Document:

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Exhibit 10.29

                          REGISTRATION RIGHTS AGREEMENT
                          -----------------------------

                  This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of April 1, 2002, by and among Telenetics Corporation, a
California corporation (the "COMPANY"), and the purchasers listed on the
signature pages hereto (the "PURCHASERS").

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

                  The Company and the Purchasers hereby agree as follows:

          1.      DEFINITIONS.
                  -----------

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

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

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

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

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

                  "CLOSING DATE" means the date of the closing of the purchase
and sale of the Notes and the Warrants pursuant to the Purchase Agreement.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the Company's Common Stock, no par value
per share.

                  "EFFECTIVENESS DATE" means with respect to the Registration
Statement the earlier of (x) the 120th day following the Closing Date and (y)
the date that is no later than five (5) days after the date on which the
Commission informs the Company that the Commission (i) will not review the

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Registration Statement or (ii) that the Company may request the acceleration of
the effectiveness of the Registration Statement and the Company makes such
request; PROVIDED, HOWEVER, that the Company shall not be required to have the
Registration Statement declared effective within such five (5) days if the
Company has not obtained Shareholder Approval (as defined in Section 3.17 of the
Purchase Agreement) by such date; PROVIDED, FURTHER, that within three (3)
business days after obtaining Shareholder Approval, the Company shall file a
request for acceleration of the Registration Statement.

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

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

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

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

                  "FILING DATE" means May 1, 2002.

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

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

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

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

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

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

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

                  "REGISTRABLE SECURITIES" means the shares of Common Stock
issuable upon conversion of the principal amount of the Notes and the shares of
Common Stock issuable upon exercise of the Warrants; PROVIDED, HOWEVER, that
Registrable Securities shall include (but not be limited to) a number of shares

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of Common Stock equal to no less than 100% of the aggregate number of shares of
Common Stock issuable at a conversion price equal to the Conversion Price Floor
(as defined in the Notes). Such registered shares of Common Stock shall be
allocated among the Holders pro rata based on the total number of Registrable
Securities issued or issuable as of each date that a Registration Statement, as
amended, relating to the resale of the Registrable Securities is declared
effective by the Commission. Notwithstanding anything herein contained to the
contrary, if the actual number of shares of Common Stock issuable upon
conversion of the Notes and upon exercise of the Warrants exceeds 100% of the
Conversion Price Floor, the term "Registrable Securities" shall be deemed to
include such additional shares of Common Stock.

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

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

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

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

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

                  "SPECIAL COUNSEL" means a special counsel to the Holders, for
which the Holders will be reimbursed by the Company pursuant to Section 4 hereof
and Section 8.1 of the Purchase Agreement.

         2.       SHELF REGISTRATION.
                  -------------------

                  On or prior to the Filing Date, the Company shall prepare and
file with the Commission a "shelf" Registration Statement covering all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form). The Company shall (i) not permit any securities, other than the
Registrable Securities and the securities listed on Schedule 2.1(c) of the
Purchase Agreement, to be included in the Registration Statement and (ii) use

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its best efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event prior to the Effectiveness Date, and to keep such Registration
Statement continuously effective under the Securities Act until such date as is
the earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which the Registrable
Securities may be sold without any restriction pursuant to Rule 144 as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent to such effect (the "EFFECTIVENESS
PERIOD"). If at any time and for any reason, an additional Registration
Statement is required to be filed because at such time the actual number of
shares of Common Stock into which the Notes are convertible and the Warrants are
exercisable exceeds one hundred twenty-five percent (125%) of the number of
shares of Registrable Securities remaining under the Registration Statement, the
Company shall have twenty (20) Business Days to file such additional
Registration Statement, and the Company shall use its best efforts to cause such
additional Registration Statement to be declared effective by the Commission as
soon as possible, but in no event later than forty (45) days after filing. If at
such time in the reasonable opinion of the Purchasers there is not or will not
be a sufficient number of Registrable Securities to be issued upon conversion of
the principal amount of the Notes then outstanding, or upon the exercise of the
Warrants then outstanding, the Purchasers shall be entitled to demand that the
Company prepare and file an additional Registration Statement.

         3.       REGISTRATION PROCEDURES.
                  ------------------------

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

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

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to

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Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

                  (c) Notify the Holders of Registrable Securities to be sold
and any Special Counsel as promptly as possible (and, in the case of (i)(A)
below, not less than three (3) days prior to such filing) and (if requested by
any such Person) confirm such notice in writing no later than one (1) Business
Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement and (C) with respect to the Registration Statement
or any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contained in any agreement contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

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

                  (e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to the Registration Statement such information as
the Company reasonably agrees should be included therein and (ii) make all

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required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.

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

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

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

                  (i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates shall, if
required under the terms of this Agreement, be free of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and
registered in such names as any Holder may request within the applicable time
periods prescribed for the issuance of shares upon conversion of Notes and
exercise of Warrants.

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

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

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

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

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

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

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

     4.           REGISTRATION EXPENSES.
                  ---------------------

                  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the extent
specified in Section 4, shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the OTC
Bulletin Board, Nasdaq SmallCap Market, Nasdaq National Market and each other
securities exchange or market on which Registrable Securities are required
hereunder to be listed, (B) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and the NASD Regulation, Inc.
and (C) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of Special Counsel for the Holders in
connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders to
the extent required by Section 8.1 of the Purchase Agreement, (v) Securities Act
liability insurance, if the Company so desires such insurance, and (vi) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.

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     5.           INDEMNIFICATION.
                  ---------------

                  (a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of 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 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 furnished in writing to
the Company by such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder or the Special Counsel expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto. The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this Agreement.

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

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Party to the Company specifically for inclusion in the Registration Statement or
such Prospectus and that such information was reasonably relied upon by the
Company for use in the Registration Statement, such Prospectus or such form of
prospectus or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder or the Special Counsel
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus.

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

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

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

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

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

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

         6.       RULE 144.
                  --------

                  As long as any Holder owns Conversion Shares, Warrants or
Warrant Shares, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders with true
and complete copies of all such filings. As long as any Holder owns Conversion
Shares, Warrants or Warrant Shares, if the Company is not required to file
reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare
and furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further

                                      -11-
<PAGE>

action as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell Conversion Shares and Warrant Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
providing any legal opinions relating to such sale pursuant to Rule 144. Upon
the request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.

         7.       MISCELLANEOUS.
                  -------------

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

                  (b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any of
its subsidiaries has, as of the date hereof entered into and currently in
effect, nor shall the Company or any of its subsidiaries, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed in SCHEDULE
2.1(c) of the Purchase Agreement, neither the Company nor any of its
subsidiaries has previously entered into any agreement currently in effect
granting any registration rights with respect to any of its securities to any
Person. Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

                  (c) NO PIGGYBACK ON REGISTRATIONS. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant hereto
or as disclosed in SCHEDULE 2.1(c) of the Purchase Agreement) may include
securities of the Company in the Registration Statement, and the Company shall
not after the date hereof enter into any agreement providing such right to any
of its securityholders, unless the right so granted is subject in all respects
to the prior rights in full of the Holders set forth herein, and is not
otherwise in conflict with the provisions of this Agreement.

                  (d) PIGGY-BACK REGISTRATIONS. If at any time when there is not
an effective Registration Statement covering (i) Conversion Shares or (ii)
Warrant Shares, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be

                                      -12-
<PAGE>

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

                  (e) FAILURE TO FILE REGISTRATION STATEMENT AND OTHER EVENTS.
The Company and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Time or if
certain other events described below occur. The Company and the Holders further
agree that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if (A) the Registration Statement is not filed on or

                                      -13-
<PAGE>

prior to the Filing Date, or is not declared effective by the Commission on or
prior to the Effectiveness Date (or in the event an additional Registration
Statement is filed because the actual number of shares of Common Stock into
which the Notes are convertible and the Warrants are exercisable exceeds the
number of shares of Common Stock initially registered is not filed and declared
effective with the time periods set forth in Section 2), or (B) the Company
fails to file with the Commission a request for acceleration in accordance with
Rule 461 promulgated under the Securities Act within five (5) Business Days of
the date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Registration Statement will not be "reviewed,"
or not subject to further review, or (C) the Registration Statement is filed
with and declared effective by the Commission but thereafter ceases to be
effective as to all Registrable Securities at any time prior to the expiration
of the Effectiveness Period, without being succeeded immediately by a subsequent
Registration Statement filed with and declared effective by the Commission, or
(D) trading in the Common Stock shall be suspended or if the Common Stock is
delisted from the OTCBB or other exchange for any reason for more than three
Business Days in the aggregate, or (E) the conversion rights of the Holders are
suspended for any reason, or (F) the Company breaches in a material respect any
covenant or other material term or condition to the Transaction Documents (other
than a representation or warranty contained therein) or any other agreement,
document, certificate or other instrument delivered in connection with the
transactions contemplated hereby and thereby, and such breach continues for a
period of thirty days after written notice thereof to the Company, or (G) the
Company has breached Section 3(n) (any such failure or breach, other than a
failure that results from a breach by a Holder of its obligations under the
Transaction Documents, being referred to as an "EVENT," and for purposes of
clauses (A) and (E) the date on which such Event occurs, or for purposes of
clause (B) the date on which such five day period is exceeded, or for purposes
of clause (C) after more than fifteen Business Days, or for purposes of clause
(D) the date on which such three Business Day period is exceeded, or for clause
(F) the date on which such thirty day period is exceeded, being referred to as
"EVENT DATE"), the Company shall pay, at the option of the Holder, an amount in
cash or shares of Common Stock, as liquidated damages to each Holder equal to 3%
for the first calendar month and 4% per calendar month thereafter or portion
thereof of the principal amount of the Notes held by such Holder plus the
principal amount of any Notes that have been converted to the extent any of the
Conversion Shares issued upon such conversion have not been sold, which
liquidated damages shall be calculated upon based upon the actual number of days
elapsed from the Event Date until the applicable Event is cured. Payments to be
made pursuant to this Section 7(e) shall be due and payable immediately upon
demand in immediately available funds. If the Holder elects to be paid in shares
of Common Stock, the number of such shares of Common Stock shall be based on the
liquidated damage amount divided by the Conversion Rate (as defined in the
Note).

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

                                      -14-
<PAGE>

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

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

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

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

                  (i) ASSIGNMENT OF REGISTRATION RIGHTS. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Affiliate of such Holder or any
other Holder or Affiliate of any other Holder of all or a portion of the Notes
or the Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or

                                      -15-
<PAGE>

assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement, (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement, and (vi) at least 100,000 shares of Registrable
Securities (appropriately adjusted for any stock dividend, split or combination
of the Common Stock) are being transferred to such transferee or assignee in
connection with such assignment of rights. In addition, each Holder shall have
the right to assign its rights hereunder to any other Person with the prior
written consent of the Company, which consent shall not be unreasonably
withheld. The rights to assignment shall apply to the Holders (and to
subsequent) successors and assigns.

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

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

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

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

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

                  (o) SHARES HELD BY THE COMPANY AND ITS AFFILIATES. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

                                      -16-
<PAGE>

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

COMPANY:                                    TELENETICS CORPORATION

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

PURCHASERS:                                 DOLPHIN OFFSHORE PARTNERS, L.P.

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

                                      -17-<PAGE>
Exhibit 10.30

                               SECURITY AGREEMENT

              SECURITY AGREEMENT, dated April 1, 2002 (this "Agreement"), by
TELENETICS CORPORATION, a California corporation having its principal place of
business at 25111 Arctic Ocean, Lake Forest, California 92630 (the "Grantor"),
for the benefit of the secured parties listed on the signature pages hereto (the
"Secured Parties")

                              W I T N E S S E T H:
                              - - - - - - - - - -

              WHEREAS, on the date hereof, the Grantor has executed secured
convertible promissory notes, in favor of each of the Secured Parties in an
aggregate principal amount of $2,115,000.00 (the "Notes"), issued pursuant to
the Note and Warrant Purchase Agreement, dated as of the date hereof among the
Grantor and the Secured Parties (the "Purchase Agreement"). In order to provide
security for the payment of all of the obligations of the Grantor to the Secured
Parties under the Notes, the Grantor has agreed to grant to the Secured Parties
a continuing lien and security interest in all of the Grantor's Inventory (as
defined below) and to execute this and such other security agreements and
instruments as are necessary to grant such lien and security interest and enable
the Secured Parties to perfect such security interest.

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

Section 1.    DEFINITIONS.

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

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

              "Collateral" shall have the meaning assigned thereto in Section 2
of this Agreement.

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

Section 2.    GRANT OF SECURITY INTEREST.

              The Grantor hereby pledges, assigns and grants to the Secured
Parties a continuing security interest in and lien on all Inventory of the
Grantor, wherever located and whether now or hereafter existing and whether now
owned or hereafter acquired and, to the extent not otherwise included all
payments under insurance (whether or not any of the Secured Parties is the loss
payee) or under any indemnity, warranty, guaranty or government award which is
payable by reason of any damage to, or any loss, taking or condemnation of, the
Inventory (collectively, the "Collateral").

                                      -1-
<PAGE>

Section 3.    OBLIGATIONS SECURED.

              The Collateral hereunder constitutes and will constitute
continuing security for the strict performance and observance by the Grantor of
the prompt payment, when due, of all present and future obligations and
indebtedness of the Grantor to the Secured Parties under the Notes (after giving
effect to any offset rights of the Grantor thereunder with respect thereto) and
of the Grantor under this Agreement (collectively, the "Obligations").

Section 4.    GRANTOR REMAINS LIABLE.

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

Section 5.    REPRESENTATIONS AND WARRANTIES.

              The Grantor represents and warrants to the Secured Parties that:

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

              (a) The Grantor has the requisite corporate power and authority to
enter into and perform this Agreement, which has been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Grantor or its board of directors or shareholders or any public authority is
required in connection therewith. The execution, delivery and performance by the
Grantor of this Agreement will not violate any provision of law applicable to
the Grantor and will not conflict with or result in the breach of any order,
writ, injunction or decree of any court or government instrumentality, or its
charter or by-laws or create a default under any agreement, note or indenture to
which it is a party or by which it is bound or to which any of its property is
subject, or result in the imposition of any lien, charge, security interest or
encumbrance of any nature whatsoever upon any of its properties or assets under

                                      -2-
<PAGE>

any agreement or any commitment to which the Grantor is bound or by which any of
its properties or assets are bound, except for the liens created under this
Agreement and except for such conflicts, defaults, violations, breaches and the
like that would not, individually or in the aggregate, have a Material Adverse
Effect.

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

              5.2 Except as disclosed on Schedule 1 to this Agreement, the
Grantor has good title to and is the lawful owner of the Collateral free from
all claims, liens, encumbrances, charges or security interests whatsoever.
Except as provided in Section 5.9 of this Agreement, the Collateral will at all
times be kept at the locations set forth on Exhibit A hereto.

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

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

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

Section 6.    COVENANTS.

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

              6.1 The Grantor shall keep and maintain the Collateral insured
against loss or damage by fire and all other risks as is customarily maintained
by similar businesses for the full insurable value thereof. Such policies shall
by their terms provide that the Secured Parties be given at least 30 days prior
written notice of any amendment, modification or cancellation thereof and that
the Secured Parties shall have the option, but not the obligation, to pay the
premiums to continue such insurance in effect or obtain like coverage.

                                      -3-
<PAGE>

Certificates of all such policies shall be delivered to the Secured Parties. The
Grantor agrees that any payment made by the Grantor pursuant to the foregoing
authorization shall bear interest thereon at the rate of 10% per annum from the
date of such payment and shall become part of the Obligations and be shall
secured by the Collateral pursuant to the terms of this Agreement. The Grantor
hereby appoints the Secured Parties as its attorney-in-fact to make, adjust or
settle any claim under any insurance policy insuring the Collateral while an
Event of Default (as defined below) shall have occurred and be continuing.

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

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

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

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

              6.6 The Grantor shall not grant, permit or suffer to exist any
lien, claim, security interest or encumbrance upon the Collateral, that is
senior or on parity with those in favor of the Secured Parties, other than the
security interests granted by the Grantor pursuant to Security Agreements dated
as of January 23, 2002 and March 1, 2002 between the Grantor and the secured
parties named therein.

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

                                      -4-
<PAGE>

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

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

              6.10 The Grantor shall not change its principal office or the
place where it maintains its records pertaining to the Collateral as specified
in Section 5.5 hereof without giving the Secured Parties at least 30 days prior
written notice thereof.

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

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

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

Section 8.    EVENTS OF DEFAULT.

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

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

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

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

                                      -5-
<PAGE>

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

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

              8.6 The Grantor shall, at any time without the prior written
consent of the Secured Parties, enter into an agreement to change the location
of the Collateral or permit any change in such location of the Collateral from
that specified in Section 5.3 hereof except as permitted by Section 6.9 of this
Agreement, and/or

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

Section 9.    REMEDIES.

              In case any Event of Default shall have occurred and be
continuing, the Secured Parties shall have, in addition to all other rights and
remedies given it by this Agreement or the Notes, those allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in any jurisdiction in which any of the Collateral may be located and,
without limiting the generality of the foregoing, the Secured Parties may
immediately, without demand of performance and without notice of intention to
sell or of time or place of sale or redemption or other notice or demand
whatsoever to the Grantor, all of which are hereby expressly waived, and without
advertisement, enter onto the premises where the Collateral is located and take
possession thereof without liability for any lawsuit or action, and sell, lease
or otherwise dispose of all or any part of the Collateral or any interest which
the Grantor may have therein, either at pubic or private sale or otherwise, and
after deducting from the proceeds of sale or other disposition of the Collateral
all expenses (including all reasonable fees and expenses of counsel) as provided
in Section 13 hereof, shall apply the residue of such proceeds toward the
payment of the Obligations. If notice of any sale or other disposition is
required by law to be given, the Grantor hereby agrees that a notice sent at
least 5 days before the time of any intended public sale or before the time
after which any private sale or other disposition of the Collateral is to be
made shall be reasonable notice of such sale or other disposition. The Grantor
agrees to assemble the Collateral, or cause it to be assembled, at such place or

                                      -6-
<PAGE>

places as the Secured Parties may designate by written notice to the Grantor. At
any such sale or other disposition, the Secured Parties may purchase the whole
or any part of the Collateral, free from any right of redemption on the part of
the Grantor, which right is hereby waived and released. Without limiting the
generality of the rights and remedies conferred upon the Secured Parties under
this Section 9, the Secured Parties may: (a) enter upon the premises of the
Grantor and take immediate possession of the Collateral, either personally or by
means of a receiver appointed by a court therefor, using reasonable force to do
so; (b) at the Secured Parties' option, use, operate, manage and control the
Collateral in any lawful manner; (c) collect and receive all rents, income,
revenue, earnings, issue and profits therefrom; and (d) maintain, repair,
renovate, alter or remove the Collateral as the Secured Parties may determine in
their discretion and any monies so collected or received by the Secured Parties
shall be applied to, or may be accumulated for application upon the Obligations
and the Grantor shall be liable for any deficiency.

Section 10.   POWER OF ATTORNEY.

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

Section 11.   NOTICES.

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

Section 12.   NO WAIVER; REMEDIES CUMULATIVE.

                                      -7-
<PAGE>

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

Section 13.   FINANCING STATEMENTS; FURTHER ASSURANCES; FILING.

              On the dates thereof, the Grantor shall deliver UCC-1 financing
statements in form and substance satisfactory to the Secured Parties and with
the Secured Parties' security interest duly noted thereon with respect to the
Collateral for filing at the appropriate offices. Thereafter, within 10 business
days after the Secured Parties' written request therefor, the Grantor shall
cause such additional Uniform Commercial Code financing statements with respect
to the Collateral or any modifications or amendments to any such financing
statements (all in form and substance reasonable satisfactory to the Secured
Parties) to be delivered to the Secured Parties for filing at the appropriate
offices. The Grantor from time to time, at its sole expense, will promptly
execute and deliver all further instruments and documents, and take all further
action that the Secured Parties may reasonably request, and hereby authorizes
the Secured Parties to take all action (including the filing of any financing
statements, continuation statements or amendments thereto with respect to the
Collateral without the signature of the Grantor where permitted by law) as the
Secured Parties in each case may deem reasonably necessary, proper or desirable
in order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Secured Parties to exercise and enforce their
rights and remedies hereunder with respect to any Collateral. A carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law. The Secured Parties shall execute terminations
to any such financing statements within 3 business days of the Grantor's request
therefore upon payment of the Obligations.

Section 14.   COSTS AND EXPENSES.

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

Section 15.   AMENDMENTS.

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

                                      -8-
<PAGE>

Section 16.   TERMINATION.

              Upon the payment in full of all Obligations, the Secured Parties
shall execute and deliver to the Grantor all such documents and instruments as
shall be necessary to evidence termination of this Agreement and the security
interests created hereunder; provided, however, the obligations of the Grantor
under Section 12 hereof shall survive any termination under this Section 15.

Section 17.   GOVERNING LAW.

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

Section 18.   ASSIGNMENT, ETC.

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

Section 19.   SEVERABILITY.

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                      -9-
<PAGE>

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

GRANTOR:                                    TELENETICS CORPORATION

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

SECURED PARTIES:                            DOLPHIN OFFSHORE PARTNERS, L.P.

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

                                      -10-
<PAGE>

                                                                       Exhibit A
                                                                              to
                                                              Security Agreement

                          Grantor's Places of Business
                          ----------------------------

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

                                     25111 Arctic Ocean
                                     Lake Forest, California 92630

         The Company maintains the following additional place of business where
a portion of the Collateral is kept:
                                     SDC
                                     4111 Citrus Ave. #5
                                     Rocklin, California 95677

         Collateral also is kept at the following third party locations:

                                     Corlund Electronics
                                     14101 Myford Road
                                     Tustin, California 92780

                                     American Optisurgical
                                     25501 Arctic Ocean
                                     Lake Forest, California 92630

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

                                      -11-
<PAGE>

                                                                      Schedule 1
                                                                              to
                                                              Security Agreement

                                   Exceptions
                                   ----------

Title to the Collateral:

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

Legal Proceedings:

         See Schedule 2.1(m) to the Purchase Agreement.

                                      -12-

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