based upon written information
furnished by the Company filed in any jurisdiction in order to qualify the
Common Stock under the securities laws thereof, or any state securities
commission or agency; (ii) the omission from documents described in clauses (a),
(b) or (c) above of a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (iii) the breach of any
representation, warranty, covenant or agreement made by the Company in this
Agreement. The Company further agrees that upon demand by a May Davis
Indemnified Party, at any time or from time to time, it will promptly reimburse
such indemnified person for any loss, claim, damage, liability, cost or expense
actually and reasonably paid by a May Davis Indemnified Party as to which the
Company has indemnified such person pursuant hereto. Notwithstanding the
foregoing provisions of this Paragraph 6(A), any such payment or reimbursement
by the Company of fees, expenses or disbursements incurred by an indemnified
person in any proceeding in which a final judgment by a court of competent
jurisdiction (after all appeals or the expiration of time to appeal) is entered
against May Davis or such indemnified person as a direct result of May Davis or
such person's gross negligence or willful misfeasance will be promptly repaid to
the Company.

         B. May Davis hereby agrees that it will indemnify and hold the Company
and each officer, director, shareholder, employee or representative of the
Company, and each person controlling, controlled by or under common control with
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act or the Rules and Regulations (collectively, the "Company
Indemnified Parties"), harmless from and against any and all loss, claim,
damage, liability, cost or expense whatsoever (including, but not limited to,
any and all reasonable legal fees and other expenses and disbursements incurred
in connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for appearance
as a witness in any action, suit or proceeding, including any inquiry,
investigation or pretrial proceeding such as a deposition) to which the Company
Indemnified Parties may become subject under the 1933 Act, the 1934 Act, the
Rules and Regulations, or any other federal or state law or regulation, common
law or otherwise, arising out of or based upon (i) the conduct of May Davis or
its officers, employees or representatives in its acting as Placement Agent for
the Offering or (ii) the breach of any representation, warranty, covenant or
agreement made by May Davis in this Agreement (iii) any false or misleading
information provided to the Company by any of the May Davis Indemnified Parties.

         C. Within five (5) business days after receipt by an indemnified party
of notice of commencement of any action covered by Section 6(A) or 6(B) hereof,
the party to be indemnified shall notify the indemnifying party of the
commencement thereof; provided, however, that the omission by one indemnified
party to so notify the indemnifying party shall not relieve the indemnifying
party of its obligation to indemnify any other indemnified party that has given
such notice and shall not relieve the indemnifying party of any liability
outside of this indemnification if not materially prejudiced thereby. In the

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event that any action is brought against the indemnified party, the indemnifying
party will be entitled to participate therein and, to the extent it may desire,
to assume and control the defense thereof with counsel chosen by it which is
reasonably acceptable to the indemnified party. After notice from the
indemnifying party to such indemnified party of its election to so assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under such Section 6(A) or 6(B) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, but the indemnified party may, at its own expense, participate in such
defense by counsel chosen by it, without, however, impairing the indemnifying
party's control of the defense. Subject to the proviso of this sentence and
notwithstanding any other statement to the contrary contained herein, the
indemnified party or parties shall have the right to choose its or their own
counsel and control the defense of any action, all at the expense of the
indemnifying party if (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action at the expense of the indemnifying party, or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstance, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such indemnified parties. No
settlement of any action or proceeding against an indemnified party shall be
made without the consent of the indemnifying party.

         D. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 6(A) or 6(B)
is due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and May Davis shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with the investigation
or defense of same) which the other may incur in such proportion so that May
Davis shall be responsible for such percent of the aggregate of such losses,
claims, damages and liabilities as shall equal the percentage of the gross
proceeds paid to May Davis and the Company shall be responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 6(D), any person controlling, controlled by or under
common control with May Davis, or any partner, director, officer, employee,
representative or any agent of any thereof, shall have the same rights to

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<PAGE>

contribution as May Davis and each person controlling, controlled by or under
common control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and each officer of the Company and each director
of the Company shall have the same rights to contribution as the Company. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against the other party under this
Section 6(D), notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any obligation they may have hereunder or
otherwise if the party from whom contribution may be sought is not materially
prejudiced thereby. The indemnity and contribution agreements contained in this
Section 6 shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified person or any termination
of this Agreement.

         7. PAYMENT OF EXPENSES.

         Each of the Company and the Investor(s) shall pay all costs and
expenses incurred by such party in connection with the Offering; provided,
however, that the legal fees and expenses incurred by May Davis in connection
with the Offering, up to a maximum of $20,000, shall be paid for by the Company.

         8. CONDITIONS OF CLOSING

         Closing shall be held at the offices of May Davis or its counsel. The
obligations of May Davis hereunder shall be subject to the continuing accuracy
of the representations and warranties of the Company herein as of the date
hereof and as of the Closing Date with respect to the Company as if it had been
made on and as of such Closing Date; the accuracy on and as of the Closing Date
of the statements of the officers of the Company made pursuant to the provisions
hereof; and the performance by the Company on and as of the Closing Date of its
covenants and obligations hereunder and to the following further conditions:

         A. At the Closing, May Davis shall receive the opinion of Rutan &
Tucker, LLP, dated as of the date of the Closing, which opinion shall be in form
and substance reasonably satisfactory to counsel for May Davis.

         B. At or prior to the Closing, counsel for May Davis shall have been
furnished such documents and certificates as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in this
Agreement and the Offering Materials, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.

         C. At and prior to the Closing, (i) there shall have been no material
adverse change nor development involving a prospective material adverse change
in the condition or prospects or the business activities, financial or
otherwise, of the Company from the latest dates as of which such condition is
set forth in the Offering Materials; (ii) there shall have been no transaction,
not in the ordinary course of business, entered into by the Company which has
not been disclosed in the Offering Materials or to May Davis in writing; (iii)
except as set forth in the Offering Materials, the Company shall not be in
default under any provision of any instrument relating to any outstanding
indebtedness for which a waiver or extension has not been otherwise received;
(iv) except as set forth in the Offering Materials, the Company shall not have

                                       11

<PAGE>

issued any securities (other than those to be issued as provided in the Offering
Materials) or declared or paid any dividend or made any distribution of its
capital stock of any class and there shall not have been any change in the
indebtedness (long or short term) or liabilities or obligations of the Company
(contingent or otherwise) except for indebtedness to it's former CEO and trade
payable debt; (v) no material amount of the assets of the Company shall have
been pledged or mortgaged, except as indicated in the Offering Materials; and
(vi) no action, suit or proceeding, at law or in equity, against the Company or
affecting any of its properties or businesses shall be pending or threatened
before or by any court or federal or state commission, board or other
administrative agency, domestic or foreign, wherein an unfavorable decision,
ruling or finding would materially adversely affect the businesses, prospects or
financial condition or income of the Company, except as set forth in the
Offering Materials.

         D. At the Closing, May Davis shall have received a certificate of the
Company signed by an executive officer of the Company, dated as of the
applicable Closing, to the effect that the conditions set forth in subparagraph
(C) above have been satisfied and that, as of the applicable closing date, the
representations and warranties of the Company set forth herein are true and
correct.

         E. At the Closing, the Company shall have duly executed and delivered
to May Davis, or its designees, the Placement Agent's Warrants, in the names and
denominations specified by May Davis.

         9. TERMINATION.

         This Agreement shall be co-terminus with, and terminate upon the same
terms and conditions as those set forth in, the Purchase Agreement. The rights
of the Investor(s) and the obligations of the Company under the Registration
Rights Agreement, and the rights of May Davis and the obligations of the Company
under the Placement Agent's Warrants and the Placement Agent's Registration
Rights Agreement shall survive the termination of this Agreement unabridged.

         10. MISCELLANEOUS.

         A. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all which shall be deemed to be
one and the same instrument.

         B. Any notices, consents, waivers, or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
receipt is received by the sending party); (iii) three (3) days after being sent
by U.S. certified mail, return receipt requested, or (iv) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

         To May Davis:
                  May Davis Group, Inc.
                  One World Trade Center - Suite 8735
                  New York, New York  10048
                  Attention: Michael Jacobs

                                       12

<PAGE>

         with a copy to:
                  Butler Gonzalez LLP
                  1000 Stuyvesant Avenue - Suite #6
                  Union, NJ  07083
                  Fax: (908) 810-0973
                  Attention: David Gonzalez, Esq.

         To the Company:
                  Telenetics Corporation
                  25111 Arctic Ocean
                  Lake Forest, CA  92630
                  Fax: (949) 455-4010
                  Attention: President

         with copy to:
                  Rutan & Tucker, LLP
                  611 Anton Boulevard, Suite 1400
                  Costa Mesa, CA  92626
                  Attention:  Larry A. Cerutti, Esq.
                  Fax:  (714) 546-9035

or to such other address of which written notice is given to the others.

         C. This Agreement shall be governed by and construed in all respects
under the laws of the State of New York, without reference to its conflict of
laws rules or principles. Any suit, action, proceeding or litigation arising out
of or relating to this Agreement shall be brought and prosecuted in such federal
or state court or courts located within the State of New York as provided by
law. The parties hereby irrevocably and unconditionally consent to the
jurisdiction of each such court or courts located within the State of New York
and to service of process by registered or certified mail, return receipt
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum.

         D. This Agreement, the Schedules hereto and the other agreements
referenced herein contain the entire understanding between the parties hereto
and may not be modified or amended except by a writing duly signed by the party
against whom enforcement of the modification or amendment is sought.

         E. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       13

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                             TELENETICS CORPORATION

                                             By: /s/ Terry S. Parker
                                                 -------------------------------
                                             Name: Terry S. Parker
                                                   -----------------------------
                                             Title: President
                                                    ----------------------------

                                             MAY DAVIS GROUP, INC.

                                             By: /S/ Michael Jacobs
                                                 -------------------------------
                                             Name:  Michael Jacobs
                                             Title:    Managing Director

                                             BUTLER GONZALEZ LLP

                                             By: /s/ David Gonzalez
                                                 -------------------------------
                                             Name: David Gonzalez
                                                  ------------------------------
                                             Title: Counsel to May Davis Group
                                                    ----------------------------

                                       14

<PAGE>

                                   SCHEDULE A

WARRANTS
--------

NAME                                                 AMOUNT
----                                                 ------

The May Davis Group, Inc.                            24,333
Mark Angelo                                          24,333
Mark Bergman                                         24,333
Hunter Singer                                        24,333
Joseph Donahue                                       24,335
Robert Farrell                                       24,333
Michael Vulcano                                      10,000
Adam Mayblum                                         19,000
Hong Zhu                                             60,500
Jason Goldstein                                       2,000
Lawrence Cohen                                        1,000
James Gonzales                                       11,500

                                       15

<PAGE>

                                   EXHIBIT "A"

                            Form of May Davis Warrant

                                (attached hereto)

                                       16

<PAGE>

                                   EXHIBIT "B"

                         Form of Butler Gonzalez Warrant

                                (attached hereto)

                                       17UNIT PURCHASE AGREEMENT

         THIS UNIT PURCHASE AGREEMENT (this "Agreement") is made by and between
TELENETICS CORPORATION, a California corporation, with its principal offices at
25111 Arctic Ocean, Lake Forest, California 92630 (the "Company") and the
undersigned (the "Subscriber") effective as of the date this Agreement is
accepted by the Company.

                                R E C I T A L S:
                                 ---------------

         A. The Company is offering (the "Offering") units (the "Units"),
consisting of $10,000 principal amount of 8% Convertible Subordinated Unsecured
Promissory Notes due 2001 (the "Notes") and warrants (the "Warrants") to
purchase shares of the Company's common stock, no par value per share (the
"Common Stock"), pursuant to the Company's Confidential Private Placement
Memorandum dated September 15, 2000 (the "Memorandum").

         B. Subscriber desires to acquire the Units in the amount set forth on
the signature page hereof.

         NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:

1. SUBSCRIPTIONS FOR SECURITIES AND REPRESENTATIONS BY SUBSCRIBER.

         1.1 Subject to the terms and conditions of this Agreement, the
Subscriber hereby subscribes for and agrees to purchase from the Company for
$10,000 per Unit, the Company's Common Stock and Warrants in an amount
aggregating the Purchase Price (as set forth on page 20 hereof) and the Company
agrees to sell Notes and Warrants to the Subscriber for the Purchase Price,
subject to the Company's right to sell to the Subscriber such lesser amount of
Notes and Warrants as it may, in its sole discretion, deem necessary or
desirable. The Purchase Price is payable by wire transfer or by check, subject
to collection, as set forth in the Subscription Documents Booklet of which this
Agreement is a part. The price per Unit is $10,000.

         1.2 The Subscriber recognizes that the purchase of the Units involves a
high degree of risk in that (i) no public market exists for the Units or
Warrants; (ii) a limited public market exists for the shares of Common Stock;
(iii) the shares of Common Stock issuable upon conversion of the Notes and
exercise of the Warrants have not been registered under the Securities Act of
1933, as amended ("1933 Act"), and the Company has no obligation to register the
shares of Common Stock, except as set forth in Section 3 below; (iv) an
investment in the Units is highly speculative and only investors who can afford
the loss of their entire investment should consider investing in the Company and
the Units; (v) the Subscriber may not be able to liquidate the Subscriber's
investment; and (vi) the Subscriber could sustain the loss of Subscriber's
entire investment. Such risks are more fully set forth in the Memorandum and the
attachments thereto.

         1.3 The Offering shall continue for a period commencing on the date of
the Memorandum and ending on the date set forth in the Memorandum.

                                       1

<PAGE>

         1.4 The Subscriber represents as follows:

                  (a) The Subscriber represents that the Subscriber is an
         Accredited Investor (as defined in Rule 501 of Regulation D promulgated
         under the 1933 Act) as indicated by the Subscriber's responses to the
         Purchaser Questionnaire, a copy of which is included in the
         Subscription Documents Booklet, and that the Subscriber is able to bear
         the economic risk of an investment in the Units.

                  (b) The Subscriber acknowledges that the Subscriber has
         significant prior investment experience, including investment in
         non-registered securities. The Subscriber recognizes the highly
         speculative nature of this investment. The Subscriber acknowledges that
         the Subscriber has carefully read the Memorandum, including but not
         limited to, the Exhibits to the Memorandum, and fully understands the
         contents thereof.

                  (c) The Subscriber hereby acknowledges that this Offering and
         the Memorandum have not been reviewed by the United States Securities
         and Exchange Commission ("SEC") or by any state securities regulator
         because it is intended to be a nonpublic offering pursuant to Sections
         3(a), 4(2) and 4(6) of the 1933 Act and Rule 506 of Regulation D
         promulgated thereunder. The Subscriber represents that the Units are
         being purchased for the Subscriber's own account, for investment
         purposes only and not for distribution or resale to others. The
         Subscriber agrees that the Subscriber will not sell or otherwise
         transfer the Units (including the shares of Common Stock underlying the
         Notes and Warrants, unless they are registered under the 1933 Act or
         unless an exemption from such registration is available.

                  (d) The Subscriber understands that the Units (including the
         shares of Common Stock underlying the Notes and Warrants) have not been
         registered under the 1933 Act by reason of a claimed exemption under
         the provisions of the 1933 Act which depends, in part, upon the
         Subscriber's investment intention. In this connection, the Subscriber
         understands that it is the position of the SEC that the statutory basis
         for such exemption would not be present if the Subscriber's
         representation merely meant that the Subscriber's present intention was
         to hold the Units (including the shares of Common Stock underlying the
         Notes and Warrants) for a short period, such as the capital gains
         period of tax statutes, for a deferred sale, for a market rise,
         assuming that a market develops, or for any other fixed period. The
         Subscriber realizes that, in the view of the SEC, a purchase now with
         an intent to resell after a pre-determined amount of time would
         represent a purchase with an intent inconsistent with the Subscriber's
         representation to the Company, and the SEC might regard such a sale or
         disposition as a deferred sale to which such exemptions are not
         available.

                  (e) The Subscriber understands that Rule 144 (the "Rule")
         promulgated by the SEC under the 1933 Act requires, among other
         conditions, a one year holding period prior to the resale (in limited
         amounts) of securities acquired in a non-public offering without having
         to satisfy the registration requirements under the 1933 Act. The
         Subscriber understands and hereby acknowledges that the Company is the
         only entity that can register the shares of Common Stock underlying the

                                       2

<PAGE>

         Notes and Warrants under the 1933 Act and that the Company is under no
         obligation to register the shares of Common Stock underlying the Notes
         and Warrants under the 1933 Act, with the exception of certain
         registration rights set forth in Section 3 below. The Subscriber
         acknowledges that the Company may, if it desires, permit the transfer
         of the shares of Common Stock underlying the Notes and Warrants out of
         the Subscriber's name only when the Subscriber's request for transfer
         is accompanied by an opinion of counsel reasonably satisfactory to the
         Company that neither the sale nor the proposed transfer results in a
         violation of the 1933 Act or any applicable state "blue sky" laws and
         subject to the provisions of Section 1.4(f) hereof.

                  (f) The Subscriber consents to the placement of a legend on
         any certificate or other document evidencing the shares of Common Stock
         underlying the Notes and Warrants stating that they have not been
         registered under the 1933 Act and under applicable state securities
         laws and setting forth or referring to the restrictions on
         transferability and sale thereof.

                  (g) The Subscriber understands that the Company will review
         this Agreement; and it is further agreed that the Company reserves the
         unrestricted right to reject or limit any subscription and to close the
         Offering at any time.

                  (h) The Subscriber hereby represents that the address of
         Subscriber furnished by the Subscriber at the end of this Agreement is
         the Subscriber's principal residence, if the Subscriber is an
         individual, or its principal business address, if the Subscriber is a
         corporation or other entity.

                  (i) The Subscriber has had a reasonable opportunity to ask
         questions of and receive answers from the Company concerning the
         Company and the Offering, and all such questions, if any, have been
         answered to the full satisfaction of the Subscriber; and the Company
         shall provide Subscriber with the opportunity to ask additional
         questions of and receive answers (all of which information shall be
         limited to information in the public realm) from the Company concerning
         the Company during the period which the Subscriber owns the Units.

                  (j) The Subscriber has such knowledge and expertise in
         financial and business matters that the Subscriber is capable of
         evaluating the merits and risks involved in an investment in the Units.

                  (k) The Subscriber has full power and authority to execute and
         deliver this Agreement and to perform the obligations of the
         undersigned hereunder; and this Agreement is a legally binding
         obligation of the Subscriber enforceable in accordance with its terms.

                  (l) Except as set forth in this Agreement and the Memorandum,
         no representations or warranties have been made to the Subscriber by
         the Company, or any of its agents, employees or affiliates, and in
         entering into this transaction, the Subscriber is not relying on any
         information, other than that contained in the Memorandum, the public
         documents of the Company and the results of an independent
         investigation by the Subscriber.

                                       3

<PAGE>

                  (m) The Subscriber agrees that the Subscriber will not sell or
         otherwise transfer the Notes and Warrants or the shares of Common Stock
         underlying the Notes and Warrants unless they are registered under the
         1933 Act and applicable state "blue sky" laws or unless an exemption
         from such registration is available. The Subscriber represents that (i)
         the Subscriber has adequate means of providing for the Subscriber's
         current needs and possible personal contingencies, (ii) the Subscriber
         has no need for liquidity in this investment, (iii) the Subscriber is
         able to bear the substantial economic risk of an investment in the
         Units for an indefinite period, and (iv) at the present time the
         Subscriber could afford a complete loss of such investment.

                  (n) It is understood that all documents, records and books
         pertaining to this investment have been made available for the
         inspection by the Subscriber's attorney and/or accountant and the
         Subscriber.

2. TERMS OF SUBSCRIPTION.

         The Offering of Shares is being made on a "best efforts" basis as in
the manner more particularly set forth in the Memorandum.

3. REGISTRATION RIGHTS.

                  (a) On or before March 15, 2001, the Company shall, at its
         sole cost and expense, file a registration statement on the appropriate
         form under the 1933 Act with the SEC covering all of the shares of
         Common Stock underlying the Notes and Warrants (the "Registrable
         Securities") for all holders of Units (collectively, the "Registered
         Holders"). The Company will use its best efforts to have such
         registration statement declared effective as soon as possible after
         filing, and to keep such registration statement current and effective
         until September 15, 2001 or until such earlier date as all of the
         Registrable Securities registered pursuant to such registration
         statement shall have been sold.

                  (b) If the Company effects any registration under the 1933 Act
         of any Registrable Securities pursuant to Section 3(a), the Company
         shall indemnify, to the extent permitted by law, and hold harmless any
         person or entity whose Registrable Securities are included in such
         registration statement (each, a "Seller"), any underwriter, any
         officer, director, affiliate, shareholder, employee or agent of any
         Seller or underwriter, and each other person, if any, who controls any
         Seller or underwriter within the meaning of Section 15 of the 1933 Act,
         against any losses, claims, damages, liabilities, judgment, fines,
         penalties, costs and expenses, joint or several, or actions in respect
         thereof (collectively, the "Claims"), to which each such indemnified
         party becomes subject, under the 1933 Act or otherwise, insofar as such
         Claims arise out of or are based upon any untrue statement or alleged
         untrue statement of any material fact contained in the registration
         statement or prospectus or any amendment or supplement thereto or any

                                       4

<PAGE>

         document filed under a state securities or blue sky law (collectively,
         the "Registration Documents") or insofar as such Claims arise out of or
         are based upon the omission or alleged omission to state in any
         Registration Document a material fact required to be stated therein or
         necessary to make the statements made therein not misleading, and will
         reimburse any such indemnified party for any legal or other expenses
         reasonably incurred by such indemnified party in investigating or
         defending any such Claim; provided that the Company shall not be liable
         in any such case to a particular indemnified party to the extent such
         Claim is based upon an untrue statement or alleged untrue statement of
         a material fact or omission or alleged omission of a material fact made
         in any Registration Document in reliance upon and in conformity with
         written information furnished to the Company by or on behalf of such
         indemnified party specifically for use in the preparation of such
         Registration Document.

                  (c) In connection with any registration statement in which any
         Seller is participating, each Seller, severally and not jointly, shall
         indemnify, to the extent permitted by law, and hold harmless the
         Company, each of its directors, each of its officers who have signed
         the registration statement, each other person, if any, who controls the
         Company within the meaning of Section 15 of the 1933 Act, each other
         Seller and each underwriter, any officer, director, affiliate,
         shareholder, employee or agent of any such other Seller or underwriter
         and each other person, if any, who controls such other Seller or
         underwriter within the meaning of Section 15 of the 1933 Act against
         any Claims to which each such indemnified party may become subject
         under the 1933 Act or otherwise, insofar as such Claims (or actions in
         respect thereof) are based upon any untrue statement or alleged untrue
         statement of any material fact contained in any Registration Document,
         or insofar as any Claims are based upon the omission or alleged
         omission to state in any Registration Document a material fact required
         to be stated therein or necessary to make the statements made therein
         not misleading, and will reimburse any such indemnified party for any
         legal or other expenses reasonably incurred by such indemnified party
         in investigating or defending any such Claim; provided, however, that
         such indemnification or reimbursement shall be payable only if, and to
         the extent that, any such Claim arises out of or is based upon an
         untrue statement or alleged untrue statement or omission or alleged
         omission made in any Registration Document in reliance upon and in
         conformity with written information furnished to the Company by the
         Seller specifically for use in the preparation thereof.

                  (d) Any person entitled to indemnification under Section 3(b)
         or 3(c) above shall notify promptly the indemnifying party in writing
         of the commencement of any Claim if a claim for indemnification in
         respect thereof is to be made against an indemnifying party under this
         Section 3(d), but the omission of such notice shall not relieve the
         indemnifying party from any liability which it may have to any
         indemnified party otherwise than under Section 3(b) or 3(c) above,
         except to the extent that such failure shall materially adversely
         affect any indemnifying party or its rights hereunder. In case any
         action is brought against the indemnified party and it shall notify the
         indemnifying party of the commencement thereof, the indemnifying party
         shall be entitled to participate in, and, to the extent that it
         chooses, to assume the defense thereof with counsel reasonably
         satisfactory to the indemnified party; and, after notice from the
         indemnifying party to the indemnified party that it so chooses, the
         indemnifying party shall not be liable for any legal or other expenses
         subsequently incurred by the indemnified party in connection with the
         defense thereof; provided, however, that (i) if the indemnifying party
         fails to take reasonable steps necessary to defend diligently the Claim

                                       5

<PAGE>

         within twenty (20) days after receiving notice from the indemnified
         party that the indemnified party believes it has failed to do so; (ii)
         if the indemnified party who is a defendant in any action or proceeding
         which is also brought against the indemnifying party reasonably shall
         have concluded that there are legal defenses available to the
         indemnified party which are not available to the indemnifying party; or
         (iii) if representation of both parties by the same counsel is
         otherwise inappropriate under applicable standards of professional
         conduct, the indemnified party shall have the right to assume or
         continue its own defense as set forth above (but with no more than one
         firm of counsel for all indemnified parties, except to the extent any
         indemnified party or parties reasonably shall have concluded that there
         are legal defenses available to such party or parties which are not
         available to the other indemnified parties or to the extent
         representation of all indemnified parties by the same counsel is
         otherwise inappropriate under applicable standards of professional
         conduct) and the indemnifying party shall be liable for any reasonable
         expenses therefor; provided, that no indemnifying party shall be
         subject to any liability for any settlement of a Claim made without its
         consent (which may not be unreasonably withheld, delayed or
         conditioned). If the indemnifying party assumes the defense of any
         Claim hereunder, such indemnifying party shall not enter into any
         settlement without the consent of the indemnified party if such
         settlement attributes liability to the indemnified party.

                  (e) If for any reason the indemnity provided in Section 3(b)
         or 3(c) above is unavailable, or is insufficient to hold harmless, an
         indemnified party, then the indemnifying party shall contribute to the
         amount paid or payable by the indemnified party as a result of any
         Claim in such proportion as is appropriate to reflect the relative
         benefits received by the indemnifying party on the one hand and the
         indemnified party on the other from the transactions contemplated by
         this Agreement. If, however, the allocation provided in the immediately
         preceding sentence is not permitted by applicable law, then each
         indemnifying party shall contribute to the amount paid or payable by
         such indemnified party in such proportion as is appropriate to reflect
         not only such relative benefits but also the relative fault of the
         indemnifying party and the indemnified party as well as any other
         relevant equitable considerations. The relative fault shall be
         determined by reference to, among other things, whether the untrue or
         alleged untrue statement of a material fact or the omission or alleged
         omission to state a material fact relates to information supplied by
         the indemnifying party or by the indemnified party and the parties'
         relative intent, knowledge, access to information and opportunity to
         correct or prevent such statement or omission. The amount paid or
         payable in respect of any Claim shall be deemed to include any legal or
         other expenses reasonably incurred by such indemnified party in
         connection with investigating or defending any such Claim.
         Notwithstanding the foregoing, no underwriter or controlling person
         thereof, if any, shall be required to contribute, in respect of such
         underwriter's participation as an underwriter in the offering, any
         amount in excess of the amount by which the total price at which the
         Registrable Securities underwritten by it and distributed to the public
         were offered to the public exceeds the amount of any damages which such
         underwriter has otherwise been required to pay by reason of such untrue
         or alleged untrue statement or omission or alleged omission. No person
         guilty of fraudulent misrepresentation (within the meaning of Section
         11(f) of the 1933 Act) shall be entitled to contribution from any
         person who was not guilty of such fraudulent misrepresentation. The
         obligation of any underwriters to contribute pursuant to this paragraph
         (e) shall be several in proportion to their respective underwriting
         commitments and not joint.

                                       6

<PAGE>

                  (f) The provisions of Section 3(b) through 3(e) of this
         Agreement shall be in addition to any other rights to indemnification
         or contribution which any indemnified party may have pursuant to law or
         contract and shall remain operative and in full force and effect
         regardless of any investigation made or omitted by or on behalf of any
         indemnified party and shall survive the transfer of the Registrable
         Securities by any such party.

                  (g) If and whenever the Company is required by the provisions
         of this Section 3 to use its best efforts to register any Registrable
         Securities under the 1933 Act, the Company shall, as expeditiously as
         possible under the circumstances and subject to the terms of this
         Section 3:

                           A. Prepare and file with the SEC a registration
                  statement with respect to such Registrable Securities and use
                  its best efforts to cause such registration statement to
                  become effective as soon as possible after filing and remain
                  effective.

                           B. Prepare and file with the SEC such amendments and
                  supplements to such registration statement and the prospectus
                  used in connection therewith as may be necessary to keep such
                  registration statement current and effective and to comply
                  with the provisions of the 1933 Act, and any regulations
                  promulgated thereunder, with respect to the sale or
                  disposition of all Registrable Securities covered by the
                  registration statement required to effect the distribution of
                  the securities, but in no event shall the Company be required
                  to do so after September 15, 2001.

                           C. Furnish to the Sellers participating in the
                  offering, copies (in reasonable quantities) of summary,
                  preliminary, final, amended or supplemented prospectuses, in
                  conformity with the requirements of the 1933 Act and any
                  regulations promulgated thereunder, and other documents as
                  reasonably may be required in order to facilitate the
                  disposition of the securities, but only while the Company is
                  required under the provisions hereof to keep the registration
                  statement current.

                           D. Use its best efforts to register or qualify the
                  Registrable Securities covered by such registration statement
                  under such other securities or blue sky laws of such
                  jurisdictions of the United States as the Sellers
                  participating in the offering shall reasonably request, and do
                  any and all other acts and things which may be reasonably
                  necessary to enable each participating Seller to consummate
                  the disposition of the Registrable Securities in such
                  jurisdictions.

                           E. Notify each Seller selling Registrable Securities,
                  at any time when a prospectus relating to any such Registrable
                  Securities covered by such registration statement is required
                  to be delivered under the 1933 Act, of the Company's becoming
                  aware that the prospectus included in such registration
                  statement, as then in effect, includes an untrue statement of

                                       7

<PAGE>

                  a material fact or omits to state any material fact required
                  to be stated therein or necessary to make the statements
                  therein not misleading in the light of the circumstances then
                  existing, and promptly prepare and furnish to each such Seller
                  selling Registrable Securities a reasonable number of copies
                  of a prospectus supplemented or amended so that, as thereafter
                  delivered to the purchasers of such Registrable Securities,
                  such prospectus shall not include an untrue statement of a
                  material fact or omit to state a material fact required to be
                  stated therein or necessary to make the statements therein not
                  misleading in the light of the circumstances then existing.

                           F. As soon as practicable after the effective date of
                  the registration statement, and in any event within eighteen
                  (18) months thereafter, make generally available to Sellers
                  participating in the offering an earnings statement (which
                  need not be audited) covering a period of at least twelve (12)
                  consecutive months beginning after the effective date of the
                  registration statement which earnings statement shall satisfy
                  the provisions of Section 11(a) of the 1933 Act, including, at
                  the Company's option, Rule 158 thereunder. To the extent that
                  the Company files such information with the SEC in
                  satisfaction of the foregoing, the Company need not deliver
                  the above referenced earnings statement to Seller.

                           G. Upon request, deliver promptly to counsel of each
                  Seller participating in the offering copies of all
                  correspondence between the SEC and the Company, its counsel or
                  auditors and all memoranda relating to discussions with the
                  SEC or its staff with respect to the registration statement
                  and permit each such Seller to do such investigation at such
                  Seller's sole cost and expense, upon reasonable advance
                  notice, with respect to information contained in or omitted
                  from the registration statement as it deems reasonably
                  necessary. Each Seller agrees that it will use its best
                  efforts not to interfere unreasonably with the Company's
                  business when conducting any such investigation and each
                  Seller shall keep any such information received pursuant to
                  this Section confidential.

                           H. Provide a transfer agent located in the United
                  States for all such Registrable Securities covered by such
                  registration statement not later than the effective date of
                  such registration statement.

                           I. List the Registrable Securities covered by such
                  registration statement on such exchanges and/or on Nasdaq or
                  the NASD's OTC Bulletin Board as the Common Stock is then
                  currently listed upon.

                           J. Pay all Registration Expenses incurred in
                  connection with a registration of Registrable Securities,
                  whether or not such registration statement shall become
                  effective; provided that each Seller shall pay all
                  underwriting discounts, commissions and transfer taxes, and
                  their own counsel fees, if any, relating to the sale or
                  disposition of such Seller's Registrable Securities pursuant
                  to a registration statement. As used herein, "Registration

                                       8

<PAGE>

                  Expenses" means any and all reasonable and customary expenses
                  incident to performance of or compliance with the registration
                  rights set forth herein, including, without limitation, (i)
                  all SEC and stock exchange or National Association of
                  Securities Dealers, Inc. registration and filing fees, (ii)
                  all fees and expenses of complying with state securities or
                  blue sky laws (including reasonable fees and disbursements of
                  counsel for the underwriters in connection with blue sky
                  qualifications of the Registrable Securities but no other
                  expenses of the underwriters or their counsel), (iii) all
                  printing, messenger and delivery expenses, and (iv) the
                  reasonable fees and disbursements of counsel for the Company
                  and the Company's independent public accountants.

                  (h) The Company acknowledges that there is no adequate remedy
         at law for failure by it to comply with the provisions of this Section
         3 and that such failure would not be adequately compensable in damages,
         and therefore agrees that its agreements contained in this Section 3
         may be specifically enforced. In the event that the Company shall fail
         to keep any registration statement effective as provided in this
         Section 3 or otherwise fails to comply with its obligations and
         agreements in this Section 3, then, in addition to any other rights or
         remedies the Registered Holders may have at law or in equity, including
         without limitation, the right of rescission, the Issuer shall indemnify
         and hold harmless the Registered Holders from and against any and all
         manner or loss which they may incur as a result of such failure. In
         addition, the Issuer shall also reimburse the Registered Holders for
         any and all reasonable legal fees and expenses incurred by them in
         successfully enforcing their rights pursuant to this Section 3,
         regardless of whether any litigation was commenced.

4. MISCELLANEOUS.

         4.1 The Company agrees to use its best efforts to file timely all
reports required to be filed by it pursuant to Sections 13 or 15 of the
Securities Exchange Act of 1934, as amended, and to provide such information as
will permit the Holder to sell the Warrants or any shares of Common Stock
acquired upon the exercise of the Warrants or in accordance with Rule 144 under
the 1933 Act.

         4.2 All notices, consents and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (a) when
delivered by hand, (b) one business day after the business day of transmission
if sent by telecopier (with receipt confirmed), provided that a copy is mailed
by certified mail, return receipt requested, or (c) one business day after the
business day of deposit with the carrier, if sent for next business day delivery
by Express Mail, Federal Express or other recognized express delivery service
(receipt requested), in each case addressed to the Company at the address
indicated on the first page of this Agreement marked "Attention: David Stone,
Chief Financial Officer", and to the Subscriber at the Subscriber's address
indicated on the last page of this Agreement (or to such other addresses and
telecopier numbers as a party may designate as to itself by notice to the other
parties).

         4.3 This Agreement shall not be changed, modified or amended except by
a writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.

                                       9

<PAGE>

         4.4 This Agreement shall be binding upon and inure to the benefit of
the parties hereto and to their respective heirs, legal representatives,
successors and assigns. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter thereof and merges
and supersedes all prior discussions, agreements and understandings of any and
every nature among them.

         4.5 Notwithstanding the place where this Agreement may be executed by
any of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed in accordance with and governed by the laws
of the State of California. The parties hereby agree that any dispute which may
arise between them arising out of or in connection with this Agreement shall be
adjudicated before a court located in California and they hereby submit to the
exclusive jurisdiction of the courts of the State of California and of the
federal courts in California with respect to any action or legal proceeding
commenced by any party, and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or proceeding brought
in such a court or respecting the fact that such court is an inconvenient forum,
relating to or arising out of this Agreement or any acts or omissions relating
to the sale of the securities hereunder, and consent to the service of process
in any such action or legal proceeding by means of registered or certified mail,
return receipt requested, in case of the address set forth below or such other
address as the undersigned shall furnish in writing to the other.

         4.6 This Agreement may be executed in counterparts. Upon the execution
and delivery of this Agreement by the Subscriber, this Agreement shall become a
binding obligation of the Subscriber with respect to the purchase of the Units
as herein provided; subject, however, to the right hereby reserved to the
Company to enter into the same agreements with other subscribers and to add
and/or to delete other persons as subscribers.

         4.7 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.

         4.8 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.

         4.9 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.

                                       10

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date indicated below as the date the subscription is accepted by the
Company.

TO BE COMPLETED BY SUBSCRIBER

1.       Print Name of Subscriber:
                                   ------------------------------------

2.       Signature of Individual Subscriber:
                                   ------------------------------------

                  - OR -

         Signature of Subscriber Other than an Individual:

         __________________________________________
         Signature

         __________________________________________
         Print Name

         __________________________________________
         Title

3.       Address of Subscriber:

         __________________________________________
         Street Address

         __________________________________________
         City, State and Zip Code

4.       Social Security or Taxpayer Identification Number:

         __________________________________________

5.       Number of Units Subscribed
                                    ------------------

         Aggregate Purchase Price $
                                   -------------------

                                       11

<PAGE>

TO BE COMPLETED BY THE COMPANY

         The foregoing subscription is accepted by the Company effective as of
_________, 2000.

TELENETICS CORPORATION,
a California corporation

By:
    -------------------------------------------------
         Terry Parker, President

                                       12

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