Document:

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Exhibit 10.3

                             MODIFICATION AGREEMENT

         THIS NOTES MODIFICATION AGREEMENT (this "AGREEMENT") is entered into as
of the 29th day of June, 2001, by and between TELENETICS CORPORATION, a
California corporation (the "ISSUER"), and DOLPHIN OFFSHORE PARTNERS, L.P. (the
"HOLDER").

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

         WHEREAS, the Issuer is the maker of that certain 12% Unsecured
Promissory Note, dated January 22, 2001, in the principal amount of $325,000
(the "12% NOTE"), in favor of the Holder; and

         WHEREAS, the Issuer is the maker of that certain 7.0% Convertible
Subordinated Debenture Due January 2, 2003, dated January 2, 2001, in the
principal amount of $2,115,000 (the "7.0% DEBENTURE"), in favor of the Holder;
and

         WHEREAS, the Issuer is the maker of that certain 10% Subordinated
Unsecured Promissory Note Due 2001, dated February 4, 2000, in the principal
amount of $250,000 (the "10% NOTE"), in favor of the Holder (the 12% Note, the
7.0% Debenture, and the 10% Note are collectively referred to herein as the
"NOTES"); and

         WHEREAS, the Issuer and the Holder desire to amend Notes as provided
herein.

                                A G R E E M E N T
                                -----------------

         NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

         1. WAIVER OF EVENTS OF DEFAULT. The Holder hereby waives any and all
defaults under the 7.0% Debenture, including but not limited to any Events of
Default, as defined in Section 14 of the 7.0% Debenture, that have occurred from
the date of the 7.0% Debenture through the date hereof (collectively,
"DEFAULTS"), and waives any and all consequences that arise from any such
Defaults including, but not limited to, any increase in the annual interest rate
of the Debentures (as defined in the 7.0% Debenture) as a result thereof.

         2. WAIVER OF FUTURE EVENTS OF DEFAULT. The Holder hereby waives any and
all defaults under the 7.0% Debenture or any of the Debentures (as defined in
the 7.0% Debenture) or any other evidences of Indebtedness (as defined in
Section 17 of the 7.0% Debenture), including, but not limited to, any Events of
Default within Sections 14 of the 7.0% Debenture, that occur from the date
hereof through September 30, 2001, and waives any and all consequences that
arise from any such defaults including, but not limited to, any increase in the
annual interest rate of the Debentures as a result thereof.

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         3. CHANGE IN INTEREST PAYMENT DATE. The Interest Payment Date under the
7.0% Debenture is hereby changed from semiannual payments of interest in arrears
on January 2 and July 2 in each year to quarterly payments of interest in
arrears on March 2, June 2, September 2, and December 2 in each year. Any and
all references in the 7.0% Debenture to semiannual interest payments are hereby
changed to quarterly interest payments.

         4. INCREASE IN INTEREST RATE OF 7.0% DEBENTURE. Commencing on July 1,
2001, and continuing until the principal amount of the 7.0% Debenture is paid,
the interest rate on the outstanding principal balance of the 7.0% Debenture
shall be increased from seven percent (7.0%) per annum to ten percent (10%) per
annum. Subject to SECTION 2 hereof, in the event the Issuer does not make a
quarterly interest payment within fifteen (15) days after the applicable
Interest Payment Date (as defined in the 7.0% Debenture), the interest rate for
such quarterly period (to the extent that the payment of such interest shall be
legally enforceable) shall be fifteen percent (15%) per annum (or at such higher
rate as provided in Section 14 of the 7.0% Debenture) on any overdue principal
and on any overdue installment of interest, which amount shall accrue daily,
from the date such interest is due under the 7.0% Debenture (i.e. the beginning
of the quarterly period in which such interest payment is due) through and
including the date of payment.

         5. EXTENSION OF TERM OF 12% NOTE. The Maturity Date of the 12% Note, as
defined therein, is hereby extended to July 2, 2002.

         6. INCREASE IN INTEREST RATE OF 12% NOTE. Commencing on October 1,
2001, and continuing through December 31, 2001, the interest rate on the
outstanding principal balance of the 12% Note shall be increased from twelve
percent (12%) per annum to fifteen percent (15%) per annum. Commencing on
January 1, 2002, and continuing until the principal amount of the 12% Note is
paid, the interest rate on the outstanding principal balance of the 12% Note
shall be increased from fifteen percent (15%) per annum to eighteen percent
(18%) per annum.

         7. EXTENSION OF TERM OF 10% NOTE. The maturity date of the 10% Note is
hereby extended from May 15, 2001 to July 2, 2002.

         8. INCREASE IN INTEREST RATE OF 10% NOTE. Commencing on July 1, 2001
and continuing until the principal amount of the 10% Note is paid, the interest
rate on the outstanding principal balance of the 10% Note shall be increased
from ten percent (10%) per annum to fifteen percent (15%) per annum; PROVIDED,
HOWEVER, that if the Issuer notifies the Holder on or before March 31, 2002 that
the Issuer intends to prepay the outstanding principal balance of the 10% Note
on or within nine (9) days prior to April 10, 2002, and the Issuer actually
prepays such outstanding principal balance on or prior to such date, then the
Holder shall waive all interest that accrued on such outstanding principal
balance from January 1, 2002 through April 10, 2002.

         9. REMAINDER OF NOTE TERMS. Except as specifically modified or amended
by the terms hereof, all other terms and conditions of the Notes shall remain in
full force and effect.

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

"ISSUER"                                    TELENETICS CORPORATION,
                                            a California corporation

                                            By: /S/ DAVID STONE
                                                --------------------------------

                                                Its:     CFO
                                                     ---------------------------

"HOLDER"                                    DOLPHIN OFFSHORE PARTNERS, L.P.

                                            By: /S/ PETER SALAS
                                                --------------------------------

                                                Its:     GENERAL PARTNER
                                                      --------------------------

                                       3<PAGE>
EXHIBIT 10.4

                      AMENDMENT TO SECURED PROMISSORY NOTE

         THIS AMENDMENT TO SECURED PROMISSORY NOTE ("Amendment") is entered into
and effective as of June 27, 2001 by and between Telenetics Corporation, a
California corporation ("Borrower"), and Shala Shashani d.b.a. SMC Group
("Lender").

                                 R E C I T A L S

         A. Borrower is indebted to Lender under a Secured Promissory Note dated
December 30, 1997 in the principal amount of $250,000 ("Note").

         B. Borrower and Lender previously had informally agreed to extend the
maturity date of the Note and to increase the interest rate of the Note from 7%
per annum to 10% per annum.

         C. Borrower and Lender agreed by letter agreement dated June 27, 2001
that the Note would be further modified on the terms set forth in this
Amendment.

                                A G R E E M E N T

         In consideration of the foregoing recitals and the agreements contained
in this Amendment, the parties agree as follows:

         1. The interest rate of the Note shall be increased by 2% per annum to
12% per annum for interest accruing from July 1, 2001.

         2. Section 1(d) of the Note is amended to provide that principal and
any unpaid accrued interest shall be paid in full by January 2, 2003 ("Maturity
Date").

         3. Section 5 is added to the Note to provide as follows:

                  "5. ASSIGNABILITY. This Note is assignable by the holder (as
security or otherwise), provided that the holder shall provide Borrower with ten
days' prior written notice of its intention to assign this Note, which notice
shall identify the proposed assignee and provided further that such assignment
is permitted by applicable law."

         4. Section 6 is added to the Note to provide as follows:

                  "6. CONVERSION RIGHTS.

                           a) Any holder of this Note may convert all or any
portion of the outstanding principal amount of this Note and accrued and unpaid
interest thereon into a number of shares of the Borrower's common stock, no par
value per share ("Common Stock"), computed by dividing such principal amount by
$0.70 (the "Conversion Price"); provided, however, that any such conversion may
occur only until the earlier of March 31, 2002 or, if the Common Stock trades at
or above $1.40 per share for ten consecutive trading days, until the date, if
any, that Borrower elects to terminate the holder's right to convert this Note.

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                           b) No fractional shares of Common Stock shall be
issued upon conversion of this Note. In lieu of Borrower issuing any fractional
shares to the holder of this Note upon the conversion of this Note, Borrower
shall pay to such holder the amount of outstanding principal and accrued but
unpaid interest that is not so converted; provided, however, that no such
amounts shall be required to be paid by Borrower prior to the Maturity Date.

                           c) The Conversion Price for conversion of this Note
pursuant to Section 6 shall be subject to adjustment from time to time as
follows:

                                    (1) If Borrower should, at any time or from
time to time while this Note is convertible, fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock ("Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such dividend distribution, split
or subdivision if no record date is fixed), the Conversion Price of this Note
shall be appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents.

                                    (2) If the number of shares of Common Stock
outstanding at any time after the date first set forth above is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for this Note shall be
appropriately increased so that the number of shares of Common Stock issuab1e on
conversion of this Note shall be decreased in proportion to such decrease in
outstanding shares."

         5. Section 7 is hereby added to the Note to provide as follows:

                  "7. WARRANT. Concurrent with the execution of this Amendment,
Borrower shall issue to Lender a three-year warrant to purchase up to 50,000
shares of Common Stock at an initial exercise price of $1.00 per share, which
exercise price and number of shares shall be subject to adjustment under certain
circumstances and which warrant shall carry piggyback registration rights."

         6. Section 8 is hereby added to the Note to provide as follows:

                  "8. PIGGYBACK REGISTRATION RIGHTS. The holder shall, with
respect to the shares of Common Stock issuable upon conversion of this Note
("Registrable Securities"), have piggyback registration rights. If Borrower
shall determine to file with the Securities and Exchange Commission a
registration statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 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), Borrower shall send to the holder written notice of such

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determination and, if within fifteen (15) days after the effective date of such
notice, the holder shall so request in writing, then Borrower shall include in
such registration statement all or any part of the Registrable Securities the
holder requests to be registered, except that if, in connection with any
underwritten public offering for the account of Borrower the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock that may be included in the registration statement because, in such
underwriter(s)' judgment, marketing or other factors dictate such limitation is
necessary to facilitate public distribution, then Borrower shall be obligated to
include in the registration statement only such limited portion of the
Registrable Securities with respect to which the holder has requested inclusion
hereunder as the underwriter shall permit. Any exclusion of Registrable
Securities shall be made pro rata with holders of other securities having the
right to include such securities in the registration statement other than
holders of securities entitled to inclusion of their securities in the
registration statement by reason of demand registration rights. If an offering
in connection with which the holder elects to participate in registration under
this Section 8 is an underwritten offering, then the Holder shall, unless
otherwise agreed by Borrower, offer and sell such Registrable Securities in an
underwritten offering using the same underwriter or underwriters and, subject to
the provisions of this Warrant, on the same terms and conditions as other shares
of Common Stock included in such underwritten offering."

         7. Except as modified above, the provisions of the Note shall remain in
full force and effect.

                                          "BORROWER"

                                          TELENETICS CORPORATION
                                          a California corporation

                                          By: /s/ David L. Stone
                                              ----------------------------------
                                                   David L. Stone,
                                                   Chief Financial Officer

                                          "LENDER"

                                          /s/ Shala Shashani
                                          --------------------------------------
                                          SHALA SHASHANI D.B.A. SMC GROUP

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