Document:

SETTLEMENT AND RELEASE AGREEMENT

         Comes now the parties hereto, Daniel A. Blattman ("Blattman"), Racon,
Incorporated ("Racon"), and Telenetics Corporation ("Telenetics") and hereby
enter into this Settlement and Release Agreement.

         WHEREAS, Blattman along with co-plaintiff Racon, filed an action
against Telenetics in King County Superior Court seeking a judgment on a
promissory note dated April 28, 2000 in the principal amount of $325,000, a copy
of which is attached hereto as Exhibit A ("The Note"), under case number
00-2-17912-OSEA ("The Action").

         WHEREAS, in The Action Telenetics contested the validity of The Note
but now acknowledges that The Note is valid and enforceable according to its
terms subject to the terms of this Settlement Agreement, and;

         WHEREAS, the parties desire to settle and compromise the claims and
defenses asserted in The Action in order to avoid further costs and the
uncertainty of outcome;

         Therefore, the parties agree as follows:

         1. CONFESSION OF JUDGMENT. Telenetics will execute and deliver to
Blattman a Confession of Judgment for the principal amount of The Note of
$325,000, plus attorneys fees of $6,000, plus interest accruals at 7.5% per
annum on the unpaid principal balance less credits for payments made pursuant to
paragraph 4 and future payments made pursuant to paragraph 2, and 12% per annum
on any unpaid and delinquent interest payments that become due hereafter under
the terms of The Note. The Confession of Judgment that Telenetics agrees to sign
is attached Exhibit B to this Settlement Agreement.

<PAGE>

         2. PAYMENTS DUE TO BLATTMAN. Telenetics will timely pay Blattman all
interest payments now coming due under The Note, and on April 28, 2001 ("Due
Date") shall pay Blattman all sums due under The Note, including the principal
sum of $325,000, plus attorneys fees of $6,000, plus unpaid interest on the
principal balance at the 7.5% per annum interest and 12% per annum interest on
any unpaid and delinquent interest installments called for under The Note.

         3. FAILURE TO PAY - DEFAULT. If Telenetics fails to pay Blattman on the
Due Date all sums due under The Note and as provided for in paragraph 2 herein,
Blattman shall give five (5) business days notice of default and if Telenetics
does not cure within that five day period by paying all sums due under The Note
and as provided for in paragraph 2 herein, Blattman may file the Confession of
Judgment and take any action available in law to collect on the judgment.
Written notice by facsimile or other means to Stephen Kennedy at Ater Wynne,
LLP, Seattle, Washington, shall be deemed adequate notice for the purpose of
this paragraph. Telenetics' failure to pay installment interest payments coming
due under The Note between the date of this Agreement and the Due Date shall not
constitute a default and shall not entitle Blattman to file the Confession of
Judgment.

         4. CREDIT FOR PAYMENTS MADE. Telenetics has made certain interest
payments to date. Telenetics shall receive credit for those payments when
received by Blattman in the amounts and on the dates listed below.

                 ------------------------ -----------------------
                 PAYMENT AMOUNT           CHECK DATE
                 ------------------------ -----------------------

                 $4,062.50                October 12, 2000
                 ------------------------ -----------------------

                 $9,750.00                August 2, 2000
                 ------------------------ -----------------------

                 $4,062.50                December 18, 2000
                 ------------------------ -----------------------

                 $2,031.25                December 29, 2000
                 ------------------------ -----------------------

                                      -2-

<PAGE>

         5. MUTUAL RELEASE. By letter agreement dated January 4, 2001 the
parties have released each other from claims, causes of action, counterclaims,
and claims for recoupment. Here again, Blattman and Racon, on the one hand, and
Telenetics on the other, release and forever discharge each other and their
agents, employees, and attorneys, from any and all claims, causes of action,
counterclaims, set-offs, or claims for recoupment, whether known or unknown, and
whether or not any such claim, cause or right was asserted in the The Action.
The only exceptions to this release are Blattman's rights under The Note and
this Settlement Agreement.

         6. MAINTENANCE OF ACTION AND DISMISSAL. Upon receiving full payment of
all amounts due under The Note and this Settlement and Release Agreement,
Blattman will dismiss The Action, with prejudice and without further costs to
either party and will return the Confession of Judgment to Telenetics. Prior to
that time, Blattman will not prosecute The Action other than to take such steps
as are necessary to avoid dismissal of The Action by the court.

         7. VENUE AND GOVERNMENT LAW. Any action to enforce the terms of this
Settlement and Release Agreement or to collect any damages for breach thereof,
shall be in the Superior Court of King County, Washington. This Settlement and
Release Agreement and the attendant promissory note and confession of judgment
shall be governed by Washington State Law.

         8. ATTORNEYS FEES. If an action is initiated to enforce this agreement
or seek damages for breach thereof, the prevailing party will be entitled to an
award of reasonable attorneys fees and all necessary costs incurred in the
prosecution or defense of such action, as the case may be.

         DATED this _____ day of January, 2001.

                                                     Telenetics Corporation

                                                     By:
                                                        ------------------------

                                                     Its:
                                                         -----------------------

                                                     DANIEL A. BLATTMAN
                                                     ------------------

                                                     /S/ Daniel A. Blattman
                                                     ----------------------

                                                     Racon, Inc.

                                                     By:
                                                        ------------------------

                                                     Its:
                                                         -----------------------

                                      -3-<PAGE>   1
                                                                   EXHIBIT 10.53

                              CONSULTING AGREEMENT

         THIS CONSULTING AGREEMENT (the "Agreement") is entered into as of
December 1, 2000, between AMERICAN COIN MERCHANDISING, INC., d/b/a SUGARLOAF
CREATIONS, INC. (hereinafter called "Employer") and John A. Sullivan
(hereinafter called "Consultant").

         1. Introduction. Consultant has been providing services as Chairman of
Employer's Board of Directors since January 1999. Consultant has agreed to
provide such services in consideration for certain payments as set forth below,
which Consultant agreed to defer based on Employer's ability to pay and cash
flow considerations. Consultant bore the risk of nonpayment if improvements did
not occur in Employer's operations, and this Agreement confirms the terms of the
understanding between Employer and Consultant. Therefore, in consideration of
the mutual covenants and agreements contained herein, the parties to this
Agreement do hereby agree as follows.

         2. Term. Employer hereby continues the engagement of Consultant to
render services to Employer as Chairman of the Board of Directors from January
1, 2001 through and including December 31, 2003. Consultant will also serve on
any special committees as requested by the Board.

         3. Services. Consultant hereby accepts this engagement and agrees to
devote such portion of his full time and attention to the business and affairs
of Employer as may be necessary to meet the reasonable expectations of the Board
of Directors of Employer.

         4. Compensation. Effective December 1, 2000, Employer will pay
Consultant $100,000 as partial consideration for his past services provided to
Employer. Commencing January 1, 2001, Consultant will receive compensation of
$100,000 per year for his past and present services under this Agreement,
payable at the intervals regularly established for payment of salaries by
Employer. Consultant shall also receive stock options for 50,000 shares of
Employer's common stock pursuant to Employer's Amended and Restated Stock Option
Plan, effective as of November 21, 2000. Such options shall be granted at the
market price as of the date of grant and shall be evidenced by the Employer's
standard Option Agreement with the following modifications: such options shall
be fully exercisable immediately.

         5. Employer's Authority. Consultant agrees to observe and comply with
the rules and regulations of Employer as adopted by Employer's Board of
Directors either orally or in writing, respecting performance of Consultant's
duties and to carry out and perform orders, directions, and policies stated by
Employer to Consultant, from time to time, either orally or in writing;
provided, however, that Consultant shall only be obligated to comply with legal
and ethical rules, regulations, orders, directions and policies of Employer.

<PAGE>   2

         6. Confidential Information and Noncompetition.

                  (a) Consultant realizes that during this Agreement, Consultant
will produce and/or will have access to confidential memoranda, notes,
information, records, maps, research results, business projections, business and
research notebooks, data, formulae, specifications, trade secrets, customer
lists, inventions and processes of Employer, and other information of a
confidential nature (collectively, "Confidential Information").

                  (b) Both during the term of this Agreement and subsequent to
its termination, Consultant agrees to hold all Confidential Information in
confidence and not to disclose, and not directly or indirectly to use, copy,
digest or summarize, any Confidential Information, except to the extent
necessary to carry out Consultant's responsibilities as directed or authorized
by Employer and, after termination of Consultant's employment hereunder, as
specifically authorized in writing by Employer.

                  (c) All records in whatsoever form and in whatsoever medium
recorded, and any and all copies thereof (including volatile electronic or
magnetic signals), relating to Employer's business that Consultant shall
prepare, or use, or come into contact with in the course of his executing his
duties under this Agreement, shall be and remain the sole property of Employer
and shall not be removed from Employer's premises except as necessary to carry
out Consultant's responsibilities as directed and authorized by Employer; and
the same shall be returned promptly to Employer upon termination of Consultant's
employment relationship with Employer or upon Employer's request.

                  (d) Consultant agrees that he possesses or will possess
knowledge, skills and reputation in the industry in which Employer operates
which are of material importance to Employer, and which are special, unique and
extraordinary. Consultant acknowledges that the loss of his services, or the use
of his services by a competitor, may cause irreparable harm to Employer.
Therefore, for the period of any severance following termination of employment
for any reason, with or without cause, Consultant, individually and personally,
shall not do any of the following, unless specifically authorized by the
Employer's Board of Directors.

                           (i) Canvass, solicit, or accept any business in the
         Industry from any present or past customer of Employer or any related
         company, if the customer is located in the United States (the
         "Territory").

                           (ii) Aid or assist any other person, entity,
         partnership, or corporation in any effort to canvass, solicit, or
         accept any business in the amusement vending machine business or
         industry (the "Industry") from any past or present customers of
         Employer or of any related company, if the customer is located within
         the Territory.

                           (iii) Directly or indirectly request or advise any
         past or present customer of Employer, or any past, present, or possible
         future customer of any related companies to withdraw, curtail, cancel,
         or not undertake business in the Industry with any related company, if
         the customer is located within the Territory.

                                       2
<PAGE>   3

                           (iv) Directly or indirectly disclose to any other
         person, entity, partnership, or corporation the names of past or
         present customers of Employer, or of any related company. The parties
         agree that the names of these customers are confidential and
         proprietary and constitute trade secrets of Employer, and are
         confidential and proprietary and constitute trade secrets of Employer
         within the meaning of C.R.S. Section 8-2-113(2)(b) and C.R.S. Section
         7-74-102(4).

                           (v) Suggest, solicit, or encourage any employee of
         Employer or any related company to leave employment; or disparage
         Employer or any related company or their conditions of employment; or
         disclose to any other person, entity, partnership, or corporation the
         names of employees of Employer.

                           (vi) Directly or indirectly establish, as manager,
         employee or owner of greater than 1% of the outstanding ownership
         interest, or participate in an enterprise competitive with any business
         which is conducted at any time during the term of this Agreement by
         Employer or any related company, and which business is in the Industry
         and in the Territory.

                           (vii) Provide any product, service, financing, aid,
         or assistance of any kind for any person, entity, partnership,
         association, or corporation which is competitive with any business
         which is conducted at any time during the term of this Agreement by
         Employer or any related company, and which business is in the Industry
         and in the Territory.

                           (viii) Compete in any manner with any business which
         is conducted at any time during the term of this Agreement by Employer
         or any related company, and which business is in the Industry and in
         the Territory.

                  (e) The rights and obligations of this Section 6 shall survive
any expiration or termination of this Agreement.

         7. Termination.

                  (a) Death, Disability or Retirement. This Agreement shall
terminate automatically upon the Consultant's death or termination due to
"Disability." For purposes of this Agreement, Disability shall mean the
Consultant's inability to perform the duties of this position, as determined in
accordance with the policies and procedures applicable with respect to the
Employer's term disability plan, then in effect.

                  (b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, the Consultant may, upon not less than 30 days'
written notice to the Employer, voluntarily terminate his services for any
reason.

                  (c) Cause. The Employer may terminate the Consultant's
services for Cause. For purposes of this Agreement, "Cause" means (i) the
Consultant's conviction of a felony or the entering by the Consultant of a plea
of nolo contendere to a felony charge, (ii) the Consultant's gross neglect,
willful malfeasance or willful gross misconduct in connection with his
employment

                                       3
<PAGE>   4

hereunder which has had a significant adverse effect on the business of the
Employer and its subsidiaries, unless the Consultant reasonably believed in good
faith that such act or nonact was in or not opposed to the best interests of the
Employer, or (iii) use of illegal drugs or persistent excessive use of alcohol.

                  (d) Notice of Termination. Any termination by the Employer for
Cause or by the Consultant for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 16. For
purposes of this Agreement, a "Notice of Termination" means a written notice
given within a reasonable time after the event or action believed to constitute
the reason for giving notice.

                  (e) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) in the case of termination for which a
Notice Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein up to 90 days after
receipt, as the case may be, and (ii) in all other cases, actual date on which
the Consultant's service terminated.

                  (f) Advisory Services. Subsequent to the Date of Termination,
Consultant agrees to be available to Employer for reasonable advisory services
and background information for the period covered by any Severance Amount, as
described below.

         8. Obligations of the Employer upon Termination.

                  (a) Death or Disability. If the Consultant's employment is
terminated during the term of this Agreement by reason of the Consultant's death
or Disability, this Agreement shall terminate without further obligations to the
Consultant or the Consultant's legal representatives under this Agreement other
than those obligations accrued hereunder through the Date of Termination and the
Employer shall pay to the Consultant (or his beneficiary of estate) the
Consultant's full compensation through the Date of Termination (the "Earned
Compensation").

                  (b) Cause and Voluntary Termination. If the Consultant's
services shall be terminated for Cause or voluntarily terminated by the
Consultant, the Employer shall pay the Consultant the Earned Compensation in
cash in a single lump sum as soon as practicable, but in no event more than 10
days, following the Date of Termination.

                  (c) Termination by the Employer other than for Cause. If the
Employer terminates the Consultant's services other than for Cause (which shall
include the failure of the Employer's directors and shareholders to nominate and
elect the Consultant as a director and as Chairman during the term of this
Agreement), the Employer shall pay to the Consultant the following amounts: (A)
the Employer's Earned Compensation; (B) a cash amount (the "Severance Amount")
equal to the remaining amount payable under this Agreement for his past and
present services.

The Earned Compensation shall be paid in accordance wit the Employer's regular
payroll practices. The Severance Amount shall be paid in a lump sum within
thirty days after the Date of Termination.

                                       4
<PAGE>   5

                  (d) Discharges of the Employer's Obligations. Except as
expressly provided in the last sentence of this Section 8(d), the amounts
payable to the Consultant pursuant to this Section 9 (whether or not reduced
pursuant to Section 8(e)) following termination of his services shall be in full
and complete satisfaction of the Consultant's rights under this Agreement and
any other claims he may have in respect of his engagement by the Employer. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon the Consultant's receipt of such amounts, the
Employer shall be released and discharged from any and all liability to the
Consultant in connection with this Agreement or otherwise in connection with the
Consultant's engagement with the Employer. Nothing in this Section 8(d) shall be
construed to release the Employer from its commitment to indemnify the
Consultant and hold the Consultant harmless from and against any claim, loss or
cause of action arising from or out of the Consultant's performance as an
officer, director or employee of the Employer or any of its Subsidiaries or in
any other capacity, including any fiduciary capacity, in which the Consultant
served at the request of the Employer to the maximum extent permitted by
applicable law and the governing documents of the Employer.

                  (e) Limit on Payments by the Employer.

                  (i) Application of Section 8(e). In the event that any amount
         or benefit paid or distributed to the Consultant pursuant to this
         Agreement, taken together with any amounts or benefits otherwise paid
         or distributed to the Consultant by the Employer or any affiliated
         company (collectively, the "Covered Payments"), would be an "excess
         parachute payment" as defined in Section 280G of the Code and would
         thereby subject the Consultant to the tax (the "Excise Tax") imposed
         under Section 4999 of the Code (or any similar tax that may hereafter
         be imposed), the provisions of this Section 8(e) shall apply to
         determine the amounts payable to Consultant pursuant to this Agreement.

                  (ii) Calculation of Payment Cap. Immediately following
         delivery of any Notice of Termination, the Employer shall notify the
         Consultant of the aggregate present value of all termination benefits
         to which he would be entitled under this Agreement and any other plan,
         program or arrangement as of the projected Date of Termination,
         together with the projected maximum payments (determined as of such
         projected Date of Termination) that could be paid without the
         Consultant being subject to the Excise Tax. Such amount shall be
         referred to as the "Payment Cap."

                  (iii) Imposition of Payment Cap. . If the Covered Payments
         exceed the Payment Cap, the parties agree that the Covered Payments
         shall automatically be reduced to the Payment Cap to eliminate any
         Excise Tax.

                  (iv) Application of Section 280G. For purposes of determining
         whether any of the Covered Payments will be subject to the Excise Tax
         and the amount of such Excise Tax,

                           (A) (x) whether Covered Payments are "parachute
                  payments" within the meaning of Section 280G of the Code, and
                  (y) whether there are "parachute payments" in excess of the
                  "base amount" (as defined under Section 280G(b)(3) of the
                  Code) shall be determined in good faith by the Employer's

                                       5
<PAGE>   6

                  independent certified public accountants appointed prior to
                  the Effective Date (the "Accountants") or tax counsel selected
                  by such Accountants, and

                           (B) the value of any non-cash benefits or any
                  deferred payment or benefit shall be determined by the
                  Accountants in accordance with the principles of Section 280G
                  of the Code.

                  (v) Adjustments in Respect of the Payment Cap. If the
         Consultant receives reduced payments and benefits under this Section
         8(e) (or this Section 8(e) is determined not to be applicable to the
         Consultant because the Accountants conclude that Consultant is not
         subject to any Excise Tax) and it is established pursuant to a final
         determination of a court or an Internal Revenue Service proceeding (a
         "Final Determination") that, notwithstanding the good faith of the
         Consultant and the Employer in applying the terms of this Agreement,
         the aggregate "parachute payments" within the meaning of Section 280G
         of the Code paid to the Consultant or for his benefit are in an amount
         that would result in the Consultant's being subject to an Excise Tax,
         then any amounts actually paid to or on behalf of the Consultant which
         are treated as excess parachute payments shall be deemed for all
         purposes to be a loan to the Consultant made on the date of receipt of
         such excess payments, which the Consultant shall have an obligation to
         repay to the Employer on demand, together with interest on such amount
         at the applicable Federal rate (as defined in Section 1274(d) of the
         Code) from the date of the payment hereunder to the date of repayment
         by the Consultant. If the Consultant receives reduced payments and
         benefits by reason of this Section 8(e) and it is established pursuant
         to a Final Determination that the Consultant could have received a
         greater amount without exceeding the Payment Cap, then the Employer
         shall promptly thereafter pay the Consultant the aggregate additional
         amount which could have been paid without exceeding the Payment Cap,
         together with interest on such amount at the applicable Federal rate
         (as defined in Section 1274(d) of the Code) from the original payment
         due date to the date of actual payment by the Employer.

                  (vi) Expenses. In the event of any dispute with the Internal
         Revenue Service concerning the imposition of any Excise Tax or any
         other matters subject to this Section 8(e), Employer shall reimburse
         Consultant for his reasonable attorney's and accountant's fees incurred
         in connection with the negotiation, litigation or settlement of such
         dispute.

         9. Assignment. Consultant's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise, nor shall Consultant's
rights hereunder be subject to any encumbrance or claim of Consultant's
creditors. Nothing in this Agreement shall prevent the consolidation of Employer
with, or its merger into, any other corporation, or the sale by Employer of all
or substantially all of its properties or assets, or the assignment by Employer
of this Agreement and the performance of its obligations hereunder to any
affiliated company; provided, however, that any such transaction, in whatever
form, whether accomplished directly, indirectly, and as one or a series of
transactions, shall not affect in any way the rights of Consultant under this
Agreement. This Agreement shall inure to the benefit of, and be enforceable by,
Consultant and any successor to or assignee of Employer.

                                        6
<PAGE>   7

         10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto in respect of the employment of Consultant by
Employer and the provisions herein shall be regarded as divisible and so far as
they are covenants not to compete shall be operative to the extent both as to
time and area covered that they may be made so applicable, and if any of said
provisions or any part thereof are declared invalid or unenforceable, the
validity and enforceability of the remainder of such provisions or parts thereof
and the applicability thereof shall not be affected thereby.

         11. Governing Law and Enforcement. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Colorado. This Agreement may be enforced in any court of
competent jurisdiction in Colorado and the prevailing party, if any, shall be
entitled to recover its reasonable attorneys' fees and expenses in addition to
any other damages.

         12. Non-Waiver. The failure of either party at any time to require
performance by the other party of any provision of this Agreement required to be
performed by such other party, will in no way affect the right of the such party
to require such performance at any time thereafter. The waiver by either party
of a breach by the other party of any provision of this Agreement shall in no
way be construed as a waiver of any succeeding breach of such provision or a
waiver of the provision itself.

         13. Remedy for Breach. The parties hereto agree that, in the event of
breach or threatened breach of any of the noncompetition covenants of this
Agreement or of any of the covenants respecting Confidential Information, or of
any of the provisions concerning restrictions on the rights and interest in the
Employer, the damage or imminent damage to the value and the goodwill of
Employer's business shall be inestimable, and that therefore any remedy at law
or in damages shall be inadequate. Accordingly, the parties hereto agree that
Employer shall be entitled to injunctive relief against Consultant in the event
of any breach or threatened breach of any of such provisions by Consultant, in
addition to any other relief (including damages) available to Employer under
this Agreement or under law.

         14. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

If to the Consultant:           at the home address of the Consultant noted on
                                the records of the Employer

If to the Employer:             AMERICAN COIN MERCHANDISING, INC.
                                5660 Central Avenue
                                Boulder, CO  80301
                                Attn: Randall J. Fagundo

                                       7
<PAGE>   8

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

EMPLOYER:                       AMERICAN COIN MERCHANDISING, INC., d/b/a
                                SUGARLOAF  CREATIONS, INC.

                                By: /s/ Randall J. Fagundo
                                    ------------------------------------------
                                    Randall J. Fagundo
                                    Its: President and Chief Executive Officer

CONSULTANT:                         /s/ John A. Sullivan
                                    ------------------------------------------
                                    John A. Sullivan

                               Address: 5660 Central Avenue
                                        Boulder, CO 80301

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