Document:

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EXHIBIT 10.2

                     AMENDED AND RESTATED SECURITY AGREEMENT

              THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "AGREEMENT"),
dated as of March 1, 2003 (this "EFFECTIVE DATE"), is made by TELENETICS
CORPORATION, a California corporation having its principal place of business at
25111 Arctic Ocean, Lake Forest, California 92630 (the "GRANTOR"), for the
benefit of the secured parties listed on the signature pages hereto (the
"SECURED PARTIES").

                              W I T N E S S E T H:

              WHEREAS, as of the Effective Date, the Grantor has executed
secured promissory notes in favor of each of the Secured Parties in an aggregate
principal amount of $2,386,228.22 (the "NOTES"), pursuant to the Amended and
Restated Note and Warrant Purchase Agreement, dated as of the Effective Date
among the Grantor and the Secured Parties (the "PURCHASE AGREEMENT"). In order
to provide security for the payment of all of the obligations of the Grantor to
the Secured Parties under the Notes, the Grantor has agreed to grant to the
Secured Parties a continuing lien and security interest (pro rata to each
Secured Party in accordance with the relative principal amounts of the Notes) in
all of the Grantor's Inventory (as defined below) and to execute this and such
other security agreements and instruments as are necessary to grant such lien
and security interest and enable the Secured Parties to perfect such security
interest; and

              WHEREAS, this Agreement is intended to and shall replace the
Security Agreements (the "ORIGINAL SECURITY AGREEMENTS") executed by the parties
as part of the Original Documents (as defined in the Purchase Agreement).

              NOW, THEREFORE, in consideration of the premises contained herein
and in the Notes and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Grantor agrees with the Secured
Parties as follows:

Section 1. DEFINITIONS.

              Capitalized terms used in this Agreement which are not otherwise
defined herein shall have the following meanings:

              "CODE" shall mean the Uniform Commercial Code as in effect in the
State of New York from time to time.

              "COLLATERAL" shall have the meaning assigned thereto in SECTION 2
of this Agreement.

              "INVENTORY" shall have the meaning assigned to that term in the
Code.

Section 2. GRANT OF SECURITY INTEREST.

              The Grantor hereby pledges, assigns and grants to the Secured
Parties a continuing security interest in and lien on all Inventory of the
Grantor (pro rata to each Secured Party in accordance with the relative
principal amounts of the Notes), wherever located and whether now or hereafter

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existing and whether now owned or hereafter acquired and, to the extent not
otherwise included all payments under insurance (whether or not any of the
Secured Parties is the loss payee) or under any indemnity, warranty, guaranty or
government award which is payable by reason of any damage to, or any loss,
taking or condemnation of, the Inventory (collectively, the "COLLATERAL").

Section 3. OBLIGATIONS SECURED.

              The Collateral hereunder constitutes and will constitute
continuing security for the strict performance and observance by the Grantor of
the prompt payment, when due, of all present and future obligations and
indebtedness of the Grantor to the Secured Parties under the Notes (after giving
effect to any offset rights of the Grantor thereunder with respect thereto) and
of the Grantor under this Agreement (collectively, the "OBLIGATIONS"). Each
Secured Party hereby acknowledges and agrees that, as of the date hereof, such
Secured Party's security interest in the Collateral is a security interest
shared pro rata with the other Secured Parties (in proportion to the face
amounts of their Notes), such that all Obligations are secured by the Collateral
and the Obligations owed to a Secured Party are secured by the Collateral only
to the extent the Secured Party has a pro rata security interest in the
Collateral (in proportion to the face amounts of the Secured Parties' Notes).

Section 4. GRANTOR REMAINS LIABLE.

              Anything herein to the contrary notwithstanding, in the absence of
the Secured Parties' express prior written consent thereto, (a) the Grantor
shall remain liable under any and all contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Secured Parties of any of the rights hereunder
shall not release the Grantor from any of its duties or obligations under any
contracts and agreements included in the Collateral, and (c) the Secured Parties
shall not have any obligation or liability under any contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Secured
Parties be obligated to perform any of the obligations or duties of the Grantor
under any such contract or agreement or to take any action to collect or enforce
any claim for payment assigned hereunder.

Section 5. REPRESENTATIONS AND WARRANTIES.

              The Grantor represents and warrants to the Secured Parties that:

         5.1 The Grantor is a corporation duly incorporated, validly existing
and in good standing under the laws of its state of incorporation, is duly
qualified and in good standing under the laws of each jurisdiction where the
character of its properties or the transaction of its business makes such
qualification necessary, except for any jurisdictions(s) (alone or in the
aggregate) in which the failure to be so qualified will not have a Material
Adverse Effect (as defined in the Purchase Agreement), and has the requisite
corporate power to own or hold under lease its properties and assets and to
conduct its business as it is now being conducted.

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         5.2 The Grantor has the requisite corporate power and authority to
enter into and perform this Agreement, which has been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Grantor or its board of directors or shareholders or any public authority is
required in connection therewith. The execution, delivery and performance by the
Grantor of this Agreement will not violate any provision of law applicable to
the Grantor and will not conflict with or result in the breach of any order,
writ, injunction or decree of any court or government instrumentality, or its
charter or by-laws or create a default under any agreement, note or indenture to
which it is a party or by which it is bound or to which any of its property is
subject, or result in the imposition of any lien, charge, security interest or
encumbrance of any nature whatsoever upon any of its properties or assets under
any agreement or any commitment to which the Grantor is bound or by which any of
its properties or assets are bound, except for the liens created under this
Agreement and except for such conflicts, defaults, violations, breaches and the
like that would not, individually or in the aggregate, have a Material Adverse
Effect.

         5.3 This Agreement has been duly executed and delivered, and
constitutes the legal, valid and binding obligation of the Grantor, enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.

         5.4 Except as disclosed on SCHEDULE 1 to this Agreement, the Grantor
has good title to and is the lawful owner of the Collateral free from all
claims, liens, encumbrances, charges or security interests whatsoever. Except as
provided in SECTION 6.9 of this Agreement, the Collateral will at all times be
kept at the locations set forth on EXHIBIT A hereto.

         5.5 The provisions of this Agreement create a valid, and upon filing a
UCC-1 financing statement with the Secretary of State of the State of
California, a perfected, security interest in the Collateral, enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.

         5.6 Except as disclosed on SCHEDULE 1 to this Agreement, there are no
judgments outstanding against the Grantor and there are no actions or
proceedings before any court or administrative agency pending or, to the
knowledge of the Grantor, threatened against the Grantor which, if determined
adversely to the Grantor, would affect the Collateral.

         5.7 The Grantor's principal office and place of business where it
maintains its records concerning the Collateral is at its address stated above.
The Grantor has no other office or place of business except as indicated on
EXHIBIT A hereto.

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Section 6. COVENANTS.

              The Grantor covenants and agrees that from the date of this
Agreement until payment in full of all of the Obligations:

         6.1 The Grantor shall keep and maintain the Collateral insured against
loss or damage by fire and all other risks as is customarily maintained by
similar businesses for the full insurable value thereof. Certificates of all
such policies shall be delivered to the Secured Party Representative (as defined
in SECTION 8 below). Such policies shall by their terms provide that the Secured
Party Representative be given at least 30 days prior written notice of any
amendment, modification or cancellation thereof and that the Secured Parties
shall have the option, but not the obligation, to pay the premiums to continue
such insurance in effect or obtain like coverage. The Grantor agrees that any
payment made by the Secured Parties pursuant to the foregoing authorization
shall bear interest thereon at the rate of 10% per annum from the date of such
payment and shall become part of the Obligations and be shall secured by the
Collateral pursuant to the terms of this Agreement. The Grantor hereby appoints
the Secured Party Representative as its attorney-in-fact to make, adjust or
settle any claim under any insurance policy insuring the Collateral while an
Event of Default (as defined below) shall have occurred and be continuing.

         6.2 The Grantor shall maintain the Collateral in good repair, working
order and condition, subject to normal wear and tear, and make all reasonable
repairs, replacements, additions and improvements thereto.

         6.3 The Grantor shall give the Secured Parties full and free access to
the Collateral and to all books, correspondence and records of the Grantor with
respect thereto upon reasonable notice and at all reasonable times, and shall
permit upon the occurrence and continuance of an Event of Default the Secured
Parties and their representatives to examine the same and to make extracts
therefrom all at the Grantor's expense.

         6.4 The Grantor shall promptly pay and discharge or cause to be paid
and discharged all its obligations and liabilities including, without
limitation, all taxes, assessments and governmental charges upon it or its
income or properties, when due unless and to the extent only that the same shall
be contested in good faith and by appropriate proceedings and then only to the
extent that a bond is filed in cases where the filing of a bond is necessary to
avoid the creation of a lien against any of its property.

         6.5 The Grantor shall do, or cause to be done, all things necessary to
preserve and keep in full force and effect its corporate existence and all
franchises, rights and privileges necessary for the proper conduct of its
business, and continue to engage in the business of the same type as now
conducted by it.

         6.6 The Grantor shall not grant, permit or suffer to exist any lien,
claim, security interest or encumbrance upon the Collateral, that is senior or
on parity with those in favor of the Secured Parties other than such liens,
claims, security interests and encumbrances as exist as of the Effective Date.

                                      -4-
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         6.7 The Grantor shall notify the Secured Parties in writing within five
(5) business days after the occurrence thereof, of the occurrence of any event
which constitutes, or which with notice or lapse of time, or both, would
constitute an Event of Default.

         6.8 The Grantor shall execute and deliver such further or additional
instruments and assurances, and take all such additional action as the Secured
Parties may require for the purpose of carrying out the provisions of this
Agreement.

         6.9 Except as expressly permitted by or described in this Agreement or
its schedules or exhibits, the Grantor shall not sell, assign, lease or
otherwise dispose of the Collateral except in the ordinary course of business.

         6.10 The Grantor shall not change its principal office or the place
where it maintains its records pertaining to the Collateral as specified in
SECTION 5.7 hereof without giving the Secured Party Representative at least 30
days prior written notice thereof.

         6.11 The Grantor shall not remove or permit the removal of the
Collateral from its present location as set forth on EXHIBIT A hereto except in
the ordinary course of business without the prior written consent of the Secured
Party Representative.

Section 7. OPTION TO PERFORM OBLIGATION OF THE GRANTOR IN RESPECT OF THE
COLLATERAL.

              If the Grantor fails or refuses to make any payment, perform any
covenant or obligation, or take any other action which the Grantor is obligated
hereunder to perform, observe, take or do, then the Secured Parties may, at
their option, without notice or demand upon the Grantor and without releasing
the Grantor from any obligation or covenant hereof, perform, observe, take or do
the same in such manner and to such extent as the Secured Parties may deem
necessary to protect any of the Collateral and their rights hereunder including,
without limitation, obtaining insurance and the payment of any taxes and the
payment of any sums necessary to discharge liens or security interests at any
time levied or placed on the Collateral.

Section 8. REPRESENTATIVE OF THE SECURED PARTIES

              Each Secured Party hereby appoints SDS Capital Partners, LLC as
the Representative of the Secured Parties hereunder and as its attorney-in-fact
for purposes of enforcing the Secured Party's rights as a secured party under
this Agreement, and SDS Capital Partners, LLC accepts such appointment as the
Representative of the Secured Parties and hereby agrees to act on behalf of the
Secured Parties as the Representative of the Secured Parties. No Secured Party
shall exercise or attempt to exercise any rights as a secured party without
prior written consent of the Representative of the Secured Parties. Should a
material default occur upon any Note, the holder of such Note shall notify the
Representative of the Secured Parties and the Representative of the Secured
Parties shall call a meeting of the Secured Parties and the Representative of
the Secured Parties. The Representative of the Secured Parties shall then take
whatever legal or other action as shall have been authorized by Secured Parties
holding a majority of the outstanding principal amount of the Notes for purposes
of enforcing the rights of the Secured Parties as secured parties under this
Agreement. Any legal or other action taken by the Representative of the Secured
Parties shall be for the benefit of the Secured Parties (pro rata to each

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Secured Party in accordance with the relative outstanding principal amounts of
the Secured Parties' Notes). Each Secured Party hereby acknowledges and agrees
that if any Secured Party shall obtain any payment (whether voluntary or
involuntary, through the exercise of any right or set-off, or otherwise) on
account of any Note held by that Secured Party in excess of that Secured Party's
ratable share of payments on account of the Notes held by all of the Secured
Parties, that Secured Party shall pay over to the Representative of the Secured
Parties or, at the Representative of the Secured Parties' direction, to any
other Secured Party pro rata in the outstanding principal amounts of each of
their respective Notes, any property in cash or otherwise received by the
Secured Party comprising the excess of that Secured Party's ratable share of
payments on account of the Notes held by all of the Secured Parties.

Section 9. EVENTS OF DEFAULT.

              For purposes of this Agreement, any of the following events shall
constitute an "EVENT OF DEFAULT":

         9.1 The Grantor shall fail to make any payment of principal and
interest on the Notes prior to the expiration of all applicable cure periods;

         9.2 The Grantor shall default in the performance or observance of any
covenant or agreement contained in this Agreement and such default shall
continue for a period of seven (7) business days following the Grantor's receipt
of written notice thereof;

         9.3 Any representation or warranty made by the Grantor in this
Agreement or the other Transaction Documents (as defined in the Purchase
Agreement) or in any other certificate, agreement, instrument or statement
delivered to the Secured Parties by or on behalf of the Grantor shall at any
time prove to have been incorrect when made in any material respect;

         9.4 There shall be a defect in the Grantor's title to any of the
Collateral and such defect in title shall not have been cured or removed within
20 days after the Grantor's receipt of written notice thereof;

         9.5 The Grantor shall become insolvent, make a general assignment for
the benefit of creditors, file a petition in bankruptcy, be adjudicated
insolvent or bankrupt, admit in writing its inability to pay its debts as they
mature, petition or apply for, consent to, or acquiesce in the appointment of, a
trustee or receiver for all or a substantial part of the Grantor's property; or
any other bankruptcy, reorganization, debt arrangement or other proceeding under
any bankruptcy, insolvency law, or any dissolution or liquidation proceeding
shall be instituted by or against the Grantor, and if instituted against it,
shall be consented to or acquiesced in by the Grantor or shall not be dismissed
or, if contested, stayed within a period of 90 days; or any judgment, writ of
attachment or execution or any similar process shall be issued or levied against
a substantial part of the property of the Grantor and shall not be released,
stayed, bonded or vacated within a period of 90 days after its issue or levy;

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         9.6 The Grantor shall, at any time without the prior written consent of
the Secured Party Representative, enter into an agreement to change the location
of the Collateral or permit any change in such location of the Collateral from
that specified in SECTION 5.4 hereof except as permitted by SECTION 6.9 of this
Agreement; and/or

         9.7 The lien created hereunder shall, for any reason other than by or
through the conduct of the Secured Parties, cease to be valid.

Section 10. REMEDIES.

              In case any Event of Default shall have occurred and be
continuing, the Secured Parties shall have, in addition to all other rights and
remedies given them by this Agreement or the Notes and subject to the
limitations set forth in SECTION 8 hereof, those allowed by law and the rights
and remedies of a secured party under the Uniform Commercial Code as enacted in
any jurisdiction in which any of the Collateral may be located and, without
limiting the generality of the foregoing, the Secured Parties may immediately,
without demand of performance and without notice of intention to sell or of time
or place of sale or redemption or other notice or demand whatsoever to the
Grantor, all of which are hereby expressly waived, and without advertisement,
enter onto the premises where the Collateral is located and take possession
thereof without liability for any lawsuit or action, and sell, lease or
otherwise dispose of all or any part of the Collateral or any interest which the
Grantor may have therein, either at pubic or private sale or otherwise, and
after deducting from the proceeds of sale or other disposition of the Collateral
all expenses (including all reasonable fees and expenses of counsel) as provided
in SECTION 15 hereof, shall apply the residue of such proceeds toward the
payment of the Obligations. If notice of any sale or other disposition is
required by law to be given, the Grantor hereby agrees that a notice sent at
least five (5) days before the time of any intended public sale or before the
time after which any private sale or other disposition of the Collateral is to
be made shall be reasonable notice of such sale or other disposition. The
Grantor agrees to assemble the Collateral, or cause it to be assembled, at such
place or places as the Secured Party Representative may designate by written
notice to the Grantor. At any such sale or other disposition, the Secured
Parties may purchase the whole or any part of the Collateral, free from any
right of redemption on the part of the Grantor, which right is hereby waived and
released. Without limiting the generality of the rights and remedies conferred
upon the Secured Parties under this SECTION 10, the Secured Parties may: (a)
enter upon the premises of the Grantor and take immediate possession of the
Collateral, either personally or by means of a receiver appointed by a court
therefor, using reasonable force to do so; (b) at the Secured Parties' option,
use, operate, manage and control the Collateral in any lawful manner; (c)
collect and receive all rents, income, revenue, earnings, issue and profits
therefrom; and (d) maintain, repair, renovate, alter or remove the Collateral as
the Secured Parties may determine in their discretion and any monies so
collected or received by the Secured Parties shall be applied to, or may be
accumulated for application upon, the Obligations and the Grantor shall be
liable for any deficiency.

Section 11. POWER OF ATTORNEY.

              The Grantor authorizes the Secured Party Representative and does
hereby make, constitute and appoint the Secured Party Representative and agents
of the Secured Party Representative with full power of substitution, as the
Grantor's true and lawful attorney-in-fact with power, in its own name or in the
name of the Grantor, upon the occurrence and continuance of any Event of

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Default, to endorse any notes checks, drafts, money orders, or other instruments
of payment (including, payments under or in respect of any policy of insurance)
in respect of the Collateral that may come into possession of the Secured
Parties; to sign and endorse any documents relating to the Collateral; to pay or
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; to grant, collect,
receive, compromise, settle and sue for monies due in respect of the Collateral;
and generally, to do at the Secured Parties' option and at the Grantor's
expense, at any time, or from time to time, all acts and things which the
Secured Parties deem necessary to protect, preserve and realize upon the
Collateral and the Secured Parties' security interests therein in order to
effect the intent of this Agreement, as fully and effectually as the Grantor
might or could do; and the Grantor hereby ratifies all that said attorney shall
do or cause to be done by virtue hereof. THIS POWER OF ATTORNEY IS COUPLED WITH
AN INTEREST AND SHALL BE IRREVOCABLE FOR AS LONG AS ANY OF THE OBLIGATIONS SHALL
BE OUTSTANDING. The Grantor agrees that any reasonable fees, costs and expenses
incurred by the Secured Parties pursuant to the foregoing authorization, and
interest thereon at the rate of 10% per annum from the date of incurring any
such reasonable fees, costs and expense, shall become part of the Obligations
and be secured by the Collateral.

Section 12. NOTICES.

              All notices, requests, demands and other communications to or upon
the respective parties hereto shall be made in accordance with SECTION 4.1 of
the Notes.

Section 13. NO WAIVER; REMEDIES CUMULATIVE.

              No failure on the part of the Secured Parties to exercise, and no
delay in exercising any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by the Secured Parties of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

Section 14. FINANCING STATEMENTS; FURTHER ASSURANCES; FILING.

              On the date hereof, the Grantor shall deliver UCC-1 financing
statements in form and substance satisfactory to the Secured Parties and with
the Secured Parties' security interest duly noted thereon with respect to the
Collateral for filing at the appropriate offices. Thereafter, within ten (10)
business days after the Secured Parties' written request therefor, the Grantor
shall cause such additional Uniform Commercial Code financing statements with
respect to the Collateral or any modifications or amendments to any such
financing statements (all in form and substance reasonable satisfactory to the
Secured Parties) to be delivered to the Secured Parties for filing at the
appropriate offices. The Grantor from time to time, at its sole expense, will
promptly execute and deliver all further instruments and documents, and take all
further action that the Secured Parties may reasonably request, and hereby
authorizes the Secured Parties to take all action (including the filing of any
financing statements, continuation statements or amendments thereto with respect
to the Collateral without the signature of the Grantor where permitted by law)

                                      -8-
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as the Secured Parties in each case may deem reasonably necessary, proper or
desirable in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Secured Parties to exercise and
enforce their rights and remedies hereunder with respect to any Collateral. A
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law. The Secured Parties shall execute
terminations to any such financing statements within three (3) business days of
the Grantor's request therefore upon payment of the Obligations. The Secured
Parties hereby consent to the Grantor's filing of amendments to and/or
terminations of Uniform Commercial Code financing statements as may be required
in connection with the replacement of the Original Security Agreements by this
Agreement.

Section 15. COSTS AND EXPENSES.

              The Grantor shall reimburse the Secured Parties for all reasonable
costs and expenses incurred by them and shall pay the reasonable fees and
disbursements to one attorney for the Secured Parties in connection with
enforcement of the Secured Parties' rights hereunder.

Section 16. AMENDMENTS.

              No amendment, modification or waiver of any provision of this
Agreement nor consent to any departure by the Grantor therefrom shall be
effective unless the same shall be in writing and signed by the Secured Parties
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

Section 17. TERMINATION.

              Upon the payment in full of all Obligations, the Secured Parties
shall execute and deliver to the Grantor all such documents and instruments as
shall be necessary to evidence termination of this Agreement and the security
interests created hereunder; PROVIDED, HOWEVER, the obligations of the Grantor
under SECTION 14 hereof shall survive any termination under this SECTION 17.

Section 18. GOVERNING LAW.

              THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OR CHOICE OF LAW.

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Section 19. ASSIGNMENT, ETC.

              The Grantor shall not assign, pledge, mortgage, sublet or
otherwise transfer or encumber any of its rights or obligations, as the case may
be, under this Agreement without the Secured Parties' prior written consent. Any
such purported assignment, pledge, mortgage, sublet, transfer or other action
without such written consent shall be void. This Agreement shall be binding upon
each of the Grantor and its successors and shall inure to the benefit of the
Secured Parties and their successors and assigns.

Section 20. SEVERABILITY.

              The provisions of this Agreement are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Agreement in any jurisdiction.

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              IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their authorized representatives on the date first above
written.

GRANTOR:                      TELENETICS CORPORATION

                              By: /s/ David L. Stone
                                  ----------------------------------------------
                                  Name: David L. Stone
                                  Title:   President

SECURED PARTIES:              SDS MERCHANT FUND, L.P.

                              By: SDS Capital Partners, LLC, its general partner

                                  By: /s/ Steve Derby
                                      ------------------------------------------
                                      Name:  Steve Derby
                                      Title:   Managing Member

                              /s/ Jeremy Bond
                              --------------------------------------------------
                              JEREMY BOND

                              /s/ John Bertsch
                              --------------------------------------------------
                              JOHN BERTSCH

                              GARY ARNOLD AND PATRICIA ARNOLD,
                              Joint Tenants with Right of Survivorship

                              By: /s/ Gary Arnold
                                  ----------------------------------------------
                                  Name:  Gary Arnold

                              By: /s/ Patricia Arnold
                                  ----------------------------------------------
                                  Name:  Patricia Arnold

                              /s/ Denis Fortin
                              --------------------------------------------------
                              DENIS FORTIN

                       [SIGNATURES CONTINUED ON NEXT PAGE]

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                              SHADOW CAPITAL LLC

                              By: /s/ B. Kent Garlinghouse
                                  ----------------------------------------------
                                  Name:  B. Kent Garlinghouse
                                  Title:    Manager

                              DRAGON COEUR LLC II-D

                              By: /s/ E.H. Arnold
                                  ----------------------------------------------
                                  Name:  E. H. Arnold
                                  Title:

                              /s/ David Random
                              --------------------------------------------------
                              DAVID RANDOM

                              /s/ Joseph Regan
                              --------------------------------------------------
                              JOSEPH REGAN

                              THE SANFORD R. PENN, JR. TRUST
                              APRIL 30, 2002

                              /s/ Sanford R. Penn, Jr.
                              --------------------------------------------------
                              Sanford R. Penn, Jr., Trustee

                              /s/ Michael N. Taglich
                              --------------------------------------------------
                              MICHAEL N. TAGLICH

                              /s/ Robert F. Taglich
                              --------------------------------------------------
                              ROBERT F. TAGLICH

                              [SIGNATURES CONTINUED ON NEXT PAGE]

                                      -12-
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                              TAG KENT PARTNERS

                              By: /s/ Michael N. Taglich
                                  ----------------------------------------------
                                  Name:  Michael N. Taglich
                                  Title:    General Partner

                              /s/ Charles S. Brand
                              --------------------------------------------------
                              CHARLES S. BRAND

                              /s/ Michael J. Fourticq
                              --------------------------------------------------
                              MICHAEL J. FOURTICQ

                              /s/ Keith Becker
                              --------------------------------------------------
                              KEITH BECKER

                              /s/ Lloyd B. Embry
                              --------------------------------------------------
                              LLOYD B. EMBRY

                              JOHN R. WORTHINGTON TRUST

                              By: /s/ John R. Worthington
                                  ----------------------------------------------
                                  John R. Worthington, Trustee

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                                                                       Exhibit A
                                                                              to
                                                              Security Agreement

                          GRANTOR'S PLACES OF BUSINESS
                          ----------------------------

         The following address is the Grantor's principal place of business and
is a location where Collateral is kept:

                             25111 Arctic Ocean
                             Lake Forest, California 92630

         The Company maintains the following additional place of business where
a portion of the Collateral is kept:

                             SDC
                             4111 Citrus Ave. #5
                             Rocklin, California 95677

         Collateral also is kept at the following third party locations:

                             Corlund Electronics
                             14101 Myford Road
                             Tustin, California 92780

                             American Optisurgical
                             25501 Arctic Ocean
                             Lake Forest, California 92630

                             DisCopy Labs
                             3550-B Jurupa St.
                             Ontario, California 91761

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                                                                      Schedule 1
                                                                              to
                                                              Security Agreement

                                   EXCEPTIONS
                                   ----------

Title to the Collateral:

         See Schedule 2.1(l) to the Purchase Agreement (except with regard to
the promissory note in favor of Knobbe, Martens Olsen & Bear LLP and the various
capital leases).

Legal Proceedings:

         See Schedule 2.1(m) to the Purchase Agreement.

                                      -15-<PAGE>

EXHIBIT 10.3

               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
               --------------------------------------------------

                  This Amended and Restated Registration Rights Agreement (this
"AGREEMENT") is made and entered into as of March 1, 2003, by and among
Telenetics Corporation, a California corporation (the "COMPANY"), and the
purchasers listed on the signature pages hereto (the "PURCHASERS").

                  This Agreement is being entered into pursuant to the Amended
and Restated Note and Warrant Purchase Agreement, dated as of the date hereof
among the Company and the Purchasers (the "PURCHASE AGREEMENT").

                  The Company and the Purchasers hereby agree as follows:

         1.       DEFINITIONS.

                  Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

                  "ADVICE" shall have meaning set forth in Section 3(m).

                  "AFFILIATE" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "CONTROL," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "AFFILIATED," "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.

                  "BOARD" shall have meaning set forth in Section 3(n).

                  "BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York generally are authorized or required by law or other
government actions to close.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the Company's common stock issued to the
Purchasers pursuant to Section 1.2 of the Purchase Agreement.

                  "CONVERSION SHARES" means the shares of the Company's common
stock previously issued to any of the Purchasers upon conversion of the Original
Notes or any portion thereof.

<PAGE>

                  "EFFECTIVENESS DATE" means with respect to the Registration
Statement the earlier of (x) the 120th day following the Filing Date and (y) the
date that is no later than five (5) Business Days after the date on which the
Commission informs the Company that the Commission (i) will not review the
Registration Statement or (ii) that the Company may request the acceleration of
the effectiveness of the Registration Statement and the Company makes such
request.

                  "EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2.

                  "EVENT" shall have the meaning set forth in Section 7(d).

                  "EVENT DATE" shall have the meaning set forth in Section 7(d).

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

                  "FILING DATE" means thirty (30) calendar days after the
earlier of (a) the filing of the Company's Form 10-KSB for the year ending
December 31, 2003 containing two years of audited financial statements, and (b)
the Company's receipt of written authorization from its independent auditors
that the Company may include the previous two years' audited financial
statements in the Registration Statement. The Company agrees to attempt to
resolve its dispute with its prior independent auditors in an effort to hasten
the arrival of the Filing Date.

                  "HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable Securities.

                  "INDEMNIFIED PARTY" shall have the meaning set forth in
Section 5(c).

                  "INDEMNIFYING PARTY" shall have the meaning set forth in
Section 5(c).

                  "LOSSES" shall have the meaning set forth in Section 5(a).

                  "PERSON" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.

                  "PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.

                                       2
<PAGE>

                  "REGISTRABLE SECURITIES" means the Common Stock, the shares of
the Company's common stock issuable upon exercise of the Warrants and the
Conversion Shares.

                  "REGISTRATION STATEMENT" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.

                  "RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "RULE 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SPECIAL COUNSEL" means a special counsel to the Holders, for
which the Holders will be reimbursed by the Company pursuant to Section 4
hereof.

         2.       SHELF REGISTRATION.

                  On or prior to the Filing Date, the Company shall prepare and
file with the Commission a "shelf" Registration Statement covering all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form). The Company shall use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the Effectiveness
Date, and to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold or
(y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144 as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company's transfer agent
to such effect (the "EFFECTIVENESS PERIOD").

                                       3
<PAGE>

         3.       REGISTRATION PROCEDURES.

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form S-3 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3 such
registration shall be on another appropriate form) in accordance with the method
or methods of distribution thereof as specified by the Holders, and use its best
efforts to cause the Registration Statement to become effective and remain
effective as provided herein; PROVIDED, HOWEVER, that not less than three (3)
Business Days prior to the filing of the Registration Statement or any related
Prospectus or any amendment or supplement thereto (including any document that
would be incorporated therein by reference), the Company shall (i) furnish to
the Holders and any Special Counsel, copies of all such documents proposed to be
filed, which documents (other than those incorporated by reference) will be
subject to the review of such Holders and such Special Counsel, and (ii) cause
its officers and directors, counsel and independent certified public accountants
to respond to such inquiries as shall be necessary, in the reasonable opinion of
counsel to such Holders, to conduct a reasonable investigation within the
meaning of the Securities Act. The Company shall not file the Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which the Holders of a majority of the Registrable Securities or any Special
Counsel shall reasonably object in writing within two (2) Business Days of their
receipt thereof.

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

                  (c) Notify the Holders of Registrable Securities to be sold
and any Special Counsel as promptly as possible (and, in the case of (i)(A)
below, not less than three (3) days prior to such filing) and (if requested by
any such Person) confirm such notice in writing no later than one (1) Business
Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed,
(B) when the Commission notifies the Company whether there will be a "review" of

                                       4
<PAGE>

such Registration Statement and whenever the Commission comments in writing on
such Registration Statement and (C) with respect to the Registration Statement
or any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contained in any agreement contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not 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 the light of the circumstances under which they
were made, not misleading.

                  (d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

                  (e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to the Registration Statement such information as
the Company reasonably agrees should be included therein and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.

                  (f) Furnish to each Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.

                  (g) Promptly deliver to each Holder and any Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto, during periods in which
such Prospectus and each amendment or supplement thereto are effective, by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

                                       5
<PAGE>

                  (h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.

                  (i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates shall, if
required under the terms of this Agreement, be free of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and
registered in such names as any Holder may request consistent with the
Transaction Documents.

                  (j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain 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,
in the light of the circumstances under which they were made, not misleading.

                  (k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the OTC Bulletin Board,
Nasdaq SmallCap Market, The Nasdaq National Market, American Stock Exchange and
any other securities exchange, quotation system or market, if any, on which
similar securities issued by the Company are then listed as and when required
pursuant to the Purchase Agreement.

                  (l) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.

                  (m) If the Registration Statement refers to any Holder by name
or otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (if such reference to such Holder by name or
otherwise is not required by the Securities Act or any similar federal statute
then in force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.

                                       6
<PAGE>

                  Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c), (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement and (iii) it will furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration Statement,
and the Company may exclude from such registration the Registrable Securities of
any such Holder who unreasonably fails to furnish such information within a
reasonable time after receiving such request.

                  Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(c)(vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"ADVICE") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.

                  (n) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the "BOARD") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose, then the Company may postpone or suspend filing or
effectiveness of a registration statement for a period not to exceed 20
consecutive days, provided that the Company may not postpone or suspend its
obligation under this Section 3(n) for more than 45 days in the aggregate during
any 12 month period; PROVIDED, HOWEVER, that no such postponement or suspension
shall be permitted for consecutive 20 day periods, arising out of the same set
of facts, circumstances or transactions.

         4.       REGISTRATION EXPENSES.

                  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the extent
specified in Section 4, shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the OTC

                                       7
<PAGE>

Bulletin Board, Nasdaq SmallCap Market, Nasdaq National Market and each other
securities exchange or market on which Registrable Securities are required
hereunder to be listed, (B) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and the NASD Regulation, Inc.
and (C) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of Special Counsel for the Holders in
connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders to
the extent required by this Agreement, (v) Securities Act liability insurance,
if the Company so desires such insurance, and (vi) fees and expenses of all
other Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

         5.       INDEMNIFICATION.

                  (a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of the Company's common stock),
investment advisors and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and attorneys' fees) and
expenses (collectively, "LOSSES") (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review), as incurred,
arising solely out of or based solely upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising solely out of or based solely upon
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions are based

                                       8
<PAGE>

solely upon information regarding such Holder or such other Indemnified Party
furnished in writing to the Company by such Holder expressly for use therein,
which information was reasonably relied on by the Company for use therein or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder or the Special Counsel expressly
for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto. The Company shall notify
the Holders promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions contemplated
by this Agreement.

                  (b) INDEMNIFICATION BY PURCHASERS. The Holders shall,
severally and not jointly, indemnify and hold harmless the Company, the
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review), as incurred, arising solely out
of or based solely upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus or form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising solely out of or based
solely upon any omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission or alleged untrue statement or omission is contained in
any information so furnished in writing by such Holder or other Indemnified
Party to the Company specifically for inclusion in the Registration Statement or
such Prospectus and that such information was reasonably relied upon by the
Company for use in the Registration Statement, such Prospectus or such form of
prospectus or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder or the Special Counsel
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus.

                  (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY) in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

                                       9
<PAGE>

                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel (which shall be reasonably
acceptable to the Indemnifying Party) that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

              All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).

                  (d) CONTRIBUTION. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

                                       10
<PAGE>

              The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

              The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.

         6.       RULE 144.

              As long as any Holder owns Common Stock, Conversion Shares,
Warrants or Warrant Shares, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders
with true and complete copies of all such filings. As long as any Holder owns
Common Stock, Conversion Shares, Warrants or Warrant Shares, if the Company is
not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange
Act, it will prepare and furnish to the Holders and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act annual and
quarterly financial statements, together with a discussion and analysis of such
financial statements in form and substance substantially similar to those that
would otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Person to sell the Common Stock, Conversion
Shares and Warrant Shares without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including providing any legal opinions relating to such sale
pursuant to Rule 144. Upon the request of any Holder, the Company shall deliver
to such Holder a written certification of a duly authorized officer as to
whether it has complied with such requirements.

         7.       MISCELLANEOUS.

                  (a) REMEDIES. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

                                       11
<PAGE>

                  (b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any of
its subsidiaries has, as of the date hereof entered into and currently in
effect, nor shall the Company or any of its subsidiaries, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.

                  (c) PIGGY-BACK REGISTRATIONS. If at any time when there is not
an effective Registration Statement covering (i) Common Stock, (ii) Conversion
Shares or (iii) Warrant Shares, the Company shall determine to prepare and file
with the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each holder of Registrable Securities
written notice of such determination and, if within thirty (30) days after
receipt of such notice, any such holder shall so request in writing, (which
request shall specify the Registrable Securities intended to be disposed of by
the Purchasers), the Company will cause the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the holder, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered, provided that if at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay expenses in accordance with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities being registered pursuant to
this Section 7(c) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered;
PROVIDED, HOWEVER, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 7(c) that are eligible for sale
pursuant to Rule 144(k) of the Securities Act. In the case of an underwritten
public offering, if the managing underwriter(s) or underwriter(s) should
reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the managing
underwriter should reasonably determine that the inclusion of such Registrable
Securities, would materially adversely affect the offering contemplated in such
registration statement, and based on such determination recommends inclusion in
such registration statement of fewer or none of the Registrable Securities of
the Holders, then (x) the number of Registrable Securities of the Holders
included in such registration statement shall be reduced pro-rata among such
Holders (based upon the number of Registrable Securities requested to be
included in the registration), if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable Securities;
PROVIDED, HOWEVER, that if Securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable Securities intended to be offered
by the Holders than the fraction of similar reductions imposed on such other
persons or entities (other than the Company).

                                       12
<PAGE>

                  (d) FAILURE TO FILE REGISTRATION STATEMENT AND OTHER EVENTS.
The Company and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Time or if
certain other events described below occur. The Company and the Holders further
agree that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if (A) the Registration Statement is not filed on or
prior to the Filing Date, or is not declared effective by the Commission on or
prior to the Effectiveness Date, or (B) the Registration Statement is filed with
and declared effective by the Commission but thereafter ceases to be effective
as to all Registrable Securities at any time prior to the expiration of the
Effectiveness Period, without being succeeded immediately by a subsequent
Registration Statement filed with and declared effective by the Commission, or
(C) trading in the Company's common stock shall be suspended or if the Company's
common stock is delisted from the OTCBB or other exchange for any reason for
more than three (3) Business Days in the aggregate, or (D) the Company breaches
in a material respect any covenant or other material term or condition to the
Transaction Documents (other than a representation or warranty contained
therein) or any other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated hereby and thereby,
and such breach continues for a period of thirty (30) days after written notice
thereof to the Company, or (E) the Company has breached Section 3(n) (any such
failure or breach, other than a failure that results from a breach by a Holder
of its obligations under the Transaction Documents, being referred to as an
"EVENT," and for purposes of clause (A) the date on which such Event occurs, or
for purposes of clause (B) after more than fifteen (15) Business Days, or for
purposes of clause (C) the date on which such three (3) Business Day period is
exceeded, or for clause (D) the date on which such thirty (30) day period is
exceeded, being referred to as "EVENT DATE"), the Company shall pay, at the
option of the Holder, an amount in cash, as liquidated damages to each Holder
equal to 3% for the first calendar month and 4% per calendar month thereafter or
portion thereof of the principal amount of the Notes held by such Holder, which
liquidated damages shall be calculated based upon the actual number of days
elapsed from the Event Date until the applicable Event is cured. Payments to be
made pursuant to this Section 7(d) shall be due and payable immediately upon
demand in immediately available funds.

                  (e) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and each of the Holders. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof may be given by Holders of at least a majority
of the Registrable Securities to which such waiver or consent relates; PROVIDED,
HOWEVER, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

                                       13
<PAGE>

                  (f) NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., Lake Forest
time, on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m., Lake Forest time, on
any date and earlier than 11:59 p.m., Lake Forest time, on such date, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be
with respect to each Holder at its address set forth under its name on EXHIBIT A
of the Purchase Agreement, or with respect to the Company, addressed to:

                                    Telenetics Corporation
                                    25111 Arctic Ocean
                                    Lake Forest, California 92630
                                    Attention: President
                                    Attention: Chief Financial Officer
                                    Telecopier:  (949) 455-9324
                                    Telephone:   (949) 455-4000

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Rutan &
Tucker, LLP, 611 Anton Boulevard, Suite 1400, Costa Mesa, California 92626,
Attention: Larry A. Cerutti, Esq., Facsimile No.: (714) 546-9035.

                  (g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors and
permitted assigns. The Company may not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of each
Holder. Each Holder may assign its rights hereunder in the manner and to the
Persons as permitted under this Agreement and the Purchase Agreement.

                  (h) ASSIGNMENT OF REGISTRATION RIGHTS. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Affiliate of such Holder or any
other Holder or Affiliate of any other Holder of all or a portion of the Notes
or the Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with

                                       14
<PAGE>

the Company to be bound by all of the provisions of this Agreement, (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement, and (vi) at least 100,000 shares of Registrable
Securities (appropriately adjusted for any stock dividend, split or combination
of the Company's common stock) are being transferred to such transferee or
assignee in connection with such assignment of rights. In addition, each Holder
shall have the right to assign its rights hereunder to any other Person with the
prior written consent of the Company, which consent shall not be unreasonably
withheld. The rights to assignment shall apply to the Holders (and to
subsequent) successors and assigns.

                  (i) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

                  (j) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law thereof.

                  (k) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                  (l) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and DECLARED
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                  (m) HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

                                       15
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.

COMPANY:                                 TELENETICS CORPORATION

                                         By: /S/ David L. Stone
                                            ------------------------------------
                                              Name:  David L. Stone
                                              Title: President

PURCHASERS:                              SDS MERCHANT FUND, L.P.

                                         By: SDS Capital Partners, LLC, its
                                         general partner

                                              By: /S/ Steve Derby
                                                 -------------------------------
                                                  Name:  Steve Derby
                                                  Title: Managing Member

                                         /S/ JEREMY BOND
                                         ---------------------------------------
                                         JEREMY BOND

                                         /S/ JOHN BERTSCH
                                         ---------------------------------------
                                         JOHN BERTSCH

                                         GARY ARNOLD AND PATRICIA ARNOLD, Joint
                                         Tenants with Right of Survivorship

                                         By: /S/ Gary Arnold
                                            ------------------------------------
                                              Name:  Gary Arnold

                                         By: /S/ Patricia Arnold
                                            ------------------------------------
                                              Name:  Patricia Arnold

                                         /S/ DENIS FORTIN
                                         ---------------------------------------
                                         DENIS FORTIN

                       [SIGNATURES CONTINUED ON NEXT PAGE]

                                       16
<PAGE>

                                     SHADOW CAPITAL LLC

                                     By: /S/ B. Kent Garlinghouse
                                        ----------------------------------------
                                          Name:  B. Kent Garlinghouse
                                          Title: Manager

                                     DRAGON COEUR LLC II-D

                                     By: /S/ E. H. Arnold
                                        ----------------------------------------
                                          Name:  E. H. Arnold
                                          Title:
                                                 -------------------------------

                                     /S/ DAVID RANDOM
                                     -------------------------------------------
                                     DAVID RANDOM

                                     /S/ JOSEPH REGAN
                                     -------------------------------------------
                                     JOSEPH REGAN

                                     THE SANFORD R. PENN, JR. TRUST
                                     DATED APRIL 30, 2002

                                     /S/ Sanford R. Penn
                                     -------------------------------------------
                                          Sanford R. Penn, Jr., Trustee

                                     /S/ MICHAEL N. TAGLICH
                                     -------------------------------------------
                                     MICHAEL N. TAGLICH

                                     /S/ ROBERT F. TAGLICH
                                     -------------------------------------------
                                     ROBERT F. TAGLICH

                       [SIGNATURES CONTINUED ON NEXT PAGE]

                                       17
<PAGE>

                                     TAG KENT PARTNERS

                                     By: /S/ Michael N. Taglich
                                        ----------------------------------------
                                          Name:  Michael N. Taglich
                                          Title: General Partner

                                     /S/ CHARLES S. BRAND
                                     -------------------------------------------
                                     CHARLES S. BRAND

                                     /S/ MICHAEL J. FOURTICQ
                                     -------------------------------------------
                                     MICHAEL J. FOURTICQ

                                     /S/ KEITH BECKER
                                     -------------------------------------------
                                     KEITH BECKER

                                     /S/ LLOYD B. EMBRY
                                     -------------------------------------------
                                     LLOYD B. EMBRY

                                     /S/ JOHN R. WORTHINGTON TRUST
                                     -------------------------------------------
                                     JOHN R. WORTHINGTON TRUST

                                     By: /S/ John R. Worthington
                                         ---------------------------------------
                                          John R. Worthington, Trustee

                                     DOLPHIN OFFSHORE PARTNERS, L.P.

                                     By:  /S/ Peter E. Salas
                                          --------------------------------------
                                          Name:  Peter E. Salas
                                          Title: General Partner

                                       18

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