Document:

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Exhibit 10.41

                               SECURITY AGREEMENT

         SECURITY AGREEMENT, dated January 23, 2002 (this "AGREEMENT"), 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, on the date hereof, the Grantor has executed senior secured
convertible promissory notes, in favor of each of the Secured Parties in an
aggregate principal amount of $2,087,500.00 (the "NOTES"), issued pursuant to
the Note and Warrant Purchase Agreement, dated as of the date hereof 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 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.

         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 Security 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,
wherever located and whether now or hereafter 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").

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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").

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.

                  (a) 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

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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.

                  (b) 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.

         5.2 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 5.9 of this Agreement, the Collateral will at all times be
kept at the locations set forth on EXHIBIT A hereto.

         5.3 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.

         5.4 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.

         5.5 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.

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. Such policies shall by
their terms provide that the Secured Parties be given at least 30 days prior
written notice of any amendment, modification or cancellation thereof and that

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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.
Certificates of all such policies shall be delivered to the Secured Parties. The
Grantor agrees that any payment made by the Grantor 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 Parties 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.

         6.7 The Grantor shall notify the Secured Parties in writing within 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.

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         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 5.5 hereof without giving the Secured Parties 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
Parties.

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. EVENTS OF DEFAULT.

         For purposes of this Agreement, any of the following events shall
constitute an "Event of Default":

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

         8.2 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;

         8.3 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;

         8.4 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;

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         8.5 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;

         8.6 The Grantor shall, at any time without the prior written consent of
the Secured Parties, 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 5.3 hereof except as permitted by Section 6.9 of this
Agreement, and/or

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

Section 9. 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
it by this Agreement or the Notes, 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
13 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 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
Parties 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 8, the

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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 10. POWER OF ATTORNEY.

         The Grantor authorizes the Secured Parties and does hereby make,
constitute and appoint the Secured Parties and agents of the Secured Parties
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 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 elating 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, receipt or, 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 act and things which the Secured Parties deem necessary to
protect, preserve and realize upon the Collateral and the Grantor's 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 11. 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 12. 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.

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Section 13. FINANCING STATEMENTS; FURTHER ASSURANCES; FILING.

         On the dates thereof, 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 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) 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 3 business days of the Grantor's request
therefore upon payment of the Obligations.

Section 14. 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 15. 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 16. 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 12 hereof shall survive any termination under this Section 15.

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Section 17. 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.

Section 18. 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 19. 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/ Shala Shashani Lutz
                                               ---------------------------------
                                               Name:  Shala Shashani Lutz
                                               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

                                            /S/ GARY ARNOLD
                                            ------------------------------------
                                            GARY ARNOLD

                                            /S/ DENNIS FORTIN
                                            ------------------------------------
                                            DENNIS 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: Manager

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

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

                                             /S/ SANFORD PENN
                                             -----------------------------------
                                             SANFORD PENN

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

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

                                            TAG KENT PARTNERS

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

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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:

                                            Comtel 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.

                                      -13-<PAGE>

EXHIBIT 10.42

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR TELENETICS CORPORATION SHALL HAVE RECEIVED
AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED.

                               WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                             TELENETICS CORPORATION

                            Expires January 23, 2007

No.: W-__                                         Number of Shares: ____________
Date of Issuance: January 23, 2002

         FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, Telenetics Corporation, a California corporation (together with
its successors and assigns, the "ISSUER"), hereby certifies that
_______________________ or its registered assigns is entitled to subscribe for
and purchase, during the period specified in this Warrant, up to
___________________________________ (________) shares (subject to adjustment as
hereinafter provided) of the duly authorized, validly issued, fully paid and
non-assessable Common Stock of the Issuer, at an exercise price per share equal
to the Warrant Price then in effect, subject, however, to the provisions and
upon the terms and conditions hereinafter set forth. Capitalized terms used in
this Warrant and not otherwise defined herein shall have the respective meanings
specified in Section 9 hereof.

         1. TERM. The right to subscribe for and purchase shares of Warrant
Stock represented hereby shall commence on the date of issuance of this Warrant
and shall expire at 5:00 p.m., eastern time, on January 23, 2007 (such period
being the "TERM").

<PAGE>

         2. METHOD OF EXERCISE PAYMENT; ISSUANCE OF NEW WARRANT; TRANSFER AND
EXCHANGE.

         (a) TIME OF EXERCISE. The purchase rights represented by this Warrant
may be exercised in whole or in part at any time and from time to time during
the Term.

         (b) METHOD OF EXERCISE. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, together
with the payment to the Issuer of an amount of consideration therefor equal to
the Warrant Price in effect on the date of such exercise multiplied by the
number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election (i) by certified or official
bank check or by wire transfer to an account designated by the Issuer, (ii)
commencing one (1) year after the Original Issue Date, by "cashless exercise" by
surrender to the Issuer for cancellation of a portion of this Warrant
representing that number of unissued shares of Warrant Stock which is equal to
the quotient obtained by dividing (A) the product obtained by multiplying the
Warrant Price by the number of shares of Warrant Stock being purchased upon such
exercise by (B) the Per Share Market Value as of the date of such exercise, or
(iii) commencing one (1) year after the Original Issue Date, by a combination of
the foregoing methods of payment selected by the Holder of this Warrant. In any
case where the consideration payable upon such exercise is being paid in whole
or in part pursuant to the provisions of clause (ii) of this subsection (b),
such exercise shall be accompanied by written notice from the Holder of this
Warrant specifying the manner of payment thereof and containing a calculation
showing the number of shares of Warrant Stock with respect to which rights are
being surrendered thereunder and the net number of shares to be issued after
giving effect to such surrender.

         (c) ISSUANCE OF STOCK CERTIFICATES. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise (if the deliveries required
to be made by the Holder pursuant to Section 2(b) are received by the Issuer
prior to 6:00 p.m. pacific time on the exercise date) and delivered to the
Holder hereof within a reasonable time, not exceeding three (3) Trading Days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.

         (d) TRANSFERABILITY OF WARRANT. Subject to Section 2(e) and subject to
the provisions of the Purchase Agreement, this Warrant may be transferred by a
Holder without the consent of the Issuer. If transferred pursuant to this
paragraph and subject to the provisions of subsection (e) of this Section 2,
this Warrant may be transferred on the books of the Issuer by the Holder hereof
in person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Issuer, properly endorsed (by the Holder executing an
assignment in the form attached hereto) and upon payment of any necessary
transfer tax or other governmental charge imposed upon such transfer. This
Warrant is exchangeable at the principal office of the Issuer for Warrants for
the purchase of the same aggregate number of shares of Warrant Stock, each new

                                      -2-
<PAGE>

Warrant to represent the right to purchase such number of shares of Warrant
Stock as the Holder hereof shall designate at the time of such exchange. All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date
and shall be identical with this Warrant except as to the number of shares of
Warrant Stock issuable pursuant hereto.

         (e) COMPLIANCE WITH SECURITIES LAWS.

                  (i) The Holder of this Warrant, by acceptance hereof,
         acknowledges that this Warrant or the shares of Warrant Stock to be
         issued upon exercise hereof are being acquired solely for the Holder's
         own account and not as a nominee for any other party, and for
         investment, and that the Holder will not offer, sell or otherwise
         dispose of this Warrant or any shares of Warrant Stock to be issued
         upon exercise hereof except pursuant to an effective registration
         statement, or an exemption from registration, under the Securities Act
         and any applicable state securities laws.

                  (ii) Except as provided in paragraph (iii) below, this Warrant
         and all certificates representing shares of Warrant Stock issued upon
         exercise hereof shall be stamped or imprinted with a legend in
         substantially the following form:

                  THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
                  EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
                  SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
                  DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND
                  UNDER APPLICABLE STATE SECURITIES LAWS OR TELENETICS
                  CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
                  REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
                  UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
                  NOT REQUIRED.

                  (iii) The restrictions imposed by this subsection (e) upon the
         transfer of this Warrant or the shares of Warrant Stock to be purchased
         upon exercise hereof shall terminate (A) when such securities shall
         have been resold pursuant to an effective registration statement under
         the Securities Act, (B) upon the Issuer's receipt of an opinion of
         counsel, in form and substance reasonably satisfactory to the Issuer,
         addressed to the Issuer to the effect that such restrictions are no
         longer required to ensure compliance with the Securities Act and state
         securities laws or (C) upon the Issuer's receipt of other evidence
         reasonably satisfactory to the Issuer that such registration and
         qualification under the Securities Act and state securities laws are
         not required. Whenever such restrictions shall cease and terminate as
         to any such securities, the Holder thereof shall be entitled to receive
         from the Issuer (or its transfer agent and registrar), without expense
         (other than applicable transfer taxes, if any), new Warrants (or, in
         the case of shares of Warrant Stock, new stock certificates) of like
         tenor not bearing the applicable legend required by paragraph (ii)
         above relating to the Securities Act and state securities laws.

                                      -3-
<PAGE>

         (f) CONTINUING RIGHTS OF HOLDER. The Issuer will, at the time of or at
any time after each exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing the extent, if any, of its continuing obligation
to afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
PROVIDED that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.

         3. STOCK FULLY PAID; RESERVATION AND LISTING OF SHARES; COVENANTS.

         (a) STOCK FULLY PAID. The Issuer represents, warrants, covenants and
agrees that, subject to Shareholder Approval (as defined in the Purchase
Agreement), all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges created by or through Issuer. The Issuer further covenants and agrees
that during the period within which this Warrant may be exercised, the Issuer
will at all times have authorized and reserved for the purpose of the issue upon
exercise of this Warrant a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.

         (b) RESERVATION. If any shares of Common Stock required to be reserved
for issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its best efforts as expeditiously as possible at its expense to
cause such shares to be duly registered or qualified. If the Issuer shall list
any shares of Common Stock on any securities exchange or market it will, at its
expense, list thereon, maintain and increase when necessary such listing, of,
all shares of Warrant Stock from time to time issued upon exercise of this
Warrant or as otherwise provided hereunder, and, to the extent permissible under
the applicable securities exchange rules, all unissued shares of Warrant Stock
which are at any time issuable hereunder, so long as any shares of Common Stock
shall be so listed. The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.

         (c) COVENANTS. The Issuer shall not by any action including, without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to protect
the rights of the Holder hereof against dilution (to the extent specifically
provided herein) or impairment. Without limiting the generality of the
foregoing, the Issuer will (i) not permit the par value, if any, of its Common
Stock to exceed the then effective Warrant Price, (ii) not amend or modify any
provision of the Articles of Incorporation or by-laws of the Issuer in any
manner that would adversely affect in any way the powers, preferences or
relative participating, optional or other special rights of the Common Stock or
which would adversely affect the rights of the Holders of the Warrants, provided
that the Company shall not be prohibited from amending its Articles to increase

                                      -4-
<PAGE>

its authorized capital stock, (iii) take all such action as may be reasonably
necessary in order that the Issuer may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of any liens, claims,
encumbrances and restrictions (other than as provided herein) upon the exercise
of this Warrant, and (iv) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be reasonably necessary to enable the Issuer to
perform its obligations under this Warrant.

         (d) LOSS, THEFT, DESTRUCTION OF WARRANTS. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

         (e) REGISTRATION RIGHTS. The Warrant Stock of the Issuer is entitled to
the benefits and subject to the terms of the Registration Rights Agreement dated
the date hereof between the Issuer and the Holder and shall carry standard
piggy-back registration rights on any registration statement filed by the Issuer
under the Securities Act 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.

         4. ADJUSTMENT OF WARRANT PRICE AND WARRANT SHARE NUMBER. The number of
shares of Common Stock for which this Warrant is exercisable, and the price at
which such shares may be purchased upon exercise of this Warrant, shall be
subject to adjustment from time to time as set forth in this Section 4. The
Issuer shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 in accordance with Section 5.

         (a) RECAPITALIZATION, REORGANIZATION, RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE.

                  (i) In case the Issuer after the Original Issue Date shall do
         any of the following (each, a "TRIGGERING EVENT"): (a) consolidate with
         or merge into any other Person and the Issuer shall not be the
         continuing or surviving corporation of such consolidation or merger, or
         (b) permit any other Person to consolidate with or merge into the
         Issuer and the Issuer shall be the continuing or surviving Person but,
         in connection with such consolidation or merger, any Capital Stock of
         the Issuer shall be changed into or exchanged for Securities of any
         other Person or cash or any other property, or (c) transfer all or
         substantially all of its properties or assets to any other Person, or
         (d) effect a capital reorganization or reclassification of its Capital
         Stock, then, and in the case of each such Triggering Event, proper
         provision shall be made so that, upon the basis and the terms and in
         the manner provided in this Warrant, the Holder of this Warrant shall
         be entitled (x) upon the exercise hereof at any time after the
         consummation of such Triggering Event, to the extent this Warrant is
         not exercised prior to such Triggering Event, to receive at the Warrant
         Price in effect at the time immediately prior to the consummation of
         such Triggering Event in lieu of the Common Stock issuable upon such

                                      -5-
<PAGE>

         exercise of this Warrant prior to such Triggering Event, the
         Securities, cash and property to which such Holder would have been
         entitled upon the consummation of such Triggering Event if such Holder
         had exercised the rights represented by this Warrant immediately prior
         thereto, subject to adjustments (subsequent to such corporate action)
         as nearly equivalent as possible to the adjustments provided for
         elsewhere in this Section 4 or (y) to sell this Warrant (or, at such
         Holder's election, a portion hereof) concurrently with the Triggering
         Event to the Person continuing after or surviving such Triggering
         Event, or to the Issuer (if Issuer is the continuing or surviving
         Person) at a sales price equal to the amount of cash, property and/or
         Securities to which a holder of the number of shares of Common Stock
         which would otherwise have been delivered upon the exercise of this
         Warrant would have been entitled upon the effective date or closing of
         any such Triggering Event (the "EVENT CONSIDERATION"), less the amount
         or portion of such Event Consideration having a fair value equal to the
         aggregate Warrant Price applicable to this Warrant or the portion
         hereof so sold.

                  (ii) Notwithstanding anything contained in this Warrant to the
         contrary, the Issuer will not effect any Triggering Event unless, prior
         to the consummation thereof, each Person (other than the Issuer) which
         may be required to deliver any Securities, cash or property upon the
         exercise of this Warrant as provided herein shall assume, by written
         instrument delivered to, and reasonably satisfactory to, the Holder of
         this Warrant, (A) the obligations of the Issuer under this Warrant (and
         if the Issuer shall survive the consummation of such Triggering Event,
         such assumption shall be in addition to, and shall not release the
         Issuer from, any continuing obligations of the Issuer under this
         Warrant) and (B) the obligation to deliver to such Holder such shares
         of Securities, cash or property as, in accordance with the foregoing
         provisions of this subsection (a), such Holder shall be entitled to
         receive, and such Person shall have similarly delivered to such Holder
         an opinion of counsel for such Person, which counsel shall be
         reasonably satisfactory to such Holder, stating that this Warrant shall
         thereafter continue in full force and effect and the terms hereof
         (including, without limitation, all of the provisions of this
         subsection (a)) shall be applicable to the Securities, cash or property
         which such Person may be required to deliver upon any exercise of this
         Warrant or the exercise of any rights pursuant hereto.

                  (iii) If with respect to any Triggering Event, the Holder of
         this Warrant has exercised its right as provided in clause (y) of
         subparagraph (i) of this subsection (a) to sell this Warrant or a
         portion thereof, the Issuer agrees that as a condition to the
         consummation of any such Triggering Event the Issuer shall secure such
         right of Holder to sell this Warrant to the Person continuing after or
         surviving such Triggering Event and the Issuer shall not effect any
         such Triggering Event unless upon or prior to the consummation thereof
         the amounts of cash, property and/or Securities required under such
         clause (y) are delivered to the Holder of this Warrant. The obligation
         of the Issuer to secure such right of the Holder to sell this Warrant
         shall be subject to such Holder's cooperation with the Issuer,
         including, without limitation, the giving of customary representations
         and warranties to the purchaser in connection with any such sale. Prior
         notice of any Triggering Event shall be given to the Holder of this
         Warrant in accordance with Section 13 hereof.

                                      -6-
<PAGE>

         (b) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Issuer shall:

                  (i) take a record of the holders of its Common Stock for the
         purpose of entitling them to receive a dividend payable in, or other
         distribution of, Additional Shares of Common Stock,

                  (ii) subdivide its outstanding shares of Common Stock into a
         larger number of shares of Common Stock, or

                  (iii) combine its outstanding shares of Common Stock into a
         smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

         (c) CERTAIN OTHER DISTRIBUTIONS. If at any time the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:

                  (i) cash (other than a cash dividend payable out of earnings
         or earned surplus legally available for the payment of dividends under
         the laws of the jurisdiction of incorporation of the Issuer),

                  (ii) any evidences of its indebtedness, any shares of stock of
         any class or any other securities or property of any nature whatsoever
         (other than cash, Common Stock Equivalents or Additional Shares of
         Common Stock), or

                  (iii) any warrants or other rights to subscribe for or
         purchase any evidences of its indebtedness, any shares of stock of any
         class or any other securities or property of any nature whatsoever
         (other than cash, Common Stock Equivalents or Additional Shares of
         Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and of
the fair value (as determined in good faith by the Board of Directors of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to the Holder) of any and all such evidences of

                                      -7-
<PAGE>

indebtedness, shares of stock, other securities or property or warrants or other
subscription or purchase rights so distributable, and (2) the Warrant Price then
in effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment. A reclassification of the Common Stock (other than a change in
par value, or from par value to no par value or from no par value to par value)
into shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 4(c) and,
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of
the outstanding shares of Common Stock within the meaning of Section 4(b).

         (d) ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.

                  (i) In the event the Issuer, shall, at any time, from time to
time, issue or sell any shares of Common Stock to a third party other than the
Holder of this Warrant or the Other Holders (as defined in the Purchase
Agreement) for a consideration per share less than the Warrant Price then in
effect for the Warrant immediately prior to the time of such issue or sale,
then, forthwith upon such issue or sale, the Warrant Price then in effect for
the Warrants shall be reduced to a price equal to the consideration per share
paid for such Common Stock and the number of shares of Common Stock for which
this Warrant is exercisable shall be increased by the product of the number of
shares of Common Stock for which this Warrant is exercisable immediately prior
to such issuance or sale multiplied by the Dilution Percentage. "Dilution
Percentage" shall mean the percentage by which the Warrant Price then in effect
is reduced pursuant to this Section 4(d).

                  (ii) If the Issuer, at any time while this Warrant is
outstanding, shall issue any Additional Shares of Common Stock to the Holder of
this Warrant (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the Warrant Price
then in effect or without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price determined by multiplying the Warrant
Price then in effect by a fraction:

                           (A) the numerator of which shall be equal to the sum
                  of (x) the number of shares of Common Stock outstanding
                  immediately prior to the issuance of such Additional Shares of
                  Common Stock PLUS (y) the number of shares of Common Stock
                  which the aggregate consideration for the total number of such
                  Additional Shares of Common Stock so issued would purchase at
                  a price per share equal to the greater of the Per Share Market
                  Value then in effect and the Warrant Price then in effect, and

                           (B) the denominator of which shall be equal to the
                  number of shares of Common Stock outstanding immediately after
                  the issuance of such Additional Shares of Common Stock.

                                      -8-
<PAGE>

                  (iii) The provisions of paragraph (ii) of Section 4(d) shall
not apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4(a) through 4(c). No adjustment of the
number of shares of Common Stock for which this Warrant shall be exercisable
shall be made under paragraph (ii) of Section 4(d) upon the issuance of any
Additional Shares of Common Stock which are issued pursuant to the exercise of
any Common Stock Equivalents, if any such adjustment shall previously have been
made upon the issuance of such Common Stock Equivalents (or upon the issuance of
any warrant or other rights therefor) pursuant to Section 4(f).

         (e) INTENTIONALLY OMITTED.

         (f) ISSUANCE OF COMMON STOCK EQUIVALENTS. If at any time the Issuer
shall take a record of the Holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Issuer is the surviving
corporation) issue or sell, any Common Stock Equivalents, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Warrant Price in effect immediately prior to the
time of such issue or sale, then the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall be
adjusted as provided in Section 4(d) on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or exchange
of all such Common Stock Equivalents shall be deemed to have been issued and
outstanding and the Issuer shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Common Stock
Equivalents. No further adjustments of the number of shares of Common Stock for
which this Warrant is exercisable and the Warrant Price then in effect shall be
made upon the actual issue of such Common Stock upon conversion or exchange of
such Common Stock Equivalents.

         (g) SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect shall have been made pursuant to Section 4(f) as
the result of any issuance of warrants, other rights or Common Stock
Equivalents, and (i) such warrants or other rights, or the right of conversion
or exchange in such other Common Stock Equivalents, shall expire, and all or a
portion of such warrants or other rights, or the right of conversion or exchange
with respect to all or a portion of such other Common Stock Equivalents, as the
case may be shall not have been exercised, or (ii) the consideration per share
for which shares of Common Stock are issuable pursuant to such Common Stock
Equivalents, shall be increased solely by virtue of provisions therein contained
for an automatic increase in such consideration per share upon the occurrence of
a specified date or event, then for each outstanding Warrant such previous
adjustment shall be rescinded and annulled and the Additional Shares of Common
Stock which were deemed to have been issued by virtue of the computation made in
connection with the adjustment so rescinded and annulled shall no longer be
deemed to have been issued by virtue of such computation. Upon the occurrence of
an event set forth in this Section 4(g) above, there shall be a recomputation
made of the effect of such Common Stock Equivalents on the basis of: (i)
treating the number of Additional Shares of Common Stock or other property, if
any, theretofore actually issued or issuable pursuant to the previous exercise
of any such warrants or other rights or any such right of conversion or
exchange, as having been issued on the date or dates of any such exercise and

                                      -9-
<PAGE>

for the consideration actually received and receivable therefor, and (ii)
treating any such Common Stock Equivalents which then remain outstanding as
having been granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other property are
issuable under such Common Stock Equivalents; whereupon a new adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect shall be made, which new adjustment shall supersede
the previous adjustment so rescinded and annulled.

         (h) PURCHASE OF COMMON STOCK BY THE ISSUER. If the Issuer at any time
while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value, then
the Warrant Price upon each such purchase, redemption or acquisition shall be
adjusted to that price determined by multiplying such Warrant Price by a
fraction (i) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such purchase, redemption or acquisition
minus the number of shares of Common Stock which the aggregate consideration for
the total number of such shares of Common Stock so purchased, redeemed or
acquired would purchase at the Per Share Market Value; and (ii) the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such purchase, redemption or acquisition. For the purposes of this
subsection (h), the date as of which the Per Share Market Price shall be
computed shall be the earlier of (x) the date on which the Issuer shall enter
into a firm contract for the purchase, redemption or acquisition of such Common
Stock, or (y) the date of actual purchase, redemption or acquisition of such
Common Stock. For the purposes of this subsection (h), a purchase, redemption or
acquisition of a Common Stock Equivalent shall be deemed to be a purchase of the
underlying Common Stock, and the computation herein required shall be made on
the basis of the full exercise, conversion or exchange of such Common Stock
Equivalent on the date as of which such computation is required hereby to be
made, whether or not such Common Stock Equivalent is actually exercisable,
convertible or exchangeable on such date.

         (i) OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect provided for in this Section 4:

                  (i) COMPUTATION OF CONSIDERATION. To the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents (or any
warrants or other rights therefor) shall be issued for cash consideration, the
consideration received by the Issuer therefor shall be the amount of the cash
received by the Issuer therefor, or, if such Additional Shares of Common Stock
or Common Stock Equivalents are offered by the Issuer for subscription, the
subscription price, or, if such Additional Shares of Common Stock or Common
Stock Equivalents are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest or accrued
dividends and without taking into account any compensation, discounts or
expenses paid or incurred by the Issuer for and in the underwriting of, or
otherwise in connection with, the issuance thereof). To the extent that such
issuance shall be for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration shall be deemed
to be the fair value of such consideration at the time of such issuance as

                                      -10-
<PAGE>

determined in good faith by the Board of Directors of the Issuer. In case any
Additional Shares of Common Stock or any Common Stock Equivalents (or any
warrants or other rights therefor) shall be issued in connection with any merger
in which the Issuer issues any securities, the amount of consideration therefor
shall be deemed to be the fair value, as determined in good faith by the Board
of Directors of the Issuer, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Common Stock
Equivalents, or any warrants or other rights therefor, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant to any
warrants or other rights to subscribe for or purchase the same shall be the
consideration received by the Issuer for issuing such warrants or other rights
plus the additional consideration payable to the Issuer upon exercise of such
warrants or other rights. The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Common Stock Equivalents shall be
the consideration received by the Issuer for issuing warrants or other rights to
subscribe for or purchase such Common Stock Equivalents, plus the consideration
paid or payable to the Issuer in respect of the subscription for or purchase of
such Common Stock Equivalents, plus the additional consideration, if any,
payable to the Issuer upon the exercise of the right of conversion or exchange
in such Common Stock Equivalents. In case of the issuance at any time of any
Additional Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividends upon any class of stock other than Common Stock,
the Issuer shall be deemed to have received for such Additional Shares of Common
Stock or Common Stock Equivalents a consideration equal to the amount of such
dividend so paid or satisfied.

                  (ii) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of the Common Stock, as provided for in Section 4(b)) up
to, but not beyond the date of exercise if such adjustment either by itself or
with other adjustments not previously made adds or subtracts less than one
percent (1%) of the shares of Common Stock for which this Warrant is exercisable
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount (except as aforesaid) which is
postponed shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose of
any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

                  (iii) FRACTIONAL INTERESTS. In computing adjustments under
this Section 4, fractional interests in Common Stock shall be taken into account
to the nearest one one-hundredth (1/100th) of a share.

                  (iv) WHEN ADJUSTMENT NOT REQUIRED. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking

                                      -11-
<PAGE>

of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled. In addition, no adjustment shall be required under
Section 4(d)(i) hereof in the event the Issuer issues or sells Additional Shares
in a transaction whose primary purpose is to establish a relationship with the
recipient thereof for strategic reasons and not to raise capital. Further,
anything herein to the contrary notwithstanding, the Issuer shall not be
required to make any adjustment of the number of shares of Common Stock issuable
upon exercise of this Warrant upon the grant or the exercise of, options or
warrants or rights to purchase stock under the Issuer's existing stock option
and stock purchase plans or upon the issuance to the Holder or the Other Holders
or their successors or assigns of replacement securities pursuant to Section
3.10(c) of the Purchase Agreement.

         (k) FORM OF WARRANT AFTER ADJUSTMENTS. The form of this Warrant need
not be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

         (l) ESCROW OF WARRANT STOCK. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Stock, but prior to the occurrence of the event for
which such record is taken, and the Holder exercises this Warrant, any shares of
Common Stock issuable upon exercise by reason of such adjustment shall be deemed
the last shares of Common Stock for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for the Holder by the Issuer to be issued
to the Holder upon and to the extent that the event actually takes place, upon
payment of the current Warrant Price. Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to occur or
is rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.

         5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to one of the national
accounting firms currently known as the "big five" selected by the Holder,
PROVIDED that the Issuer shall have ten (10) days after receipt of notice from
such Holder of its selection of such firm to object thereto, in which case such
Holder shall select another such firm and the Issuer shall have no such right of
objection. The firm selected by the Holder of this Warrant as provided in the
preceding sentence shall be instructed to deliver a written opinion as to such
matters to the Issuer and such Holder within thirty (30) days after submission
to it of such dispute. Such opinion shall be final and binding on the parties
hereto. The fees and expenses of such accounting firm shall be paid by the
Issuer.

                                      -12-
<PAGE>

         6. FRACTIONAL SHARES. No fractional shares of Warrant Stock will be
issued in connection with an exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.

         7. OWNERSHIP CAP AND CERTAIN EXERCISE RESTRICTIONS.

         (a) Notwithstanding anything to the contrary set forth in this Warrant,
at no time may a holder of this Warrant exercise this Warrant if the number of
shares of Common Stock to be issued pursuant to such exercise would exceed, when
aggregated with all other shares of Common Stock owned by such holder at such
time, the number of shares of Common Stock which would result in such holder
owning more than 4.999% of all of the Common Stock outstanding at such time;
provided, however, that upon a holder of this Warrant providing the Issuer with
sixty (60) days notice (pursuant to Section 13 hereof) (the "Waiver Notice")
that such holder would like to waive this Section 7(a) with regard to any or all
shares of Common Stock issuable upon exercise of this Warrant, this Section 7(a)
will be of no force or effect with regard to all or a portion of the Warrant
referenced in the Waiver Notice.

         (b) The Holder may not exercise the Warrant hereunder to the extent
such exercise would result in the Holder beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 9.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon exercise of the Warrant held by the Holder after
application of this Section.

         8. INTENTIONALLY OMITTED.

         9. DEFINITIONS. For the purposes of this Warrant, the following terms
have the following meanings:

                  "ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common
         Stock issued by the Issuer after the Original Issue Date, and all
         shares of Other Common, if any, issued by the Issuer after the Original
         Issue Date, except (i) the Warrant Stock; (ii) shares of Common Stock
         issuable upon conversion of the Notes; (iii) shares of Common Stock to
         be issued to strategic partners and/or in connection with a strategic
         merger or acquisition; (iv) shares of Common Stock or the issuance of
         options to purchase shares of Common Stock to employees, officers,
         directors, consultants and vendors in accordance with the Issuer's
         equity incentive policies; (v) the issuance of Securities pursuant to
         the conversion or exercise of convertible or exercisable securities
         issued or outstanding on or prior to the date hereof; (vi) shares of
         Common Stock issued or issuable as replacement securities or upon
         exercise or conversion of replacement securities pursuant to Section
         3.10(c) of the Purchase Agreement; and (vii) shares of Common Stock
         issued upon conversion of all shares of the Issuer's Series A
         Convertible Preferred Stock that remain outstanding as of the date
         hereof, unless the weighted average per share conversion price for all
         such conversions is less than $.20.

                  "ARTICLES OF INCORPORATION" means the Articles of
         Incorporation of the Issuer as in effect on the Original Issue Date,
         and as hereafter from time to time amended, modified, supplemented or

                                      -13-
<PAGE>

         restated in accordance with the terms hereof and thereof and pursuant
         to applicable law.

                  "BOARD" shall mean the Board of Directors of the Issuer.

                  "CAPITAL STOCK" means and includes (i) any and all shares,
         interests, participations or other equivalents of or interests in
         (however designated) corporate stock, including, without limitation,
         shares of preferred or preference stock, (ii) all partnership interests
         (whether general or limited) in any Person which is a partnership,
         (iii) all membership interests or limited liability company interests
         in any limited liability company, and (iv) all equity or ownership
         interests in any Person of any other type.

                  "COMMON STOCK" means the Common Stock, no par value per share,
         of the Issuer and any other Capital Stock into which such stock may
         hereafter be changed.

                  "COMMON STOCK EQUIVALENT" means any Convertible Security or
         warrant, option or other right to subscribe for or purchase any
         Additional Shares of Common Stock or any Convertible Security.

                  "CONVERTIBLE SECURITIES" means evidences of Indebtedness,
         shares of Capital Stock or other Securities which are or may be at any
         time convertible into or exchangeable for Additional Shares of Common
         Stock. The term "Convertible Security" means one of the Convertible
         Securities.

                  "GOVERNMENTAL AUTHORITY" means any governmental, regulatory or
         self-regulatory entity, department, body, official, authority,
         commission, board, agency or instrumentality, whether federal, state or
         local, and whether domestic or foreign.

                  "HOLDERS" mean the Persons who shall from time to time own any
         Warrant. The term "Holder" means one of the Holders.

                  "INDEPENDENT APPRAISER" means a nationally recognized or major
         regional investment banking firm or firm of independent certified
         public accountants of recognized standing (which may be the firm that
         regularly examines the financial statements of the Issuer) that is
         regularly engaged in the business of appraising the Capital Stock or
         assets of corporations or other entities as going concerns, and which
         is not affiliated with either the Issuer or the Holder of any Warrant.

                  "ISSUER" means Telenetics Corporation, a California
         corporation, and its successors.

                  "MAJORITY HOLDERS" means at any time the Holders of Warrants
         exercisable for a majority of the shares of Warrant Stock issuable
         under the Warrants at the time outstanding.

                  "NASDAQ" means The Nasdaq SmallCap Market.

                                      -14-
<PAGE>

                  "NOTES" means the senior secured convertible promissory notes
         issued in connection with the Purchase Agreement.

                  "ORIGINAL ISSUE DATE" means January 23, 2002.

                  "OTC BULLETIN BOARD" means the over-the-counter electronic
         bulletin board.

                  "OTHER COMMON" means any other Capital Stock of the Issuer of
         any class which shall be authorized at any time after the date of this
         Warrant (other than Common Stock) and which shall have the right to
         participate in the distribution of earnings and assets of the Issuer
         without limitation as to amount.

                  "PERSON" means an individual, corporation, limited liability
         company, partnership, joint stock company, trust, unincorporated
         organization, joint venture, Governmental Authority or other entity of
         whatever nature.

                  "PER SHARE MARKET VALUE" means on any particular date (a) the
         closing price per share of the Common Stock on such date on the OTC
         Bulletin Board or another registered national stock exchange on which
         the Common Stock is then listed, or if there is no such price on such
         date, then the closing price on such exchange or quotation system on
         the date nearest preceding such date, or (b) if the Common Stock is not
         then reported by the OTC Bulletin Board or the National Quotation
         Bureau Incorporated (or similar organization or agency succeeding to
         its functions of reporting prices), then the average of the "Pink
         Sheet" quotes for the relevant conversion period, as determined in good
         faith by the holder, or (c) if the Common Stock is not then publicly
         traded the fair market value of a share of Common Stock as determined
         by an Independent Appraiser selected in good faith by the Majority
         Holders; PROVIDED, however, that the Issuer, after receipt of the
         determination by such Independent Appraiser, shall have the right to
         select an additional Independent Appraiser, in which case, the fair
         market value shall be equal to the average of the determinations by
         each such Independent Appraiser; and PROVIDED, FURTHER that all
         determinations of the Per Share Market Value shall be appropriately
         adjusted for any stock dividends, stock splits or other similar
         transactions during such period. The determination of fair market value
         by an Independent Appraiser shall be based upon the fair market value
         of the Issuer determined on a going concern basis as between a willing
         buyer and a willing seller and taking into account all relevant factors
         determinative of value, and shall be final and binding on all parties.
         In determining the fair market value of any shares of Common Stock, no
         consideration shall be given to any restrictions on transfer of the
         Common Stock imposed by agreement or by federal or state securities
         laws, or to the existence or absence of, or any limitations on, voting
         rights.

                  "PURCHASE AGREEMENT" means the Note and Warrant Purchase
         Agreement dated as of January 23, 2002 among the Issuer and the
         investors a party thereto.

                  "SECURITIES" means any debt or equity securities of the
         Issuer, whether now or hereafter authorized, any instrument convertible
         into or exchangeable for Securities or a Security, and any option,
         warrant or other right to purchase or acquire any Security. "Security"
         means one of the Securities.

                                      -15-
<PAGE>

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
         or any similar federal statute then in effect.

                  "SUBSIDIARY" means any corporation at least 50% of whose
         outstanding Voting Stock shall at the time be owned directly or
         indirectly by the Issuer or by one or more of its Subsidiaries, or by
         the Issuer and one or more of its Subsidiaries.

                  "TERM" has the meaning specified in Section 1 hereof.

                  "TRADING DAY" means (a) a day on which the Common Stock is
         traded on the OTC Bulletin Board, or (b) if the Common Stock is not
         listed on the OTC Bulletin Board, a day on which the Common Stock is
         traded on any other registered national stock exchange, or (c) if the
         Common Stock is not traded on the OTC Bulletin Board, a day on which
         the Common Stock is quoted in the over-the-counter market as reported
         by the National Quotation Bureau Incorporated (or any similar
         organization or agency succeeding its functions of reporting prices);
         PROVIDED, HOWEVER, that in the event that the Common Stock is not
         listed or quoted as set forth in (a), (b) and (c) hereof, then Trading
         Day shall mean 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 are authorized or required by law or other government
         action to close.

                  "VOTING STOCK" means, as applied to the Capital Stock of any
         corporation, Capital Stock of any class or classes (however designated)
         having ordinary voting power for the election of a majority of the
         members of the Board of Directors (or other governing body) of such
         corporation, other than Capital Stock having such power only by reason
         of the happening of a contingency.

                  "WARRANTS" means the Warrants issued and sold pursuant to the
         Purchase Agreement, including, without limitation, this Warrant, and
         any other warrants of like tenor issued in substitution or exchange for
         any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
         hereof or of any of such other Warrants.

                  "WARRANT PRICE" means U.S. $.44064, as such price may be
         adjusted from time to time as shall result from the adjustments
         specified in this Warrant, including Section 4 hereto.

                  "WARRANT SHARE NUMBER" means at any time the aggregate number
         of shares of Warrant Stock which may at such time be purchased upon
         exercise of this Warrant, after giving effect to all prior adjustments
         and increases to such number made or required to be made under the
         terms hereof.

                  "WARRANT STOCK" means Common Stock issuable upon exercise of
         any Warrant or Warrants or otherwise issuable pursuant to any Warrant
         or Warrants.

                                      -16-
<PAGE>

         10. OTHER NOTICES. In case at any time:

                           (A)      the Issuer shall make any distributions to
                                    the holders of Common Stock; or

                           (B)      the Issuer shall authorize the granting to
                                    all holders of its Common Stock of rights to
                                    subscribe for or purchase any shares of
                                    Capital Stock of any class or of any Common
                                    Stock Equivalents or other rights; or

                           (C)      there shall be any reclassification of the
                                    Capital Stock of the Issuer; or

                           (D)      there shall be any capital reorganization by
                                    the Issuer; or

                           (E)      there shall be any (i) consolidation or
                                    merger involving the Issuer or (ii) sale,
                                    transfer or other disposition of all or
                                    substantially all of the Issuer's property,
                                    assets or business (except a merger or other
                                    reorganization in which the Issuer shall be
                                    the surviving corporation and its shares of
                                    Capital Stock shall continue to be
                                    outstanding and unchanged and except a
                                    consolidation, merger, sale, transfer or
                                    other disposition involving a wholly-owned
                                    Subsidiary); or

                           (F)      there shall be a voluntary or involuntary
                                    dissolution, liquidation or winding-up of
                                    the Issuer or any partial liquidation of the
                                    Issuer or distribution to holders of Common
                                    Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least ten (10)
days prior to the action in question and not less than ten (10) days prior to
the record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such requires no notice, then
two (2) Trading Days written notice thereof describing the matters upon which
action is to be taken). The Holder shall have the right to send two (2)
representatives selected by it to each meeting, who shall be permitted to
attend, but not vote at, such meeting and any adjournments thereof. This Warrant
entitles the Holder to receive copies of all financial and other information
distributed or required to be distributed to the holders of the Common Stock.

                                      -17-
<PAGE>

         11. AMENDMENT AND WAIVER. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; PROVIDED, HOWEVER, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 11 without the consent of the Holder of this Warrant.

         12. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.

         13. 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., eastern time, on a
Trading Day, (ii) the Trading 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., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading 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 the Holder of
this Warrant or of Warrant Stock issued pursuant hereto, addressed to such
Holder at its last known address or facsimile number appearing on the books of
the Issuer maintained for such purposes, or with respect to the Issuer,
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

with copies (which copies shall not constitute notice to the Company) to:

                                    Rutan & Tucker, LLP
                                    611 Anton Boulevard, Suite 1400
                                    Costa Mesa, California 92626
                                    Attention: Larry A. Cerutti, Esq.
                                    Telecopier: (714) 546-9035
                                    Telephone: (714) 641-5100

                                      -18-
<PAGE>

Copies of notices to the Holder shall be sent to Jenkens & Gilchrist Parker
Chapin LLP, The Chrysler Building, 405 Lexington Avenue, New York, New York
10174, Attention: Christopher S. Auguste, Esq., Telecopier no.: (212) 704-6288.
Any party hereto may from time to time change its address for notices by giving
at least ten (10) days written notice of such changed address to the other party
hereto.

         14. WARRANT AGENT. The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

         15. REMEDIES. The Issuer stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.

         16. SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.

         17. MODIFICATION AND SEVERABILITY. If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.

         18. HEADINGS. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

                                      -19-
<PAGE>

         IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.

                                         TELENETICS CORPORATION

                                         By:
                                            -----------------------------------
                                            Name:  Shala Shashani Lutz
                                            Title: President

                                      -20-
<PAGE>

                                  EXERCISE FORM

                             TELENETICS CORPORATION

The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of Telenetics
Corporation covered by the within Warrant.

Dated: _________________            Signature __________________________________

                                    Address   __________________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________            Signature __________________________________

                                    Address   __________________________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________            Signature __________________________________

                                    Address   __________________________________

                           FOR USE BY THE ISSUER ONLY:

This Warrant No. W-_____ canceled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.

                                      -21-

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