Document:

INTERCREDITOR AGREEMENT

         THIS INTERCREDITOR AGREEMENT ("Agreement") dated as of Nov 6, 2000
is made by and among Telenetics Corporation, a California corporation (the
"Borrower"), Harvey Bibicoff ("Bibicoff"), Shala Shashani, doing business as SMC
Group, a sole proprietorship ("Shashani"), and SMC Communications Group, Inc.
("SMC"). Each of Bibicoff, Shashani and SMC are referred to herein as a "Lender"
and collectively as the "Lenders".

                                    RECITALS:

         A. As of the date hereof, Borrower, Bibicoff and certain other parties
have entered into a Settlement Agreement and Mutual Release (the "Settlement
Agreement"), pursuant to which Borrower is obligated to pay Bibicoff a total sum
of $530,000 plus any accrued but unpaid interest, as calculated under the
Settlement Agreement (the "Settlement Proceeds"). The Settlement Proceeds
consist of (i) $230,000 of outstanding principal, plus accrued but unpaid
interest, under that certain Promissory Note, dated on or about December 31,
1998, delivered by Borrower to Bibicoff (the "Bibicoff Note"), and (ii) $300,000
plus accrued but unpaid interest pursuant to paragraph 2 of the Settlement
Agreement. The Settlement Proceeds are secured by that certain Security
Agreement, dated as of the date hereof, by and between Borrower and Bibicoff
(the "Bibicoff Security Agreement").

         B. As of December 30, 1997, Borrower delivered to Shashani that certain
(i) Secured Promissory Note in the principal amount of $141,500, and (ii)
Secured Promissory Note in the principal amount of $250,000 (collectively, the
"Shashani Notes"). The amounts owed to Shashani under the Shashani Notes are
secured by that certain Amendment to Security Agreement, dated as of March 31,
1998, by and between Borrower and Shashani (the "Shashani Security Agreement"),
which amended and replaced that certain Security Agreement, dated February 7,
1992, by and between Borrower and Shashani.

         C. As of December 31, 1997, Borrower delivered to SMC that certain
Secured Promissory Note in the principal amount of $115,535 (the "SMC Note").
The amount owed to SMC under the SMC Note is secured by that certain Security
Agreement, dated as of December 31, 1997, by and between Borrower and SMC (the
"SMC Security Agreement")

         C. The Borrower and each of the Lenders have requested, subject to the
terms and conditions set forth herein, that the Lenders enter into this
Agreement in order to induce Bibicoff to enter into the Settlement Agreement.
Accordingly, for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, each of the Lenders agree with the other Lenders that so
long as any Secured Indebtedness (as defined below) is outstanding, the Borrower
and each Lender will comply with such of the following provisions as are
applicable to it.

1. CERTAIN DEFINITIONS.

         1.1 PROMISSORY DOCUMENT: The term "Promissory Document" shall mean each
of the Settlement Agreement, including the Bibicoff Note referred to therein,
the Shashani Notes and the SMC Note, as each is amended, restated, increased or
refinanced from time to time.

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         1.2 SECURITY AGREEMENT: The term "Security Agreement" shall mean each
of the Bibicoff Security Agreement, the Shashani Security Agreement and the SMC
Security Agreement, as each is amended, restated, increased or refinanced from
time to time.

         1.3 SECURED INDEBTEDNESS. The term "Secured Indebtedness" shall mean
the aggregate outstanding principal amount, together with accrued but unpaid
interest (including any interest accruing after the commencement of any action
or proceeding under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable domestic or foreign federal or state
bankruptcy, insolvency or other similar law, and any other interest that would
have accrued but for the commencement of such proceeding), premiums and any
other amounts (including any fees or expenses) owed or payable with respect to
the Promissory Documents or the Security Agreements.

2. INTERCREDITOR AGREEMENT.

         2.1 PARI PASSU STATUS IN SECURED INDEBTEDNESS. Each of the Lenders
hereby acknowledges and agrees that no Lender shall have priority over any other
Lender with respect to any payments in respect of, or any collateral securing,
the Secured Indebtedness. Each of the Lenders hereby acknowledges and agrees
that its rights and priority are PARI PASSU with the rights and priority of the
other Lenders. In addition, and without limitation of the generality of the
foregoing, each Lender hereby confirms that regardless of the relative times of
attachment or perfection thereof or the order of filing of financing statements,
mortgages or other documents, and regardless of anything to the contrary
contained in any documents executed in connection with any of the Secured
Indebtedness, any security interests or liens granted from time to time to any
Lender as security for any Secured Indebtedness shall in all respects be PARI
PASSU with the security interests and liens granted from time to time to the
other Lenders. Notwithstanding the foregoing, each of Shashani and SMC
acknowledge and agree that, except as set forth in Section 2.3, Borrower may
make payments to Bibicoff in satisfaction of its obligations to pay Bibicoff the
Settlement Proceeds pursuant to and in accordance with the Settlement Agreement
without making payments to Shashani or SMC under the Shashani Notes or the SMC
Note, as the case may be.

         2.2 NOTICES OF DEFAULT. Each of the Lenders shall provide a copy to the
other Lenders of any written notice provided by such Lender to Borrower with
respect to (i) the occurrence of any act or breach by Borrower constituting a
default or the occurrence of any event that, with notice or the passage of time,
or both, would constitute a default by Borrower under any Promissory Document or
Security Agreement, (ii) the acceleration of amounts due and payable by Borrower
to such Lender, or (iii) the occurrence of any event or condition that would
constitute, in the reasonable judgment of such Lender, a material adverse change
in the business or operations of Borrower (each, an "Event of Default"). Such
notices shall be delivered in accordance with Section 6 below within three (3)
calendar days of the date any such notice is given to Borrower.

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         2.3 DISPOSITION OF BORROWER'S ASSETS. In the event of (i) an Event of
Default, (ii) any insolvency, bankruptcy, receivership, liquidation,
reorganization, assignment for the benefit of creditors or other similar
proceeding relating to the Borrower, whether voluntary or involuntary, (iii) any
proceeding for the voluntary liquidation, dissolution or other winding-up of the
Borrower, whether involving insolvency or bankruptcy proceedings or not, or (iv)
any attachment of, foreclosure on, or other judicial action with respect to all
or any portion of the assets of the Borrower, or any transfer of such asset in
lieu of any such judicial action, or any creation of any lien, security
interest, mortgage, or deed of trust or the security on any such assets, then,
and in any such event, any payment or other distribution of any character,
whether in cash, securities or other property out of or in respect of the assets
of the Borrower or any proceeds thereof or any such security, shall be shared by
the Lenders on a PARI PASSU basis with the amount thereto to which each such
Lender is entitled determined by reference to the principal amount of Secured
Indebtedness held by each Lender in proportion to the total outstanding
principal amount of all Secured Indebtedness; provided, however, that no Lender
shall take any action without written notice to the other Lenders.

         2.4 PAYMENTS TO BE HELD IN TRUST. If (i) Shashani or SMC shall have
received any payment, distribution or security out of any of the assets of the
Borrower, whether arising out of or as a result of any event described in
Section 2.3 above or otherwise, or (ii) Bibicoff shall have received any
payment, distribution or security out of any of the assets of the Borrower which
arises out of or as a result of any event described in Section 2.3 above, then,
and in any such event, the receiving party thereof shall promptly provide each
of the other Lenders a clear and detailed accounting thereof, and shall promptly
take all action necessary to implement the sharing contemplated by Section 2.3
above. Any such payment, distribution or security so received shall be deemed to
be held in trust by the receiving party thereof for the benefit of the Lenders
until such sharing has been implemented and completed as contemplated by Section
2.3 above. If Bibicoff receives any payment, distribution or security out of any
of the assets of the Borrower and such payment does not arise out of or as a
result of an event described in Section 2.3 above, then Bibicoff shall not be
obligated to provide each of the other Lenders an accounting thereof and is not
obligated to implement the sharing contemplated by Section 2.3 above.

         2.5 COOPERATION. Each of the Lenders agrees to use reasonable best
efforts to cooperate with one another in the realization upon and liquidation of
the assets of the Borrower following an Event of Default, and to promptly advise
one another of any actions taken with respect thereto, or of any modification or
amendment of any or all of the documents with respect to the Secured
Indebtedness; provided, however, that no Lender shall enter into any such
modification or amendment that would (i) extend the term of such Secured
Indebtedness, (ii) increase the applicable rate of interest thereunder, or (iii)
increase the amount of Borrower's indebtedness thereunder, without the prior
written approval of a majority in interest of the Lenders (determined by
reference to the principal amount of Secured Indebtedness held by each Lender in
proportion to the total outstanding principal amount of all Secured
Indebtedness).

          3. RELEASE OF COLLATERAL. Without limiting any of the rights
(including the right to foreclose upon any collateral) of the Lenders under any
of the Promissory Documents or Security Agreements or under the provisions of
any applicable law, in the event that a majority of the Lenders (the "RELEASING
LENDERS") shall have fully released all of their security interests in, and
liens upon, any collateral which secures the Secured Indebtedness subject to a
security interest or lien in favor of the other Lenders (the "OTHER LENDERS"),
the Other Lenders agree that such collateral shall thereupon be released from
all such security interests and liens in favor of the Other Lenders, provided
that such collateral is being sold or transferred either (a) in the ordinary

                                       3

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course of business or (b) following the occurrence of an Event of Default, which
Event of Default has not been cured or waived by the Releasing Lenders, and
after the giving of ten (10) days' prior written notice to the Other Lenders of
any such proposed sale or transfer, for consideration which is reasonably
equivalent to the fair value of such collateral, and subject to the net proceeds
of such sale or transfer being shared by the Lenders on a PARI PASSU basis with
the amount thereto to which each such Lender is entitled determined by reference
to the principal amount of Secured Indebtedness held by each Lender in
proportion to the total outstanding principal amount of all Secured
Indebtedness. The Other Lenders agree that within ten (10) days after the
written request of the Releasing Lenders, the Other Lenders will execute,
deliver and file any and all such termination statements, lien releases or other
agreements or instruments as the Releasing Lenders shall reasonably deem
necessary or appropriate in order to give effect to the foregoing provisions of
this Section 3. Without limiting the generality of the foregoing provisions of
this Section 3, the Lenders, and each of them, may (but shall not be obligated
to) cause an independent appraisal to be made as to the fair value of any
collateral proposed to be sold or transferred and may conclusively rely upon the
results of any such appraisal.

4. RIGHT TO AMEND, ETC. Any demand for payment of any Secured Indebtedness made
by any holder of Secured Indebtedness may be rescinded in whole or in part by
such holder. The holders of Secured Indebtedness may exercise or refrain from
exercising any rights and/or remedies against the Borrower and others, if any,
liable under the Secured Indebtedness. The Secured Indebtedness shall
conclusively be deemed to have been created, contracted and incurred and
permitted to remain outstanding in reliance upon the provisions of this
Agreement.

5. FURTHER ASSURANCES. The Borrower, for itself and its respective successors
and assigns, agrees to execute and deliver to the Lenders, at the expense of the
Borrower, such further documents and instruments and to take such further action
as the Lenders, or any of them, may at any time or times reasonably request in
order to carry out the provisions and intent of this Agreement.

6. NOTICES. All notices and other communications hereunder to any Lender shall
be in writing and shall be personally delivered or mailed by first class mail,
postage prepaid, to the respective addresses set forth under the signature of
such Lender set forth on the signature page(s) to this Agreement, or to such
other address or addresses as the party to whom such notice is directed may have
designated in writing to the other parties hereto. All notices and other
communications hereunder to Borrower shall be in writing and shall be personally
delivered or mailed by first class mail, postage prepaid, to the following
addresses:

                           Telenetics Corporation
                           25111 Arctic Ocean
                           Lake Forest, California 92630
                           Attention:  President

                           with a copy to:

                           Rutan & Tucker, LLP
                           611 Anton Boulevard, Suite 1400
                           Costa Mesa, California 92626
                           Attention:  Larry A. Cerutti, Esq.

                                       4

<PAGE>

or to such other address or addresses as the party to whom such notice is
directed may have designated in writing to the other parties hereto. A notice
shall be deemed to have been given upon the earlier to occur of (i) three (3)
days after the date on which it is deposited in the U.S. mails or (ii) receipt
by the party to whom such notice is directed.

         7. SUCCESSORS; CONTINUING EFFECT, ETC. This Agreement is being entered
into for the benefit of, and shall be binding upon, the holders of the Secured
Indebtedness and their respective successors and assigns. This Agreement shall
be a continuing agreement and shall be irrevocable and shall remain in full
force and effect so long as there is Secured Indebtedness outstanding.

         8. BINDING AUTHORITY. Terry Parker is the duly elected President of
Borrower and has the authority to bind Borrower to the terms and provisions of
this Agreement.

         9. MISCELLANEOUS. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall be governed by the laws of the State of
California without reference to the choice of law principles thereof.

                         [SIGNATURES ON FOLLOWING PAGE]

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         IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument as of the date first above written.

BORROWER:                            TELENETICS CORPORATION
--------

                                     By: /s/ Terry Parker
                                        ----------------------------------------
                                          Terry Parker, President

LENDERS:
                                     /s/ Harvey Bibicoff
                                     -------------------------------------------
                                     Harvey Bibicoff

                                     Address:
                                     -------------------------------------------
                                     -------------------------------------------
                                     -------------------------------------------

                                     Shala Shashani
                                     -------------------------------------------
                                     Shala Shashani, dba SMC Group

                                     Address:
                                     -------------------------------------------
                                     -------------------------------------------
                                     -------------------------------------------

                                     SMC COMMUNICATIONS GROUP, INC.

                                     By: /s/ Shala Shashani
                                        ----------------------------------------
                                        Shala Shashani, President

                                     Address:
                                     -------------------------------------------
                                     -------------------------------------------
                                     -------------------------------------------

                                       6THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("1933 ACT"), OR ANY STATE SECURITIES LAWS AND SHALL NOT
BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED, WHETHER OR
NOT FOR CONSIDERATION, BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF
A FAVORABLE OPINION OF ITS COUNSEL OR THE SUBMISSION TO THE COMPANY OF SUCH
OTHER EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL FOR THE COMPANY, IN EITHER
CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE 1933
ACT AND APPLICABLE STATE SECURITIES LAWS.

                             TELENETICS CORPORATION

                          Common Stock Purchase Warrant
                                       to
                            Purchase ________ Shares
                                       of
                                  Common Stock

                This Common Stock Purchase Warrant is issued to:

                                     (name)
                           -------------------------

                                    (address)
                           -------------------------
                           -------------------------

by TELENETICS CORPORATION, a California corporation (hereinafter called the
"Company", which term shall include its successors and assigns).

         FOR VALUE RECEIVED and subject to the terms and conditions hereinafter
set out, the registered holder of this Warrant as set forth on the books and
records of the Company (the "Holder") is entitled upon surrender of this Warrant
to purchase from the Company __________________________________ (______) fully
paid and nonassessable shares of Common Stock, no par value per share (the
"Common Stock"), at the Exercise Price (as defined below) per share.

         This Warrant shall expire at the close of business on November 7, 2003
(the "Expiration Date").

         1. (a) The right to purchase shares of Common Stock represented by this
Warrant may be exercised by the Holder, in whole or in part, by the surrender of
this Warrant (properly endorsed if required) at the principal office of the
Company at 25111 Arctic Ocean, Lake Forest, California 92630 (or such other
office or agency of the Company as it may designate by notice in writing to the
Holder at the address of the Holder appearing on the books of the Company), and
upon payment to the Company, by cash or by certified check or bank draft, of the
Exercise Price for such shares. The Company agrees that the shares of Common
Stock so purchased shall be deemed to be issued to the Holder as the record

<PAGE>

owner of such shares of Common Stock as of the close of business on the date on
which this Warrant shall have been surrendered and payment shall have been made
for such shares of Common Stock as aforesaid. Certificates for the shares of
Common Stock so purchased (together with a cash adjustment in lieu of any
fraction of a share) shall be delivered to the Holder within a reasonable time
after the rights represented by this Warrant shall have been so exercised, and,
unless this Warrant has expired, a new Warrant representing the number of shares
of Common Stock, if any, with respect to which this Warrant shall not then have
been exercised, in all other respects identical with this Warrant, shall also be
issued and delivered to the Holder within such time, or, at the request of the
Holder, appropriate notation may be made on this Warrant and the same returned
to the Holder.

                  (b) This Warrant may be exercised to acquire, from and after
the date hereof, the number of shares of Common Stock set forth on the first
page hereof (subject to adjustments described in this Warrant); provided,
however, the right hereunder to purchase such shares of Common Stock shall
expire at the close of business on the Expiration Date.

         2. This Warrant is being issued by the Company pursuant to the terms of
a Settlement Agreement and Mutual Release relating to Orange County Superior
Court Case No. 815922 (the "Settlement Agreement").

         3. The Company covenants and agrees that all Common Stock upon issuance
against payment in full of the Exercise Price by the Holder pursuant to this
Warrant will be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof (except to the extent
resulting from the Holder's own circumstances, actions or omissions). The
Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will have at
all times authorized, and reserved for the purpose of issue or transfer upon
exercise of the rights evidenced by this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant, and will procure at its sole expense upon each such reservation of
shares the listing thereof (subject to issuance or notice of issuance) on all
stock exchanges on which the Common Stock is then listed or inter-dealer trading
systems on which the Common Stock is then traded. The Company will take all such
action as may be necessary to assure that such shares of Common Stock may be so
issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common Stock may
be listed or inter-dealer trading system on which the Common Stock is then
traded. The Company will not take any action which would result in any
adjustment in the number of shares of Common Stock purchasable hereunder if the
total number of shares of Common Stock issuable pursuant to the terms of this
Warrant after such action upon full exercise of this Warrant and, together with
all shares of Common Stock then outstanding and all shares of Common Stock then
issuable upon exercise of all options and other rights to purchase shares of
Common Stock then outstanding, would exceed the total number of shares of Common
Stock then authorized by the Company's Restated and Amended Articles of
Incorporation, as then amended.

                                      -2-

<PAGE>

         4. The Initial Exercise Price is $1.92 per share of Common Stock
("Initial Exercise Price"). The Initial Exercise Price shall be adjusted as
provided for below in this Section 4 (the Initial Exercise Price, and the
Initial Exercise Price, as thereafter then adjusted, shall be referred to as the
"Exercise Price") and the Exercise Price from time to time shall be further
adjusted as provided for below in this Section 4. Upon each adjustment of the
Exercise Price, the Holder shall thereafter be entitled to receive upon exercise
of this Warrant, at the Exercise Price resulting from such adjustment, the
number of shares of Common Stock obtained by (i) multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of shares of Common
Stock purchasable hereunder immediately prior to such adjustment, and (ii)
dividing the product thereof by the Exercise Price resulting from such
adjustment. The Exercise Price shall be adjusted as follows:

                  (i) In the case of any amendment to the Company's Restated and
         Amended Articles of Incorporation to change the designation of the
         Common Stock or the rights, privileges, restrictions or conditions in
         respect to the Common Stock or division of the Common Stock, this
         Warrant shall be adjusted so as to provide that upon exercise thereof,
         the Holder shall receive, in lieu of each share of Common Stock
         theretofore issuable upon such exercise, the kind and amount of shares,
         other securities, money and property receivable upon such designation,
         change or division by the Holder issuable upon such exercise had the
         exercise occurred immediately prior to such designation, change or
         division. This Warrant shall be deemed thereafter to provide for
         adjustments which shall be as nearly equivalent as may be practicable
         to the adjustments provided for in this Section 4. The provisions of
         this Subsection 4(i) shall apply in the same manner to successive
         reclassifications, changes, consolidations and mergers.

                  (ii) If the Company shall at any time subdivide its
         outstanding shares of Common Stock into a greater number of shares of
         Common Stock, or declare a dividend or make any other distribution upon
         the Common Stock payable in shares of Common Stock, the Exercise Price
         in effect immediately prior to such subdivision or dividend or other
         distribution shall be proportionately reduced, and conversely, in case
         the outstanding shares of Common Stock shall be combined into a smaller
         number of shares of Common Stock, the Exercise Price in effect
         immediately prior to such combination shall be proportionately
         increased.

                  (iii) If any capital reorganization or reclassification of the
         capital stock of the Company, or any consolidation or merger of the
         Company with or into another corporation or other entity, or the sale
         of all or substantially all of the Company's assets to another
         corporation or other entity shall be effected in such a way that
         holders of shares of Common Stock shall be entitled to receive stock,
         securities, other evidence of equity ownership or assets with respect
         to or in exchange for shares of Common Stock, then, as a condition of
         such reorganization, reclassification, consolidation, merger or sale
         (except as otherwise provided below in this Section 4), lawful and
         adequate provisions shall be made whereby the Holder shall thereafter
         have the right to receive upon the exercise hereof upon the basis and
         upon the terms and conditions specified herein, such shares of stock,
         securities, other evidence of equity ownership or assets as may be
         issued or payable with respect to or in exchange for a number of
         outstanding shares of such Common Stock equal to the number of shares
         of Common Stock immediately theretofore purchasable and receivable upon
         the exercise of this Warrant under this Section 4 had such
         reorganization, reclassification, consolidation, merger or sale not
         taken place, and in any such case appropriate provisions shall be made

                                      -3-

<PAGE>

         with respect to the rights and interests of the Holder to the end that
         the provisions hereof (including, without limitation, provisions for
         adjustments of the Exercise Price and of the number of shares of Common
         Stock receivable upon the exercise of this Warrant) shall thereafter be
         applicable, as nearly as may be, in relation to any shares of stock,
         securities, other evidence of equity ownership or assets thereafter
         deliverable upon the exercise hereof (including an immediate
         adjustment, by reason of such consolidation or merger, of the Exercise
         Price to the value for the Common Stock reflected by the terms of such
         consolidation or merger if the value so reflected is less than the
         Exercise Price in effect immediately prior to such consolidation or
         merger). Subject to the terms of this Warrant, in the event of a merger
         or consolidation of the Company with or into another corporation or
         other entity as a result of which the number of shares of common stock
         of the surviving corporation or other entity issuable to holders of
         Common Stock, is greater or lesser than the number of shares of Common
         Stock outstanding immediately prior to such merger or consolidation,
         then the Exercise Price in effect immediately prior to such merger or
         consolidation shall be adjusted in the same manner as though there were
         a subdivision or combination of the outstanding shares of Common Stock.

                  (iv) In case the Company shall, at any time prior to exercise
         of this Warrant, consolidate or merge with any other corporation or
         other entity (where the Company is not the surviving entity) or
         transfer all or substantially all of its assets to any other
         corporation or other entity, then the Company shall, as a condition
         precedent to such transaction, cause effective provision to be made so
         that the Holder of this Warrant upon the exercise of this Warrant after
         the effective date of such transaction shall be entitled to receive the
         kind and amount of shares, evidences of indebtedness and/or other
         securities or property receivable on such transaction by a holder of
         the number of shares of Common Stock as to which this Warrant was
         exercisable immediately prior to such transaction (without giving
         effect to any restriction upon such exercise); and, in any such case,
         appropriate provision shall be made with respect to the rights and
         interest of the Holder of this Warrant to the end that the provisions
         of this Warrant shall thereafter be applicable (as nearly as may be
         practicable) with respect to any shares, evidences of indebtedness or
         other securities or assets thereafter deliverable upon exercise of this
         Warrant.

                  Whenever the Exercise Price shall be adjusted pursuant to this
Section 4, the Company shall issue a certificate signed by its President or Vice
President and by its Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), and the Exercise
Price after giving effect to such adjustment, and shall cause copies of such
certificates to be mailed (by first-class mail, postage prepaid) to the Holder
of this Warrant.

                  No fractional shares of Common Stock shall be issued in
connection with any exercise of this Warrant, but in lieu of such fractional
shares, the Company shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Exercise Price then in
effect.

                                      -4-

<PAGE>

         5. The Holder shall, with respect to the shares of Common Stock
issuable upon the exercise of this Warrant, have the registration rights set
forth in the Settlement Agreement pursuant to which the Company is, among other
things, issuing this Warrant. Such registration rights are incorporated herein
by this reference as if such provisions had been set forth herein in full.

         6. This Warrant need not be changed because of any change in the
Exercise Price or in the number of shares of Common Stock purchased hereunder.

         7. The terms defined in this paragraph, whenever used in this Warrant,
shall, unless the context otherwise requires, have the respective meanings
hereinafter specified. The term "Common Stock" shall mean and include the
Company's Common Stock, no par value per share, authorized on the date of the
original issue of this Warrant and shall also include in case of any
reorganization, reclassification, consolidation, merger or sale of assets of the
character referred to in Section 4 hereof, the stock, securities or assets
provided for in such paragraph. The term "Company" shall also include any
successor corporation to Telenetics Corporation by merger, consolidation or
otherwise. The term "outstanding" when used with reference to Common Stock shall
mean at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company. The term "1933 Act" shall mean the Securities Act of
1933, as amended, or any successor federal statute, and the rules and
regulations of the Securities and Exchange Commission, or any other federal
agency then administering the 1933 Act, thereunder, all as the same shall be in
effect at the time.

         8. This Warrant is exchangeable, upon the surrender hereby by the
Holder at the office or agency of the Company, for new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed for and purchased hereunder,
each of such new Warrants to represent the right to subscribe for and purchase
such number of shares of Common Stock as shall be designated by the Holder at
the time of such surrender. Upon receipt of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant or any such new
Warrants and, in the case of any such loss, theft, or destruction, upon delivery
of a bond of indemnity, reasonably satisfactory to the Company, or, in the case
of any such mutilation, upon surrender or cancellation of this Warrant or such
new Warrants, the Company will issue to the Holder a new Warrant of like tenor,
in lieu of this Warrant or such new Warrants, representing the right to
subscribe for and purchase the number of shares of Common Stock which may be
subscribed for and purchased hereunder.

         9. The Company will at no time close its transfer books against the
transfer of this Warrant or of any shares of Common Stock issued or issuable
upon the exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant. This Warrant shall not entitle the Holder to any
voting rights or any rights as a shareholder of the Company. The rights and
obligations of the Company, of the Holder, and of any holder of shares of Common
Stock issuable hereunder, shall survive the exercise of this Warrant.

                                      -5-

<PAGE>

         10. This Warrant, together with the Settlement Agreement, sets forth
the entire agreement of the Company and the Holder of the Common Stock issuable
upon the exercise of this Warrant with respect to the rights of the Holder and
the Common Stock issuable upon the exercise of this Warrant.

         11. The validity, interpretation and performance of this Warrant and
each of its terms and provisions shall be governed by the laws of the State of
California, without regard to choice of law principles.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer under its corporate seal and dated as of November 7,
2000.

                                         TELENETICS CORPORATION

                                         By:
                                             -----------------------------------
                                             Terry Parker, President

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