Document:

EXHIBIT 10.(b)
<TABLE>
<S>                                          <C>                          <C>    <C>         <C>
Public Works and Government Services             Travaus publics et Services
Canada                                           gouvernementaux Canada

                                             ---------------------------------------------------------------
Purchasing Office - Bureau des achats:       Title - Sujet
Electrical & Electronics Products Division   CNR ANTENNA
11 Laurier St./11, rue Laurier               ----------------------------------------------- ---------------
6B1, Place du Portage, Phase III             Contract No. - N du contrat                     Date
Gatineau, Quebec K1A 0S5                     W8486-030974/002/HN                             July 15,2004
                                             ---------------------------------------------------------------
                                             Client Reference No. - N de reference du client
                                             W848630974
                                             ---------------------------------------------------------------
                                             Requisition No. - N de la demande
                                             W8486-030974
CONTRACT - CONTRAT                           ---------------------------- ----------------------------------
                                             File No. N de dossier        CCC No./N ccc - FMS no./N VME
Your proposal is accepted to sell Her        Hn357.W8486-030974
Majesty the Queen in right of Canada, in     ---------------------------------------------------------------
accordance with the terms and conditions     Financial Code (s)                              GST/HST
set out herein, referred to herein or        Code)s) financier (s)                           TPS/TVH
attached hereto, the goods, services,        2184BQ-C113-8486ZM-0000009224                    -----
and construction listed herein and on        GSTE01-B304-81710                                  X
any attached sheets at the price or                                                           -----
prices set out therefor.                     ---------------------------------------------------------------
                                             F.O.B. - F.A.B.
Nous acceptons votre proposition de vendre   Plant - Usine
a Sa Majeste la Reine u chef du Canada,      ---------------------------- ----------------------------------
aux conditions enoncees ou incluses par      GST/HST - TPS/TVH            Duty - Drolts
reference dans les presentes, et aux         See Herein - Voir ci-        See Herein -Voir ci-inclus
annexes ci-jointes, les blens, services      inclus
et construction enumeres dans les            ---------------------------- ----------------------------------
presentes, et sur toute feuille ci-annexee,  Destination - of Goods, Services, and Construction:
au(x) prix indique (s).                      Destination -des blens, services et contruction:
                                             DEPARTMENT OF NATIONAL DEFENCE
Comments - Commentaires                      CFSD MONTREAL
$1,310,650.00 US converted at $1.38 CDN =    6363 RUE NOTRE DAME ST E.
$1,808,697.00 CDN                            MONTREAL
                                             QUEBEC
                                             H4N3R9
                                             Canada
                                             ---------------------------------------------------------------
</TABLE>

                                        1
<PAGE>
<TABLE>
<S>                                          <C>                          <C>    <C>         <C>
                                             Invoices - Original and two copies to be sent to:
                                             Factures - Envoyer I'original et deux copies a:
                                             DEPARTMENT OF NATIONAL DEFENCE
Vendor/Firm Name and Address                 CFSD MONTREAL
Raison sociale et adresse du fournisseur/de  P.O. BOX 4000 STN K
l'entrepreneur                               MONTREAL
891380073PG0001                              QUEBEC
Antenna Products Corp.                       HIN349
101 S.E. 25th Avenue                         CANADA
Mineral Wells                                ----------------------------------------------- ---------------
Texas                                        Address Enquiries to: - Adresser toutes         Buyer Id - Id
76067                                        questions a:                                    de l'acheteur
United States                                Demers, Carole                                  hn357
                                             ----------------------------------- ----------- ---------------
                                             Telephone No. - N de telephone      FAX No. N de FAX
                                             (819) 956-4034 (  )                 (819 953-4944
                                             ----------------------------------- ---------------------------
                                             Total Estimated Cost - Cout total   Currency Type - Devise
CANADA                                       estimatif $1,310,650.00             USD
                                             ----------------------------------- ---------------------------
                                             For the Minister - Pour le Ministre
                                             /s/ D Charlibois
                                             ---------------------------------------------------------------
</TABLE>

                                       2
<PAGE>
<TABLE>
<S>     <C>                          <C>   <C>   <C> <C>     <C>       <C>             <C>
Public Works and Government Services Travaux publics et Services   Document No. W8486-03097/002/HN
Canada                               gouvernementaux Canada
------- ---------------------------- ----- ----- --- ------- --------- --------------- -----------
                                     Dest. Inv.                Unit
                                     Code  Code  Qtr U. of I   Price   Total Item Cost  Delivery
Item                                 Dest. Fact. Qte U. de D   Prix     Cout unitaire   Livraison
Article          Description                                 unitaire   tout reporte
------- ---------------------------- ----- ----- --- ------- --------- --------------- -----------
   2    NSN - NNO:  5985-21-914-4507 WB941 W1941 500   Each  $  371.00 $185,500.00     2004-12-31
        ANTENNA SUBASSEMBLY.  UPPER
        ELEMENT ASSEMBLY
        NSCM/CAGE - COF/CAGE:  06032
        Part No. - N de la partie:
                    9480194-1
------- ---------------------------- ----- ----- --- ------- --------- --------------- -----------
   3    NSN - NNO:  5985-21-914-4513 WB941 W1941 500   Each  $1,098.00 $549,000.00     2004-12-31
        ANTENNA SUBASSEMBLY.  LOWER
        ELEMENT ASSEMBLY
        NSM/CAGE - COF/CAGE:  06032
        Part No. - N de la partie:

                    9480300-1
------- ---------------------------- ----- ----- --- ------- --------- --------------- -----------
   4    NSN - NNO:  5985-21-914-4514 WB941 W1941 100   Each  $3,137.00 $313,700.00     2004-12-31
        ANTENNA SUBASSEMBLY. HOUSING
        ASSEMBLY
        NSCM/CAGE - COF/CAGE:  06032
        Part No. - N de la partie:
                    9480193-1
------- ---------------------------- ----- ----- --- ------- --------- --------------- -----------
</TABLE>

                     Line Item Detail - Details de I'article

                                       3
<PAGE>
<TABLE>
<S>     <C>                          <C>   <C>   <C> <C>     <C>       <C>             <C>
Public Works and Government Services Travaux publics et Services   Document No. W8486-03097/002/HN
Canada                               gouvernementaux Canada
------- ---------------------------- ----- ----- --- ------- --------- --------------- -----------
                                     Dest. Inv.                Unit
                                     Code  Code  Qtr U. of I   Price   Total Item Cost  Delivery
Item                                 Dest. Fact. Qte U. de D   Prix     Cout unitaire   Livraison
Article          Description                                 unitaire   tout reporte
------- ---------------------------- ----- ----- --- ------- --------- --------------- -----------
   5    NSN - NNO:  5985-21-920-2937 WB941 W1941  50   Each  $5,249.00  $  262,450.00   2004-12-31
        ANTENNA. 3479. OMM HIGH; C/W
        5985-21-914-4514 EA 1
        5985-21-914-4507 EA 1,
        5985-21-914-4513 EA 1
        NSCM/CAGE - COF/CAGE; 06032
        Part No. - N de la partie:
                    9480191-1
------------------------------------ --------------------------------- ---------------------------
                                     Subtotal - Sous-total:             $1,310,650.00
                                     GST/HST Total - TPS/TVH Total:             $0.00
                                     Other % Total - Total Autre %:             $0.00
                                     Total:                             $1,310,650.00
                                     --------------------------------- ---------------------------
</TABLE>

                     Line Item Detail - Details de I'article

                                       4
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------
                           INSTRUCTIONS TO CONTRACTORS

THE FOLLOWING TERMS AND CONDITIONS ARE INCORPORATED HEREIN

SACC Reference    Section                                 Date
XLEFT02           NSCM Traceability                       27/09/96

Standard Instructions and Conditions

Standard Acquisition Clauses and Conditions Manual

All instructions, general terms, conditions and clauses identified herein by
title, number and date are set out in the Standard Acquisition Clauses and
Conditions Manual issued by Public Works and Government Services Canada (PWGSC).

An electronic version of the Manual is available on the PWGSC Website:
http://sacc.pwgsc.gc.ca/sacc/index-e.jsp.
----------------------------------------

Terms and Conditions of the Contract

Pursuant to the Department of Public Works and Government Services Act, S.C.
1996, c. 16, the general terms, conditions and clauses identified herein by
title, number and date, and the Conditions set out in Part B of the standard
instructions and conditions, 9403 (2003/12/12) are hereby incorporated by
reference into and form part of this Contract as though expressly set out
herein, subject to any other express terms and conditions herein contained.
(Derived from - Provenant de: A0000C, (12/12/03)

Conditions

General conditions

9601 (2003/12/12), General Conditions - Long Form
(Derived from - Provenant de:K0000D, 14/05/04)

Priority of Documents

The documents specified below form part of and are incorporated into the
Contract. If there is a discrepancy between the wording of any documents which
appear on the list, the wording of the document which first appears shall
prevail over the wording of any document which subsequently appears on the list.

1.       these articles of agreement;

                                       5
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------
2.       the general conditions 9601 Long form, (2003/12/12)

3.       standard instructions and conditions 9403 (2003/12/12)

4.       the offer, dated March 30, 2004
(derived from - Provenant de: B4025D, 12/12/03)

Applicable Laws

This contract shall be interpreted and governed, and the relations between the
Parties determined, by the laws in force in the Province of Ontario, CANADA.
(Derived from - Provenant de: A9070C, 14/05/04)

Defence Contract

The Contract is a defence contract within the meaning of the Defence Production
Act and shall be read accordingly.
(Derived from - Provenant de: A9006D, 21/06/99)

Authority, Contracting

The Contracting Authority is the contracting officer named on page one (1) of
this Contract and is responsible for the management of this Contract. Any
changes to the Contract must be authorized in writing by the Contracting
Authority. The Contractor is not to perform work in excess of or outside the
scope of this Contract based on verbal or written requests or instructions from
any government personnel other than the aforementioned officer.
(Derived from - Provenant de: A1024C,29/10/93)

Supplier Contracts

Name and telephone number of the person responsible for:

General Enquiries

         Name:             Tammy Garland/Ron Chandler
         Telephone No.:    940-325-3301
         Facsimile No.:    940-325-0716
         E-mail address:   garland@antennaproducts.com
                           ---------------------------

                                       6
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------
Delivery Followup

         Name:             Tina Cooper
         Telephone No.:    940-325-3301
         Facsimile No.:    940-325-0716
         E-mail address:   cooper@antennaproducts.com
                           --------------------------
(Derived from - Provenant de:  D0030D, 25/05/01)

Materiel

Materiel supplied shall be new and conform to the latest issue of the applicable
drawing, specification and/or part number that is in effect on the solicitation
closing date.
(Derived from - Provenant de B1000D, 15/12/95)

Taxes - Foreign Suppliers

Unless otherwise specified in the Contract, the price herein includes no amount
for any federal excise tax, state or local sales or use tax, or any other tax of
a similar nature, or any Canadian tax whatsoever. Such price, however, includes
all other taxes. If the Work is normally subject to federal excise tax, Canada
will, upon request, furnish the Contractor with a certificate of exemption from
such federal excise tax in the form prescribed by the federal regulations.
Canada undertakes to supply the Contractor with such evidence of export as may,
from time to time, be properly requested by the tax authorities. If, as a result
of Canada's failure to do so, the Contractor is compelled to pay such federal
excise tax, Canada shall reimburse the Contractor therfor, provided, however,
that the Contractor will thereafter take such steps as Canada may require in an
effort to recover such payment, and shall refund to Canada any amount so
recovered.
(Derived from - Provenant de: C2000D, 16/02/98)

Customs Duty - Defence

1. As the goods to be supplied under the Contract are defence supplies, customs
duties on importation to Canada may be remitted under the Tariff Item Number
9982.00.00 of the Schedule to the Customs Tariff.

2. Remission of customs duty payable may be granted under the Tariff Item Number
9982.00.00 when the total contract value of the defence supplies is C$250,000 or
more. This reflects the import value of the goods plus the duty that would be
applicable in the absence of the Customs Tariff.

                                       7
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------
3. The Department of National Defence will be responsible for prearranging
remission on importation or for paying customs duties on importation and
applying to Canada Border Services Agency for a refund. The importer is
responsible for applying to Public Works and Government Services Canada in good
time for the certification required by the Customs tariff.
(Derived from - Provenant de: C2610D, 14/05/04)

Canadian Customs Documentation

GENERAL

1. The Contractor shall provide two (2) copies of the Canada Customs Invoice
(CCI) or two (2) copies of the commercial invoice marked "For Customs Purposes
Only" for all shipments when the Department of National Defence is the importer.

2. For shipments from the United States and/or Mexico which are of American,
Mexican or Canadian origin, as defined by the North American Free Trade
Agreement (NAFTA), proof of origin must be provided. This proof shall be in the
form of a NAFTA Certificate of Origin for shipments valued greater than C$1,600
or a simple statement on the invoice for shipments valued at less than C$1,600.
In either case, the document shall include an original signature and shall
reference the contract number.

         NOTE: This certificate is not required for any valued shipment when the
               total contract value exceeds C$250,000.

3. Commercial customs brokers shall not be employed to customs clear merchandise
provided against any contract, unless authorized by the Director Logistics
Business Management/Transportation Movements 2 at National Defence Headquarters,
telephone: (613) 995-0834, facsimile: (613) 992-9921.

COMPLETION OF DOCUMENTS

4. The completed CCI or commercial invoice must include the following
information:

         (a) complete description of the material being shipped, including the
applicable export tariff number, Harmonized Code or, in the united States, the
Schedule B number;

         (b) value and terms of sale for each item (e.g. sale, loan, warranty,
Incoterms 2000), including value of repairs, warranty repairs and/or replacement
costs;

                                       8
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------

         (c) all contract numbers and financial codes are to be shown (Use Field
3 on the CCI form);

         (d) country of origin of goods; and

         (e) when a NAFTA Certificate of Origin has been prepared, the
description field of the CCI or invoice shall include a statement confirming
that it has been completed and is attached to that invoice.

DISTRIBUTION OF DOCUMENTS

5. The Contractor shall attach the following to shipping container No. 1 of all
shipments using a waterproof envelope marked "Canada Customs Documentations":

         (a) one (1) copy of the CCI or one (1) copy of the commercial invoice
as applicable, and;

         (b) one (1) copy of the NAFTA Certificate of Origin (if applicable).

6. The second copy of each of the above-mentioned forms shall be attached to the
shipping documents. (Derived from - Provenant de: C2608D, 12/12/03)

Canadian Customs Duty and Sales Tax

Canadian customs duty and sales tax, if applicable, are extra to the Contract
Price and payable by the consignee. (Derived from - Provenant de: C2605D,
30/10/96)

Basis of Payment - Firm Price

Subject to the provisions of this Contract and, in particular, to the Method of
Payment provisions, the Contractor shall be paid the firm unit/lot price(s)
specified in the Contract, in U.S. dollars, FOB plant, the Goods and Services
Tax (GST) and/or the Harmonized Sales Tax (HST) extra, as applicable. Freight
charges to destination and all applicable Custom duties and Excise taxes are
excluded and payable by consignee.
(Derived from - Provenant de:XHN21, 03/15/2001)

                                       9
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------
Preparation for Delivery

Preparation for delivery shall be in accordance with the latest issue of the
Canadian Forces packaging specification D-LM-008-036/SF-000.
(Derived from - Provenant de: D3016D, 12/12/03

Delivery Schedule

Prior to the delivery of materials the contractor will be required to contact
the "Traffic Officer/Receipts Section" (see below) to schedule delivery.
Deliveries may be refused at no cost to the Crown should this procedure not be
followed.

25CFSD Montreal:  (514) 252-2777 Ext. 2363
(Derived from - Provenant de: XDL10, 10/12/01)

Materiel Off Contract in USA

MATERIEL OFF CONTRACT IN USA FOR DELIVERY IN CANADA:
Before loading of any shipment weighing 20,000 pounds and over, or which is of
sufficient weight to constitute an economical carload/truckload, routing
instructions shall be obtained by the supplying activity from the Department of
Public Works and Government Services Canada, 501 Pennsylvania Avenue N.W.,
Washington, D.C. 20001 USA.

All less-than-carload/truckload shipments shall be routed by the supplying
activity by the most direct and economical means. The mode selected should be
consistent with the characteristics and value of the shipment. Unless otherwise
directed, parcel post shall not be used and the shipment shall not be insured.

If shipments are forwarded by means other than Air or Rail, they must be shipped
IN BOND TO CONSIGNEE IN CANADA; i.e. with a carrier bonded by Revenue Canada
Customs.

Advance notification of shipping particulars including time of departure, method
and route of shipment, and estimated time of arrival will be forwarded to the
consignee, for urgently required shipments.
(Derived from - Rovenant de: XCEL21,05/02/99)

                                       10
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------
Priority Rating

Canada is a participant in the U.S. Defence Priorities and Allocations System
and this defence contract is eligible for a Priority Rating. The Central
Allocations and Defence Priorities Allocations Officer, Public Works and
Government Services Canada, shall advise the Contractor as to the appropriate
priority rating within sixty (60) days of the date of this Contract.
(Derived from - Provenant de: C2800C,10/12/01)

Delivery - Mandatory

The Contractor shall make the delivery complete by December 31, 2004.
(Derived from Provenant de: D0006D, 15/09/97)

ISO 9001:2000 - Quality Management Systems - Requirements (QAC C)

The Contractor shall be responsible for implementing a quality system
appropriate to the scope of work to be performed. It is recommended that the
quality system be based on ISO 9001:2000 - Quality Management Systems -
Requirements.

The Contractor shall be responsible for performing or having performed all
inspections and tests necessary to substantiate that the materiel or services
provided conform to the drawings, specifications and contract requirements. The
Contractor shall keep accurate and complete inspection records which shall, upon
request, be made available to the authorized Department of National Defence
(DND) representative, who may make copies thereof and take extracts therefrom
during the performance of the Contract and for a period of one (1) year
thereafter.

The Contracting Authority and DND shall have access to the Work at any time
during working hours where any part of the Work is being carried out and may
make examinations and such tests of the Work as they may think fit under the
circumstances. Should the Work or any part thereof not be in accordance with the
requirements of the Contract, the authorized DND representative shall have the
right to reject the Work and require its correction or replacement at the
Contractor's expense. DND shall inform the Contractor of the motives for any
such rejections.

Notwithstanding the foregoing, all materiel is subject to verification and
acceptance by DND at destination prior to payment. The authorized DND

representative at destination may either be the consignee(s), the Technical
Authority, or the Quality Assurance Authority.
(Derived from - Provenant de:  D5543D, 12/12/03)

                                       11
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------
Inspection/Acceptance

The Work provided under the Contract shall be subject to inspection and
acceptance by the Consignee at destination. (Derived from - Provenant de:
D5308D, 21/06/99)

Invoicing Instructions

1. The Contractor shall submit invoices on its own form, and shall include the
following information: the date, name and address of the consignee (s), item
number, quantity, part number, reference number and description, contract file,
serial numbers, Client Reference Number, and Procurement Business Number.
Invoices will be distributed as follows:

         (a) The original and one copy to - Consignee

         (b) One (1) copy to :

             Department of Public Works and Government Services
             ICPSSS, LEFTD
             HN Division
             11 Laurier Street
             Gatineau, Quebec
             K1A OS5

             Attention CAROLE DEMERS

         (c) One (1) copy to:

             National Defence Headquarters
             MGen George R. Pearkes Building
             101 Colonel By Drive
             Ottawa, On K1A 0K2

             Attention:  DLCSPM 5-2-4A

2. Canada will only make payment upon receipt of a satisfactory invoice duly
supported by specified release documents and any other documents called for
under the Contract.

3. The Contractor shall not submit an invoice prior to shipment of the items to
which it relates.
(Derived from - Provenant de: H5001D, 13/12/02)

                                       12
<PAGE>
Contract No. -         Amd. No. - N de la modif.   Buyer ID - Id de l'acheteur
N du contrat                                       hn 357
W8486-030974/002/HN    File No. - N du dossier     CCC No./N CCC - FMS No./N VME
Client Ref. No. -      hn357W8486-030974
N de ref. du client
W848630974
--------------------------------------------------------------------------------

Method of Payment

1. Payment by Canada to the Contractor for the Work shall be made within:

         (a) thirty (30) days following the date on which all of the Work has
             been delivered at the location(s) specified in the Contract, i.e.
             the delivery point not the ultimate destination, and all other Work
             required to be performed by the Contractor under the terms of the
             Contract has been completed; or

         (b) thirty (30) days following the date on which an invoice and
             substantiating documentation are received according to the terms of
             the Contract;

         whichever date is  the later.

2. If Canada has any objection to the form of the invoice or the substantiating
documentation, within fifteen (15) days of its receipt, Canada shall notify the
Contractor of the nature of the objection. "Form of the invoice" means an
invoice which contains or is accompanied by such substantiating documentation as
Canada requires. Failure by Canada to act within fifteen (15) days will only
result in the date specified in paragraph 1 of the clause to apply for the sole
purpose of calculating interest on overdue accounts.
(Derived from - Provenant de: H1000D, 12/12/03)

International Sanctions

1. Persons in Canada, and Canadians outside of Canada, are bound by economic
   sanctions imposed by Canada. As a result, the Government of Canada cannot
   accept delivery of goods or services that originate, either directly or
   indirectly,from the countries or persons subject to economic sanctions.

   Details on existing sanctions can be found at:
   http://www.dfait-maeci.cg.ca/trade/sanctions-e.asp
   --------------------------------------------------
2. It is a condition of this Contract that the Contractor not supply to the
   Government of Canada any goods or services which are subject to economic
   sanctions.

3. By law, the Contractor must comply with changes to the regulations imposed
   during the life of the Contract. During the performance of the Contract,
   should the imposition of sanctions against a country or person or the
   addition of a good or service to the list of sanctioned goods or services
   cause an impossibility of performance for the Contractor, the situation will
   be treated by the Parties as a force majeure. The Contractor shall forthwith
   inform Canada of the situation; the procedures applicable to force majeure
   shall then apply.
(Derived from - Provenant de: K2105D, 24/05/02)

                                       13<PAGE>

                                                                    EXHIBIT 10.1

                                 AMENDMENT NO. 1
                             TO AMENDED AND RESTATED
                     NOTE AND WARRANT PURCHASE AGREEMENT AND
               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

         THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED NOTE AND WARRANT PURCHASE
AGREEMENT AND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"AMENDMENT NO. 1") dated as of September 30, 2004 (the ("AMENDMENT DATE"), is by
and between TELENETICS CORPORATION, a California corporation (the "COMPANY"),
and the persons and entities listed on EXHIBIT A hereto who sign the signature
pages of this Amendment No. 1 (each a "PURCHASER" and collectively, the
"PURCHASERS"). All capitalized terms used but not otherwise defined in this
Amendment No. 1 shall have the meanings ascribed to them in the Amended and
Restated Note and Warrant Purchase Agreement dated as of March 1, 2003 (the
"PURCHASE AGREEMENT").

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

         A. As of January 23, 2002, March 1, 2002, and April 1, 2002, the
Company entered into Note and Warrant Purchase Agreements, Security Agreements,
Registration Rights Agreements, Senior Secured Convertible Promissory Notes and
Secured Convertible Promissory Notes (collectively, the "ORIGINAL NOTES"), and
Warrants to Purchase Shares of Common Stock (the "ORIGINAL WARRANTS") of the
Company (collectively, the "ORIGINAL DOCUMENTS") with the Purchasers.

         B. As of March 1, 2003, the Company entered into the Purchase
Agreement, Amended and Restated Warrants to Purchase Shares of Common Stock,
Amended and Restated Security Agreements, Amended and Restated Registration
Rights Agreement, and Amended and Restated Secured Promissory Notes
(collectively, the "AMENDED DOCUMENTS") with the Purchasers that replaced the
Original Documents. The Amended and Restated Secured Promissory Notes, when
referred to separately from the Amended Documents, shall be referred to herein
as the "FIRST AMENDED NOTES."

         C. The Company and the Purchasers acknowledge and agree that, due to a
variety of factors, the Company is experiencing cash flow problems that
negatively impact its ability to meet its obligations to the Purchasers. On or
about July 21, 2004, the Company, Dolphin Offshore Partners, L.P. and SDS
Merchant Fund, L.P. (on behalf of itself and the other Purchasers (as defined in
the Purchase Agreement)) executed into a Consent of Holders of Secured
Promissory Notes Due March 1, 2006 pursuant to which the Purchasers each waived
any default or other penalty provisions in the Amended Documents, which waiver
covers the period from May 15, 2004 through September 30, 2004.

         D. The Company and the Purchasers agree that a restructuring of the
debt incurred by the Company pursuant to the Original Documents and the Amended
Documents will aid in the ability of the Company to meet its obligations to the
Purchasers. Each Purchaser agrees to surrender and deliver its First Amended
Note and in exchange therefor shall receive from the Company (i) a Second
Amended and Restated Secured Promissory Note (collectively, the "SECOND AMENDED
NOTES"), (ii) Principal Stock (as defined below) or warrants (the "ADDITIONAL
WARRANTS") to purchase Common Stock (the "ADDITIONAL WARRANT SHARES"), as the
case may be, as described in more detail below, and (iii) Inducement Stock (as
defined below).

                                      -1-

<PAGE>

         E. This Amendment No. 1 is intended to amend the Purchase Agreement
executed by the parties as part of the Amended Documents.

         F. This Amendment No. 1 has been mutually negotiated between informed,
sophisticated, consensual parties over an extended period of time.

         NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and the Purchasers agree as follows:

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

         1. AMENDED AND RESTATED NOTES. Concurrently with a Purchaser's
execution of this Amendment No. 1, the Purchaser shall surrender and deliver to
the Company the First Amended Note that was issued to the Purchaser. Upon
surrender and delivery by the Purchasers of the First Amended Notes (and the
cancellation thereof), and the execution of this Amendment No. 1 by the parties,
the Company shall deliver to each Purchaser a Second Amended Note in a form
substantially similar to that attached hereto as EXHIBIT B. From the Amendment
Date, all references in the Purchase Agreement to a "NOTE" or "NOTES" shall
refer to (a) a Second Amended Note or the Second Amended Notes, as the case may
be, that has or have been issued to replace any First Amended Notes, and (b) any
remaining First Amended Notes. The Company and each Purchaser acknowledges and
agrees that the outstanding balance of principal and accrued but unpaid interest
on the Purchaser's First Amended Note is the amount set forth next to the
Purchaser's name on EXHIBIT A (the "ORIGINAL BALANCES"). The Company has agreed
to pay each Purchaser at least twenty percent (20%) of their respective Original
Balance by issuing a number of shares of Common Stock ("PRINCIPAL STOCK") or
Additional Warrants to purchase an equivalent number of Additional Warrant
Shares, as set forth next to each Purchaser's name on EXHIBIT A (no fractional
shares will be issued). The principal balance of each of the Second Amended
Notes shall equal at most eighty percent (80%) of the Purchasers' respective
Original Balances, as set forth next to the Purchasers' names on EXHIBIT A.

         The Company and the Purchasers are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded by Section 4(2) of the Securities Act of 1933 and the
rules and regulations promulgated thereunder (the "SECURITIES ACT"), including
Regulation D ("REGULATION D"), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments to be made hereunder.

         2. ISSUANCE OF COMMON STOCK. As part of the consideration for entering
into this Amendment No. 1, as of the Amendment Date, the Company shall issue
additional shares of Common Stock (the "INDUCEMENT STOCK") to each of the
Purchasers in the amount set forth next to each Purchaser's name on EXHIBIT A.

                                      -2-

<PAGE>

         3. WAIVER OF PRIOR BREACHES, DEFAULTS, ETC. As part of the
consideration for entering into this Amendment No. 1 and receiving the
Inducement Stock, each of the Purchasers, as of May 15, 2004 and through and
including the Amendment Date, hereby waives any and all rights, remedies, causes
of action and any other claims that it may have against the Company relating to
any breach, default, penalty, failure to pay or any other transgression or
noncompliance on the part of the Company under the terms of the Original
Documents or the Amended Documents through the Amendment Date.

         4. RELATION TO AMENDED DOCUMENTS. It is the intention of the Company
and the Purchasers that all references to a "Note" or the "Notes" in the Amended
Documents shall, from the Amendment Date, refer to the Second Amended Notes that
have been issued pursuant hereto and the remaining First Amended Notes, and that
all terms and conditions thereof and relevant thereto shall apply to those
Second Amended Notes and remaining First Amended Notes.

         5. WARRANTS. As of the Amendment Date, the Company shall issue to those
Purchasers who have elected to receive Additional Warrants rather than Principal
Stock the Additional Warrants pursuant to a Warrant to Purchase Shares of Common
Stock Agreement in form substantially similar to that attached hereto as EXHIBIT
C.

         6. REGISTRATION RIGHTS. Each Purchaser that receives shares of
Principal Stock, Inducement Stock or Additional Warrants pursuant to this
Amendment No. 1, shall have those certain piggyback registration rights and
related obligations set forth in EXHIBIT D to this Amendment No. 1. Pursuant to
Section 7(e) of the Amended and Restated Registration Rights Agreement, each
Purchaser hereby waives and consents to a departure from the provisions of
Section 7 of the Amended and Restated Registration Rights Agreement to the
extent that the "FILING DATE" as defined in the Amended and Restated
Registration Rights Agreement is hereby waived and extended such that the Filing
Date shall hereafter be deemed to be thirty (30) Business Days (as defined in
the Amended and Restated Registration Rights Agreement) after the Holders (as
defined in the Amended and Restated Registration Rights Agreement) of a majority
of the Registrable Securities have requested, in a signed writing delivered to
the Company, that the Company register at least a majority of the Registrable
Securities; provided, however, that the Filing Date may be no earlier than May
31, 2005. If each of the Purchasers, as the term Purchaser is defined in the
Amended and Restated Registration Rights Agreement, is a party to this Amendment
No. 1 or otherwise consents, then Section 7(e) of the Amended and Restated
Registration Rights Agreement shall hereby be deemed to be amended and restated
to read in its entirety as follows:

         (e) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
         the provisions of this sentence, may not be amended, modified or
         supplemented, and waivers or consents to departures from the provisions
         hereof may not be given, unless the same shall be in writing and signed
         by the Company and Holders of at least a majority of the Registrable
         Securities to which such waiver or consent relates.

         7. LEGEND. Each certificate representing Common Stock, the Additional
Warrants and the Additional Warrant Shares shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required by applicable state securities or "BLUE SKY" laws):

                                      -3-

<PAGE>

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") 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.

         The Company agrees to reissue certificates representing any of
Inducement Stock, Principal Stock or Additional Warrant Shares, without the
legend set forth above if at such time, prior to making any transfer of any such
securities, such holder thereof shall give written notice to the Company
describing the manner and terms of such transfer and removal as the Company may
reasonably request. Such proposed transfer or legend removal will not be
effected until: (a) the Company has notified such holder that either (i) in the
opinion of Company counsel, the registration of Inducement Stock, Principal
Stock or Additional Warrant Shares under the Securities Act is not required in
connection with such proposed transfer; or (ii) a registration statement under
the Securities Act covering such proposed disposition has been filed by the
Company with the Commission and has become effective under the Securities Act;
and (b) the Company has notified such holder that either: (i) in the opinion of
Company counsel, the registration or qualification under the securities or "BLUE
SKY" laws of any state is not required in connection with such proposed
disposition, or (ii) compliance with applicable state securities or "BLUE SKY"
laws has been effected. The Company will use its best efforts to respond to any
such notice from a holder within five (5) days. In the case of any proposed
transfer under this SECTION 7, the Company will use reasonable efforts to comply
with any such applicable state securities or "BLUE SKY" laws, but shall in no
event be required, in connection therewith, to qualify to do business in any
state where it is not then qualified or to take any action that would subject it
to tax or to the general service of process in any state where it is not then
subject. The restrictions on transfer contained in SECTION 7 shall be in
addition to, and not by way of limitation of, any other restrictions on transfer
contained in any other section of the Purchase Agreement.

         8. ACCREDITED INVESTOR. Each Purchaser continues to be an accredited
investor (as defined in Rule 501 of Regulation D), and such Purchaser has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Second Amended Notes, the Principal
Stock, the Additional Warrants, the Additional Warrant Shares and the Inducement
Stock, as the case may be. Each Purchaser acknowledges that an investment in
such securities is speculative and involves a high degree of risk.

         9. INTEGRATION. SECTION 8.3 of the Purchase Agreement and the
integration clause contained therein shall, from the Amendment Date, be deemed
to include this Amendment No. 1.

         10. ADDRESS CHANGE. The Company's address in SECTION 8.4 of the
Purchase Agreement is hereby changed to the following:

                                      -4-

<PAGE>

                  Telenetics Corporation
                  39 Parker
                  Irvine, California 92618
                  Attention:  President
                  Attention:  Chief Financial Officer
                  Telecopier:  (949) 455-9324
                  Telephone:  (949) 455-4000

         11. OTHER PROVISIONS UNCHANGED. All terms, conditions and provisions of
the Purchase Agreement not amended or otherwise affected by this Amendment No. 1
shall remain in full force and effect. If any conflict arises or exists between
the provisions of this Amendment No. 1 and the Purchase Agreement, this
Amendment No. 1 shall control.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -5-

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be duly executed by their respective authorized officers as of the date first
above written.

COMPANY:                               TELENETICS CORPORATION

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

PURCHASERS:                            SDS CAPITAL GROUP SPC, LTD.

                                       By: /S/ Scott Derby
                                          --------------------------------------
                                            Name:  Scott Derby
                                            Title: General Counsel

                                       /S/ Jeremy Bond
                                       -----------------------------------------
                                       JEREMY BOND

                                       -----------------------------------------
                                       JOHN BERTSCH

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

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

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

                                       /S/ Denis Fortin
                                       -----------------------------------------
                                       DENIS FORTIN

                       [SIGNATURES CONTINUED ON NEXT PAGE]

                                      -6-

<PAGE>

                                       SHADOW CAPITAL LLC

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

                                       DRAGON COEUR LLC II-D

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

                                       -----------------------------------------
                                       DAVID RANDOM

                                       -----------------------------------------
                                       JOSEPH REGAN

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

                                       By:
                                          --------------------------------------
                                            Sanford R. Penn, Jr., Trustee

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

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

                       [SIGNATURES CONTINUED ON NEXT PAGE]

                                      -7-

<PAGE>

                                     TAG KENT PARTNERS

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

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

                                     -------------------------------------------
                                     MICHAEL J. FOURTICQ

                                     /S/ Keith Becker
                                     -------------------------------------------
                                     KEITH BECKER

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

                                     -------------------------------------------
                                     JOHN R. WORTHINGTON TRUST

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

                                     DOLPHIN DIRECT EQUITY PARTNERS, L.P.

                                     By:  Dolphin Advisors, LLC, General Partner

                                          By: /S/ Peter E. Salas
                                              ----------------------------------
                                              Name:  Peter E. Salas
                                              Title: Managing Member

                                      -8-

<PAGE>
<TABLE>
                                                         EXHIBIT A
                                                         ---------

                                                    LIST OF PURCHASERS

------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
                                                                                       NUMBER OF
                                                                                      ADDITIONAL
                                                                                    WARRANT SHARES
                                                                                    UNDERLYING THE
                                                                                      ADDITIONAL
                                       ORIGINAL                       NUMBER OF        WARRANTS         NUMBER OF
                                        BALANCE                       SHARES OF      ISSUED AS OF       SHARES OF
                                      (PRINCIPAL     DOLLAR AMOUNT    PRINCIPAL      THE AMENDMENT     INDUCEMENT
                                          AND          OF SECOND     STOCK ISSUED       DATE FOR       STOCK ISSUED
             NAMES AND                INTEREST AS       AMENDED       AS OF THE        PRINCIPAL          AS OF
    ADDRESSES OF PURCHASERS (1)      OF 9-30-04)($)     NOTE ($)    AMENDMENT DATE     REDUCTION     AMENDMENT DATE
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
<S>                                    <C>              <C>                  <C>      <C>                <C>
SDS Capital Group SPC, Ltd.            1,202,902.43     962,321.95          -0-       3,286,619          721,741
53 Forest Avenue, 2nd Floor
Old Greenwich, CT 06870
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Jeremy Bond                               36,359.67      29,087.74      99,343               -0-          21,816
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
John R. Bertsch                           36,359.67      29,087.74      99,343               -0-          21,816
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Gary Arnold and Patricia Arnold,          36,359.67      29,087.74      99,343               -0-          21,816
Joint Tenants with Right of
Survivorship
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Denis Fortin                              36,359.67      29,087.74      99,343               -0-          21,816
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Shadow Capital LLC                        36,359.67      29,087.74      99,343               -0-          21,816
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Dragon Coeur LLC II-D                     72,719.31      58,175.45     198,687               -0-          43,632
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
David Random                              18,179.83      14,543.87      49,672               -0-          10,908
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Joseph F. Regan                           18,179.83      14,543.87      49,672               -0-          10,908
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
The Sanford R. Penn Trust                 18,179.83      14,543.87      49,672               -0-          10,908
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Michael N. Taglich                        18,179.83      14,543.87      49,672               -0-          10,908
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Robert F. Taglich                         18,179.83      14,543.87      49,672               -0-          10,908
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Tag Kent Partners                         81,798.68      65,438.95     223,494               -0-          49,079
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Charles S. Brand                          16,760.57      13,408.46      45,794               -0-          10,056
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Michael J. Fourticq                       40,597.84      32,478.28     110,923               -0-          24,359
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Keith Becker                              22,513.09      18,010.48      61,511               -0-          13,508
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Lloyd B. Embry                            22,513.09      18,010.47      61,511               -0-          13,508
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
John R. Worthington Trust                 22,513.09      18,010.47      61,511               -0-          13,508
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
Dolphin Direct Equity Partners, L.P.   1,903,334.22   1,522,667.38   5,200,367               -0-       1,142,001
129 East 17th Street
New York, N.Y. 10003
------------------------------------ -------------- -------------- ---------------- ---------------- ----------------
</TABLE>

(1) Unless otherwise stated, the address of each Purchaser is c/o Taglich
Brothers, Inc., 1370 Avenue of the Americas, 31st Floor, New York, NY 10019.

                                      A-1

<PAGE>

                                    EXHIBIT B
                       FORM OF SECOND AMENDED AND RESTATED
                             SECURED PROMISSORY NOTE

[See Exhibit 10.2 to this Form 8-K]

                                      B-1

<PAGE>

                                    EXHIBIT C
               FORM OF WARRANT TO PURCHASE SHARES OF COMMON STOCK

[See Exhibit 10.3 to this Form 8-K]

                                      C-1

<PAGE>

                                    EXHIBIT D
                               REGISTRATION RIGHTS

1. PIGGY-BACK REGISTRATION. If at any time when there is not an effective
federal registration statement covering (i) Principal Stock, (ii) Inducement
Stock or (iii) Additional Warrant Shares (collectively, "SECURITIES"), the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each holder of Securities that are not then registered ("REGISTRABLE
SECURITIES") written notice of such determination and, if within ten (10) days
after receipt of such notice, any such Holder shall so request in writing,
(which request shall specify the Registrable Securities intended to be disposed
of by the Holders), the Company will cause the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holder, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered, provided that if at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such Holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration and
(ii) in the case of a determination to delay registering, shall be permitted to
delay registering any Registrable Securities being registered for the same
period as the delay in registering such other securities. The Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities that are
eligible for sale pursuant to Rule 144(k) of the Securities Act; and provided
further, that the Holder has promptly furnished in writing to the Company or the
Company's counsel such information as the Company or the Company's counsel shall
reasonably require in connection with the registration statement.

         In the case of an underwritten public offering, if the managing
underwriter(s) or underwriter(s) should reasonably object to the inclusion of
the Registrable Securities in such registration statement, then if the Company
after consultation with the managing underwriter should reasonably determine
that the inclusion of such Registrable Securities, would adversely affect the
offering contemplated in such registration statement, and based on such
determination recommends inclusion in such registration statement of fewer or
none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the

                                      D-1

<PAGE>

Company after consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided, however, that if securities are being offered
for the account of other persons or entities as well as the Company, such
reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar
reductions imposed on such other persons or entities (other than the Company).

2.       INDEMNIFICATION.

         (a) INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding
any termination of the Purchase Agreement, indemnify and hold harmless each
Holder, the officers, directors, agents, brokers (including brokers who offer
and sell Registrable Securities as principal as a result of a pledge or any
failure to perform under a margin call of the Company's common stock),
investment advisors and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and attorneys' fees) and
expenses (collectively, "LOSSES") (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review), as incurred,
arising solely out of or based solely upon any untrue or alleged untrue
statement of a material fact contained in the registration statement, any
prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising solely out of or based solely upon
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder or such other Indemnified Party
(as defined below) furnished in writing to the Company by such Holder expressly
for use therein, which information was reasonably relied on by the Company for
use therein or to the extent that such information relates to such Holder or
such Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the registration statement, such prospectus or such form of prospectus or in any
amendment or supplement thereto. The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by these registration
rights provisions.

         (b) INDEMNIFICATION BY PURCHASERS. The Holders shall, severally and not
jointly, indemnify and hold harmless the Company, the directors, officers,
agents and employees, each person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling persons, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising solely out of or based solely upon
any untrue statement or alleged untrue statement of a material fact contained in
the registration statement, any prospectus, or any form of prospectus or form of
prospectus or in any amendment or supplement thereto or in any preliminary

                                      D-2

<PAGE>

prospectus, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any prospectus or supplement thereto, in the light of
the circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission or alleged untrue
statement or omission is contained in any information so furnished in writing by
such Holder or other Indemnified Party to the Company specifically for inclusion
in the registration statement or such prospectus and that such information was
reasonably relied upon by the Company for use in the registration statement,
such prospectus or such form of prospectus or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the registration statement, such
prospectus or such form of prospectus.

         (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any action, claim, suit,
investigation or proceeding (including without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or threatened
("PROCEEDING") is brought or asserted against any person entitled to indemnity
hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party promptly shall notify
the person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
the Purchase Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

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

                                      D-3

<PAGE>

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

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

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

                  The indemnity and contribution agreements contained in these
registration rights provisions are in addition to any liability that the
Indemnifying Parties may have to the Indemnified Parties.

                                      D-4

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