<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1999
REGISTRATION NO. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TELENETICS CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
California
--------------------------------------------------------------
(State or Other Jurisdiction of Incorporation or Organization)
33-0061894
------------------------------------
(I.R.S. Employer Identification No.)
26772 Vista Terrace Drive, Lake Forest, California 92630
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Telenetics Corporation 1998 Stock Option Plan
Telenetics Corporation 1999 Employee Stock Purchase Plan
--------------------------------------------------------
(Full Title of the Plan)
David Stone, 26772 Vista Terrace Drive, Lake Forest, California 92630
---------------------------------------------------------------------
(Name and Address of Agent for Service)
(949) 455-4000
-------------------------------------------------------------
(Telephone Number, Including Area Code, of Agent for Service)
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
========================================================================================================================
Proposed Maximum Proposed Maximum
Amount to be Offering Price Per Aggregate Offering Amount of
Title of Securities to be Registered Registered Share (1) Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 1,600,000 shares $1.47 $2,352,000 $653.86
==================================== ==================== ==================== ==================== ====================
</TABLE>
(1) Calculated in accordance with Rule 457(h), on the basis of the average of
the bid and asked price per share as reported for such securities by the
OTC Electronic Bulletin Board on August 6, 1999.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of Form
S-8 (plan information and registrant information) will be delivered to
participants in the Registrant's 1998 Stock Option Plan and 1999 Employee Stock
Purchase Plan in accordance with Rule 428(b)(1) of the Securities Act of 1933,
as amended (the "Securities Act"). Such documents need not be filed with the
Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 of the Securities Act. These documents, which include the statement of
availability required by Item 2 of Form S-8, and the documents incorporated by
reference in this Registration Statement pursuant to Item 3 of Form S-8 (Part II
hereof), taken together, constitute a prospectus that meets the requirements of
Section 10(a) of the Securities Act.
1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant incorporates the following documents by reference in
this Registration Statement:
(a) The Registrant's Transition Report on Form 10-KSB for the nine
months ended December 31, 1998 filed on April 15, 1999;
(b) All reports of the Registrant filed pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
since December 31, 1998; and
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A, filed with the Commissioner on
March 3, 1988.
All other documents filed by the Registrant after the date of this
Registration Statement pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act, prior to the filing of a post-effective amendment to this
Registration Statement which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of filing such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The Registrant's Common Stock is registered pursuant to Section 12 of
the Exchange Act. Therefore, the description of the securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Restated and Amended Articles of Incorporation limit,
to the maximum extent permitted by California law, the personal liability of
directors for monetary damages in an action brought by or in the right of the
Registrant for breach of a director's duties to the Registrant or its
shareholders, except for liability: (i) for acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law; (ii) for acts
or omissions that a director believes to be contrary to the best interests of
the Registrant or its shareholders or that involve the absence of good faith on
the part of the director; (iii) for any transaction for which a director derived
an improper personal benefit; (iv) for acts or omission that show a reckless
disregard for the director's duty to the Registrant or its shareholders in
circumstances in which the director was aware, or should have been aware, in the
2
<PAGE>
ordinary course of performing a director's duties, of a risk of serious injury
to the Registrant or its shareholders; (v) for acts or omissions that constitute
an unexcused pattern of inattention that amounts to an abdication of the
director's duty to the Registrant or its shareholders; and (vi) for engaging in
transactions described in the California Corporations Code or California case
law which result in liability, or approving the same kinds of transactions.
The Registrant's Restated and Amended Articles of Incorporation also
authorize the Registrant to provide indemnification to its agents, as defined in
Section 317 of the California Corporations Code, through the Registrant's
Restated and Amended By-Laws or through agreements with such agents or both, for
breach of duty to the Registrant and its shareholders, in excess of the
indemnification to agents or both, for breach of duty to the Registrant and its
shareholders, in excess of the indemnification otherwise permitted by Section
317 of the California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code.
The Registrant's Restated and Amended By-Laws provide for
indemnification of the Registrant's officers, directors, employees, and other
agents to the extent and under the circumstances permitted by California law.
ITEM 8. EXHIBITS.
4.1 Restated and Amended Articles of Incorporation of the
Registrant*
4.2 Restated and Amended By-Laws of the Registrant*
4.3 Telenetics Corporation 1998 Stock Option Plan**
4.4 Telenetics Corporation 1999 Employee Stock Purchase Plan
4.5 Form of Telenetics Corporation 1999 Employee Stock Purchase
Plan Subscription Agreement
5 Opinion of Rutan & Tucker, LLP
23.1 Consent of BDO Seidman, LLP, independent certified public
accountants
23.2 Consent of George Rombach, CPA, independent certified public
accountant
23.3 Consent of Rutan & Tucker, LLP (contained in its opinion filed
as Exhibit 5 to this Registration Statement)
- ---------------
* Filed as an exhibit to the Registrant's Form 10-KSB for the nine
months transition period ended December 31, 1998 on April 15,
1999.
** Filed as an exhibit to the Registrant's Proxy Statement filed
pursuant to Section 14(a) of the Securities Exchange Act on April
30, 1999.
3
<PAGE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the
total value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Forest, State of California, on this 9th day of
August, 1999.
TELENETICS CORPORATION
By: /S/ MICHAEL A. ARMANI
------------------------------------
Michael A. Armani, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ MICHAEL A. ARMANI President, Chief August 9, 1999
- -------------------------------- Executive Officer,
Michael A. Armani Chairman of the Board
and Director (Principal
Executive Officer)
/S/ DAVID STONE Chief Financial Officer August 9, 1999
- -------------------------------- (Principal Financial and
David Stone Principal Accounting
Officer)
/S/ SHALA SHASHANI Secretary and Director August 9, 1999
- --------------------------------
Shala Shashani
/S/ GEORGE LEVY Director August 9, 1999
- --------------------------------
George Levy
/S/ EDMUND P. FINAMORE Director August 9, 1999
- --------------------------------
Edmund P. Finamore
/S/ THOMAS POVINELLI Director August 9, 1999
- --------------------------------
Thomas Povinelli
</TABLE>
5
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- ------------
4.4 Telenetics Corporation 1999
Employee Stock Purchase Plan
4.5 Form of Telenetics Corporation 1999 Employee
Stock Purchase Plan Subscription Agreement
5 Opinion of Rutan & Tucker, LLP,
counsel for the Registrant (including
consent)
23.1 Consent of BDO Seidman, LLP,
independent certified public accountants
23.2 Consent of George Rombach, CPA
independent certified public accountant
<PAGE>
TELENETICS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN. The purpose of this Telenetics Corporation 1999
Employee Stock Purchase Plan (the "Plan") is to provide Eligible Employees with
an incentive to advance the best interests of the Company (and those Affiliates
which may be designated by the Committee), by providing a method whereby they
may voluntarily purchase Common Stock at a favorable price and upon favorable
terms.
2. DEFINITIONS. For purposes of this Plan the following terms shall be
defined as follows:
"Account" means the bookkeeping account maintained by the
Company, or by a record-keeper on behalf of the Company, for a Participant
pursuant to Section 7(a).
"Affiliate" means any subsidiary Corporation of the Company,
as defined in Section 424(f) of the Code, whether now or hereafter acquired.
"Board of Directors" means the Board of Directors of
Telenetics Corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, no par value per share,
of Telenetics Corporation.
"Committee" means the committee established by the Company's
Board of Directors to administer this Plan pursuant to Section 12.
"Company" means Telenetics Corporation, a California
corporation, including any subsidiaries, if any.
"Compensation" means the Eligible Employee's annualized rate
of salary in effect at any time during the term of this Plan, exclusive of all
overtime earnings, shift differentials, bonus payments, performance awards,
stock option exercises, stock appreciation rights, restricted stock exercises,
auto allowances, tuition reimbursement and all other forms of remuneration not
required by the Eligible Employee's employment relationship.
"Contributions" means all bookkeeping amounts credited to the
Account of a Participant pursuant to Section 7(a).
"Effective Date" means July 26, 1999.
"Eligible Employees" means all employees of the Company or of
any Affiliate which has been designated in writing by the Committee as a
Participating Affiliate. Notwithstanding the foregoing, "Eligible Employee"
shall not include (i) employees customarily employed less than twenty (20) hours
1
<PAGE>
weekly; (ii) employees whose customary employment is for not more than five (5)
months in any calendar year; and (iii) employees who, immediately after a right
to purchase is granted, would be deemed for purposes of Section 423(b)(3) of the
Code to own stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the shares of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Date" means, with respect to an Offering Period, the
last day of that Offering Period.
"Fair Market Value" means (i) the last sale price if the
Common Stock is then quoted on the Nasdaq National Market; (ii) the closing
price as reported for composite transactions if the Common Stock is then traded
on a national securities exchange; or (iii) the average of the closing
representative bid and asked prices if the Common Stock is then reported on
Nasdaq or the National Association of Securities Dealers, Inc. OTC Electronic
Bulletin Board, in each case on the date as of which fair market value is being
determined. If the Common Stock is not traded, quoted or reported on any of the
above exchanges or reporting systems on such date, the Committee shall make a
good faith attempt to establish the fair market value of the Common Stock and in
connection therewith shall take such action as it deems necessary or advisable.
If the first day or last day of any Offering Period is a Saturday, Sunday or
holiday on which Nasdaq or the applicable national securities exchange is
closed, the fair market value shall be determined as of the immediately
preceding Friday or other day on which Nasdaq or the applicable national
securities exchange was open.
"Grant Date" means the first day of each Offering Period.
"Offering Period" means the six-consecutive month period
commencing on each January 1 and July 1 during the term of this Plan and during
which time payroll deductions will be made from the Compensation of Eligible
Employees who become Participants in the Plan; provided, however, that the
initial Offering Period shall be short Offering Period which shall commence on
the Effective Date and end on December 31, 1999.
"Option" means the stock option to acquire shares of Common
Stock granted to a Participant pursuant to Section 8.
"Participant" means an Eligible Employee who has elected to
participate in this Plan and who has filed a valid and effective Subscription
Agreement to make Contributions pursuant to Section 6.
"Plan" means this Telenetics Company 1999 Employee Stock
Purchase Plan, as amended from time to time.
"Share" means a share of Common Stock.
"Subscription Agreement" means the written agreement filed by
an Eligible Employee with the Company pursuant to Section 6 to participate in
this Plan.
2
<PAGE>
3. ELIGIBILITY. Any person employed as an Eligible Employee as of a
Grant Date shall be eligible to participate in this Plan during the Offering
Period in which such Grant Date occurs, subject to the Eligible Employee
satisfying the requirements of Section 6.
4. STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS. The total number of
Shares to be made available under this Plan is 600,000 authorized and unissued
shares of Common Stock, or shares of Common Stock repurchased on the open
market, subject to adjustments pursuant to Section 16. In the event that all of
the Shares made available under this Plan are subscribed prior to the expiration
of this Plan, this Plan may be terminated in accordance with Section 20.
5. OFFERING PERIODS. During the term of this Plan, the Company will
offer Options to purchase Shares to all Participants during each Offering
Period. Each Option shall become effective on the Grant Date. The term of each
Option shall be six months (except with respect to those Options granted during
the first Offering Period) and shall end on the Exercise Date. The first
Offering Period shall commence on or after the Effective Date. Offering Periods
shall continue until this Plan is terminated in accordance with Section 20, or,
if earlier, until no Shares remain available for Options pursuant to Section 4.
6. PARTICIPATION. An Eligible Employee may become a participant in this
Plan by completing a Subscription Agreement on a form approved by and in a
manner prescribed by the Committee (or its delegate). To become effective,
Subscription Agreements must be filed with the Company prior to the applicable
Grant Date and must set forth the amount or whole percentage of the Eligible
Employee's Compensation (which shall not be less than 1% and not more than 10%
of such Eligible Employee's Compensation) to be credited to the Participant's
Account as Contributions each pay period. The Committee may permit Eligible
Employees to make separate Contribution elections with respect to the bonus
portion of their Compensation, on such terms and conditions as the Committee may
prescribe. Subscription Agreements shall contain the Eligible Employee's
authorization and consent to the Company's withholding from his or her
Compensation the amount of his or her Contributions. A Subscription Agreement
shall remain valid only for the Offering Period for which it relates.
7. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) The Company shall maintain on its books, or cause to be
maintained by a record-keeper, an Account in the name of each Participant. The
percentage of Compensation elected to be applied as Contributions by a
Participant shall be deducted from such Participant's Compensation on each
payday during the period for payroll deductions set forth below and such payroll
deductions shall be credited to that Participant's Account as soon as
administratively practicable after such date. A Participant may not make any
additional payments to his or her Account. A Participant's Account shall be
reduced by any amounts used to pay the Option Price of Shares acquired, or by
any other amounts distributed pursuant to the terms hereof.
(b) Payroll deductions with respect to an Offering Period shall
commence as of the first day of the payroll period which coincides with or
immediately follows the applicable Grant Date and shall end on the last day of
the payroll period which coincides with or immediately precedes the applicable
Exercise Date, unless sooner terminated by the Participant as provided in this
Section 7 or until his or her participation terminates pursuant to Section 11.
3
<PAGE>
(c) A Participant may terminate his or her Contributions during an
Offering Period by completing and filing with the Company, in such form and on
such terms as the Committee (or its delegate) may prescribe, a written
withdrawal form which shall be signed by the Participant. Such termination shall
be effective as soon as administratively practicable after its receipt by the
Company.
(d) A Participant may discontinue or otherwise change the level of
his or her Contributions (within Plan limits) during an Offering Period by
completing and filing with the Company, in such form and on such terms as the
Committee (or its delegate) may prescribe, a written change in Contributions
election which shall be signed by the Participant. Such change shall be
effective as soon as administratively practicable after its receipt by the
Company. A Participant shall make no more than two elections pursuant to this
Section 7(d) in any one Offering Period and any elections in excess of such
limit shall be invalid.
8. GRANT OF OPTION.
(a) On each Grant Date, each Eligible Employee who is a participant
during that Offering Period shall be granted an Option to purchase a number of
Shares. The Option shall be exercised on the Exercise Date. The number of Shares
subject to the Option shall be determined by dividing the Participant's Account
balance as of the applicable Exercise Date by the Option Price.
(b) The Option Price per Share of the Shares subject to an Option
shall be the lesser of: (i) 85% of the Fair Market Value of a share of Common
Stock on the applicable Grant Date; or (ii) 85% of the Fair Market Value of a
share of Common Stock on the applicable Exercise Date.
(c) Notwithstanding anything else contained herein, a person who is
otherwise an Eligible Employee shall not be granted any Option or other right to
purchase Shares under this Plan to the extent (i) it would, if exercised, cause
the person to own "stock" (as such term is defined for purposes of Section
423(b)(3) of the Code) possessing 5% or more of the total combined voting power
or value of all classes of stock of the Company, or any Affiliate, or (ii) such
Option causes such individual to have rights to purchase stock under this Plan
and any other plan of the Company qualified under Section 423 of the Code which
accrue at a rate which exceeds $25,000 of the fair market value of the stock of
the Company or of an Affiliate (determined at the time the right to purchase
such stock is granted) for each calendar year in which such right is
outstanding. For this purpose a right to purchase Shares accrues when it first
become exercisable during the calendar year. In determining whether the stock
ownership of an Eligible Employee equals or exceeds the 5% limit set forth
above, the rules of Section 424(d) of the Code (relating to attribution of stock
ownership) shall apply.
9. EXERCISE OF OPTION. Unless a Participant's Plan participation is
terminated as provided in Section 11, his or her Option for the purchase of
Shares shall be exercised automatically on the Exercise Date for that Offering
Period, without any further action on the Participant's part, and the maximum
number of Shares subject to such Option shall be purchased at the Option Price
with the balance of such Participant's Account. The Committee, in its discretion
4
<PAGE>
and prior to the applicable Offering Period, may limit the purchase of
fractional Shares under the Plan; provided that if any amount (which is not
sufficient to purchase a whole Share) remains in a Participant's Account after
the exercise of his or her Option on the Exercise Date: (i) such amount shall be
credited to such Participant's Account for the next Offering Period, if he or
she is then a Participant; or (ii) if such Participant is not a Participant in
the next Offering Period, or if the Committee so elects, such amount shall be
refunded to such Participant as soon as administratively practicable after such
date.
10. DELIVERY. As soon as administratively practicable after the
Exercise Date, the Company shall deliver to each Participant a certificate
representing the Shares purchased upon exercise of his or her Option. The
Company may make available an alternative arrangement for delivery of Shares to
a record keeping service. The Committee (or its delegate), in its discretion,
may either require or permit the Participant to elect that such certificates be
delivered to such record keeping service. In the event the Company is required
to obtain from any commission or agency authority to issue any such certificate,
the Company will seek to obtain such authority. Inability of the Company to
obtain from any such commission or agency authority which counsel for the
Company deems necessary for the lawful issuance of any such certificate shall
relieve the Company from liability to any Participant except to return to the
Participant the amount of the balance in his or her Account.
11. TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS.
(a) Upon a Participant's termination from employment with the
Company for any reason or in the event that a Participant is no longer an
Eligible Employee or if the Participant elects to terminate Contributions
pursuant to Section 7(c), at any time prior to the last day of an Offering
Period in which he or she participates, such Participant's Account shall be paid
to him or her or in cash, or, in the event of such Participant's death, paid to
the person or persons entitled thereto under Section 13, and such Participant's
Option for that Offering Period shall be automatically terminated.
(b) A Participant's termination from Plan participation precludes
the Participant from again participating in this Plan during that Offering
Period. However, such termination shall not have any effect upon his or her
ability to participate in any succeeding Offering Period, provided that the
applicable eligibility and participation requirements are again then met. A
Participant's termination from Plan participation shall be deemed to be a
revocation of that Participant's Subscription Agreement and such Participant
must file a new Subscription Agreement to resume Plan participation in any
succeeding Offering Period.
12. ADMINISTRATION.
(a) The Board of Directors shall appoint the Committee, which shall
be composed of not less than two members of the Board of Directors. Each member
of the Committee, in respect of any transaction at a time when an affected
Participant may be subject to Section 16 of the Exchange Act, shall be a
"non-employee director" within the meaning of Rule 16b-3 promulgated under
Section 16 of the Exchange Act. The Board of Directors may, at any time,
increase or decrease the number of members of the Committee, may remove from
membership on the Committee all or any portion of its members, and may appoint
such person or persons as it desires to fill any vacancy existing on the
Committee, whether caused by removal, resignation, or otherwise. The Board of
Directors may also, at any time, assume or change the administration of this
Plan.
5
<PAGE>
(b) The Committee shall supervise and administer this Plan and
shall have full power and discretion to adopt, amend and rescind any rules
deemed desirable and appropriate for the administration of this Plan and not
inconsistent with the terms of this Plan, and to make all other determinations
necessary or advisable for the administration of this Plan. The Committee shall
act by majority vote or by unanimous written consent. No member of the Committee
shall be entitled to act on or decide any matter relating solely to himself or
herself or any of his or her rights or benefits under this Plan. The Committee
shall have full power and discretionary authority to construe and interpret the
terms and conditions of this Plan, which construction or interpretation shall be
final and binding on all parties including the Company, Participants and
beneficiaries. The Committee may delegate ministerial non-discretionary
functions to third parties, including officers of the Company.
(c) Any action taken by, or inaction of, the Company, the Board of
Directors or the Committee relating to this Plan shall be within the absolute
discretion of that entity or body. No member of the Board of Directors or
Committee, or officer of the Company shall be liable for any such action or
inaction.
13. DESIGNATION OF BENEFICIARY.
(a) A Participant may file, in a manner prescribed by the Committee
(or its delegate), a written designation of a beneficiary who is to receive any
Shares or cash from such Participant's Account under this Plan in the event of
such Participant's death. If a Participant's death occurs subsequent to the end
of an Offering Period but prior to the delivery to him or her of any Shares
deliverable under the terms of this Plan, such Shares and any remaining balance
of such Participant's Account shall be paid to such beneficiary (or such other
person as set forth in Section 13(b)) as soon as administratively practicable
after the Company receives notice of such Participant's death and any
outstanding unexercised Option shall terminate. If a Participant's death occurs
at any other time, the balance of such Participant's Account shall be paid to
such beneficiary (or such other person as set forth in Section 13(b)) in cash as
soon as administratively practicable after the Company receives notice of such
Participant's death and such Participant's Option shall terminate. If a
Participant is married and the designated beneficiary is not his or her spouse,
spousal consent shall be required for such designation to be effective.
(b) Beneficiary designations may be changed by the Participant (and
his or her spouse, if required) at any time on forms provided and in the manner
prescribed by the Committee (or its delegate). If a Participant dies with no
validly designated beneficiary under this Plan who is living at the time of such
Participant's death, the Company shall deliver all Shares and/or cash payable
pursuant to the terms hereof to the executor or administrator of the estate of
the Participant, or if no such executor or administrator has been appointed, the
Company, in its discretion, may deliver such Shares and/or cash to the spouse or
to any one or more dependents or relatives of the Participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
6
<PAGE>
14. TRANSFERABILITY. Neither Contributions credited to a Participant's
Account nor any Options or rights with respect to the exercise of Options or
right to receive Shares under this Plan may be anticipated, alienated,
encumbered, assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution, or as provided in
Section 13) by the Participant. Any such attempt at anticipation, alienation,
encumbrance, assignment, transfer, pledge or other disposition shall be without
effect and all amounts shall be paid and all shares shall be delivered in
accordance with the provisions of this Plan. Amounts payable or shares
deliverable pursuant to this Plan shall be paid or delivered only to the
Participant or, in the event of the Participant's death, to the Participant's
beneficiary pursuant to Section 13.
15. USE OF FUNDS; INTEREST. All Contributions received or held by the
Corporation under this Plan will be included in the general assets of the
Corporation and may be used for any corporate purpose. No interest will be paid
to any Participant or credited to his or her Account under this Plan.
16. ADJUSTMENTS OF AND CHANGES IN THE SHARES. In the event that the
Shares shall be changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization, stock split,
combination of shares, or otherwise), or if the number of Shares shall be
increased through a stock split or the payment of a stock dividend, then there
shall be substituted for or added to each Share theretofore reserved for sale
under this Plan, the number and kind of shares of stock or other securities into
which each outstanding Share shall be so changed, or for which each such Share
shall be exchanged, or to which each such Share is entitled, as the case may be,
or the number or kind of securities which may be sold under this Plan and the
purchase price per Share shall be appropriately adjusted consistent with such
change in such manner as the Committee (or its delegate) may deem equitable to
prevent substantial dilution or enlargement of rights granted to, or available
for, Eligible Employees under this Plan.
17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an Option unless the exercise of such Option and the issuance and
delivery of such Shares complies with all applicable provisions of law, domestic
or foreign, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, any applicable state securities laws, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the Shares may then be listed. As a condition precedent to the
exercise of any Option, if, in the opinion of counsel for the Company such a
representation is required under applicable law, the Company may require any
person exercising such Option to represent and warrant that the Shares subject
thereto are being acquired only for investment and without any present intention
to sell or distribute such Shares.
18. PLAN CONSTRUCTION.
(a) It is the intent of the Company that transactions in and
affecting Options in the case of Participants who are or may be subject to the
prohibitions of Section 16 of the Exchange Act satisfy any then applicable
requirements of Rule 16b-3 promulgated under Section 16 of the Exchange Act so
that such persons (unless they otherwise agree) will be entitled to the
exemptive relief of Rule 16b-3 of the Exchange Act in respect of those
transactions and will not be subject to avoidable liability thereunder.
Accordingly, this Plan shall be deemed to contain and the Shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions as may be required by Rule 16b-3 of the Exchange Act to qualify for
the maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
7
<PAGE>
(b) This Plan and Options are intended to qualify under Section 423
of the Code.
(c) If any provision of this Plan or of any Option would otherwise
frustrate or conflict with the intents expressed above, that provision to the
extent possible shall be interpreted so as to avoid such conflict. If the
conflict remains irreconcilable, the Committee may disregard the provision if it
concludes that to do so furthers the interest of the Company and is consistent
with the purposes of this Plan as to such persons in the circumstances.
19. EMPLOYEES' RIGHTS. Nothing in this Plan (or in any agreement
related to this Plan) shall confer upon any Eligible Employee or Participant any
right to continue in the service or employ of the Company or constitute any
contract or agreement of service or employment, or interfere in any way with the
right of the Company to reduce such person's compensation or other benefits or
to terminate the services or employment or such Eligible Employee or
Participant, with or without cause, but nothing contained in this Plan or any
document related hereto shall affect any other contractual right of any Eligible
Employee or Participant. No Participant shall have any rights as a shareholder
until a certificate for Shares has been issued in the Participant's name
following exercise of his or her Option. No adjustment will be made for
dividends or other rights as a shareholder for which a record date is prior to
the issuance of such Share certificate. Nothing in this Plan shall be deemed to
create any fiduciary relationship between the Company and any Participant.
20. EFFECTIVENESS; AMENDMENT; TERMINATION OF PLAN.
(a) Subject to shareholder approval, the Plan shall be effective as
of the Effective Date. No new Offering Periods shall commence on or after the
tenth anniversary of the Effective Date and this Plan shall terminate on such
date unless sooner terminated pursuant to this Section 20. Pursuant to
applicable provisions of California law, any shares of Common Stock purchased by
Eligible Employees pursuant to this Plan before shareholder approval is obtained
must be rescinded if shareholder approval is not obtained within one year after
the Effective Date.
(b) The Board may amend, modify or terminate this Plan at any time
without notice. Shareholder approval for any amendment or modification shall not
be required, except to the extent required by Section 423 of the Code or other
applicable law, or deemed necessary or advisable by the Board of Directors. No
amendment, modification, or termination pursuant to this Section 20(b) shall,
without written consent of the Participant, affect in any manner materially
adverse to the Participant any rights or benefits of such Participant or
obligations of the Company under any Option granted under this Plan prior to the
effective date of such change. Changes contemplated by Section 16 shall not be
deemed to constitute changes or amendments requiring Participant consent.
Notwithstanding the foregoing, the Committee shall have the right to designate
from time to time the Affiliates whose employees may be eligible to participate
in this Plan and such designation shall not constitute any amendment to this
Plan requiring shareholder approval.
21. NOTICES. All notices or other communications by a Participant to
the Corporation contemplated by this Plan shall be deemed to have been duly
given when received in the form and manner specified by the Committee (or its
delegate) at the location, or by the person, designated by the Committee (or its
delegate) for that purpose.
8
<PAGE>
22. MISCELLANEOUS.
(a) This Plan and related documents shall be governed by, and
construed in accordance with, the laws of the State of California. If any
provision shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan shall continue to be fully
effective.
(b) Captions and headings are given to the sections of this Plan
solely as a convenience to facilitate reference. Such captions and headings
shall not be deemed in any way material or relevant to the construction of
interpretation of this Plan or any provision hereof.
(c) The adoption of this Plan shall not affect any other
compensation or incentive plans in effect for the Company. Nothing in this Plan
shall be construed to limit the right of the Company (i) to establish any other
forms of incentives or compensation for employees of the Company, or (ii) to
grant or assume options (outside the scope of and in addition to those
contemplated by this Plan) in connection with any proper corporate purpose.
9
<PAGE>
TELENETICS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
Attached to this Subscription Agreement as Exhibits A and B are copies
of the Telenetics Corporation 1999 Employee Stock Purchase Plan (the "Plan") and
related Prospectus. The Plan is voluntary and provides Eligible Employees the
opportunity to purchase shares of the Company's common stock at a discount. You
should complete this form if you want to participate in the Plan commencing with
the _____________ to ____________ Offering Period. IN ORDER TO BE VALID, THIS
SUBSCRIPTION AGREEMENT MUST BE PROPERLY EXECUTED AND RECEIVED BY THE CORPORATION
ON OR BEFORE ___________.
DEFERRAL ELECTION. If you are an Eligible Employee (as defined in the Plan) as
of ___________, you may participate in the Plan for the ____________ to
_____________ Offering Period.
To commence participation in the Plan, initial the box below and indicate the
level of Contributions that are to be deducted from your Compensation. You
should indicate the level of Contributions that are to be deducted from your
Compensation (excluding bonuses) and from your bonuses (if any).
____ I hereby authorize the Company to deduct from my paycheck each pay
period ____% (designate a whole number from 1% to 10%, or zero) of my
Compensation (excluding bonuses) and ____% (designate a whole number
from 1% to 10%, or zero) of my bonuses, for the purchase of Common
Stock under the Plan. My Contributions will be deducted from each one
of my paychecks beginning with the first full pay period commencing on
__________ and will continue for the entire Offering Period (unless my
Plan participation terminates or until I file a Withdrawal Form or a
Change in Contributions Form with the Company pursuant to the terms of
the Plan). My Contributions are subject to certain limits under the
Plan and any Contributions in excess of these limits will be refunded
to me. I must file a new Subscription Agreement for each Offering
Period in which I am eligible and wish to participate in the Plan.
BENEFICIARY DESIGNATION. (Please initial the following box if you have attached
a Designation of Beneficiary form. If you have already filed a Designation of
Beneficiary form under the Plan, you do not need to file a new form unless you
wish to change your beneficiary.)
____ I hereby acknowledge that I have read and completed the Designation of
Beneficiary attached hereto as Exhibit C.
SIGNATURE. I hereby agree to be bound by the terms of the Plan, acknowledge
receipt of a copy of the Plan and Prospectus, and authorize the election,
payroll deductions, and beneficiary designation (if applicable) specified above.
____________________________ ___________________________
Signature Date
____________________________ ___________________________
Print Name Social Security Number
<PAGE>
Exhibit 5
August 11, 1999
Telenetics Corporation
26772 Vista Terrace Drive
Lake Forest, California 92630
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Telenetics Corporation, a California
corporation (the "Company"), and in such capacity have examined the form of
Registration Statement on Form S-8 (the "Registration Statement") to be filed
with the Securities and Exchange Commission (the "Commission") by the Company in
connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of up to 1,600,000 shares of common stock, no par value per share,
of the Company (the "Shares"). The Shares are to be sold by the Company (i) upon
the exercise of the stock options granted by the Company under its 1998 Stock
Option Plan and (ii) in connection with purchases of shares of common stock
under the Company's 1999 Employee Stock Purchase Plan. The Shares will be
offered and sold pursuant to the Company's Registration Statement to be filed
with the Commission.
As counsel for the Company and for purposes of this opinion, we have
made those examinations and investigations of legal and factual matters we
deemed advisable and have examined the originals, or copies certified to our
satisfaction as being true copies, of those corporate records, certificates,
documents and other instruments which, in our judgment, we considered necessary
or appropriate to enable us to render the opinion expressed below. For these
purposes, we have relied upon certificates provided by public officials and by
officers of the Company as to certain factual matters. We have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to the original documents of documents submitted to
us as certified or photostatic copies, and the authenticity of the originals of
the latter documents.
On the basis of the foregoing, and solely relying thereon, we are of
the opinion that the Shares are duly authorized and provided the Shares are
issued, delivered and paid for in the manner and upon the terms contemplated by
the Registration Statement, the Shares will be validly issued, fully paid and
nonassessable.
<PAGE>
Telenetics Corporation
August 11, 1999
Page -2-
We consent to the use of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission thereunder.
Very truly yours,
/S/ RUTAN & TUCKER, LLP
<PAGE>
Exhibit 23.1
CONSENT OF BDO SEIDMAN, LLP,
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Telenetics Corporation
Lake Forest, California
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated March 18,
1999, except as to Note 14, which is as of April 15, 1999, relating to the
financial statements of Telenetics Corporation appearing in the Company's
Transition Report on Form 10-KSB for the nine months ended December 31, 1998.
/S/ BDO SEIDMAN, LLP
Orange County, California
August 9, 1999
<PAGE>
Exhibit 23.2
CONSENT OF GEORGE F. ROMBACH, CPA
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
The Board of Directors
Telenetics Corporation
I consent to the incorporation by reference in the Prospectus constituting a
part of this Registration Statement of my report dated July 13, 1998 relating to
the financial statements of Telenetics Corporation appearing in the Company's
Transition Report on Form 10-KSB for the nine months ended December 31, 1998.
/S/ GEORGE F. ROMBACH, CPA
Orange County, California
August 9, 1999
