TELENETICS CORP
8-K, 2000-01-21
TELEPHONE & TELEGRAPH APPARATUS
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<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



        Date of report (Date of earliest event reported): January 7, 2000



                             TELENETICS CORPORATION
             (Exact name of registrant as specified in its charter)



           California                                             33-0061894
(State or Other Jurisdiction of          0-16580                (IRS Employer
         Incorporation)          (Commission File Number)    Identification No.)



                               25111 Arctic Ocean
                              Lake Forest, CA 92630
                    (Address of Principal Executive Offices)


                                 (949) 455-4000
              (Registrant's telephone number, including area code)


                                 Not Applicable
         (Former Name or Former Address, if Changed Since Last Report.)

<PAGE>

Item 2.  Acquisition or Disposition of Assets

         On January 7, 2000, Telenetics Corporation (the "Company") acquired all
         of the outstanding stock of eflex Wireless, Inc. ("Eflex"). The stock
         was acquired from Edward L. Didion and Teralyn Didion, John D. McLean
         and Kathleen M. McLean, William C. Saunders and Paula Saunders and
         Terry S. Parker (collectively, the "Selling Shareholders").

         Eflex has developed proprietary technology for sending and receiving
         data over the existing control channels of cellular networks and is
         headquartered in Brandon, Florida.

         The acquisition is expected to be accounted for using the Purchase
         Method of accounting. The purchase price was approximately $ 3 million.
         The acquisition was funded through use of the Company's Common Stock
         and operating capital. In determining the purchase price for Eflex, the
         Company took into account the value of companies of similar industry
         and size to Eflex, the proprietary technology of Eflex and its
         officers, comparable transactions and the market for such companies
         generally.

Item 7.  Financial Statements and Exhibits

         (a)  Financial statements of businesses acquired

                  It is impracticable to provide the required financial
                  statements for the acquired business at the time this Form 8-K
                  is filed. The registrant shall file the required financial
                  statements under cover of Form 8-K/A on or before March 24,
                  2000.

         (b)  Pro forma financial information.

                  To be provided on or before March 24, 2000.

         (c)  Exhibits

                  2.1   Stock Purchase Agreement dated as of January 7, 2000
                        between the Company and the Selling Shareholders.

                  2.2   Promissory Note dated as of January 7, 2000 from the
                        Company in favor of Saunders & Parker, Inc. for
                        $136,444.90.

                  2.3   Non-Qualified Stock Option dated January 7, 2000 issued
                        by the Company to Edward L. Didion.

                  2.4   Non-Qualified Stock Option dated January 7, 2000 issued
                        by the Company to John D. McLean.

                  2.5   Non-Qualified Stock Option dated January 7, 2000 issued
                        by the Company to Saunders & Parker, Inc.

                  2.6   Non-Qualified Stock Option dated January 7, 2000 issued
                        by the Company to T. Keith Odom.

                  2.7   Registration Rights Agreement dated January 7, 2000
                        between the Company and Edward L. Didion.

                  2.8   Registration Rights Agreement dated January 7, 2000
                        between the Company and John D. McLean.

                                       2
<PAGE>

                  2.9   Registration Rights Agreement dated January 7, 2000
                        between the Company and Saunders & Parker, Inc.

                  2.10  Registration Rights Agreement dated January 7, 2000
                        between the Company and T. Keith Odom.

                  2.11  Registration Rights Agreement between the Company and
                        Terry S. Parker.

                  2.12  Registration Rights Agreement dated January 7, 2000
                        between the Company and William C. Saunders

                  2.13  Consulting Agreement dated January 7, 2000 between the
                        Company and Edward L. Didion.

                  2.14  Employment Agreement dated January 7, 2000 between the
                        Company and John D. McLean.

                  2.15  Employment Agreement dated January 7, 2000 between the
                        Company and T. Keith Odom.

                  2.16  Consulting Agreement dated January 7, 2000 between the
                        Company and Saunders & Parker, Inc.

                  2.17  Promissory Note dated as of January 7, 2000 from the
                        Company in favor of John D. McLean for $107,500.

                  2.18  Shareholder Agreement dated as of January 7, 2000.

                                       3
<PAGE>

                                   SIGNATURES
                                   ----------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


Date:  January 21, 2000

                                                     TELENETICS CORPORATION


                                                     By: /S/ Michael A. Armani
                                                         ---------------------
                                                        Michael A. Armani,
                                                        President

                                       4
<PAGE>

                                  Exhibit Index
                                  -------------

Exhibit 2.1       Stock Purchase Agreement dated as of January 7, 2000
                  between the Company and the Selling Shareholders.

Exhibit 2.2       Promissory Note dated January 7, 2000 from the Company in
                  favor of Saunders & Parker, Inc. for $136,444.90.

Exhibit 2.3       Non-Qualified Stock Option dated January 7, 2000 issued by the
                  Company to Edward L. Didion.

Exhibit 2.4       Non-Qualified Stock Option dated January 7, 2000 issued by the
                  Company to John D. McLean.

Exhibit 2.5       Non-Qualified Stock Option dated January 7, 2000 issued by the
                  Company to Saunders & Parker, Inc.

Exhibit 2.6       Non-Qualified Stock Option dated January 7, 2000 issued by the
                  Company to T. Keith Odom.

Exhibit 2.7       Registration Rights Agreement dated January 7, 2000 between
                  the Company and Edward L. Didion.

Exhibit 2.8       Registration Rights Agreement dated January 7, 2000 between
                  the Company and John D. McLean.

Exhibit 2.9       Registration Rights Agreement dated January 7, 2000 between
                  the Company and Saunders & Parker, Inc.

Exhibit 2.10      Registration Rights Agreement dated January 7, 2000 between
                  the Company and T. Keith Odom.

Exhibit 2.11      Registration Rights Agreement dated January 7, 2000 between
                  the Company and Terry S. Parker.

Exhibit 2.12      Registration Rights Agreement dated January 7, 2000 between
                  the Company and William C. Saunders

Exhibit 2.13      Consulting Agreement dated January 7, 2000 between the Company
                  and Edward L. Didion.

Exhibit 2.14      Employment Agreement dated January 7, 2000 between the Company
                  and John D. McLean.

Exhibit 2.15      Employment Agreement dated January 7, 2000 between the Company
                  and T. Keith Odom.

Exhibit 2.16      Consulting Agreement dated January 7, 2000 between the Company
                  and Saunders & Parker, Inc.

Exhibit 2.17      Promissory Note dated January 7, 2000 from the Company in
                  favor of John D. McLean for $107,500.

Exhibit 2.18      Shareholder Agreement dated as of January 7, 2000.

                                       5


                            STOCK PURCHASE AGREEMENT

         THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
January 7, 2000, by and among Telenetics Corporation, a California corporation
("TELENETICS"), and Edward L. Didion ("DIDION"), John D. McLean ("MCLEAN"),
William C. Saunders ("SAUNDERS") and Terry S. Parker ("PARKER"), each an
individual (individually, each a "SELLER," and collectively, the "SELLERS."

                                 R E C I T A L S

         A. Sellers own, in the aggregate, all of the issued and outstanding
shares (the "SHARES") of capital stock of eflex Wireless, Inc., a Delaware
corporation (the "COMPANY").

         B. Telenetics desires to purchase from Sellers, and Sellers desire to
sell to Telenetics, the Shares on the terms and conditions set forth in this
Agreement.

                                A G R E E M E N T

         NOW, THEREFORE, the parties to this Agreement agree as follows:

1.       PURCHASE AND SALE OF SHARES.

         1.1 PURCHASE AND SALE. Subject to the terms and conditions set forth
herein, at the Closing (as defined in SECTION 6.1 below), Sellers shall
transfer, convey, assign and deliver the Shares to Telenetics, and Telenetics
shall acquire, purchase and accept the Shares from Sellers.

         1.2 CONSIDERATION. The aggregate consideration (the "CONSIDERATION") to
be paid in connection with the acquisition of the Shares shall equal the Base
Purchase Price plus the Earn-Out Purchase Price, which terms are defined as
follows:

                  (a) The "BASE PURCHASE PRICE" shall consist of an aggregate of
         750,000 shares (the "BASE STOCK") of common stock, no par value per
         share, of Telenetics ("TELENETICS COMMON STOCK"); and

                  (b) The "EARN-OUT PURCHASE PRICE" shall consist of an
         aggregate of 6,000,558 shares of Telenetics Common Stock (the
         "ADDITIONAL STOCK").

                  (c) PAYMENT OF CONSIDERATION. At the Closing, by virtue of the
         acquisition by Telenetics of the Shares, each of the Shares shall be
         exchanged for a number of shares of Telenetics Common Stock equal to
         the number of shares of Base Stock divided by the total number of
         Shares, and (ii) the right to receive a number of shares of Telenetics
         Common Stock equal to the number of shares of Additional Stock divided
         by the total number of Shares, subject to the conditions contained in
         SECTION 1.3 below.

1.3      EARN-OUT CONDITIONS.
<PAGE>

                  (a) For purposes of this SECTION 1.3, the "EARN-OUT PERIOD"
         shall mean the period commencing on the Closing Date and ending on the
         earlier of December 31, 2004 or the date upon which all shares of
         Additional Stock have become issuable pursuant to this SECTION 1.3. The
         Earn-Out Purchase Price shall become payable, if at all, in the
         following increments based upon the successful implementation by
         Telenetics or the Company of the Company's overhead telemetry-based
         technology, as described in EXHIBIT A attached hereto and incorporated
         herein by reference (the "TECHNOLOGY") and the successful completion
         during the Earn-Out Period of the installation of the following numbers
         of units equipped with the Technology:
<TABLE>
<CAPTION>

            After the Following                  Telenetics Shall Issue the Following Number
           Aggregate Number of                      of Shares of Telenetics Common Stock
         Installations is Completed:                    Comprising the Additional Stock      :
         --------------------------              ---------------------------------------------
                  <S>                                         <C>
                  100,000                                     1,000,145 shares
                  200,000                                     1,029,497 shares
                  300,000                                     1,158,184 shares
                  345,000                                       249,229 shares
                  390,000                                       255,620 shares
                  435,000                                       262,259 shares
                  480,000                                       269,161 shares
                  525,000                                       276,339 shares
                  570,000                                       283,807 shares
                  615,000                                       291,583 shares
                  660,000                                       299,682 shares
                  705,000                                       308,124 shares
                  750,000                                       316,928 shares
</TABLE>

                  (b) If and when earned, the shares of Telenetics Common Stock
         to be issued pursuant to this SECTION 1.3 as the Earn-Out Purchase
         Price shall be allocated and issued to Sellers pro rata in proportion
         to their ownership of the Shares immediately prior to the Closing. In
         no case shall the aggregate number of shares of Telenetics Common Stock
         issuable pursuant to this SECTION 1.3 exceed the aggregate number of
         shares of Additional Stock, as the same may be adjusted in accordance
         with this Agreement.

                  (c) Notwithstanding anything to the contrary contained in
         SECTION 1.3(a), if prior to the expiration of the Earn-Out Period the
         Company or Telenetics undertakes to (i) sell, lease, exchange or
         otherwise dispose of the Technology or (ii) merge into or consolidate
         with any other entity (other than Telenetics or a wholly-owned
         subsidiary of Telenetics), or effect any transaction (including a
         merger or other reorganization) or series of related transactions, in
         which more than 50% of the voting power of Telenetics is disposed of,
         then immediately prior to such event Telenetics shall issue the
         remaining shares of Additional Stock not yet issued pursuant to SECTION
         1.3(a), regardless of the number of installations completed prior to
         such date.

                                       2
<PAGE>

                  (d) Notwithstanding anything to the contrary contained in
         SECTION 1.3(a), if upon the expiration of the Earn-Out Period the
         Company has bona fide fully executed contracts in place pursuant to
         which the Company is obligated to perform installations that would have
         resulted in the issuance of Additional Stock if the Earn-Out Period had
         not yet expired, then Telenetics shall issue upon the expiration of the
         Earn-Out Period that number of shares of Additional Stock that would
         have been issuable pursuant to SECTION 1.3(a) if the installations had
         been completed prior to the expiration of the Earn-Out Period.

                  (e) Telenetics shall not be required to issue fractions of
         shares of Telenetics Common Stock pursuant to this Agreement, and all
         such fractions of shares of Telenetics Common Stock to which a Seller
         would otherwise be entitled pursuant to this Agreement shall be
         aggregated, and in lieu of such remaining fractional shares there shall
         be paid to the Seller at the time the shares are issued an amount in
         cash equal to the stated fraction of the fair market value of a share
         of Telenetics Common Stock, as determined in good faith by the Board of
         Directors of Telenetics.

2.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLERS.

         Except as set forth in a schedule dated the date of this Agreement and
delivered by Sellers to Telenetics concurrently herewith (the "DISCLOSURE
SCHEDULE") specifically identifying the Section of this Agreement requiring the
delivery of such disclosure, each Seller severally and not jointly makes the
representations and warranties to Telenetics as set forth below; provided,
however, that with respect to the representations and warranties contained in
SECTIONS 2.13, 2.14 AND 2.24, each of Saunders and Parker makes such
representations and warranties to the best of his knowledge.

         2.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes qualification necessary, other than
in jurisdictions where the failure to qualify would not have a Material Adverse
Effect. In this Agreement, any reference to any event, change or effect being
"material" with respect to any entity or group of entities means any material
event, change or effect related to the condition (financial or otherwise),
properties, assets, liabilities, businesses, operations or results of operations
of such entity or group of entities taken as a whole. In this Agreement, the
term "MATERIAL ADVERSE EFFECT" used in connection with a party means any event,
change or effect that is materially adverse to the condition (financial or
otherwise), properties, assets, liabilities, businesses, operations or results
of operations of that party, taken separately or as a whole; provided, however,
that a Material Adverse Effect shall not include any adverse effect resulting
from general economic conditions or conditions affecting the overhead
telemetry-based technology market. The Company does not have any subsidiaries.
The Company has provided to Telenetics or its counsel complete and correct
copies of the certificate of incorporation and bylaws of the Company, as amended
to the date of this Agreement, and copies of all minutes of meetings and actions
by written consent of stockholders, directors and board committees of the
Company.

                                       3
<PAGE>

2.2      CAPITAL STRUCTURE.

                  2.2.1 STOCK AND OPTIONS. The authorized capital stock of the
         Company consists of 100,000 shares of common stock, $.01 par value per
         share (the "COMMON STOCK"), and no shares of preferred stock. The
         Shares are the only shares of Common Stock that are issued and
         outstanding. All of the Shares are validly issued, fully paid and
         nonassessable and not subject to preemptive rights. Each Seller
         represents that the Shares owned by such Seller are owned by such
         Seller free and clear of any liens, security interests, pledges,
         agreement, claims, charges or encumbrances, and that such Seller has
         done nothing, and has not caused the Company to do anything, that would
         form the basis upon which any person (other than a Seller as set forth
         below in this SECTION 2.2.1) may claim to be in any way the record or
         beneficial owner of, or to be entitled to acquire (of record or
         beneficially), any shares of the capital stock or other equity
         securities of the Company, including without limitation, the Shares.
         The Shares are owned by the Sellers in the following proportions:


               NAME OF SELLER           NUMBER OF SHARES OWNED
               --------------           ----------------------
                  Didion                        4,500
                  McLean                        1,000
                  Saunders                      2,250
                  Parker                        2,250

                  2.2.2 NO OTHER COMMITMENTS. There are no options, warrants,
         calls, rights, commitments, conversion rights or agreements of any
         character to which the Company is a party or by which the Company is
         bound obligating the Company to issue, deliver or sell, or cause to be
         issued, delivered or sold, any shares of capital stock of the Company
         or securities convertible into or exchangeable for shares of capital
         stock of the Company, or obligating the Company to grant, extend or
         enter into any option, warrant, call, right, commitment, conversion
         right or agreement. There are no voting trusts or other agreements or
         understandings to which the Company or any Seller is a party with
         respect to the voting of the capital stock of the Company. In addition,
         the Company has no obligation (contingent or otherwise) to purchase,
         redeem or otherwise acquire any of its equity securities or any
         interests therein or to pay any dividend or make any distribution in
         respect thereof.

2.3      AUTHORITY.

                  2.3.1 CORPORATE ACTION. The Company has all requisite
         corporate power and authority to enter into this Agreement and the
         other agreements contemplated to be entered into by the Company as
         described in SECTION 6.2 (collectively, the "COMPANY TRANSACTION
         AGREEMENTS"), and to perform its obligations under and to consummate
         the transactions contemplated by the Company Transaction Agreements.
         The execution and delivery of the Company Transaction Agreements by the
         Company and the consummation by the Company of the transactions
         contemplated thereby have been duly authorized by all necessary
         corporate action on the part of the Company. The Company Transaction
         Agreements have been duly executed and delivered by the Company and
         constitute the valid and binding obligation of the Company, enforceable
         against the Company in accordance with their terms, except that
         enforceability may be subject to (i) bankruptcy, insolvency,
         reorganization, fraudulent conveyance, fraudulent transfer or other
         similar laws affecting or relating to enforcement of creditors' rights
         generally and (ii) general equitable principles.

                                       4
<PAGE>

                  2.3.2 SELLERS' AUTHORITY. Each Seller represents that such
         Seller has full power and capacity to enter into this Agreement and the
         other agreements contemplated to be entered into by such Seller as
         described in SECTION 6.2 (the "SELLER TRANSACTION AGREEMENTS"), and
         that the Seller Transaction Agreements have been duly executed and
         delivered by such Seller and constitute the valid and binding
         obligation of such Seller, enforceable against such Seller in
         accordance with their terms, except that enforceability may be subject
         to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
         fraudulent transfer or other similar laws affecting or relating to
         enforcement of creditors' rights generally and (ii) general equitable
         principles.

                  2.3.3 NO CONFLICT. Neither the execution, delivery and
         performance of the Company Transaction Agreements, nor the consummation
         of the transactions contemplated thereby nor compliance with the
         provisions thereof will conflict with, or result in any violations of,
         or cause a default (with or without notice or lapse of time, or both)
         under, or give rise to a right of termination, amendment, cancellation
         or acceleration of any obligation contained in, or the loss of any
         material benefit under, or result in the creation of any lien, security
         interest, charge or encumbrance upon any of the material properties or
         assets of the Company under, any term, condition or provision of (x)
         the certificate of incorporation or bylaws of the Company or (y) any
         loan or credit agreement, note, bond, mortgage, indenture, lease or
         other material agreement, judgment, order, decree, statute, law,
         ordinance, rule or regulation applicable to the Company or its
         properties or assets, other than any such conflicts, violations,
         defaults, losses, liens, security interests, charges, or encumbrances
         which, individually or in the aggregate, would not have a Material
         Adverse Effect.

                  2.3.4 GOVERNMENTAL CONSENTS. Each Seller represents that no
         consent, approval, order or authorization of, or registration,
         declaration or filing with, any court, administrative agency or
         commission or other governmental authority or instrumentality, domestic
         or foreign (each a "GOVERNMENTAL ENTITY"), is required to be obtained
         by the Company or such Seller in connection with the execution and
         delivery of the Company Transaction Agreements or the Seller
         Transaction Agreements or the consummation of the transactions
         contemplated thereby.

         2.4 FINANCIAL STATEMENTS. The Company has furnished to Telenetics
copies of the compiled statements of assets, liabilities and equity and the
related statements of revenues and expenses and schedules of retained earnings
for the months of August, September, October and November 1999 and the
respective one, two, three and four month periods then ended. All financial
statements referred to in this SECTION 2.4 (the "FINANCIAL STATEMENTS") have
been prepared on an income tax basis, applied on a consistent basis during the
respective periods, and fairly present the financial condition of the Company as
at the respective dates thereof and the results of operation of the Company for
the respective periods covered by the statements of income contained in therein.
The Company does not have any material obligations or liabilities, contingent or
otherwise, of the type required to be disclosed on financial statements that are
not fully disclosed by the Financial Statements.

                                       5
<PAGE>

         2.5 COMPLIANCE WITH APPLICABLE LAWS. The business of the Company is not
being conducted in violation of any law, ordinance, regulation, rule or order of
any Governmental Entity where the violation would have a Material Adverse
Effect. Each Seller represents that neither the Company nor such Seller has been
notified by any Governmental Entity that any investigation or review with
respect to the Company is pending or threatened, nor has any Governmental Entity
notified the Company or such Seller of its intention to conduct an investigation
or review. The Company has all permits, licenses and franchises from
Governmental Entities required to conduct its business as now being conducted.

         2.6 INSURANCE. The Company does not maintain and has never applied for
fire, casualty, general liability or errors and omissions insurance, and no
events have occurred that would have caused the Company to make a claim under
any such policy.

         2.7 LITIGATION. There is no suit, action, arbitration, demand, claim or
proceeding pending or, to the best knowledge of such Seller, threatened against
the Company, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. The Company has delivered to Telenetics or its counsel
correct and complete copies of all correspondence prepared by its counsel for
the Company's accountants in connection with each compilation of the Company's
financial statements and any correspondence since the date of the last
compilation.

         2.8 LABOR AND EMPLOYMENT.

                  2.8.1 ERISA. The Company does not maintain, nor has it ever
         maintained, any employee benefit plan or arrangement including, but not
         limited to deferred compensation, stock option, stock purchase, bonus,
         incentive and severance plans and employee benefit plans as defined in
         Section 3(3) of the Employee Retirement Income Security Act of 1974, as
         amended ("ERISA").

                  2.8.2 COBRA. The Company has complied with all of the
         requirements of Section 4980B of the Internal Revenue Code of 1986, as
         amended (the "CODE"), and Part 6 of Title 1 of ERISA ("COBRA"), with
         respect to each employee welfare benefit plan, as defined in Section
         3(1) of ERISA, it maintains or has ever maintained. The Company has
         provided, or will have provided prior to the Closing, to all
         individuals entitled thereto, all required notices and coverage
         pursuant to COBRA with respect to any "qualifying event" as defined in
         COBRA occurring prior to and including the Closing Date, and no
         material tax payable on account of COBRA has been incurred with respect
         to any current or former employees (or their beneficiaries) of the
         Company.

                                       6
<PAGE>

                  2.8.3 OTHER COMPLIANCE. The Company is in compliance in all
         material respects with all applicable laws, agreements and contracts
         relating to employment, employment practices, wages, hours, and terms
         and conditions of employment, including, but not limited to, employee
         compensation matters, but not including ERISA.

         2.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed on the
Disclosure Schedule, at November 30, 1999 (the "BALANCE SHEET DATE"), (i) the
Company did not have any liabilities or obligations of any nature (matured or
unmatured, fixed or contingent) which were material to the Company, taken as a
whole, and were not provided for in the balance sheet of the Company at the
Balance Sheet Date, a copy of which has been delivered to Telenetics (the
"BALANCE SHEET"); and (ii) all reserves established by the Company and set forth
in the Balance Sheet were reasonably adequate.

         2.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet Date
there has not occurred:

                  (a) any change in the condition (financial or otherwise),
         properties, assets, liabilities, businesses, operations or results of
         operations of the Company, taken separately or as a whole, that could
         reasonably constitute a Material Adverse Effect;

                  (b) any amendments or changes in the certificate of
         incorporation or bylaws of the Company;

                  (c) any damage, destruction or loss, whether covered by
         insurance or not, that could reasonably constitute a Material Adverse
         Effect;

                  (d) any redemption, repurchase or other acquisition of shares
         of the Common Stock by the Company, or any declaration, setting aside
         or payment of any dividend or other distribution (whether in cash,
         stock or property) with respect to the Common Stock;

                  (e) any material increase in or modification of the
         compensation or benefits payable or to become payable by the Company to
         any of its directors or employees, except in the ordinary course of
         business consistent with past practice;

                  (f) any material increase in or modification of any bonus,
         pension, insurance or other benefit (including, but not limited to, the
         granting of stock options, restricted stock awards or stock
         appreciation rights) made to, for or with any of its employees or
         consultants, other than in the ordinary course of business consistent
         with past practice;

                  (g) any acquisition or sale of a material amount of property
         or assets of the Company, other than in the ordinary course of business
         consistent with past practices;

                  (h) any alteration in any term of any outstanding security of
         the Company;

                  (i) any (A) incurrence, assumption or guarantee by the Company
         of any debt for borrowed money; (B) issuance or sale of any securities
         convertible into or exchangeable for debt securities of the Company; or
         (C) issuance or sale of options or other rights to acquire from the
         Company, directly or indirectly, debt securities of the Company or any
         securities convertible into or exchangeable for any such debt
         securities;

                                       7
<PAGE>

                  (j) any creation or assumption by the Company of any mortgage,
         pledge, security interest or lien or other encumbrance on any asset;

                  (k) any making of any loan, advance or capital contribution to
         or investment in any person other than (i) travel loans or advances
         made in the ordinary course of business of the Company, (ii) other
         loans and advances in an aggregate amount which does not exceed $25,000
         outstanding at any time and (iii) purchases on the open market of
         liquid, publicly traded securities;

                  (l) any entering into, amendment of, relinquishment,
         termination or non-renewal by the Company of any contract, lease
         transaction, commitment or other right or obligation other than in the
         ordinary course of business, except as expressly contemplated in this
         Agreement or any other agreement to be executed in connection herewith;

                  (m) any transfer or grant of a right under the IP Rights (as
         defined in SECTION 2.14), other than those transferred or granted in
         the ordinary course of business;

                  (n) any labor dispute or charge of unfair labor practice
         (other than routine individual grievances), any activity or proceeding
         by a labor union or representative thereof to organize any employees of
         the Company or any campaign being conducted to solicit authorization
         from employees to be represented by the labor union; or

                  (o) any agreement or arrangement made by the Company to take
         any action which, if taken prior to the date hereof, would have made
         any representation or warranty set forth in this Agreement untrue or
         incorrect unless otherwise disclosed.

         2.11 NO DEFAULTS. The Company is not in default under, and there exists
no event, condition or occurrence which, after notice or lapse of time, or both,
would constitute a default by the Company under, any contract or agreement to
which the Company is a party and which would, if terminated or modified, have a
Material Adverse Effect.

         2.12 CERTAIN AGREEMENTS. Neither the execution and delivery of the
Company Transaction Agreements or the Seller Transaction Agreements nor the
consummation of the transactions contemplated thereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any director, officer or
employee of the Company from the Company, (ii) materially increase any benefits
otherwise payable or (iii) result in the acceleration of the time of payment or
vesting of any benefits.

         2.13 TAXES.

                  (a) For purposes of this Agreement, "TAX" or collectively
         "TAXES" means any and all federal, state, local, and foreign taxes,
         assessments, and other governmental charges, duties, impositions, and
         liabilities, including taxes based upon or measured by gross receipts,
         income, profits, sales, use and occupation, and value added, ad
         valorem, transfer, franchise, withholding, payroll, recapture,
         employment, estimated, excise and property taxes, together with all
         interest, penalties, and additions imposed with respect to those
         amounts and any obligations under any agreements or arrangements with
         any other person with respect to those amounts and including any
         liability for taxes of a predecessor entity.

                                       8
<PAGE>

                  (b) As of the Closing, the Company will have prepared and
         filed all required federal, state, local, and foreign returns,
         estimates, information statements, and reports relating to any and all
         Taxes ("RETURNS") concerning or attributable to the Company that are
         required to be filed by or with respect to the Company on or prior to
         the Closing, and each of the Returns shall be true, correct, and
         complete in all material respects and shall have been completed in
         accordance with applicable law;

                  (c) As of the Closing, the Company: (A) will have paid or
         accrued in accordance with generally accepted accounting principles all
         Taxes concerning or attributable to the Company relating to periods
         ending on or before the Closing regardless of whether reflected on
         Returns and (B) will have withheld with respect to their employees all
         federal and state income taxes, FICA, FUTA, and other Taxes required to
         be withheld;

                  (d) The Company has not been delinquent in the payment of any
         Tax nor is there any Tax deficiency outstanding, proposed or assessed
         against the Company, nor has the Company executed any waiver of the
         statute of limitations on or extending the period for the assessment or
         collection of any Taxes;

                  (e) No audit or other examination of any Return of the Company
         is presently in progress, nor has the Company been notified of any
         request for an audit or examination;

                  (f) The Company does not have any liabilities for unpaid
         federal, state, local and foreign Taxes which have not been accrued or
         reserved in accordance with generally accepted accounting principles on
         the Balance Sheet, and such Seller does not have knowledge of any
         reasonable basis for the assertion of any liability attributable to the
         Company, or any of its assets and operations;

                  (g) The Company has delivered to Telenetics and its counsel
         copies of all federal and state income and all state sales and use Tax
         Returns for all periods since its incorporation;

                  (h) There are (and as of immediately following the Closing
         there will be) no liens, pledges, charges, claims, security interests,
         or other encumbrances of any sort (the "LIENS") on the assets of the
         Company relating or attributable to Taxes other than liens for sales
         and payroll taxes not yet due and payable;

                  (i) Such Seller does not have knowledge of any reasonable
         basis for the assertion of any claim relating or attributable to Taxes
         which, if adversely determined, would result in any Lien on the assets
         of the Company;

                                       9
<PAGE>

                  (j) None of the assets of the Company is property that is
         required to be treated as owned by any other person pursuant to the
         "safe harbor lease" provisions of former Code Section 168(f)(8), and
         none of the assets is treated as "tax-exempt use property" within the
         meaning of Code Section 168(h);

                  (k) The Company has not filed any consent agreement under Code
         Section 341(f) or agreed to have Code Section 341(f) apply to any
         disposition of a "subsection (f) asset" (as defined in Code Section
         341(f)(4)) owned by the Company;

                  (l) The Company has not been included in any "consolidated,"
         "unitary," or "combined" Return provided for under the law of the
         United States or any state or locality with respect to Taxes for any
         taxable period;

                  (m) The Company is not a party to a tax sharing, allocation,
         indemnification or similar agreement or arrangement, nor does the
         Company owe any amount under any agreement or arrangement;

                  (n) No Return of the Company contains a disclosure statement
         under Code Section 6662 (or predecessor provision) or any similar
         provision of state, local, or foreign law;

                  (o) The Company is not nor has it been at any time a "United
         States real property holding corporation" within the meaning of Code
         Section 897(c)(2);

                  (p) No indebtedness of the Company consists of "corporate
         acquisition indebtedness" within the meaning of Code Section 279;

                  (q) The Company has not taken any action not in accordance
         with past practice that would have the effect of deferring any Tax
         liability of the Company from any period ending on before the Closing
         Date to any taxable period ending after the Closing Date;

                  (r) The Company was not acquired in a "qualified stock
         purchase" under Code Section 338(d)(3), and no elections under Code
         Section 338(g), protective carryover basis elections, or offset
         prohibition elections are applicable to the Company or any predecessor
         corporations; and

                  (s) The tax bases of the assets of the Company for purposes of
         determining future amortization, depreciation, and other federal income
         tax deductions are accurately reflected on the tax books and records of
         the Company.

         2.14 INTELLECTUAL PROPERTY.

                  (a) The Company owns or has acquired all material Intellectual
         Property Rights (as defined below), including rights to make, use and
         sell goods and services, as necessary or required for the conduct of
         its business as presently conducted (the Intellectual Property Rights
         being referred to as the "IP RIGHTS"), and these rights are reasonably
         sufficient for the conduct of its business;

                                       10
<PAGE>

                  (b) The execution, delivery and performance of the Company
         Transaction Agreements or the Seller Transaction Agreements and the
         consummation of the transactions contemplated thereby will not
         constitute a material breach of any instrument or agreement governing
         any IP Rights ("IP RIGHTS AGREEMENTS"), will not cause the forfeiture
         or termination or give rise to a right of forfeiture or termination of
         any IP Right or materially impair the right of the Company or
         Telenetics to use, sell or license any IP Right or portion thereof
         (except where the breach, forfeiture or termination would not have a
         Material Adverse Effect);

                  (c) Neither the manufacture, marketing, license, sale or
         intended use of any product currently licensed or sold by the Company
         or currently under development by the Company violates any license or
         agreement between the Company and any third party or, to the best
         knowledge of such Seller, infringes any Intellectual Property Right of
         any other party; and there is no pending or, to the best knowledge of
         such Seller, threatened claim or litigation contesting the validity,
         ownership or right to use, sell, license or dispose of any IP Right
         nor, to the best knowledge of such Seller, is there any basis for any
         claim, nor has such Seller received any written notice asserting that
         any IP Right or the proposed use, sale, license or disposition thereof
         conflicts or will conflict with the rights of any other party, nor, to
         the best knowledge of such Seller, is there any basis for any
         assertion, and

                  (d) The Company has taken reasonable and practicable steps
         designed to safeguard and maintain its proprietary rights in all
         material IP Rights. All officers, employees and consultants of the
         Company have executed and delivered to the Company an agreement
         regarding the protection of proprietary information and the assignment
         to the Company of all Intellectual Property Rights arising from the
         services performed for the Company by those persons. No current or
         prior officer, employee or consultant of the Company claims an
         ownership interest in any IP Rights as a result of having been involved
         in the development of that property while employed by or consulting to
         the Company, or otherwise.

                  The term "INTELLECTUAL PROPERTY RIGHTS" shall mean all
         worldwide industrial and intellectual property rights, including,
         without limitation, patents, patent applications, patent rights,
         trademarks, trademark registrations, trademark registration
         applications, trade names, service marks, service mark registrations,
         service mark registration applications, copyrights, copyright
         registrations, copyright registration applications, franchises,
         licenses, inventories, know-how, trade secrets, customer lists,
         proprietary processes and formulae, all source and object codes,
         algorithms, architecture, structure, display screens, layouts,
         inventions, development tools and all documentation and media
         constituting, describing or relating to the above, including, without
         limitation, manuals, memoranda and records.

         2.15 FEES AND EXPENSES. The Company has not paid or become obligated to
pay any fee or commission to any broker, finder or intermediary in connection
with the transactions contemplated by this Agreement.

                                       11
<PAGE>

         2.16 ENVIRONMENTAL MATTERS.

                  (a) None of the properties or facilities of the Company is in
         violation of any federal, state or local law, ordinance, regulation or
         order relating to industrial hygiene or to the environmental conditions
         on, under or about the properties or facilities, including, but not
         limited to, soil and ground water condition, except where the
         violations would not constitute a Material Adverse Effect. During the
         time that the Company has owned or leased its properties and
         facilities, to the best knowledge of such Seller, no third party has
         released, used, generated, manufactured or stored on, under or about
         the properties or facilities or transported to or from the properties
         or facilities any hazardous materials.

                  (b) During the time that the Company has owned or leased its
         properties and facilities, there has been no litigation brought or
         threatened against the Company by, or any settlement reached by the
         Company with, any party or parties alleging the presence, disposal,
         release or threatened release of any hazardous materials on, from or
         under any of the properties or facilities.

         2.17 INTERESTED PARTY TRANSACTIONS. Except as disclosed in the
Disclosure Schedule, no officer or director of the Company or any "affiliate" or
"associate" (as those terms are defined in Rule 405 promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), of any such person
has had, either directly or indirectly, a material interest in: (i) any person
or entity which purchases from or sells, licenses or furnishes to the Company
any material amount of goods, property, technology or intellectual or other
property rights or services; or (ii) any material contract or agreement to which
the Company is a party or by which it may be bound or affected.

         2.18 DISCLOSURE. No representation or warranty made by the Company or
Sellers in this Agreement, nor any document, written information, written
statement, financial statement, certificate or exhibit prepared and furnished or
to be prepared and furnished by the Company or its representatives or Sellers
pursuant hereto or in connection with the transactions contemplated hereby, when
taken together, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished.

         2.19 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon the Company that
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company, any acquisition of
property by the Company or the conduct of business by the Company as currently
conducted.

         2.20 INTENTIONALLY OMITTED.

         2.21 PERSONAL PROPERTY. The Company has good title, free and clear of
all title defects, objections and liens, including without limitation, leases,
chattel mortgages, conditional sales contracts, collateral security arrangements
and other title or interest-retaining arrangements, to all of its machinery,
equipment, furniture, inventory and other personal property. All personal
property used in the business of the Company is in good operating condition. All
of the leases to personal property utilized in the business of the Company are
valid and enforceable against the Company and are not in default by the Company,
or to the knowledge of such Seller, are any of the other parties thereto in
default thereof.

                                       12
<PAGE>

         2.22 REAL PROPERTY. The Company does not own any real property. The
Disclosure Schedule contains a list of all leases for real property to which the
Company is a party, the square footage leased with respect to each lease and the
expiration date of each lease. These leases are valid and enforceable and are
not in default. To the best knowledge of such Seller, the real property leased
or occupied by the Company, the improvements located thereon, and the furniture,
fixtures and equipment relating thereto (including plumbing, heating, air
conditioning and electrical systems), conform to any and all applicable health,
fire, safety, zoning, land use and building laws, ordinances and regulations.
There are no outstanding contracts made by the Company for any improvements made
to the real property leased or occupied by the Company that have not been paid
for.

         2.23 WARRANTIES. Neither the Company nor Sellers have made any
warranties or guarantees relating to the Company's products other than as
implied or required by law. The Disclosure Schedule contains a list of all
warranty and indemnification obligations of the Company relating to patents and
other proprietary rights.

         2.24 CONTRACTS. The Disclosure Schedule lists all oral or written
agreements, notes, instruments, or contracts to which the Company is a party or
by which its assets or properties may be bound which involve the payment or
receipt of more than $25,000 (on an annual basis), or which have a term of more
than one year, or which involve intellectual property, or which are employment
or consulting agreements, or to which the Company and one or more Sellers or
entities owned or operated by one or more Sellers is a party (the "CONTRACTS").
The Company is not in default in performance of its obligations under any
material provisions of the Contracts. Such Seller has no knowledge of any
violation of any Contract by any other party thereto and such Seller has no
knowledge of any intent by any other party to a Contract not to perform its
obligations under any Contract.

         2.25 INTENTIONALLY OMITTED.

         2.26 DEVELOPMENT TOOLS. The Disclosure Schedule contains a complete
list of all material software development tools used or currently intended to be
used by the Company in the development of any of the Company Products, except
for any tools that are generally available and are used in their generally
available form (such as standard compilers) ("COMPANY DEVELOPMENT TOOLS"). The
Disclosure Schedule also sets forth, for each Company Development Tool: (a) for
any Company Development Tool not entirely developed internally by the employees
of the Company, the identity of the independent contractors and consultants
involved in a material way in such development and a list of the material
agreements with such independent contractors and consultants with respect to the
Company Development Tools; (b) a list of any third parties with any rights to
receive material royalties or other payments with respect to such Company
Development Tools, and a schedule of all such royalties payable; (c) a list of
any material restrictions on the Company's unrestricted right to use and
distribute the Company Development Tools; and (d) a list of all agreements with
third parties for the use by the third party of the Company Development Tools.

                                       13
<PAGE>

         2.27 INVESTMENT REPRESENTATION.

                  (a) Each Seller acknowledges that, upon issuance, the Base
         Stock, the options to be issued at the Closing (the "OPTIONS"), the
         shares of common stock underlying the Options (the "UNDERLYING STOCK"),
         and the Additional Stock, if any, will not have been "registered" and
         will therefore be "restricted securities" as these terms are used under
         the Securities Act and the rules and regulations thereunder. By their
         execution of this Agreement, each Seller agrees, represents and
         warrants that (i) his acquisition of the Base Stock, Options,
         Underlying Stock and Additional Stock, is for investment only, for his
         own account and not with a view to "distribution" as that term is used
         under the Securities Act, (ii) he is an "accredited investor" as that
         term is used in Regulation D under the Securities Act, and (iii) copies
         of Telenetics' Form 10-KSB for the nine months ended December 31, 1998,
         and Forms 10-QSB for the quarters ended March 31, June 30 and September
         30, 1999 have been made available to him. Each Seller agrees that he
         shall not at any time make any sale, pledge, hypothecation, gift or
         other transfer of Base Stock, Options, Underlying Stock or Additional
         Stock except pursuant to an effective registration statement under the
         Securities Act or pursuant to the provisions of Rule 144 under the
         Securities Act or another exemption from the registration requirements
         of the Securities Act, and in accordance with the provisions of this
         SECTION 2.27 and any applicable state "blue sky" or other securities
         laws, and that prior to making any sale or other disposition of Base
         Stock, Options, Underlying Stock or Additional Stock pursuant to any
         such exemption, he shall, if requested by Telenetics, obtain an opinion
         of counsel, satisfactory to Telenetics' counsel, that such sale
         complies with applicable federal and state securities laws.

                  (b) Each Seller agrees that he has been informed that the Base
         Stock, Options, Underlying Stock and Additional Stock must be held
         indefinitely unless they are subsequently registered under the
         Securities Act or an exemption from such registration is available, and
         he understands that any sale of the Base Stock, Options, Underlying
         Stock or Additional Stock made in reliance upon Rule 144, or any other
         like rule, can be made only in limited amounts in accordance with the
         terms and conditions of those rules and, if those rules are not
         applicable, any resale may require compliance with another available
         exemption under the Securities Act or, in the alternative, may require
         registration of the Base Stock, Options, Underlying Stock or Additional
         Stock. Sellers acknowledge that Telenetics makes no representation or
         covenant that it shall conduct its affairs so as to permit sales under
         Rule 144, and except as set forth in the registration rights agreements
         that are being entered into by and between Telenetics and each Seller
         concurrently with the execution of this Agreement relating to the
         Underlying Stock (the "REGISTRATION RIGHTS AGREEMENTS"), Telenetics is
         under no obligation to register or repurchase the Base Stock, the
         Options, the Underlying Stock or the Additional Stock.

                  (c) In furtherance of the foregoing, Telenetics and its
         transfer agent are hereby authorized to decline to make any transfer of
         securities if such transfer would constitute a violation or breach of
         this SECTION 2.27. Sellers acknowledge that Telenetics shall cause
         appropriate legends to be placed on the certificates representing the
         Base Stock, the Additional Stock and the Underlying Stock to reflect
         the foregoing.

                                       14
<PAGE>

3.       REPRESENTATIONS AND WARRANTIES OF TELENETICS.

         Telenetics hereby represents and warrants to Sellers that:

         3.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Telenetics is
a corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing to
do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes qualification necessary, other than
in jurisdictions where the failure to qualify would not have a Material Adverse
Effect. Telenetics has made available to the Company and the Sellers or their
respective counsel complete and correct copies of the articles of incorporation
and bylaws of Telenetics as amended to the date of this Agreement.

         3.2 CAPITAL STRUCTURE. The authorized capital stock of Telenetics
consists of 25,000,000 shares of common stock, no par value per share
("TELENETICS COMMON STOCK"), 1,480,000 shares of Series A 7.0% Convertible
Redeemable Preferred Stock, no par value per share (the "SERIES A PREFERRED
STOCK"), 128,571 shares of Series B Convertible Preferred Stock, no par value
per share (the "SERIES B PREFERRED STOCK"), 400,000 shares of Series C 7.0%
Convertible Preferred Stock, no par value per share (the "SERIES C PREFERRED
STOCK"), and 2,991,429 shares of undesignated preferred stock, no par value per
share (the "UNDESIGNATED PREFERRED STOCK"). As of the date hereof, 10,273,754
shares of Telenetics Common Stock are issued and outstanding (which amount does
not include the Base Stock issuable hereunder), 12,628,106 shares of Telenetics
Common Stock are reserved for issuance upon the exercise of outstanding options
and warrants to purchase Telenetics Common Stock (which amount includes the
shares underlying the Options and the Additional Stock) and upon conversion of
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock, 736,884 shares of Series A Preferred Stock are issued and outstanding,
128,571 shares of Series B Preferred Stock are issued and outstanding, 400,000
shares of Series C Preferred Stock are issued and outstanding, and no shares of
Undesignated Preferred Stock are issued and outstanding. Except for the options,
warrants and convertible securities for which shares of Telenetics Common Stock
are reserved for issuance as described in this SECTION 3.2, and except as
provided in the Telenetics Transaction Agreements, there are no options,
warrants, calls, rights, commitments, conversion rights or agreements of any
character to which Telenetics is a party or by which Telenetics is bound
obligating Telenetics to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock of Telenetics or securities
convertible into or exchangeable for shares of capital stock of Telenetics, or
obligating Telenetics to grant, extend or enter into any option, warrant, call,
right, commitment, conversion right or other agreement. None of the outstanding
shares of Telenetics Common Stock, Series A Preferred Stock, Series B Preferred
Stock or Series C Preferred Stock are subject to preemptive rights.

                                       15
<PAGE>

         3.3 AUTHORITY.

                  3.3.1 CORPORATE ACTION. Telenetics has all requisite corporate
         power and authority to enter into this Agreement and the other
         agreements contemplated to be entered into by Telenetics as described
         in SECTION 6.3 (collectively, the "TELENETICS TRANSACTION AGREEMENTS"),
         and to perform its obligations under and to consummate the transactions
         contemplated by the Telenetics Transaction Agreements. The execution
         and delivery of the Telenetics Transaction Agreements by Telenetics and
         the consummation by Telenetics of the transactions contemplated thereby
         have been duly authorized by all necessary corporate action on the part
         of Telenetics. The Telenetics Transaction Agreements have been duly
         executed and delivered by Telenetics and constitute the valid and
         binding obligation of Telenetics, enforceable against Telenetics in
         accordance with their terms, except that enforceability may be subject
         to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
         fraudulent transfer or other similar laws affecting or relating to
         enforcement of creditors' rights generally and (ii) general equitable
         principles.

                  3.3.2 NO CONFLICT. Neither the execution, delivery and
         performance of the Telenetics Transaction Agreements, nor the
         consummation of the transactions contemplated thereby nor compliance
         with the provisions hereof will conflict with, or result in any
         violations of, or cause a default (with or without notice or lapse of
         time, or both) under, or give rise to a right of termination,
         amendment, cancellation or acceleration of any obligation contained in,
         or the loss of any material benefit under, or result in the creation of
         any lien, security interest, charge or encumbrance upon any of the
         material properties or assets of Telenetics under, any term, condition
         or provision of (x) the articles of incorporation or bylaws of
         Telenetics or (y) any loan or credit agreement, note, bond, mortgage,
         indenture, lease or other material agreement, judgment, order, decree,
         statute, law, ordinance, rule or regulation applicable to Telenetics or
         its properties or assets, other than any such conflicts, violations,
         defaults, losses, liens, security interests, charges or encumbrances
         which, individually or in the aggregate, would not have a Material
         Adverse Effect.

                  3.3.3 GOVERNMENTAL CONSENTS. No consent, approval, order or
         authorization of, or registration, declaration or filing with, any
         Governmental Entity is required to be obtained by Telenetics in
         connection with the execution and delivery of the Telenetics
         Transaction Agreements or the consummation of the transactions
         contemplated thereby, except for securities law filings to be made in
         connection with the issuance of the Base Stock, the Additional Stock,
         the Options and the Underlying Stock.

         3.4 SEC DOCUMENTS.

                  3.4.1 SEC REPORTS. Telenetics has made available to the
         Company or its counsel correct and complete copies of each report,
         schedule, registration statement and definitive proxy statement filed
         by Telenetics with the Securities and Exchange Commission (the "SEC")
         on or after July 14, 1998 (the "TELENETICS SEC DOCUMENTS"), which are
         all the documents (other than preliminary material) that Telenetics was
         required to file with the SEC on or after that date. As of their
         respective dates or, in the case of registration statements, their
         effective dates (or if amended or superseded by a filing prior to the
         date of this Agreement, then on the date of such filing), none of the
         Telenetics SEC Documents contained any untrue statement of a material
         fact or omitted to state a material fact required to be stated therein
         or necessary in order to make the statements therein, in light of the
         circumstances under which they were made, not misleading, and the
         Telenetics SEC Documents complied when filed in all material respects
         with the then applicable requirements of the Securities Act, or the
         Securities Exchange Act of 1934, as amended, as the case may be, and
         the rules and regulations promulgated by the SEC thereunder.

                                       16
<PAGE>

                  3.4.2 FINANCIAL STATEMENTS. The financial statements of
         Telenetics included in the Telenetics SEC Documents complied as to form
         in all material respects with the then applicable accounting
         requirements and the published rules and regulations of the SEC with
         respect thereto, were prepared in accordance with generally accepted
         accounting principles applied on a consistent basis during the periods
         involved (except as may have been indicated in the notes thereto or, in
         the case of the unaudited statements, as permitted by Form 10-QSB
         promulgated by the SEC) and fairly present the financial position of
         Telenetics as at the respective dates thereof and the results of its
         operations and cash flows for the respective periods then ended.

         3.5 LITIGATION. There is no suit, action, arbitration, demand, claim or
proceeding pending or, to the knowledge of Telenetics, threatened against
Telenetics in connection with or relating to the transactions contemplated by
this Agreement or of any action taken or to be taken in connection herewith or
the consummation of the transactions contemplated hereby.

         3.6 FEES AND EXPENSES. Telenetics has not paid or become obligated to
pay any fee or commission to any broker, finder or intermediary in connection
with the transactions contemplated by this Agreement.

         3.7 DISCLOSURE. No representation or warranty made by Telenetics in
this Agreement, nor any document, written information, written statement,
financial statement, certificate or exhibits prepared and furnished or to be
prepared and furnished by Telenetics or its representatives pursuant hereto or
in connection with the transactions contemplated hereby, when taken together,
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances under which they were furnished.

         3.8 INVESTMENT REPRESENTATION. Telenetics agrees, represents and
warrants that its acquisition of the Shares is for investment only, for its own
account and not with a view to "distribution" as that term is used under the
Securities Act.

4.       ADDITIONAL AGREEMENTS.

         4.1 EMPLOYEE MATTERS. Following the Closing, all employees of the
Company will either (i) continue to be employees of the Company or (ii) be
offered comparable employment by Telenetics. Notwithstanding the foregoing,
Telenetics makes no representation, warranty or promise as to the length of time
that any such employee will remain in the employ of the Company or Telenetics
following the Closing (except with respect to those employees who become parties
to Employment Agreements pursuant to SECTION 4.2).

                                       17
<PAGE>

         4.2 EMPLOYMENT AGREEMENTS. Concurrently with the Closing, Telenetics
and each of McLean and T. Keith Odom shall enter into employment agreements (the
"EMPLOYMENT AGREEMENTS") upon such terms and conditions as are mutually
acceptable to Telenetics and each of such persons, to the extent each is a party
thereto.

         4.3 CONSULTING AGREEMENTS. Concurrently with the Closing, Telenetics
and each of Didion and Saunders & Parker, Inc., a Texas corporation ("S & P")
shall enter into consulting agreements (the "CONSULTING AGREEMENTS") upon such
terms and conditions as are mutually acceptable to Telenetics and each of Didion
and S & P, to the extent each is a party thereto.

         4.4 MEMBERSHIP ON THE TELENETICS BOARD OF DIRECTORS. At the next annual
meeting of the shareholders of Telenetics, and at each annual meeting of the
shareholders of Telenetics occurring prior to the expiration of the Earn-Out
Period, Telenetics shall propose and recommend, at the request of S & P, either
Parker or Saunders on Telenetics' management slate of directors for election by
the shareholders of Telenetics. Whichever of Parker or Saunders is not requested
to be proposed and recommended for election pursuant to the preceding sentence
shall be appointed to serve as an advisor to the Telenetics Board of Directors,
shall be given all notices that are provided to directors of Telenetics, at the
same time and in the same manner that such notices are provided to such
directors, and shall be permitted to attend all meetings of the Board of
Directors of Telenetics. Saunders and Parker shall both serve as advisors to the
Board of Directors of Telenetics until either is appointed to the Board of
Directors of Telenetics pursuant to this SECTION 4.4.

         4.5 CERTAIN TAX MATTERS.

                  4.5.1 TAX RETURNS. Sellers shall prepare or cause to be
         prepared and file or cause to be filed all Returns (including any
         amended Return) for the Company for all periods ending on or prior to
         the Closing Date that are required to be filed after the Closing
         ("PRE-CLOSING RETURNS"). Telenetics shall cause an authorized officer
         of the Company to sign and file or cause to be filed the Pre-Closing
         Returns.

                  4.5.2 AUDITS. Sellers shall have the right, at Sellers' own
         expense, to control any audit and to contest, resolve and defend
         against any assessment, notice of deficiency or other adjustment or
         proposed adjustment of Taxes with respect to any taxable period ending
         on or before the Closing Date; provided, however, that Sellers shall
         not have the right to agree to any assessment, deficiency, settlement
         or other adjustment or proposed adjustment of Taxes with respect to any
         taxable period ending after the Closing Date without Telenetics' prior
         written consent.

                  4.5.3 COOPERATION ON TAX MATTERS. Telenetics and Sellers shall
         cooperate fully, as and to the extent reasonably requested by the other
         party, in connection with the filing of Returns and any audit,
         litigation or other proceeding with respect to Taxes. Such cooperation
         shall include the retention and, upon the other party's request, the
         provision of records and information that are reasonably relevant to
         any such audit, litigation or other proceeding and making employees
         available on a mutually convenient basis to provide additional
         information and explanation of any material provided hereunder.

                                       18
<PAGE>

         4.6 TRADE PAYABLES. Following the Closing, Telenetics shall cause the
Company to pay the trade payables and attorneys' fees disclosed by the Company
to Telenetics prior to the Closing, plus reasonable attorneys' fees and costs of
MHK&H (as hereinafter defined) incurred by Saunders, Parker and/or the Company
in connection with the negotiation, preparation and execution of this Agreement
and the other documents executed in connection with this Agreement.

         4.7 SHAREHOLDER RATIFICATION. At the next annual meeting of the
shareholders of Telenetics, which meeting shall occur no later than May 31,
2000, Telenetics shall seek ratification by its shareholders of the contemplated
issuance of the final 2,098,043 shares (the "FINAL SHARES") of the Additional
Stock that may become issuable by Telenetics pursuant to SECTION 1.3 hereof.
Telenetics, the members of the Board of Directors of Telenetics and Sellers
shall enter into a shareholders agreement whereby each party to the shareholders
agreement shall agree to vote his or her shares of Telenetics Common Stock in
favor of the contemplated issuance of the Final Shares.

5.       INDEMNIFICATION OF THE PARTIES.

         5.1 INDEMNIFICATION BY SELLERS. Each Seller shall, severally and not
jointly (i.e., in proportion to each such Seller's ownership in the Shares),
indemnify, defend, protect and hold harmless Telenetics, each of its successors
and assigns and each of its directors, officers, employees, agents, subsidiaries
and affiliates (each an "TELENETICS INDEMNIFIED PARTY"), at all times from and
after the date of this Agreement against all losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, costs and expenses
("LOSSES") (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation ("LEGAL EXPENSES")) based upon,
resulting from or arising out of (i) any inaccuracy or breach of any
representation, or warranty of such Seller contained in or made in connection
with this Agreement, and (ii) the breach by such Seller of, or the failure by
such Seller to observe, any of his respective covenants or other agreements
contained in or made in connection with this Agreement.

         5.2 INDEMNIFICATION BY TELENETICS. Telenetics shall indemnify, defend,
protect and hold harmless each Seller and such Seller's respective heirs,
successors and assigns (each a "SELLER INDEMNIFIED PARTY"), at all times from
and after the date of this Agreement against all Losses based upon, resulting
from or arising out of (i) any inaccuracy or breach of any representation, or
warranty of Telenetics contained in or made in connection with this Agreement,
and (ii) the breach by Telenetics of, or the failure by Telenetics to observe,
any of its covenants or other agreements contained in or made in connection with
this Agreement.

         5.3 ADJUSTMENTS TO INDEMNIFICATION PAYMENTS. Any payment made to any
Telenetics Indemnified Party or any Seller Indemnified Party (each, an
"INDEMNIFIED PARTY") pursuant to this SECTION 5 in respect of any claim will be
net of any insurance proceeds realized by and paid to the indemnified party in
respect of any such claim. The indemnified party will use its reasonable efforts
to make insurance claims relating to any claim for which it is seeking
indemnification pursuant to this SECTION 5; provided, however, that the
indemnified party will not be obligated to make such an insurance claim if the
indemnified party in its reasonable judgment believes the cost of pursuing such
an insurance claim, together with any corresponding increase in insurance
premiums or other chargebacks to the indemnified party, would exceed the value
of the claim for which the indemnified party is seeking indemnification.

                                       19
<PAGE>

         5.4 INDEMNIFICATION PROCEDURES.

                  (a) Promptly after receipt by an indemnified party of notice
         of the commencement of any action, suit or proceeding by a person not a
         party to this Agreement in respect of which the indemnified party will
         seek indemnification hereunder (a "THIRD PARTY ACTION"), the
         indemnified party shall notify the party required to provide
         indemnification (the "INDEMNIFYING PARTY") in writing, but any failure
         to so notify the indemnifying party shall not relieve it from any
         liability that it may have to the indemnified party under SECTION 5.1
         OR 5.2, except to the extent that the indemnifying party is prejudiced
         by the failure to give such notice. The indemnifying party shall be
         entitled to participate in the defense of such Third Party Action and
         to assume control of such defense (including settlement of such Third
         Party Action) with counsel reasonably satisfactory to such indemnified
         party; provided, however, that:

                           (i) the indemnified party shall be entitled to
                  participate in the defense of such Third Party Action and to
                  employ counsel at its own expense (which shall not constitute
                  Legal Expenses for purposes of this Agreement) to assist in
                  the handling of such Third Party Action;

                           (ii) the indemnifying party shall obtain the prior
                  written approval of the indemnified party before entering into
                  any settlement of such Third Party Action or ceasing to defend
                  against such Third Party Action, if pursuant to or as a result
                  of such settlement or cessation, injunctive or other equitable
                  relief would be imposed against the indemnified party or the
                  indemnified party would be adversely affected thereby (it
                  being understood and agreed that monetary payments agreed to
                  and paid by the indemnifying party shall not be deemed to
                  adversely affect the indemnified party);

                           (iii) no indemnifying party shall consent to the
                  entry of any judgment or enter into any settlement that does
                  not include as an unconditional term thereof the giving by
                  each claimant or plaintiff to each indemnified party of a
                  release from all liability in respect of such Third Party
                  Action; and

                           (iv) the indemnifying party shall not be entitled to
                  control the defense of any Third Party Action unless the
                  indemnifying party confirms in writing its assumption of such
                  defense and continues to pursue the defense reasonably and in
                  good faith. After written notice by the indemnifying party to
                  the indemnified party of its election to assume control of the
                  defense of any such Third Party Action in accordance with the
                  foregoing, (i) the indemnifying party shall not be liable to
                  such indemnified party hereunder for any Legal Expenses
                  subsequently incurred by such indemnified party attributable
                  to defending against such Third Party Action, and (ii) as long
                  as the indemnifying party is reasonably contesting such Third
                  Party Action in good faith, the indemnified party shall not
                  admit any liability with respect to, or settle, compromise or
                  discharge the claim underlying, such Third Party Action

                                       20
<PAGE>

                  without the indemnifying party's prior written consent. If the
                  indemnifying party does not assume control of the defense of
                  such Third Party Action in accordance with this SECTION 5.4,
                  the indemnified party shall have the right to defend and/or
                  settle such Third Party Action in such manner as it may deem
                  appropriate at the cost and expense of the indemnifying party,
                  and the indemnifying party will promptly reimburse the
                  indemnified party therefor in accordance with this SECTION
                  5.4. The reimbursement of fees, costs and expenses required by
                  this SECTION 5.4 shall be made by periodic payments during the
                  course of the investigation or defense, as and when bills are
                  received or expenses incurred.

                  (b) If an indemnified party has actual knowledge of any facts
         or circumstances other than the commencement of a Third Party Action
         which cause in good faith it to believe that it is entitled to
         indemnification under this SECTION 5, then such indemnified party shall
         promptly give the indemnifying party notice thereof in writing, but any
         failure to so notify the indemnifying party shall not relieve it from
         any liability that it may have to the indemnified party under SECTION
         5.1 OR 5.2, except to the extent that the indemnifying party is
         prejudiced by the failure to give such notice.

         5.5 MANNER OF INDEMNIFICATION. All indemnification by a Seller under
this SECTION 5 shall be effected by the payment of cash, the delivery of a bank
cashier's check, the delivery of shares of Base Stock or Additional Stock free
and clear of any liens, security interests, pledges, agreements, claims, charges
or other encumbrances (other than those arising under securities laws and those
created by or at the request of Telenetics), or in Telenetics' sole discretion,
may be accomplished by the set off of any amounts otherwise payable by
Telenetics to Sellers pursuant to the Telenetics Transaction Agreements or by a
combination of the foregoing. For purposes of this SECTION 5.5, the value of a
share of Base Stock or Additional Stock shall be equal to the closing sale price
of a share of Telenetics Common Stock on the date immediately preceding the
delivery of such shares pursuant to this SECTION 5.5. Indemnification by
Telenetics under this SECTION 5 may be effected by the payment of cash or
delivery of a check, or by a combination of the foregoing, and neither the
exercise of nor the failure to exercise such right of set off will constitute an
election of remedies or limit Telenetics in any manner in the enforcement of any
other remedies that may be available to it. The exercise of such right of set
off by Telenetics in good faith, whether or not ultimately determined to be
justified, will not constitute an event of default under any of the Telenetics
Transaction Agreements.

         5.6 SURVIVAL. The representations, warranties, covenants and agreements
of the parties made in this Agreement shall survive (and not be affected in any
respect by) the Closing and any examination or investigation conducted by or on
behalf of the parties hereto and any information that any party may receive
pursuant to the Disclosure Schedule or otherwise. Notwithstanding the foregoing,
the rights to indemnification provided for in this SECTION 5 with respect to
each representation and warranty contained in this Agreement shall terminate on
the date (the "SURVIVAL DATE") occurring on the third anniversary of the Closing
Date; provided, however, that (i) the right to indemnification concerning the
matters set forth in SECTIONS 2.8, 2.13 AND 2.16 shall survive until their
applicable statutes of limitation, (ii) the right to indemnification concerning
the matters set forth in SECTION 2.2 shall continue forever and (ii) the right
to indemnification with respect to such representations and warranties, and the
liability of any party with respect thereto, shall not terminate with respect to
any claim, whether or not fixed as to liability or liquidated as to amount, with
respect to which such indemnifying party has been given written notice prior to
the Survival Date.

                                       21
<PAGE>

         5.7 LIMITATION ON AMOUNT. Notwithstanding anything to the contrary
contained in this Agreement, the aggregate amount to be paid by any Seller to
Telenetics with respect to any Loss based upon, resulting from or arising out of
any inaccuracy or breach of any representation or warranty of such Seller
contained in this Agreement, and the aggregate amount to be paid by Telenetics
to any Seller with respect to any Loss based upon, resulting from or arising out
of any inaccuracy or breach of any representation or warranty of Telenetics
contained in this Agreement, shall not exceed the value of the Base Purchase
Price paid to such Seller, as calculated based upon the closing sale price of a
share of Telenetics Common Stock on the Closing Date (which is $4.062), plus in
the case of Saunders, one-half of the aggregate amount paid by Telenetics to S &
P at the Closing and pursuant to the Telenetics Note (as defined below), plus in
the case of Parker, one-half of the aggregate amount paid by Telenetics to S & P
at the Closing pursuant to the Telenetics Note.

         5.8 BASKET. Notwithstanding anything to the contrary contained in this
Agreement, Sellers shall not be liable to Telenetics with respect to any single
Loss based upon, resulting from or arising out of any inaccuracy or breach of
any representation or warranty of Sellers contained in this Agreement that does
not exceed $50,000; provided, however, that when the aggregate amount of all
such Losses reaches $50,000, Sellers shall, subject to the above limitation of
their maximum aggregate liability, thereafter be liable to Telenetics in full
for all such Losses.

6.       CLOSING.

         6.1 CLOSING DATE. The closing of the transactions contemplated by this
Agreement ("CLOSING") will take place at a location mutually agreed upon by the
parties on the date hereof ("CLOSING DATE").

         6.2 DELIVERIES BY SELLERS AT THE CLOSING. At the Closing, Sellers shall
deliver to Telenetics:

                  (a) Certificates representing all of the Shares, free of liens
         or encumbrances (other than encumbrances imposed by applicable
         securities laws), accompanied by duly executed stock powers by each
         Seller in favor of Telenetics with all necessary transfer stamps
         affixed thereto or other evidence of payment of applicable stock
         transfer taxes, if any;

                  (b) The resignations of each of the officers and directors of
         the Company;

                  (c) This Agreement duly executed by each of the Sellers,
         accompanied by the consent of each Seller's spouse, as set forth on the
         signature pages hereof;

                  (d) The Employment Agreements duly executed by each of the
         individuals who are parties thereto, together with evidence of the
         termination of the existing employment relationships between the
         Company and each of the individuals who are parties to the Employment
         Agreements;

                                       22
<PAGE>

                  (e) The Consulting Agreements duly executed by each of the
         individuals or entities who are parties thereto, together with evidence
         of the termination of any existing consulting or employment
         relationships between the Company and S & P and/or Didion;

                  (f) The Registration Rights Agreements, duly executed by each
         of the individuals or entities that are parties thereto;

                  (g) Certificates dated as of a date no longer than ten days
         prior to the Closing Date, duly issued by the secretaries of state
         and/or other appropriate officials in the Company's state of
         incorporation and in each jurisdiction where the Company is qualified
         to do business as a foreign corporation, showing that the Company is in
         good standing and authorized to do business in each such state and,
         where such information is generally made available by the appropriate
         authorities, that all state franchise and/or income tax returns have
         been filed and taxes paid for the Company for all periods prior to the
         Closing;

                  (h) Required consents of third parties, if any;

                  (i) The opinion of Munsch Hardt Kopf & Harr, P.C., counsel to
         the Company, Saunders, Parker and S & P ("MHK&H"); and

                  (j) Evidence satisfactory to Telenetics and its counsel that
         the contracts or agreements listed on the Disclosure Schedule to be
         terminated concurrently with the Closing have been terminated.

         6.3 DELIVERIES BY TELENETICS AT THE CLOSING. At the Closing, Telenetics
shall deliver to Sellers:

                  (a) Certificates representing the Base Stock, with facsimile
         signatures of appropriate Telenetics officers and endorsement by
         Telenetics' transfer agent;

                  (b) Option agreements representing the Options;

                  (c) The Employment Agreements;

                  (d) The Consulting Agreements;

                  (e) The Registration Rights Agreements;

                  (f) Check made payable to S & P in the amount of one-half of
         the principal and interest due as of the Closing from the Company to S
         & P pursuant to the Promissory Note dated August 27, 1999 made by the
         Company in favor of S & P (the "S & P NOTE");

                  (g) Promissory note made by Telenetics in favor of S & P in
         the principal amount of one-half of the principal and interest due as
         of the Closing from the Company to S & P pursuant to the S & P Note
         (the "TELENETICS NOTE");

                                       23
<PAGE>

                  (h) Promissory note made by Telenetics in favor of McLean in
         the principal amount of $107,500, as referenced in the Disclosure
         Schedule;

                  (i) Evidence of the appointment of Saunders and Parker as
         advisors to the Telenetics Board of Directors;

                  (j) Required consents of third parties, if any; and (k) The
         opinion of Rutan & Tucker, LLP, counsel to Telenetics.

         6.4 DELIVERIES BY THIRD PARTIES AT THE CLOSING. At the Closing, the
following additional deliveries shall be made:

                  (a) Sellers shall cause S & P to deliver to Telenetics for
         cancellation that certain Promissory Note dated May 10, 1999 in the
         principal amount of $30,000 made by the Company in favor of S & P and
         the S & P Note.

                  (b) Sellers shall cause S & P and the Company to provide to
         Telenetics evidence satisfactory to Telenetics and its counsel that the
         contracts or agreements listed on the Disclosure Schedule to be
         terminated concurrently with the Closing have been terminated.

                  (c) Sellers shall cause S & P to deliver duly executed UCC
         termination statements terminating S & P's security interest in the
         assets of the Company;

                  (d) Armani shall execute and deliver to S & P a guaranty and a
         stock pledge agreement pledging as security for Telenetics' repayment
         of the Telenetics Note 500,000 of the shares of Telenetics Common Stock
         owned by Armani immediately prior to the Closing.

7.       NON-COMPETITION.

         7.1 DEFINITIONS. For purposes of this SECTION 7, the following terms
shall have the following meanings:

                  (a) "BUSINESS" shall mean the development, production,
         manufacture, sale, lease or distribution of the Technology and/or
         products and services relating to the Technology, as developed, in
         development or conducted by the Company as of, or immediately preceding
         the date of this Agreement, or conducted, developed or in development
         by the Company or by Telenetics or their respective affiliates,
         successors or assigns during the Non-Competition Period, the Employee
         Non-Solicitation Period or the Customer Non-Solicitation Period;

                  (b) "BUSINESS TERRITORY" shall mean the world, including all
         countries and political subdivisions thereof.

                                       24
<PAGE>

                  (c) "COMPETE" shall mean, with respect to the Business: (i)
         managing, supervising or otherwise participating in a management or
         sales capacity; or (ii) otherwise managing, operating, controlling,
         participating in the ownership, management or control of, or being
         connected with or having any interest in, as a stockholder, agent,
         partner, lender, consultant, advisor or otherwise, any business or
         person that provides goods, products or services competitive with those
         provided by the Business; provided, however, that nothing contained
         herein will prohibit a Seller from owning less than one percent of any
         class of securities listed on a national securities exchange or traded
         publicly in the over-the-counter market or from performing his duties
         in accordance with the terms of the Employment Agreement or Consulting
         Agreement to which he or an entity by which he is employed is a party;

                  (d) "CUSTOMER NON-SOLICITATION PERIOD" shall mean, with
         respect to each Seller, the later of: (i) the period commencing on the
         Closing Date and continuing for a period of two years after the
         expiration of the Earn-Out Period; and (ii) two years after the
         termination of such Seller's employment or consulting relationship with
         the Company, Telenetics or any of their respective successors, assigns,
         subsidiaries or affiliates; provided, however, that the Customer
         Non-Solicitation Period with respect to each Seller shall be extended
         by the number of days in which such Seller is or was engaged in
         activities constituting a breach of SECTION 7.4.

                  (e) The term "CUSTOMERS" shall mean, with respect to each
         Seller, any person that, as of or immediately preceding the date of
         this Agreement, or during the Non-Competition Period, the Employee
         Non-Solicitation Period or the Customer Non-Solicitation Period is or
         was a client or customer of the Company, Telenetics or any of their
         respective subsidiaries or affiliates.

                  (f) The words "DIRECTLY OR INDIRECTLY," as they modify the
         word "Compete" or "Competing," shall mean: (i) acting as an agent,
         representative, consultant, officer, director, member, independent
         contractor or employee of any person that is Competing with the
         Business; (ii) participating in any such Competing person or enterprise
         as an owner, partner, limited partner, joint venturer, member, creditor
         or shareholder (except as expressly permitted herein); or (iii)
         communicating to any such Competing person or enterprise the names or
         addresses or any other information concerning any Customer or any other
         confidential information of the Business.

                  (g) "EMPLOYEES" shall mean: (i) any employee of the Company,
         Telenetics or any of their respective subsidiaries or affiliates as of,
         or immediately prior to the date of this Agreement or during the
         Non-Competition Period, the Employee Non-Solicitation Period or the
         Customer Non-Solicitation Period; or (ii) any former employee of the
         Company, Telenetics or any of their respective subsidiaries or
         affiliates whose employment with the Company, Telenetics, or any of
         their respective successors, assigns, subsidiaries or affiliates ceased
         less than one year before the date of co-venturing, solicitation,
         inducement or recruitment.

                  (h) "EMPLOYEE NON-SOLICITATION PERIOD" shall mean, with
         respect to each Seller, the later of: (i) the period commencing on the
         Closing Date and continuing for a period of two years after the
         expiration of the Earn-Out Period; and (ii) two years after the
         termination of such Seller's employment or consulting relationship with
         the Company, Telenetics or any of their respective successors, assigns,
         subsidiaries or affiliates; provided, however, that the Employee
         Non-Solicitation Period with respect to each Seller shall be extended
         by the number of days in which such Seller is or was engaged in
         activities constituting a breach of SECTION 7.3.

                                       25
<PAGE>

                  (i) "NON-COMPETITION PERIOD" shall mean, with respect to each
         Seller, the later of: (i) the period commencing on the Closing Date and
         continuing for a period of two years after the expiration of the
         Earn-Out Period; and (ii) two years after the termination of such
         Seller's employment or consulting relationship with the Company,
         Telenetics or any of their respective successors, assigns, subsidiaries
         or affiliates; provided, however, that the Non-Competition Period with
         respect to each Seller shall be extended by the number of days in which
         such Seller is or was engaged in activities constituting a breach of
         SECTION 7.2.

                  (j) The term "PERSON" shall mean any natural person, firm,
         partnership, association, corporation, company, limited liability
         company, limited partnership, trust, business trust, Governmental
         Entity or other entity.

                  (k) The term "PROSPECTIVE CUSTOMER" shall mean any person that
         Telenetics, the Company, or any of their respective subsidiaries or
         affiliates has contacted, or has developed a strategy or plan to
         contact, for the purpose of acquiring such person as a customer or
         client during the period from January 1, 1999 through the expiration of
         the Customer Non-Solicitation Period.

         7.2 NON-COMPETITION. During the Non-Competition Period, no Seller
shall, and no Seller shall permit any of such Seller's affiliates to, directly
or indirectly Compete with the Business in the Business Territory. Set forth in
the Company Disclosure Schedule is a complete and accurate listing of all states
within the United States and all foreign countries and territories in which the
Company or its predecessor has sold or marketed its products or services or
conducted its business prior to the date of this Agreement.

         7.3 NON-SOLICITATION OF EMPLOYEES. Sellers recognize that the Employees
are a valuable resource of Telenetics and the Company. Accordingly, during the
Employee Non-Solicitation Period, no Seller shall, either alone or in
conjunction with any other person or entity, directly or indirectly go into
business with any Employee or solicit, induce or recruit any Employee to leave
the employ of Telenetics, the Company, or any of their respective successors,
assigns, subsidiaries or affiliates.

         7.4 NON-SOLICITATION OF CUSTOMERS. Sellers recognize that the Customers
and Prospective Customers are a valuable resource of Telenetics and the Company.
Accordingly, during the Customer Non-Solicitation Period, no Seller shall,
either alone or in conjunction with any other person or entity, directly or
indirectly call on, solicit, take away, accept as a client, customer or
prospective client or customer, or attempt to call on, solicit, take away,
accept as a client, customer or prospective client or customer a Customer or
Prospective Customer for the purpose of Competing with the Business.

                                       26
<PAGE>

         7.5 ADDITIONAL AGREEMENTS. Each Seller hereby expressly agrees and
acknowledges that:

                  (a) Telenetics and the Company have protectable business
         interests throughout the Business Territory, and that competition with
         and against such business interests would be harmful to Telenetics or
         the Company, as the case may be;

                  (b) the covenants contained in this SECTION 7 are reasonable
         as to time and geographical area and do not place any unreasonable
         burden upon each Seller's ability to earn a livelihood;

                  (c) the public will not be harmed as a result of enforcement
         of the covenants contained in this SECTION 7; (d) the personal legal
         counsel for each of Saunders and Parker has reviewed the covenants
         contained in this SECTION 7;

                  (e) the personal legal counsel for each of McLean and Didion
         has reviewed the covenants contained in this SECTION 7, and/or each of
         McLean and Didion has had ample opportunity but has knowingly and
         willingly declined to take advantage of such opportunity for his
         personal legal counsel to review the covenants contained in this
         SECTION 7;

                  (f) the parties have entered into the covenants contained
         herein in connection with and as a condition precedent to the
         consummation of the Agreement, pursuant to which Telenetics shall
         acquire the Company; the agreements, actions, covenants, and promises
         contained herein are intended to protect and ensure the value of
         Business, including its goodwill, which actions, covenants, and
         promises are a material consideration to Telenetics in connection with
         the Agreement; and, to the extent that the laws of any jurisdiction in
         which this Agreement shall be interpreted, construed, and/or enforced
         distinguish between covenants given in connection with the sale of a
         business and its goodwill and covenants given in connection with
         employment, this covenant will be given the broader interpretation
         customarily given to covenants in connection with the sale of a
         business and the transfer of goodwill to Telenetics, notwithstanding
         any employment or engagement as a consultant of each Seller by
         Telenetics or the Company following the Closing;

                  (g) Telenetics and each Seller agree that the provisions of
         this SECTION 7 shall survive the Closing; and

                  (h) each Seller understands and agrees to each and every term
         and condition contained in this SECTION 7.

                                       27
<PAGE>

         7.6 REMEDIES; ENFORCEABILITY. Each Seller recognizes and acknowledges
that irreparable damage will result to Telenetics in the event of a breach by
that Seller or any of that Seller's affiliates of the provisions of this SECTION
7, and, accordingly, in the event of such a breach, Telenetics will be entitled,
in addition to any other legal or equitable damages and remedies to which it may
be entitled or which may be available, to an injunction to restrain the
violation thereof. If any provision of this SECTION 7 shall be adjudicated by a
court of competent jurisdiction to be invalid or unenforceable because of the
scope, duration, area of its applicability, or any other reason, the court
making such determination will have the power to modify such scope, duration, or
area, or all of them, or to strike an invalid or unenforceable provision, in
whole or in part, to the extent necessary to make such scope, duration, area, or
provision valid and enforceable.

8.       MISCELLANEOUS.

         8.1 GOVERNING LAW. The internal laws of the State of California
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms and the interpretation and enforcement
of the rights and duties of the parties hereto.

         8.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. No party hereto
may assign any of its rights or obligations hereunder without the prior written
consent of the other parties hereto. Subject to the preceding sentence, this
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns. Nothing expressed
or referred to in this Agreement will be construed to give any person or entity
other than the parties to this Agreement any legal or equitable right, remedy or
claim with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their respective heirs,
successors and permitted assigns.

         8.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the interest of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the economic,
business and other purpose of the void unenforceable provision.

         8.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original as regards any party
whose signature appears thereon and all of which together will constitute one
and the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.

         8.5 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.

         8.6 AMENDMENT AND WAIVERS. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default.

                                       28
<PAGE>

         8.7 EXPENSES. Except as set forth in SECTION 4.6, Telenetics, on the
one hand, and Sellers, on the other, will each bear their own expenses and legal
fees incurred with respect to this Agreement and the transactions contemplated
hereby.

         8.8 ATTORNEYS' FEES. Should suit be brought to enforce or interpret any
part of this Agreement, the prevailing party will be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including, without limitation, costs, expenses and fees
on any appeal).

         8.9 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (at such other address for a party as shall be
specified by like notice):

         If to the Company to:      eflex Wireless, Inc.
                                    138 North Moon Avenue
                                    Brandon, Florida 33510-4400
                                    Attention: President
                                    Telecopier: (813) 681-2119

         With a copy to:            Munsch Hardt Kopf & Harr, P.C.
                                    4000 Fountain Place
                                    1445 Ross Avenue
                                    Dallas, Texas 75202
                                    Attention: Sally A. Schreiber, Esq.
                                    Telecopier: (214) 978-4323

         If to Telenetics to:       Telenetics Corporation
                                    25111 Arctic Ocean
                                    Lake Forest, California 92630
                                    Attention: Chief Executive Officer
                                    Telecopier: (949) 455-9324

         With a copy to:            Rutan & Tucker, LLP
                                    611 Anton Boulevard, Suite 1400
                                    Costa Mesa, California 92626
                                    Attention: Larry A. Cerutti, Esq.
                                    Telecopier: (714) 546-9035

         If to Saunders:            William C. Saunders
                                    5735 Prestwick Lane
                                    Dallas, Texas 75252

                                       29
<PAGE>

         If to Parker:              Terry S. Parker
                                    8463 North 1175 West
                                    Monticello, Indiana 47960

         If to Saunders or Parker,
         then with a copy to:       Munsch Hardt Kopf & Harr, P.C.
                                    4000 Fountain Place
                                    1445 Ross Avenue
                                    Dallas, Texas 75202
                                    Attention: Sally A. Schreiber, Esq.
                                    Telecopier: (214) 978-4323

         If to Didion:              Edward L. Didion
                                    9828 Gallagher Road
                                    Dover, Florida 33527

         If to McLean:              John D. McLean
                                    400 Thornwyck Trail
                                    Roswell, Georgia 30076
                                    Telecopier: (770) 643-7816

         All notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of delivery, (b) in
the case of a telecopy, when the party receiving the copy shall have confirmed
receipt of the communication (including by means of a machine-generated
confirmation), (c) in the case of delivery by nationally-recognized overnight
courier, on the business day following dispatch, and (d) in the case of mailing,
on the third business day following such mailing.

         8.10 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof will
not be construed for or against either party. A reference to a Section or an
Exhibit will mean a Section in, or Exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for reference purposes
only and will not in any manner limit the construction of this Agreement which
will be considered as a whole. This Agreement has been negotiated between
unrelated parties who are sophisticated and knowledgeable in the matters
contained in this Agreement and who have acted in their own self interest. In
addition, each party affirms that it has been afforded the opportunity to
receive independent advice from its respective legal counsel as to the
advisability of entering into this Agreement and to consult and discuss the
provisions of this Agreement with its respective legal counsel and fully
understands the legal effect of each provision. Accordingly, any rule of law,
including Section 1654 of the California Civil Code, as well as any other
statute, law, ordinance or common law principles or other authority of any
jurisdiction of similar effect, or legal decision that would require
interpretation of any ambiguities in this Agreement against the party who has
drafted it is not applicable and is hereby waived. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the purpose of
the parties, and this Agreement shall not be interpreted or construed against
any party to this Agreement because that party or any attorney or representative
for that party drafted this Agreement or participated in the drafting of this
Agreement. FURTHER, THE LIMITATION OF LIABILITIES AND REMEDIES AND THE EXCLUSION
OF DAMAGES AND WARRANTIES CONTAINED HEREIN REFLECT A BARGAINED FOR ALLOCATION OF
RISKS BASED ON NEGOTIATIONS AND CONSIDERATION EXCHANGED BETWEEN THE PARTIES.

                                       30
<PAGE>

         8.11 NO JOINT VENTURE. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other. The status of
the parties hereto is, and at all times will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.

         8.12 FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.

         8.13 ABSENCE OF THIRD PARTY RIGHTS. No provisions of this Agreement are
intended, nor will be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any client, customer,
affiliate, shareholder or partner of any party hereto or any other person or
entity unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.

         8.14 ENTIRE AGREEMENT. This Agreement and the schedules and exhibits
hereto constitute the entire understanding and agreement of the parties hereto
with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto. The
express terms hereof control and supersede any course of performance or usage of
trade inconsistent with any of the terms hereof.

         8.15 CHANGE IN TELENETICS COMMON STOCK. If the outstanding shares of
Telenetics Common Stock are changed, reclassified, split, combined, or converted
into or exchanged for another class of securities or securities of another
issuer, whether by amendment to the articles of incorporation of Telenetics or
by consolidation, merger or otherwise, appropriate adjustment shall be made to
the terms of this Agreement to give effect to such change, reclassification,
split, combination, conversion or exchange.

                  [remainder of page intentionally left blank]



                                       31
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed by their duly authorized respective officers as of the
date first above written.

                                        TELENETICS CORPORATION,
                                        a California corporation


                                        By: /s/ Michael A. Armani
                                           -------------------------------------
                                           Michael A. Armani, President


                                        SELLERS:


                                           /s/ Edward L. Didion
                                           -------------------------------------
                                           Edward L. Didion, an individual


                                           /s/ John D. McLean
                                           -------------------------------------
                                           John D. McLean, an individual


                                           /s/ William C. Saunders
                                           -------------------------------------
                                           William C. Saunders, an individual


                                           /s/ Terry S. Parker
                                           -------------------------------------
                                           Terry S. Parker, an unmarried man


                                       32
<PAGE>



Each of the undersigned spouses has executed this Agreement for purposes of
confirming and acknowledging that they (i) are familiar with this Agreement and
its contents, (ii) consent to the conveyance to Telenetics of their community
property or other interest, if any, in shares of capital stock of the Company
pursuant to this Agreement, (iii) acknowledge that the shares of Telenetics
Common Stock and Options to be delivered to their spouse pursuant to this
Agreement will be issued in the name of their spouse only, and that such
issuance and their spouse's ownership and transfer of such securities is subject
to the terms and conditions of this Agreement.


                                   /s/ Teralyn Didion
                                   ---------------------------------------------
                                   Teralyn Didion, spouse of Edward L. Didion


                                   /s/ Kathleen M. McLean
                                   ---------------------------------------------
                                   Kathleen M. McLean, spouse of John D. McLean



                                   /s/ Paula Saunders
                                   ---------------------------------------------
                                   Paula Saunders, spouse of William C. Saunders



                                       33
<PAGE>



                   EXHIBIT A TO EFLEX STOCK PURCHASE AGREEMENT

                          Description of the Technology
                          -----------------------------


1.       See attached Power Point Presentation, which is incorporated herein by
         reference.

2.       See attached copy of the Company's website, which is incorporated
         herein by reference.

3.       See attached Description of Methods/Devices for Registering and
         Controlling Remote Cellular Modules, which is incorporated herein by
         reference.


<PAGE>

                                      FINAL

     DISCLOSURE SCHEDULE FOR STOCK PURCHASE AGREEMENT DATED JANUARY 7, 2000
    BY AND AMONG TELENETICS CORPORATION ("TELENETICS") AND EDWARD L. DIDION,
  JOHN D. MCLEAN, WILLIAM C. SAUNDERS AND TERRY S. PARKER ("SELLERS") RELATING
      TO THE PURCHASE AND SALE OF THE OUTSTANDING SHARES OF CAPITAL STOCK
                     OF EFLEX WIRELESS, INC. (THE "COMPANY")

         The following section numbers refer to the appropriate sections of the
above-referenced Stock Purchase Agreement and are followed by descriptions of
disclosures being made by Sellers.

2.2. CAPITAL STRUCTURE

         2.2.1 - The representations contained therein are subject to any rights
         under community property laws, if any; restrictions on transferability
         under applicable securities laws; and agreements, encumbrances, and
         rights that arose under those contracts listed in Section 2.24 of this
         Disclosure Schedule except those described in m, n and o therein.

         2.2.2 - The representations contained therein are subject to any
         rights, commitments and agreements that arose under those contracts
         listed in Section 2.24 of this Disclosure Schedule except those
         described in m, n and o therein.

2.4 FINANCIAL STATEMENTS

         The only items that may be of significance and are not reflected,
         accrued for or shown in footnotes to the Financial Statements are as
         follows:

         a)     John McLean's deferred Base Salary of $87,500 as described in
                Section 3 of his Employment and Noncompetition Agreement dated
                as of June 1, 1999 between Mr. McLean and the Company, as
                successor to Residential Utility Meter Service's, Inc. ("RUMS")
                and his $20,000 "Completion of Funding" bonus as described in
                Section 4 of such agreement. These amounts are being paid by
                Telenetics through a note being issued in connection with the
                closing.

         b)     T. Keith Odom's annual $10,000 bonus, which was due after
                December 31, 1999 and is being paid by Telenetics as a signing
                bonus provided for in the employment agreement being entered
                into at the closing between Telenetics and Mr. Odom.

         The liabilities described in Section 2.9 to this Disclosure Schedule
         (to the extent they are not contained on the Financial Statements) are
         incorporated herein by reference.


                                  Page 1 of 6
<PAGE>

2.9 ABSENCE OF UNDISCLOSED LIABILITIES

         The November 30, 1999 Financial Statements show an outstanding Accounts
         Payable of $40,797.22. As of that time, $18,573.80 was due to GTE
         Telecommunications Services Incorporated ("GTE TSI") and $23,195 was
         due to Munsch, Hardt, Kopf and Harr, P.C. If a contract amendment is
         completed with GTE TSI, GTE TSI has agreed to reduce the past due
         amounts to $5,537. If no such contract amendment is reached with GTE
         TSI, the Company would be liable to reimburse GTE TSI for the above
         payable plus any development or testing costs that GTE TSI has incurred
         on behalf of the Company pursuant to the Information and Network
         Products and Services Agreement dated January 16, 1999 between the
         Company and GTE TSI (the "Existing GTE Contract"). GTE TSI has provided
         significant testing and development support over the last several
         months, but they have not provided the Company with any estimated
         costs, because they believe the contract will be completed soon and
         their support to the Company is not billable to the Company if the
         contract is signed. Sellers believe that if billable, the costs will be
         less than $100,000.


         Sections 2.4, 2.21 and 2.22 of this disclosure schedule are
         incorporated herein by reference.

         The liabilities that arise under the contracts disclosed in Section
         2.24 of this Disclosure Schedule are incorporated herein by reference.

         The Company has received an invoice from Saunders & Parker, Inc. in the
         amount of $2,051 for legal fees incurred in connection with the
         formation of the Company.

         Also, the Company has paid a $10,000 retainer to Wayne Porter at
         Trenam, Kemper for patent work that is projected to total about
         $45,000.

         Finally, the Company has been making monthly payments under a
         lease/service agreement on a copy machine that is leased by PCS under
         an agreement that expires in April 2000; the Company has been paying
         GMAC Financial Services approximately $260 for vehicle leased by PCS
         for Ed Didion; and the Company has been reimbursing John McLean for an
         apartment leased by Mr. McLean in Brandon, Florida. In connection with
         the Stock Purchase Agreement, the Company has agreed to continue to
         make payments due on the copy machine through April 2000. In addition,
         the Company and Sellers have agreed that following the closing of the
         Stock Purchase Agreement, the Company will no longer be responsible for
         payments on the leased vehicle and the apartment.

2.10 ABSENCE OF CERTAIN CHANGES OR EVENTS

         2.10 (a) - Since the November 30, 1999 Financial Statements, the
         Company borrowed another $40,000 from Saunders & Parker, Inc. Thus, the
         `Note Payable to S&P' in the Financial Statements has increased from
         $227,000 to $267,000.

2.12 CERTAIN AGREEMENTS

         Section 2.4 above is incorporated herein by reference. Also, repayment
         of the note from the Company to Saunders & Parker, Inc. is triggered by
         this transaction.

                                   Pge 2 of 6

<PAGE>

2.14 INTELLECTUAL PROPERTY

         2.14 (a) - The Company owns key intellectual property needed to provide
         its goods and services, but does not own all intellectual property
         rights it requires to conduct its business. To access remote devices
         using the `Static TLDN' technology which the Company is in the process
         of patenting, the service requires the licensing of a couple of patents
         of GTE TSI. In the contract amendment that is under negotiation, GTE
         TSI will be granting the Company the right to operate under its
         patents.

         To access remote devices, the device may be `paged' with one or more
         numbers. If more than one number is used (as the service currently is
         configured), this `practices' a "Multi-NAM" patent held by another
         telecommunications company (possibly Nokia). If the Company continues
         to purchase its cellular transceivers from companies licensed to sell
         products incorporating the "Multi-NAM" patent (such as Ericcson and
         Standard), then the Company is effectively paying a royalty to use the
         "Multi-NAM" patent through the price it pays for the transceivers.
         There may be many other patents required to conduct the Company's
         business (e.g. cellular technologies, etc.), but the company intends to
         buy products from licensees so the Company does not need to know about
         these patents. If the Company chooses to not buy products from existing
         licensees (e.g. in order to further cost reduce the product), then the
         Company would be required to obtain licenses from and pay royalties to
         the companies holding the patents.

         There is a HighwayMaster patent on "data messaging using a feature
         request" (Patent #5,771,455), for which Sellers believe GTE TSI shares
         licensing rights. This patent appears to cover use of "feature
         requests" to send data to a host, which is what the Company uses and
         thus may become an issue. The Company asked GTE TSI why they had not
         included it in their list of patents in the contract amendment that is
         under negotiation, and their intellectual property attorney indicated
         that he did not think it applied to our service (only an opinion, not a
         full analysis of the issue). The Company's Chief Technical Officer
         feels the HighwayMaster patent would not hold up in a court test,
         because it is trying to patent "feature requests" that were defined in
         the public domain well over a year before the patent application was
         filed (i.e. it tries to patent the public IS41 Standard). The Sellers
         feel that the patent does not apply to the majority of the Company's
         services, as they are stationary, not mobile as claimed in the patent
         or they pass through GTE TSI, a licensee. But if the patent does apply
         to services of the Company, then the Company faces payment of royalties
         to HighwayMaster (or some arrangement), sublicensing through GTE TSI or
         others, or contesting the patent in court. The Company has considered
         having its patent attorney research and opine on the validity of the
         patent, but has not yet initiated that costly undertaking.

         2.14 (c) - See Section 2.14 (a) above for patents that may be infringed
         by the Company's services.

                                  Page 3 of 6
<PAGE>

2.17 INTERESTED PARTY TRANSACTIONS

         Contracts contained in Section 2.24 of this Disclosure Schedule are
         incorporated herein by reference.

2.21 PERSONAL PROPERTY

         The Company has purchased portable computers, desktop computers,
         printers, some documents, telephones, supplies and certain software
         (such as Office 2000, Visual Basic 6.0, Windows 98, etc.). The receipts
         for all these purchases are contained in the Company's expense reports
         submitted by its three employees.

         The remainder of the tangible personal property in the office is owned
         by Progressive Computer Software, Inc., which is a corporation
         wholly-owned by Ed Didion ("PCS"). Pursuant to the Bill of Sale,
         Assignment, Assumption, and Option Agreement dated August 27, 1999
         between PCS and the Company (the "PCS Bill of Sale"), the Company
         purchased, among other things, all assets needed for the Company's
         telemetry/meter reading service system, all hardware and software
         developed by Ed Didion since January 1, 1998 and all assets acquired
         since May 10, 1999. The PCS Bill of Sale also gives the Company the
         unlimited right to use on a rent-free, cost-free basis any and all of
         PCS's furniture, fixtures, equipment and supplies that were not
         transferred pursuant to the PCS Bill of Sale, together with an option
         to acquire any or all of such items for their fair market value on or
         before April 30, 2000.

2.22 REAL PROPERTY

         The building the Company occupies is leased from One Stop Financial
         Center, Inc. by PCS pursuant to a Lease Agreement dated November 17,
         1998. Pursuant to the PCS Bill of Sale, PCS assigned to the Company
         PCS's rights under the lease agreement. the Company pays the monthly
         lease fees of about $1,076 to One Stop Financial Center, Inc.

2.24 CONTRACTS

         The Existing GTE Contract described in Section 2.9 above, as amended by
         that certain Agreement to Consent of Assignment and Termination dated
         effective September 1, 1999 between GTE TSI, RUMS and the Company, and
         the confidentiality and nondisclosure agreements listed below are the
         only existing contracts or agreements between the Company and persons
         or entities other than the Sellers and/or entities owned or controlled
         by one or more of the Sellers:

                  James Gunn - 11/3/99
                  Telenetics - 10/15/99
                  HighwayMaster - 9/20/99
                  Bell South - 6/1/99
                  Paradigm Manufacturing - 3/4/99
                  Bob Bozman - 3/4/99
                  GTE TSI - 10/12/98

         The Company is a party to only the following contracts or agreements
         with one or more of the Sellers and/or entities owned or controlled by
         one or more of the Sellers:

                                  Page 4 od 6
<PAGE>

         a)     Loan Agreement dated August 27, 1999 between the Company and
                Saunders & Parker, Inc. - to be terminated at the closing of the
                Stock Purchase Agreement

         b)     Promissory Note dated August 27, 1999 in the principal amount of
                $305,000 made by the Company in favor of Saunders & Parker,
                Inc., which note supersedes the Promissory Note dated May 10,
                1999 in the principal amount of $30,000, made by RUMS in favor
                of Saunders & Parker, Inc. - to be terminated at the closing of
                the Stock Purchase Agreement

         c)     Security Agreement dated August 27, 1999 between the Company and
                Saunders & Parker, Inc. - to be terminated at the closing of the
                Stock Purchase Agreement

         d)     Shareholders' Agreement dated August 27, 1999 between the
                Company and each of the Sellers - to be terminated at the
                closing of the Stock Purchase Agreement

         e)     Voting Agreement dated August 27, 1999 between the Company and
                each of the Sellers - to be terminated at the closing of the
                Stock Purchase Agreement

         f)     Push/Pull Agreement dated August 27, 1999 between the Company,
                William C. Saunders and Terry S. Parker - to be terminated at
                the closing of the Stock Purchase Agreement

         g)     5% Option Agreement dated August 27, 1999 between the Company
                and each of the Sellers - to be terminated at the closing of the
                Stock Purchase Agreement

         h)     Option Agreement dated August 27, 1999 between the Company,
                William C. Saunders and Terry S. Parker - to be terminated at
                the closing of the Stock Purchase Agreement

         i)     Consulting Agreement dated June 1, 1999 between Saunders &
                Parker, Inc. and the Company, as successor to RUMS - to be
                terminated at the closing of the Stock Purchase Agreement

         j)     Employment and Noncompetition Agreement dated June 1, 1999
                between John D. McLean and the Company, as successor to RUMS -
                to be terminated at the closing of the Stock Purchase Agreement

         k)     Employment and Noncompetition Agreement dated June 1, 1999
                between Edward L. Didion and the Company, as successor to RUMS -
                to be terminated at the closing of the Stock Purchase Agreement

         l)     Memorandum of Agreement dated May 10, 1999 between Saunders &
                Parker, Inc., William C. Saunders, Terry S. Parker, Ed Didion
                and the Company, as successor to RUMS - to be terminated at the
                closing of the Stock Purchase Agreement

                                  Page 5 of 6
<PAGE>

         m)     Bill of Sale and Assignment Agreement dated August 27, 1999
                between Edward L. Didion and the Company

         n)     Bill of Sale, Assignment, Assumption and Option Agreement dated
                August 27, 1999 between Progressive Computer Software, Inc. and
                the Company

         o)     Bill of Sale, Assignment and Assumption Agreement dated August
                27, 1999 between RUMS and the Company

         The actual hardware design of the electronic card that is the basis of
         the Company's remote devices has been subcontracted through Paradigm
         Manufacturing. Paradigm has developed the card and owns the hardware
         design. Paradigm now wants to enter into a formal manufacturing
         contract with the Company before they provide the Company with the
         latest prototypes. The Company has not entered into any binding
         arrangements with Paradigm or any other parties (other than with GTE
         TSI, as described above) and is not and will not be responsible for any
         of Paradigm's costs unless and until a formal arrangement is executed.

         The disclosure contained in Section 2.22 of this Disclosure Schedule
         (regarding the lease), Section 2.4 of this Disclosure Schedule
         (regarding the obligation to Odom), and Section 2.9 of this Disclosure
         Schedule (regarding the contracts referenced therein) are incorporated
         herein by reference.

         The Company also has miscellaneous "off the shelf" software.

2.26 DEVELOPMENT TOOLS

         The Company mainly uses generally available software development tools
         such as Visual Basic and Windows NT. It has not formally developed and
         documented tools of its own, other than macros and databases to assist
         in the development process.


                                  Page 6 of 6




                                 PROMISSORY NOTE

$136,444.90                       Dallas, Texas                  January 7, 2000

         FOR VALUE RECEIVED, the undersigned, Telenetics Corporation, a
California corporation ("MAKER"), hereby unconditionally promises to pay to the
order of Saunders & Parker, Inc., a Texas corporation ("LENDER"), or other
holder of this Note (Lender or such holder being called "PAYEE"), at 5735
Prestwick Lane, Dallas, Texas 75252, or at such other address given by Payee to
Maker, the principal sum of One Hundred Thirty Six Thousand Four Hundred Forty-
Four and 90/100 Dollars ($136,444.90), together with interest thereon at the
rate of 10% per annum. All payments of interest shall be computed on the per
annum basis of a 360-day year composed of twelve 30-day months.

         1. POST-MATURITY INTEREST. The entire unpaid principal balance of this
Note from day to day outstanding shall, from and after maturity, bear interest
at the highest lawful rate.

         2. PAYMENT TERMS. The principal of and interest on this Note shall be
paid as follows:

            (a) Principal of and interest on this Note shall be due and payable
         in full on February 15, 2000.

            (b) Maker shall have the right to prepay all or any part of
         this Note, without premium or penalty, prior to the date of maturity.

         3. APPLICATION OF PAYMENTS. All payments and prepayments on this Note
shall be applied first to accrued but unpaid interest and then to unpaid
principal in inverse order of maturity.

         4. SECURITY. Payment of this Note is secured as set forth in that
certain Stock Pledge Agreement (herein so called) and that certain Guaranty
(herein so called), each dated the date of this Note and executed by Michael A.
Armani ("ARMANI").

         5. COSTS OF COLLECTION. If this Note is placed in the hands of an
attorney for collection, Maker agrees to pay the reasonable attorneys' fees and
costs of collection of the holder hereof.

         6. EVENTS OF DEFAULT AND REMEDIES. The entire unpaid principal balance
of, and all accrued and unpaid interest on, this Note shall immediately become
due and payable at the option of Payee upon the occurrence of one or more of the
following events of default (individually and collectively, hereinafter called a
"DEFAULT"):

            (a) The failure or refusal of Maker to pay all or any part of
         the principal of or accrued interest on this Note as and when the same
         becomes due and payable in accordance with the terms hereof, and the
         continuation of such failure or refusal for a period of ten days after
         notice thereof to Maker from Payee; or

            (b) Maker shall (i) voluntarily seek, consent to, or acquiesce in
         the benefit or benefits of the Bankruptcy Code of the United States of
         America or any other applicable liquidation, conservatorship,

                                     Page 1
<PAGE>

         bankruptcy, moratorium, rearrangement, receivership, insolvency,
         reorganization, suspension of payments, or similar debtor relief law
         from time to time in effect affecting the rights of creditors generally
         ("DEBTOR RELIEF LAWS") or dissolve or liquidate, or (ii) be made the
         subject of any proceeding provided for by any Debtor Relief Law that
         could suspend or otherwise affect any of the rights of the holder
         hereof; PROVIDED, HOWEVER, if such proceeding described in this clause
         (ii) is withdrawn or dismissed within 60 days from the date of the
         institution of such proceeding, then such event shall no longer be
         deemed a Default hereunder; or

            (c) The failure of Armani to deliver the Collateral (as defined in
         the Stock Pledge Agreement) pursuant to and as required by the Stock
         Pledge Agreement by the close of business on January 17, 2000, or the
         failure of any of the representations or warranties made by Armani in
         the Stock Pledge Agreement to be true and correct when made; or

            (d) The failure or refusal by Maker to perform any of its
         obligations under this Note (other than those described in (a)
         immediately above) if such failure or refusal continues for a period of
         30 days after notice thereof to Maker from Payee; or

            (e) The occurrence of a default under the Stock Pledge Agreement or
         the Guaranty or any other document, instrument, or agreement executed
         to provide a guaranty of or security for this Note (each, a "NOTE
         DOCUMENT").

         In the event a Default shall have occurred and be continuing, Payee may
proceed to protect and enforce its rights hereunder and under the Note Documents
either by suit in equity and/or by action at law, or by other appropriate
proceedings, whether for the specific performance of any covenant or agreement
contained herein or in any of the Note Documents or in aid of the exercise of
any power or right granted by this Note or any of the Note Documents or to
enforce any other legal or equitable right of Payee.

         7. USURY SAVINGS CLAUSE. Regardless of any provision contained in this
Note or any of the other Note Documents, (a) Payee shall never be deemed to have
contracted for or be entitled to receive, collect, or apply as interest on this
Note any amount in excess of the maximum rate of non-usurious interest permitted
by applicable law; (b) in no event shall Maker be obligated to pay interest
exceeding such maximum legal rate; and (c) all agreements, conditions, or
stipulations, if any, that may in any event or contingency whatsoever operate to
bind, obligate, or compel Maker to pay a rate of interest exceeding the maximum
legal rate shall be without binding force or effect, at law or in equity, to the
extent only of the excess of interest over such maximum legal rate. If any
interest is charged in excess of the maximum legal rate (hereinafter referred to
as "EXCESS"), Maker acknowledges and stipulates that any such charge shall be
the result of an accidental and bona fide error, and such Excess shall be first
applied to reduce the principal then unpaid hereunder; second, applied to any
other obligation of Maker to Payee, and third, returned to Maker, it being the
intention of the parties hereto not to enter at any time into an usurious or
other illegal relationship. Maker recognizes that such an unintentional result
could inadvertently occur. By the execution of this Note, Maker covenants that
(a) the credit or return of any Excess shall constitute the acceptance by Maker
of such Excess and (b) Maker shall not seek or pursue any other remedy, legal or
equitable, against Payee or any holder hereof based, in whole or in part, upon
the charging or receiving of any interest in excess of the maximum legal rate.
For the purpose of determining whether or not any Excess has been contracted

                                     Page 2
<PAGE>

for, charged, or received by Payee, Payee and Maker shall, to the maximum,
extent permitted by applicable law, (a) characterize any non-principal payment
(other than payments that are expressly designated as interest payments under
this Note) as an expense, fee, or premium and not as interest; (b) exclude the
effects of voluntary prepayments; and (c) spread, amortize, prorate, and
allocate all interest at any time contracted for, charged, or received by Payee
in equal parts during the entire term of this Note.

         8. WAIVERS. Maker and each surety, endorser, guarantor, and other party
liable for the payment of any sums of money payable on this Note severally waive
presentment and demand for payment, protest, and notice of protest and
nonpayment and agree that their liability on this Note shall not be affected by
any renewal or extension in the time of payment hereof or by any release or
change in any security for the payment of this Note, regardless of the number of
such renewals, extensions, releases, or changes.

         9. BUSINESS DAYS. In any case where a payment of principal or interest
hereon is due on a day which is not a Business Day, Maker shall be entitled to
delay such payment until the next succeeding Business Day, but interest shall
continue to accrue until the payment is, in fact, made. As used herein,
"BUSINESS DAY" means every day other than a Saturday, Sunday, or other day on
which national banks in the State of Texas are not required to be open for
business.

                                                     Maker:


                                                     TELENETICS CORPORATION

                                                     By: /s/ Michael A. Armani
                                                        ------------------------
                                                     Its: President
                                                         -----------------------

                                     Page 3


                           NON-QUALIFIED STOCK OPTION


         THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED OR
         OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
         SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                                                                 January 7, 2000

                             TELENETICS CORPORATION

         WHEREAS, in connection with the services to be rendered to Telenetics
Corporation, a California corporation (the "COMPANY"), by Edward L. Didion, an
individual ("HOLDER"), pursuant to that certain Consulting Agreement of even
date herewith by and between the Company and Holder (the "SERVICE AGREEMENT"),
the Company desires to grant to Holder a non-qualified stock option to purchase
shares of the Company's common stock, no par value per share ("COMMON STOCK").

         NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING, the Company hereby
grants to Holder an option to purchase (this "OPTION") up to One Hundred Fifty
Thousand (150,000) shares (such shares as adjusted from time to time are
referred to herein individually, each as an "OPTION SHARE," and collectively, as
the "OPTION Shares") of Common Stock of the Company at the Exercise Price (as
defined below). This Option may be exercised in accordance with the terms of
this Option by surrendering this Option, with (i) the form of Election to
Purchase set forth hereon duly executed by Holder and (ii) the form of
Restricted Stock Letter attached hereto duly executed by Holder (unless the sale
of the Option Shares is registered under the Securities Act), at the Company's
principal executive office ("OFFICE"), and by paying in full the Exercise Price,
plus transfer taxes, if any, in United States currency by cash, check or money
order payable to the order of the Company.

         1. DURATION, VESTING AND EXERCISE OF OPTION.

            (a) This Option shall vest and become exercisable according to the
         following schedule: On the date hereof, Fifty Thousand (50,000) Option
         Shares shall become vested and exercisable. On January 7, 2001, an
         additional Fifty Thousand (50,000) Option Shares shall become vested
         and exercisable. On January 7, 2002, the remaining Fifty Thousand
         (50,000) Option Shares shall become vested and exercisable, at which
         time all of the Option Shares shall be vested and exercisable.

            (b) This Option (to the extent not earlier exercised) shall expire
         on January 6, 2005 (such date being referred to herein as the
         "EXPIRATION DATE"). If this Option is not surrendered to the Company
         for exercise in accordance with SECTION 1(c) prior to the close of
         business on the Expiration Date it shall be void.
<PAGE>

            (c) This Option may be exercised, to the extent not previously
         exercised, in whole or in part, prior to the Expiration Date at the per
         Option Share Exercise Price determined in accordance with SECTIONS 2
         AND 4. In order to exercise such right, Holder shall surrender this
         Option to the Company at the Office with the form of Election to
         Purchase and the Restricted Stock Letter attached hereto duly completed
         and signed, and shall tender payment in full of the Exercise Price to
         the Company for the Company's account, together with such taxes as are
         specified in SECTION 8, for each Option Share with respect to which
         this Option is being exercised. If this Option is exercised as to less
         than all of the Option Shares purchasable, one or more new option(s)
         shall be issued to Holder for the remaining number of Option Shares
         evidenced by this Option.

         2. EXERCISE PRICE. Subject to adjustment pursuant to SECTION 4, the
price per share at which Option Shares shall be purchasable upon exercise of
this Option (the "EXERCISE PRICE") shall be $1.75.

         3. ISSUANCE OF OPTION SHARE CERTIFICATES.

            (a) Upon surrender of this Option, delivery of an Election to
         Purchase and delivery of a Restricted Stock Letter (if the sale of the
         Option Shares is not registered under the Securities Act) in the forms
         attached hereto and payment of the Exercise Price and transfer taxes,
         the Company shall issue and deliver certificates representing shares of
         Common Stock ("CERTIFICATES") in the manner set forth in the Election
         to Purchase delivered by Holder to the Company.

            (b) If the shares of Common Stock deliverable upon exercise of this
         Option are not registered under the Securities Act, the Certificates
         shall bear a legend in substantially the following form:

                  "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                  (THE `ACT'), AND MAY NOT BE RESOLD, ASSIGNED, PLEDGED OR
                  HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
                  TO THE ISSUER THAT REGISTRATION UNDER SAID ACT IS NOT
                  REQUIRED."

         4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF OPTION SHARES
PURCHASABLE. The Exercise Price and the number of Option Shares purchasable upon
the exercise of this Option are subject to adjustment from time to time upon the
occurrence of the events specified in this SECTION 4. If, by reason of any
merger, consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-off, spin-off, combination
of shares, exchange of shares, or other similar changes in the capital structure
of the Company (each, a "REORGANIZATION"), the outstanding securities of the
same class as the Option Shares (the "OPTION SHARE CLASS OF SECURITIES") are
substituted or exchanged for, combined or changed into any cash, property or

                                       2
<PAGE>

other securities or into a greater or lesser number of shares, the number and/or
kind of shares and/or interests subject to this Option and the Exercise Price
shall be appropriately adjusted to prevent dilution or enlargement of the rights
of Holder so that, thereafter, this Option shall be exercisable for the
securities, cash and/or other property that would have been received in respect
of the Option Shares if this Option had been exercised in full immediately prior
to such event. Such adjustments shall be made successively whenever any event
described in the foregoing sentence occurs.

         5. FRACTIONAL OPTION SHARES. The Company shall not be required to issue
fractions of Option Shares upon exercise of this Option or to distribute
certificates that evidence fractional Option Shares. All fractions of Option
Shares to which Holder would otherwise be entitled shall be aggregated and in
lieu of such remaining fractional Option Share, there shall be paid to Holder at
the time this Option is exercised as herein provided an amount in cash equal to
the stated fraction of the fair market value of an Option Share as determined in
good faith by the Board of Directors of the Company.

         6. RESERVATION AND ISSUANCE OF OPTION SHARES. The Company represents
and warrants that (a) there have been reserved, and the Company shall at all
times keep reserved, out of its authorized Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase
represented by this Option, and (b) there are no restrictions in the Company's
articles of incorporation or bylaws that prevent the Company from issuing shares
of its Common Stock for the purpose of enabling it to satisfy any obligation to
issue Option Shares upon exercise of this Option in accordance with its terms.
The Company covenants and agrees that it will not amend its articles of
incorporation or bylaws in any manner, or take any other action, that could
adversely affect the Company's ability to issue Option Shares upon exercise of
this Option.

         The Company further represents and warrants that all shares of its
Common Stock issued upon exercise of this Option will, upon issuance in
accordance with the terms of this Option, (a) be legally issued and free from
all taxes, liens, charges, encumbrances and security interests created by the
Company with respect to the issuance thereof and (b) be duly and validly issued,
fully paid and nonassessable Common Stock as to which no holder shall have any
liability other than Holder's payment of the Exercise Price.

         7. MUTILATED OR MISSING OPTION CERTIFICATES. If this Option is
mutilated, lost, stolen or destroyed, the Company shall issue and deliver, in
exchange and substitution for and upon cancellation of the mutilated Option, or
in lieu of and substitution for the lost, stolen or destroyed Option, a new
option in substantially the same form as this Option and representing an option
to purchase an equivalent number of Option Shares, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of this
Option and an indemnity or bond, if requested, satisfactory to the Company.
Holder shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.

         8. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Option Shares issuable upon the exercise of this
Option; PROVIDED, HOWEVER, that the Company shall not be required to pay any tax

                                       3
<PAGE>

or taxes that may be payable in respect of any transfer involved in the issuance
of any options or any Option Share certificates in a name other than that of
Holder, and the Company shall not be required to issue or deliver such Option
Share certificates unless and until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

         9. CERTAIN NOTICES TO HOLDER. Upon any adjustment to the number of
Option Shares issuable pursuant to exercise of this Option or to the Exercise
Price pursuant to SECTION 4, the Company, within fifteen (15) calendar days
thereafter, shall cause to be given to Holder, at his address appearing on the
Company's records, written notice of such adjustments in accordance with this
SECTION 9. Where appropriate such notice may be given in advance and included as
part of the notice required to be mailed under the other provisions of this
SECTION 9. If:

            (a) The Company authorizes the issuance or distribution of
         securities or assets to holders of its shares of Common Stock or makes
         any distribution (other than cash dividends) to the holders of its
         shares of Common Stock;

            (b) The Company becomes a party to any consolidation or merger for
         which approval of any shareholder of the Company is required, conveys
         or transfers all or substantially all of its properties, assets, or
         business, shall engage in any reorganization or recapitalization or
         makes any tender or exchange offer for shares of its Common Stock;

            (c) The Company becomes subject to voluntary or involuntary
         dissolution, liquidation or winding up; or

            (d) The Company proposes to take any other action that would require
         an adjustment of the Exercise Price pursuant to SECTION 4;

then the Company shall cause to be given to Holder at his address appearing on
the Company's records, at least fifteen (15) calendar days prior to the
applicable record date hereinafter specified, a written notice in accordance
with this SECTION 9 stating (i) the date as of which the holders of record of
Common Stock to be entitled to receive any such securities or assets are to be
determined, (ii) the initial expiration date set forth in any tender or exchange
offer made by the Company for shares of its Common Stock or (iii) the date on
which any such consolidation or merger, conveyance, transfer, reorganization or
recapitalization, dissolution, liquidation or winding up is expected to become
effective or consummated, and the date as of which it is expected that holders
of record of Common Stock shall be entitled to exchange such Common Stock for
securities or other property that may be deliverable upon such consolidation or
merger, conveyance, transfer, reorganization or recapitalization, dissolution,
liquidation or winding up. The failure to give the notice required by this
SECTION 9 or any defect therein shall not affect the legality or validity of any
distribution, right, option, consolidation, conveyance, transfer,
reorganization, dissolution, liquidation or winding up or the vote upon any
action.

                                       4
<PAGE>

         Nothing contained in this Option shall be construed as conferring upon
Holder the right to vote or to consent or to receive notice as a shareholder in
respect of any rights or other matter whatsoever as a shareholder of the
Company, or any other rights or liabilities as a shareholder of the Company.

         10. NONTRANSFERABILITY OF OPTION. Except by will, the laws of descent
and distribution or qualified domestic relations order, this Option is not
transferable by Holder.

         11. NOTICES. Any notice or demand authorized by this Option to be given
or made by Holder to or on the Company shall be sufficiently given or made if
personally delivered or sent by first class United States mail, by overnight
courier guaranteeing next-day delivery, or by facsimile confirmed by letter,
addressed (until another address is given in writing by the Company) to the
Office.

         Any notice pursuant to this Option to be given by the Company to Holder
shall be sufficiently given if personally delivered or sent by first class
United States mail, by overnight courier guaranteeing next-day delivery, or by
facsimile confirmed by letter, addressed (until another address is filed in
writing by Holder with the Company) to the address specified in the Company's
records.

         12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Option without the consent or concurrence of Holder in
order to cure any ambiguity, manifest error or other mistake in this Option.

         13. TERMINATION OF SERVICE.

            (a) GENERAL. If Holder's services to the Company pursuant to the
         Service Agreement are terminated ("SERVICE TERMINATION") for any other
         reason than for Good Cause (as that term is defined in the Service
         Agreement) or voluntary resignation by Holder, then Holder may at any
         time within three months after the effective date of the Service
         Termination exercise the Option to the extent that Holder was entitled
         to exercise the Option at the date of Service Termination, provided
         that in no event shall the Option be exercisable after the Expiration
         Date. If Service Termination occurs for Good Cause or due to voluntary
         resignation by Holder, the Option shall immediately terminate and be of
         no further force or effect.

            (b) DEATH OR DISABILITY OF HOLDER. In the event of the death or
         Disability (as that term is defined in Section 22(e)(3) of the Internal
         Revenue Code of 1986, as amended) of Holder within a period during
         which the Option, or any part thereof, could have been exercised by
         Holder, including three months after the effective date of Service
         Termination for any other reason than for Good Cause or voluntary
         resignation (the "OPTION PERIOD"), the Option shall lapse unless it is
         exercised within the Option Period and in no event later than twelve
         months after the date of the Holder's death or Disability by Holder or
         Holder's legal representative or representatives in the case of a
         Disability or, in the case of death, by the person or persons entitled
         to do so under Holder's last will and testament or if Holder fails to
         make a testamentary disposition of the Option or shall die intestate,
         by the person or persons entitled to receive the Option under the
         applicable laws of descent and distribution. An Option may be exercised
         following the death or Disability of Holder only if the Option was
         exercisable by Holder immediately prior to his death or Disability. In

                                       5
<PAGE>

         no event shall the Option be exercisable after the Expiration Date. The
         Company shall have the right to require evidence satisfactory to it of
         the rights of any person or persons seeking to exercise the Option
         under this SECTION 13 to exercise the Option.

         14. ACCELERATION OF VESTING. If the Company undertakes to (i) sell,
lease, exchange, convey or otherwise dispose of all or substantially all of its
property or business, or (ii) merge into or consolidate with any other entity
(other than a wholly-owned subsidiary of the Company), or effect any transaction
(including a merger or other reorganization) or series of related transactions,
in which more than 50% of the voting power of the Company is disposed of, then
all of the Option Shares shall become automatically vested and exercisable
immediately prior to such event.

         15. SUCCESSORS. All the representations, warranties, agreements,
covenants and provisions of this Option by or for the benefit of the Company or
Holder shall bind and inure to the benefit of their respective permitted heirs,
successors and assigns hereunder.

         16. GOVERNING LAW. This Option shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be
construed in accordance with the internal laws of the State of California
without regard to conflicts of laws principles.

         17. BENEFITS OF THIS AGREEMENT. Nothing in this Option shall be
construed to give to any person or entity other than the Company and Holder any
legal or equitable right, remedy or claim under this Option, and this Option
shall be for the sole and exclusive benefit of the Company and Holder, except as
otherwise provided in SECTION 15.

         18. INVALIDITY OF PROVISIONS. If any provision of this Option is or
becomes invalid, illegal or unenforceable in any respect, such provision shall
be deemed amended to the extent necessary to cause it to express the intent of
the parties to the maximum possible extent and be valid legal and enforceable.
The invalidity or deemed amendment of such provision shall not affect the
validity, legality or enforceability of any other provision hereof.

         19. NO IMPAIRMENT. The Company will not, by amendment of its articles
of incorporation or through any reorganization, recapitalization transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the provisions
of this Option and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of Holder against impairment.

                                       6
<PAGE>

         20. SECTION HEADINGS. The section headings contained in this Option are
for convenience only and shall be without substantive meaning or content.

         The Company has caused this Option to be duly executed as of the day
and year first above written.

                                       TELENETICS CORPORATION



                                       By: /S/ Michael A. Armani
                                           -------------------------------------
                                           Michael A. Armani, President

                                       7
<PAGE>

                             TELENETICS CORPORATION

                           NON-QUALIFIED STOCK OPTION

                              ELECTION TO PURCHASE

         The undersigned hereby irrevocably elects to purchase ____________
Option Shares issuable upon the exercise of the Non-Qualified Stock Option dated
January 7, 2000 ("OPTION"), and requests that certificates for such Option
Shares be issued and delivered as follows:

ISSUE TO:          _____________________________________________________________
                   (Name)

                   _____________________________________________________________
                   (Address, including Zip Code)

                   _____________________________________________________________
                   (Social Security or Tax Identification Number)

DELIVER TO:        _____________________________________________________________
                   (Name)

                   at __________________________________________________________
                      (Address, including Zip Code)

         If the number of Option Shares hereby exercised is less than all the
Option Shares represented by the Option, the undersigned requests that a new
option representing the number of Option Shares not exercised be issued and
delivered as set forth above or otherwise as the undersigned shall direct in
writing.

         In full payment of the purchase price of the Option Shares being issued
upon exercise of the Option and transfer taxes, if any, the undersigned hereby
tenders payment of $_____________ by cash, check or money order payable in
United States currency to the order of Telenetics Corporation.

Dated: __________                  _____________________________________________
                                   (Signature)


                                   (Signature must conform in all respects to
                                   name of holder as specified on the face of
                                   the Option.)

                                   PLEASE INSERT SOCIAL SECURITY OR TAX
                                   IDENTIFICATION NUMBER OF HOLDER

<PAGE>

                                    EXHIBIT A
                                    ---------

                         FORM OF RESTRICTED STOCK LETTER

         THE UNDERSIGNED (hereinafter referred to as "PURCHASER") is exercising
the Non-Qualified Stock Option tendered with this Restricted Stock Letter, and
in connection with such exercise, makes the following representations and
warranties to Telenetics Corporation (the "COMPANY") with the knowledge and
intent that the Company shall be entitled to rely thereon in delivering shares
of the Company's Common Stock ("SHARES") to Purchaser upon exercise of the
Non-Qualified Stock Option:

         1. Purchaser is acquiring the Shares for investment for Purchaser's own
account, and not with a view to or for sale in connection with any distribution
thereof. Purchaser understands that the Shares to be purchased have not been
registered pursuant to the Securities Act of 1933, as amended (the "ACT"), and
the offer and sale of the Shares is intended to be exempt from registration
under the Act, which exemption depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of Purchaser's representations
as expressed herein.

         2. Purchaser is an "accredited investor" as defined in the rules and
regulations of the Act and Purchaser has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of Purchaser's investment in the Shares, and Purchaser is capable of
bearing the economic risks of such investment, including the risk of loss of
Purchaser's entire investment in the Shares.

         3. Purchaser acknowledges that the Company has made available to
Purchaser or Purchaser's agents all documents and information relating to an
investment in the Shares requested by or on behalf of Purchaser.

         4. All Shares issued on delivery of this Restricted Stock Letter shall
bear the legend set forth in SECTION 3 of the annexed Non-Qualified Stock Option
and the Shares received on delivery of this Restricted Stock Letter shall be
subject to the restrictions set forth therein.

         Executed ______________________

                                            Purchaser:  ________________________



                                            Signature:  ________________________

                                       2


                           NON-QUALIFIED STOCK OPTION


         THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED OR
         OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
         SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                                                                 January 7, 2000

                             TELENETICS CORPORATION

         WHEREAS, in connection with the services to be rendered to Telenetics
Corporation, a California corporation (the "COMPANY"), by John D. McLean, an
individual ("HOLDER"), pursuant to that certain Employment Agreement of even
date herewith by and between the Company and Holder (the "SERVICE AGREEMENT"),
the Company desires to grant to Holder a non-qualified stock option to purchase
shares of the Company's common stock, no par value per share ("COMMON STOCK").

         NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING, the Company hereby
grants to Holder an option to purchase (this "OPTION") up to Three Hundred
Thousand (300,000) shares (such shares as adjusted from time to time are
referred to herein individually, each as an "OPTION SHARE," and collectively, as
the "OPTION SHARES") of Common Stock of the Company at the Exercise Price (as
defined below). This Option may be exercised in accordance with the terms of
this Option by surrendering this Option, with (i) the form of Election to
Purchase set forth hereon duly executed by Holder and (ii) the form of
Restricted Stock Letter attached hereto duly executed by Holder (unless the sale
of the Option Shares is registered under the Securities Act), at the Company's
principal executive office ("OFFICE"), and by paying in full the Exercise Price,
plus transfer taxes, if any, in United States currency by cash, check or money
order payable to the order of the Company.

         1. DURATION, VESTING AND EXERCISE OF OPTION.

            (a) This Option shall vest and become exercisable according to the
         following schedule: On the date hereof, One Hundred Thousand (100,000)
         Option Shares shall become vested and exercisable. On January 7, 2001,
         an additional One Hundred Thousand (100,000) Option Shares shall become
         vested and exercisable. On January 7, 2002, the remaining One Hundred
         Thousand (100,000) Option Shares shall become vested and exercisable,
         at which time all of the Option Shares shall be vested and exercisable.

            (b) This Option (to the extent not earlier exercised) shall expire
         on January 6, 2005 (such date being referred to herein as the
         "EXPIRATION DATE"). If this Option is not surrendered to the Company
         for exercise in accordance with SECTION 1(c) prior to the close of
         business on the Expiration Date it shall be void.

<PAGE>

            (c) This Option may be exercised, to the extent not previously
         exercised, in whole or in part, prior to the Expiration Date at the per
         Option Share Exercise Price determined in accordance with SECTIONS 2
         AND 4. In order to exercise such right, Holder shall surrender this
         Option to the Company at the Office with the form of Election to
         Purchase and the Restricted Stock Letter attached hereto duly completed
         and signed, and shall tender payment in full of the Exercise Price to
         the Company for the Company's account, together with such taxes as are
         specified in SECTION 8, for each Option Share with respect to which
         this Option is being exercised. If this Option is exercised as to less
         than all of the Option Shares purchasable, one or more new option(s)
         shall be issued to Holder for the remaining number of Option Shares
         evidenced by this Option.

         2. EXERCISE PRICE. Subject to adjustment pursuant to SECTION 4, the
price per share at which Option Shares shall be purchasable upon exercise of
this Option (the "EXERCISE PRICE") shall be $1.75.

         3. ISSUANCE OF OPTION SHARE CERTIFICATES.

            (a) Upon surrender of this Option, delivery of an Election to
         Purchase and delivery of a Restricted Stock Letter (if the sale of the
         Option Shares is not registered under the Securities Act) in the forms
         attached hereto and payment of the Exercise Price and transfer taxes,
         the Company shall issue and deliver certificates representing shares of
         Common Stock ("CERTIFICATES") in the manner set forth in the Election
         to Purchase delivered by Holder to the Company.

            (b) If the shares of Common Stock deliverable upon exercise of this
         Option will not be registered under the Securities Act, the
         Certificates shall bear a legend in substantially the following form:

                  "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                  (THE `ACT'), AND MAY NOT BE RESOLD, ASSIGNED, PLEDGED OR
                  HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
                  TO THE ISSUER THAT REGISTRATION UNDER SAID ACT IS NOT
                  REQUIRED."

         4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF OPTION SHARES
PURCHASABLE. The Exercise Price and the number of Option Shares purchasable upon
the exercise of this Option are subject to adjustment from time to time upon the
occurrence of the events specified in this SECTION 4. If, by reason of any
merger, consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-off, spin-off, combination
of shares, exchange of shares, or other similar changes in the capital structure
of the Company (each, a "REORGANIZATION"), the outstanding securities of the
same class as the Option Shares (the "OPTION SHARE CLASS OF SECURITIES") are
substituted or exchanged for, combined or changed into any cash, property or
other securities or into a greater or lesser number of shares, the number and/or

                                       2
<PAGE>

kind of shares and/or interests subject to this Option and the Exercise Price
shall be appropriately adjusted to prevent dilution or enlargement of the rights
of Holder so that, thereafter, this Option shall be exercisable for the
securities, cash and/or other property that would have been received in respect
of the Option Shares if this Option had been exercised in full immediately prior
to such event. Such adjustments shall be made successively whenever any event
described in the foregoing sentence occurs.

         5. FRACTIONAL OPTION SHARES. The Company shall not be required to issue
fractions of Option Shares upon exercise of this Option or to distribute
certificates that evidence fractional Option Shares. All fractions of Option
Shares to which Holder would otherwise be entitled shall be aggregated and in
lieu of such remaining fractional Option Share, there shall be paid to Holder at
the time this Option is exercised as herein provided an amount in cash equal to
the stated fraction of the fair market value of an Option Share as determined in
good faith by the Board of Directors of the Company.

         6. RESERVATION AND ISSUANCE OF OPTION SHARES. The Company represents
and warrants that (a) there have been reserved, and the Company shall at all
times keep reserved, out of its authorized Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase
represented by this Option, and (b) there are no restrictions in the Company's
articles of incorporation or bylaws that prevent the Company from issuing shares
of its Common Stock for the purpose of enabling it to satisfy any obligation to
issue Option Shares upon exercise of this Option in accordance with its terms.
The Company covenants and agrees that it will not amend its articles of
incorporation or bylaws in any manner, or take any other action, that could
adversely affect the Company's ability to issue Option Shares upon exercise of
this Option.

         The Company further represents and warrants that all shares of its
Common Stock issued upon exercise of this Option will, upon issuance in
accordance with the terms of this Option, (a) be legally issued and free from
all taxes, liens, charges, encumbrances and security interests created by the
Company with respect to the issuance thereof and (b) be duly and validly issued,
fully paid and nonassessable Common Stock as to which no holder shall have any
liability other than Holder's payment of the Exercise Price.

         7. MUTILATED OR MISSING OPTION CERTIFICATES. If this Option is
mutilated, lost, stolen or destroyed, the Company shall issue and deliver, in
exchange and substitution for and upon cancellation of the mutilated Option, or
in lieu of and substitution for the lost, stolen or destroyed Option, a new
option in substantially the same form as this Option and representing an option
to purchase an equivalent number of Option Shares, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of this
Option and an indemnity or bond, if requested, satisfactory to the Company.
Holder shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.

         8. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Option Shares issuable upon the exercise of this
Option; PROVIDED, HOWEVER, that the Company shall not be required to pay any tax

                                       3
<PAGE>

or taxes that may be payable in respect of any transfer involved in the issuance
of any options or any Option Share certificates in a name other than that of
Holder, and the Company shall not be required to issue or deliver such Option
Share certificates unless and until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

         9. CERTAIN NOTICES TO HOLDER. Upon any adjustment to the number of
Option Shares issuable pursuant to exercise of this Option or to the Exercise
Price pursuant to SECTION 4, the Company, within fifteen (15) calendar days
thereafter, shall cause to be given to Holder, at his address appearing on the
Company's records, written notice of such adjustments in accordance with this
SECTION 9. Where appropriate such notice may be given in advance and included as
part of the notice required to be mailed under the other provisions of this
SECTION 9. If:

            (a) The Company authorizes the issuance or distribution of
         securities or assets to holders of its shares of Common Stock or makes
         any distribution (other than cash dividends) to the holders of its
         shares of Common Stock;

            (b) The Company becomes a party to any consolidation or merger for
         which approval of any shareholder of the Company is required, conveys
         or transfers all or substantially all of its properties, assets, or
         business, shall engage in any reorganization or recapitalization or
         makes any tender or exchange offer for shares of its Common Stock;

            (c) The Company becomes subject to voluntary or involuntary
         dissolution, liquidation or winding up; or

            (d) The Company proposes to take any other action that would require
         an adjustment of the Exercise Price pursuant to SECTION 4;

then the Company shall cause to be given to Holder at his address appearing on
the Company's records, at least fifteen (15) calendar days prior to the
applicable record date hereinafter specified, a written notice in accordance
with this SECTION 9 stating (i) the date as of which the holders of record of
Common Stock to be entitled to receive any such securities or assets are to be
determined, (ii) the initial expiration date set forth in any tender or exchange
offer made by the Company for shares of its Common Stock or (iii) the date on
which any such consolidation or merger, conveyance, transfer, reorganization or
recapitalization, dissolution, liquidation or winding up is expected to become
effective or consummated, and the date as of which it is expected that holders
of record of Common Stock shall be entitled to exchange such Common Stock for
securities or other property that may be deliverable upon such consolidation or
merger, conveyance, transfer, reorganization or recapitalization, dissolution,
liquidation or winding up. The failure to give the notice required by this
SECTION 9 or any defect therein shall not affect the legality or validity of any
distribution, right, option, consolidation, conveyance, transfer,
reorganization, dissolution, liquidation or winding up or the vote upon any
action.

                                       4
<PAGE>

         Nothing contained in this Option shall be construed as conferring upon
Holder the right to vote or to consent or to receive notice as a shareholder in
respect of any rights or other matter whatsoever as a shareholder of the
Company, or any other rights or liabilities as a shareholder of the Company.

         10. NONTRANSFERABILITY OF OPTION. Except by will, the laws of descent
and distribution or qualified domestic relations order, this Option is not
transferable by Holder.

         11. NOTICES. Any notice or demand authorized by this Option to be given
or made by Holder to or on the Company shall be sufficiently given or made if
personally delivered or sent by first class United States mail, by overnight
courier guaranteeing next-day delivery, or by facsimile confirmed by letter,
addressed (until another address is given in writing by the Company) to the
Office.

         Any notice pursuant to this Option to be given by the Company to Holder
shall be sufficiently given if personally delivered or sent by first class
United States mail, by overnight courier guaranteeing next-day delivery, or by
facsimile confirmed by letter, addressed (until another address is filed in
writing by Holder with the Company) to the address specified in the Company's
records.

         12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Option without the consent or concurrence of Holder in
order to cure any ambiguity, manifest error or other mistake in this Option.

         13. TERMINATION OF SERVICE.

            (a) GENERAL. If Holder's services to the Company pursuant to the
         Service Agreement are terminated ("SERVICE TERMINATION") for any other
         reason than for Good Cause (as that term is defined in the Service
         Agreement) or voluntary resignation by Holder, then Holder may at any
         time within three months after the effective date of the Service
         Termination exercise the Option to the extent that Holder was entitled
         to exercise the Option at the date of Service Termination, provided
         that in no event shall the Option be exercisable after the Expiration
         Date. If Service Termination occurs for Good Cause or due to voluntary
         resignation by Holder, Holder may at any time within 30 days after the
         effective date of such Service Termination exercise the Option to the
         extent that Holder was entitled to exercise the Option at the effective
         date of such Service Termination, provided that in no event shall the
         Option, or any part thereof, be exercisable after the Expiration Date.

            (b) DEATH OR DISABILITY OF HOLDER. In the event of the death or
         Disability (as that term is defined in Section 22(e)(3) of the Internal
         Revenue Code of 1986, as amended) of Holder within a period during
         which the Option, or any part thereof, could have been exercised by
         Holder, including three months after the effective date of Service
         Termination for any other reason than for Good Cause or voluntary
         resignation (the "OPTION PERIOD"), the Option shall lapse unless it is
         exercised within the Option Period and in no event later than twelve
         months after the date of the Holder's death or Disability by Holder or
         Holder's legal representative or representatives in the case of a


                                       5
<PAGE>

         Disability or, in the case of death, by the person or persons entitled
         to do so under Holder's last will and testament or if Holder fails to
         make a testamentary disposition of the Option or shall die intestate,
         by the person or persons entitled to receive the Option under the
         applicable laws of descent and distribution. An Option may be exercised
         following the death or Disability of Holder only if the Option was
         exercisable by Holder immediately prior to his death or Disability. In
         no event shall the Option be exercisable after the Expiration Date. The
         Company shall have the right to require evidence satisfactory to it of
         the rights of any person or persons seeking to exercise the Option
         under this SECTION 13 to exercise the Option.

         14. ACCELERATION OF VESTING. If the Company undertakes to (i) sell,
lease, exchange, convey or otherwise dispose of all or substantially all of its
property or business, or (ii) merge into or consolidate with any other entity
(other than a wholly-owned subsidiary of the Company), or effect any transaction
(including a merger or other reorganization) or series of related transactions,
in which more than 50% of the voting power of the Company is disposed of, then
all of the Option Shares shall become automatically vested and exercisable
immediately prior to such event.

         15. SUCCESSORS. All the representations, warranties, agreements,
covenants and provisions of this Option by or for the benefit of the Company or
Holder shall bind and inure to the benefit of their respective permitted heirs,
successors and assigns hereunder.

         16. GOVERNING LAW. This Option shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be
construed in accordance with the internal laws of the State of California
without regard to conflicts of laws principles.

         17. BENEFITS OF THIS AGREEMENT. Nothing in this Option shall be
construed to give to any person or entity other than the Company and Holder any
legal or equitable right, remedy or claim under this Option, and this Option
shall be for the sole and exclusive benefit of the Company and Holder, except as
otherwise provided in SECTION 15.

         18. INVALIDITY OF PROVISIONS. If any provision of this Option is or
becomes invalid, illegal or unenforceable in any respect, such provision shall
be deemed amended to the extent necessary to cause it to express the intent of
the parties to the maximum possible extent and be valid legal and enforceable.
The invalidity or deemed amendment of such provision shall not affect the
validity, legality or enforceability of any other provision hereof.

         19. NO IMPAIRMENT. The Company will not, by amendment of its articles
of incorporation or through any reorganization, recapitalization transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the provisions
of this Option and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of Holder against impairment.

                                       6
<PAGE>

         20. SECTION HEADINGS. The section headings contained in this Option are
for convenience only and shall be without substantive meaning or content.

         The Company has caused this Option to be duly executed as of the day
and year first above written.

                                              TELENETICS CORPORATION



                                              By:   /S/ Michael A. Armani
                                                    ----------------------------
                                                    Michael A. Armani, President

                                       7
<PAGE>

                             TELENETICS CORPORATION

                           NON-QUALIFIED STOCK OPTION

                              ELECTION TO PURCHASE

         The undersigned hereby irrevocably elects to purchase ____________
Option Shares issuable upon the exercise of the Non-Qualified Stock Option dated
January 7, 2000 ("OPTION"), and requests that certificates for such Option
Shares be issued and delivered as follows:

ISSUE TO:          _____________________________________________________________
                   (Name)

                   _____________________________________________________________
                   (Address, including Zip Code)

                   _____________________________________________________________
                   (Social Security or Tax Identification Number)

DELIVER TO:        _____________________________________________________________
                   (Name)

                   at __________________________________________________________
                      (Address, including Zip Code)

         If the number of Option Shares hereby exercised is less than all the
Option Shares represented by the Option, the undersigned requests that a new
option representing the number of Option Shares not exercised be issued and
delivered as set forth above or otherwise as the undersigned shall direct in
writing.

         In full payment of the purchase price of the Option Shares being issued
upon exercise of the Option and transfer taxes, if any, the undersigned hereby
tenders payment of $_____________ by cash, check or money order payable in
United States currency to the order of Telenetics Corporation.

Dated:  __________                 _____________________________________________
                                   (Signature)

                                   (Signature must conform in all respects to
                                   name of holder as specified on the face of
                                   the Option.)

                                   PLEASE INSERT SOCIAL SECURITY OR TAX
                                   IDENTIFICATION NUMBER OF HOLDER

Signature Guaranteed:

____________________________

<PAGE>

                                    EXHIBIT A
                                    ---------

                         FORM OF RESTRICTED STOCK LETTER

         THE UNDERSIGNED (hereinafter referred to as "PURCHASER") is exercising
the Non-Qualified Stock Option tendered with this Restricted Stock Letter, and
in connection with such exercise, makes the following representations and
warranties to Telenetics Corporation (the "COMPANY") with the knowledge and
intent that the Company shall be entitled to rely thereon in delivering shares
of the Company's Common Stock ("SHARES") to Purchaser upon exercise of the
Non-Qualified Stock Option:

         1. Purchaser is acquiring the Shares for investment for Purchaser's own
account, and not with a view to or for sale in connection with any distribution
thereof. Purchaser understands that the Shares to be purchased have not been
registered pursuant to the Securities Act of 1933, as amended (the "ACT"), and
the offer and sale of the Shares is intended to be exempt from registration
under the Act, which exemption depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of Purchaser's representations
as expressed herein.

         2. Purchaser is an "accredited investor" as defined in the rules and
regulations of the Act and Purchaser has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of Purchaser's investment in the Shares, and Purchaser is capable of
bearing the economic risks of such investment, including the risk of loss of
Purchaser's entire investment in the Shares.

         3. Purchaser acknowledges that the Company has made available to
Purchaser or Purchaser's agents all documents and information relating to an
investment in the Shares requested by or on behalf of Purchaser.

         4. All Shares issued on delivery of this Restricted Stock Letter shall
bear the legend set forth in SECTION 3 of the annexed Non-Qualified Stock Option
and the Shares received on delivery of this Restricted Stock Letter shall be
subject to the restrictions set forth therein.

         Executed ______________________

                                            Purchaser:__________________________



                                            Signature:__________________________

                                       2


                           NON-QUALIFIED STOCK OPTION


         THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED OR
         OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
         SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                                                                 January 7, 2000

                             TELENETICS CORPORATION

         WHEREAS, in connection with the services to be rendered to Telenetics
Corporation, a California corporation (the "COMPANY"), by Saunders & Parker,
Inc., a Texas corporation ("HOLDER"), pursuant to that certain Consulting
Agreement of even date herewith by and between the Company and Holder (the
"SERVICE AGREEMENT"), the Company desires to grant to Holder a non-qualified
stock option to purchase shares of the Company's common stock, no par value per
share ("COMMON STOCK").

         NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING, the Company hereby
grants to Holder an option to purchase (this "OPTION") up to Six Hundred
Thousand (600,000) shares (such shares as adjusted from time to time are
referred to herein individually, each as an "OPTION SHARE," and collectively, as
the "OPTION SHARES") of Common Stock of the Company at the Exercise Price (as
defined below). This Option may be exercised in accordance with the terms of
this Option by surrendering this Option, with (i) the form of Election to
Purchase set forth hereon duly executed by Holder and (ii) the form of
Restricted Stock Letter attached hereto duly executed by Holder (unless the sale
of the Option Shares is registered under the Securities Act), at the Company's
principal executive office ("OFFICE"), and by paying in full the Exercise Price,
plus transfer taxes, if any, in United States currency by cash, check or money
order payable to the order of the Company.

         1. DURATION, VESTING AND EXERCISE OF OPTION.

            (a) This Option shall vest and become exercisable in full on the
         date hereof.

            (b) This Option (to the extent not earlier exercised) shall expire
         on January 6, 2005 (such date being referred to herein as the
         "EXPIRATION DATE"). If this Option is not surrendered to the Company
         for exercise in accordance with SECTION 1(C) prior to the close of
         business on the Expiration Date it shall be void.

            (c) This Option may be exercised, to the extent not previously
         exercised, in whole or in part, prior to the Expiration Date at the per
         Option Share Exercise Price determined in accordance with SECTIONS 2
         AND 4. In order to exercise such right, Holder shall surrender this
         Option to the Company at the Office with the form of Election to
         Purchase and the Restricted Stock Letter (unless the sale of the Option
         Shares is registered under the Securities Act) attached hereto duly
         completed and signed, and shall tender payment in full of the Exercise


<PAGE>

         Price to the Company for the Company's account, together with such
         taxes as are specified in SECTION 8, for each Option Share with respect
         to which this Option is being exercised. If this Option is exercised as
         to less than all of the Option Shares purchasable, one or more new
         option(s) shall be issued to Holder for the remaining number of Option
         Shares evidenced by this Option.

         2. EXERCISE PRICE. Subject to adjustment pursuant to SECTION 4, the
price per share at which Option Shares shall be purchasable upon exercise of
this Option (the "EXERCISE PRICE") shall be $1.75.

         3. ISSUANCE OF OPTION SHARE CERTIFICATES.

            (a) Upon surrender of this Option, delivery of an Election to
         Purchase and delivery of a Restricted Stock Letter (if the sale of the
         Option Shares is not registered under the Securities Act) in the forms
         attached hereto and payment of the Exercise Price and transfer taxes,
         the Company shall issue and deliver certificates representing shares of
         Common Stock ("CERTIFICATES") in the manner set forth in the Election
         to Purchase delivered by Holder to the Company.

            (b) If the shares of Common Stock deliverable upon exercise of this
         Option are not registered under the Securities Act, the Certificates
         shall bear a legend in substantially the following form:

                  "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                  (THE `ACT'), AND MAY NOT BE RESOLD, ASSIGNED, PLEDGED OR
                  HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
                  TO THE ISSUER THAT REGISTRATION UNDER SAID ACT IS NOT
                  REQUIRED."

         4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF OPTION SHARES
PURCHASABLE. The Exercise Price and the number and kind of Option Shares
purchasable upon the exercise of this Option are subject to adjustment from time
to time upon the occurrence of the events specified in this SECTION 4. If, by
reason of any merger, consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-off, spin-off, combination
of shares, exchange of shares, or other similar changes in the capital structure
of the Company (each, a "REORGANIZATION"), the outstanding securities of the
same class as the Option Shares (the "OPTION SHARE CLASS OF SECURITIES") are
substituted or exchanged for, combined or changed into any cash, property or
other securities or into a greater or lesser number of shares, the number and/or
kind of shares and/or interests subject to this Option and the Exercise Price
shall be appropriately adjusted to prevent dilution or enlargement of the rights
of Holder so that, thereafter, this Option shall be exercisable for the
securities, cash and/or other property that would have been received in respect
of the Option Shares if this Option had been exercised in full immediately prior
to such event. Such adjustments shall be made successively whenever any event
described in the foregoing sentence occurs.

                                       2
<PAGE>

         5. FRACTIONAL OPTION SHARES. The Company shall not be required to issue
fractions of Option Shares upon exercise of this Option or to distribute
certificates that evidence fractional Option Shares. All fractions of Option
Shares to which Holder would otherwise be entitled shall be aggregated and in
lieu of such remaining fractional Option Share, there shall be paid to Holder at
the time this Option is exercised as herein provided an amount in cash equal to
the stated fraction of the fair market value of an Option Share as determined in
good faith by the Board of Directors of the Company.

         6. RESERVATION AND ISSUANCE OF OPTION SHARES. The Company represents
and warrants that (a) there have been reserved, and the Company shall at all
times keep reserved, out of its authorized Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase
represented by this Option, and (b) there are no restrictions in the Company's
articles of incorporation or bylaws that prevent the Company from issuing shares
of its Common Stock for the purpose of enabling it to satisfy any obligation to
issue Option Shares upon exercise of this Option in accordance with its terms.
The Company covenants and agrees that it will not amend its articles of
incorporation or bylaws in any manner, or take any other action, that could
adversely affect the Company's ability to issue Option Shares upon exercise of
this Option.

         The Company further represents and warrants that all shares of its
Common Stock issued upon exercise of this Option will, upon issuance in
accordance with the terms of this Option, (a) be legally issued and free from
all taxes, liens, charges, encumbrances and security interests created by the
Company with respect to the issuance thereof and (b) be duly and validly issued,
fully paid and nonassessable Common Stock as to which no holder shall have any
liability other than Holder's payment of the Exercise Price.

         7. MUTILATED OR MISSING OPTION CERTIFICATES. If this Option is
mutilated, lost, stolen or destroyed, the Company shall issue and deliver, in
exchange and substitution for and upon cancellation of the mutilated Option, or
in lieu of and substitution for the lost, stolen or destroyed Option, a new
option in substantially the same form as this Option and representing an option
to purchase an equivalent number of Option Shares, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of this
Option and an indemnity or bond, if requested, satisfactory to the Company.
Holder shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.

         8. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Option Shares issuable upon the exercise of this
Option; PROVIDED, HOWEVER, that the Company shall not be required to pay any tax
or taxes that may be payable in respect of any transfer involved in the issuance
of any options or any Option Share certificates in a name other than that of
Holder, and the Company shall not be required to issue or deliver such Option
Share certificates unless and until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

                                       3
<PAGE>

         9. CERTAIN NOTICES TO HOLDER. Upon any adjustment to the number of
Option Shares issuable pursuant to exercise of this Option or to the Exercise
Price pursuant to SECTION 4, the Company, within fifteen (15) calendar days
thereafter, shall cause to be given to Holder, at his address appearing on the
Company's records, written notice of such adjustments in accordance with this
SECTION 9. Where appropriate such notice may be given in advance and included as
part of the notice required to be mailed under the other provisions of this
SECTION 9. If:

            (a) The Company authorizes the issuance or distribution of
         securities or assets to holders of its shares of Common Stock or makes
         any distribution (other than cash dividends) to the holders of its
         shares of Common Stock;

            (b) The Company becomes a party to any consolidation or merger for
         which approval of any shareholder of the Company is required, conveys
         or transfers all or substantially all of its properties, assets, or
         business, shall engage in any reorganization or recapitalization or
         makes any tender or exchange offer for shares of its Common Stock;

            (c) The Company becomes subject to voluntary or involuntary
         dissolution, liquidation or winding up; or

            (d) The Company proposes to take any other action that would require
         an adjustment of the Exercise Price pursuant to SECTION 4;

then the Company shall cause to be given to Holder at his address appearing on
the Company's records, at least fifteen (15) calendar days prior to the
applicable record date hereinafter specified, a written notice in accordance
with this SECTION 9 stating (i) the date as of which the holders of record of
Common Stock to be entitled to receive any such securities or assets or
distribution are to be determined, (ii) the initial expiration date set forth in
any tender or exchange offer made by the Company for shares of its Common Stock,
(iii) the date on which any such consolidation or merger, conveyance, transfer,
reorganization or recapitalization, dissolution, liquidation or winding up is
expected to become effective or consummated, and the date as of which it is
expected that holders of record of Common Stock shall be entitled to exchange
such Common Stock for securities or other property that may be deliverable upon
such consolidation or merger, conveyance, transfer, reorganization or
recapitalization, dissolution, liquidation or winding up, or (iv) the date on
which any other action that would require an adjustment of the Exercise Price
pursuant to SECTION 4 is expected to become effective or be consummated and any
relevant record date for holders of Common Stock related thereto. The failure to
give the notice required by this SECTION 9 or any defect therein shall not
affect the legality or validity of any distribution, right, option,
consolidation, conveyance, transfer, reorganization, dissolution, liquidation or
winding up or the vote upon any action.

         Nothing contained in this Option shall be construed as conferring upon
Holder the right to vote or to consent or to receive notice as a shareholder in
respect of any rights or other matter whatsoever as a shareholder of the
Company, or any other rights or liabilities as a shareholder of the Company.

                                       4
<PAGE>

         10. NONTRANSFERABILITY OF OPTION. This Option is not transferable by
Holder voluntarily, involuntarily or by operation of law, except that this
Option may be transferred in whole or in part by Holder to William C. Saunders
and/or Terry S. Parker, and if such transfer occurs, this Option may be further
transferred by Mr. Saunders or Mr. Parker only by will, the laws of descent and
distribution or a qualified domestic relations order.

         11. NOTICES. Any notice or demand authorized by this Option to be given
or made by Holder to or on the Company shall be sufficiently given or made if
personally delivered or sent by first class United States mail, by overnight
courier guaranteeing next-day delivery, or by facsimile confirmed by letter,
addressed (until another address is given in writing by the Company) to the
Office.

         Any notice pursuant to this Option to be given by the Company to Holder
shall be sufficiently given if personally delivered or sent by first class
United States mail, by overnight courier guaranteeing next-day delivery, or by
facsimile confirmed by letter, addressed (until another address is filed in
writing by Holder with the Company) to the address specified in the Company's
records.

         12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Option without the consent or concurrence of Holder in
order to cure any ambiguity, manifest error or other mistake in this Option.

         13. INTENTIONALLY OMITTED.


                  [remainder of page intentionally left blank]

                                       5
<PAGE>

         14. SUCCESSORS. All the representations, warranties, agreements,
covenants and provisions of this Option by or for the benefit of the Company or
Holder shall bind and inure to the benefit of their respective permitted heirs,
successors and assigns hereunder.

         15. GOVERNING LAW. This Option shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be
construed in accordance with the internal laws of the State of California
without regard to conflicts of laws principles.

         16. BENEFITS OF THIS AGREEMENT. Nothing in this Option shall be
construed to give to any person or entity other than the Company and Holder any
legal or equitable right, remedy or claim under this Option, and this Option
shall be for the sole and exclusive benefit of the Company and Holder, except as
otherwise provided in SECTION 14.

         17. INVALIDITY OF PROVISIONS. If any provision of this Option is or
becomes invalid, illegal or unenforceable in any respect, such provision shall
be deemed amended to the extent necessary to cause it to express the intent of
the parties to the maximum possible extent and be valid legal and enforceable.
The invalidity or deemed amendment of such provision shall not affect the
validity, legality or enforceability of any other provision hereof.

         18. NO IMPAIRMENT. The Company will not, by amendment of its articles
of incorporation or through any reorganization, recapitalization transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the provisions
of this Option and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of Holder against impairment.

         19. SECTION HEADINGS. The section headings contained in this Option are
for convenience only and shall be without substantive meaning or content.

         The Company has caused this Option to be duly executed as of the day
and year first above written.

                                             TELENETICS CORPORATION



                                             By:   /s/ Michael A. Armani
                                                   -----------------------------
                                                   Michael A. Armani, President

                                       6
<PAGE>

                             TELENETICS CORPORATION

                           NON-QUALIFIED STOCK OPTION

                              ELECTION TO PURCHASE

         The undersigned hereby irrevocably elects to purchase ____________
Option Shares issuable upon the exercise of the Non-Qualified Stock Option dated
January 7, 2000 ("OPTION"), and requests that certificates for such Option
Shares be issued and delivered as follows:

ISSUE TO:          _____________________________________________________________
                   (Name)

                   _____________________________________________________________
                   (Address, including Zip Code)

                   _____________________________________________________________
                   (Social Security or Tax Identification Number)

DELIVER TO:        _____________________________________________________________
                   (Name)

                   at __________________________________________________________
                      (Address, including Zip Code)

         If the number of Option Shares hereby exercised is less than all the
Option Shares represented by the Option, the undersigned requests that a new
option representing the number of Option Shares not exercised be issued and
delivered as set forth above or otherwise as the undersigned shall direct in
writing.

         In full payment of the purchase price of the Option Shares being issued
upon exercise of the Option and transfer taxes, if any, the undersigned hereby
tenders payment of $_____________ by cash, check or money order payable in
United States currency to the order of Telenetics Corporation.

Dated: ___________                 _____________________________________________
                                   (Signature)

                                   (Signature must conform in all respects to
                                   name of holder as specified on the face of
                                   the Option.)

                                   PLEASE INSERT SOCIAL SECURITY OR TAX
                                   IDENTIFICATION NUMBER OF HOLDER

<PAGE>

                                    EXHIBIT A
                                    ---------

                         FORM OF RESTRICTED STOCK LETTER

         THE UNDERSIGNED (hereinafter referred to as "PURCHASER") is exercising
the Non-Qualified Stock Option tendered with this Restricted Stock Letter, and
in connection with such exercise, makes the following representations and
warranties to Telenetics Corporation (the "COMPANY") with the knowledge and
intent that the Company shall be entitled to rely thereon in delivering shares
of the Company's Common Stock ("SHARES") to Purchaser upon exercise of the
Non-Qualified Stock Option:

         1. Purchaser is acquiring the Shares for investment for Purchaser's own
account, and not with a view to or for sale in connection with any distribution
thereof. Purchaser understands that the Shares to be purchased have not been
registered pursuant to the Securities Act of 1933, as amended (the "ACT"), and
the offer and sale of the Shares is intended to be exempt from registration
under the Act, which exemption depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of Purchaser's representations
as expressed herein.

         2. Purchaser is an "accredited investor" as defined in the rules and
regulations of the Act and Purchaser has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of Purchaser's investment in the Shares, and Purchaser is capable of
bearing the economic risks of such investment, including the risk of loss of
Purchaser's entire investment in the Shares.

         3. Purchaser acknowledges that the Company has made available to
Purchaser or Purchaser's agents all documents and information relating to an
investment in the Shares requested by or on behalf of Purchaser.

         4. All Shares issued on delivery of this Restricted Stock Letter shall
bear the legend set forth in SECTION 3 of the annexed Non-Qualified Stock Option
and the Shares received on delivery of this Restricted Stock Letter shall be
subject to the restrictions set forth therein.

         Executed ______________________

                                            Purchaser:__________________________



                                            Signature:__________________________

                                       2




                           NON-QUALIFIED STOCK OPTION


         THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED OR
         OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
         SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                                                                 January 7, 2000

                             TELENETICS CORPORATION

         WHEREAS, in connection with the services to be rendered to Telenetics
Corporation, a California corporation (the "COMPANY"), by T. Keith Odom, an
individual ("HOLDER"), pursuant to that certain Employment Agreement of even
date herewith by and between the Company and Holder (the "SERVICE AGREEMENT"),
the Company desires to grant to Holder a non-qualified stock option to purchase
shares of the Company's common stock, no par value per share ("COMMON STOCK").

         NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING, the Company hereby
grants to Holder an option to purchase (this "OPTION") up to One Hundred
Thousand (100,000) shares (such shares as adjusted from time to time are
referred to herein individually, each as an "OPTION SHARE," and collectively, as
the "OPTION SHARES") of Common Stock of the Company at the Exercise Price (as
defined below). This Option may be exercised in accordance with the terms of
this Option by surrendering this Option, with (i) the form of Election to
Purchase set forth hereon duly executed by Holder and (ii) the form of
Restricted Stock Letter attached hereto duly executed by Holder (unless the sale
of the Option Shares is registered under the Securities Act), at the Company's
principal executive office ("OFFICE"), and by paying in full the Exercise Price,
plus transfer taxes, if any, in United States currency by cash, check or money
order payable to the order of the Company.

         1. DURATION, VESTING AND EXERCISE OF OPTION.

            (a) This Option shall vest and become exercisable according to the
         following schedule: On the date hereof, Thirty-Three Thousand, Three
         Hundred Thirty-Three (33,333) Option Shares shall become vested and
         exercisable. On January 7, 2001, an additional Thirty-Three Thousand,
         Three Hundred Thirty-Three (33,333) Option Shares shall become vested
         and exercisable. On January 7, 2002, the remaining Thirty-Three
         Thousand, Three Hundred Thirty-Four (33,334) Option Shares shall become
         vested and exercisable, at which time all of the Option Shares shall be
         vested and exercisable.

            (b) This Option (to the extent not earlier exercised) shall expire
         on January 6, 2005 (such date being referred to herein as the
         "EXPIRATION DATE"). If this Option is not surrendered to the Company
         for exercise in accordance with SECTION 1(c) prior to the close of
         business on the Expiration Date it shall be void.

<PAGE>

            (c) This Option may be exercised, to the extent not previously
         exercised, in whole or in part, prior to the Expiration Date at the per
         Option Share Exercise Price determined in accordance with SECTIONS 2
         AND 4. In order to exercise such right, Holder shall surrender this
         Option to the Company at the Office with the form of Election to
         Purchase and the Restricted Stock Letter attached hereto duly completed
         and signed, and shall tender payment in full of the Exercise Price to
         the Company for the Company's account, together with such taxes as are
         specified in SECTION 8, for each Option Share with respect to which
         this Option is being exercised. If this Option is exercised as to less
         than all of the Option Shares purchasable, one or more new option(s)
         shall be issued to Holder for the remaining number of Option Shares
         evidenced by this Option.

         2. EXERCISE PRICE. Subject to adjustment pursuant to SECTION 4, the
price per share at which Option Shares shall be purchasable upon exercise of
this Option (the "EXERCISE PRICE") shall be $1.75.

         3. ISSUANCE OF OPTION SHARE CERTIFICATES.

            (a) Upon surrender of this Option, delivery of an Election to
         Purchase and delivery of a Restricted Stock Letter (if the sale of the
         Option Shares is not registered under the Securities Act) in the forms
         attached hereto and payment of the Exercise Price and transfer taxes,
         the Company shall issue and deliver certificates representing shares of
         Common Stock ("CERTIFICATES") in the manner set forth in the Election
         to Purchase delivered by Holder to the Company.

            (b) If the shares of Common Stock deliverable upon exercise of this
         Option are not registered under the Securities Act, the Certificates
         shall bear a legend in substantially the following form:

                  "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                  (THE `ACT'), AND MAY NOT BE RESOLD, ASSIGNED, PLEDGED OR
                  HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
                  TO THE ISSUER THAT REGISTRATION UNDER SAID ACT IS NOT
                  REQUIRED."

         4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF OPTION SHARES
PURCHASABLE. The Exercise Price and the number of Option Shares purchasable upon
the exercise of this Option are subject to adjustment from time to time upon the
occurrence of the events specified in this SECTION 4. If, by reason of any
merger, consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-off, spin-off, combination
of shares, exchange of shares, or other similar changes in the capital structure
of the Company (each, a "REORGANIZATION"), the outstanding securities of the
same class as the Option Shares (the "OPTION SHARE CLASS OF SECURITIES") are
substituted or exchanged for, combined or changed into any cash, property or

                                       2
<PAGE>

other securities or into a greater or lesser number of shares, the number and/or
kind of shares and/or interests subject to this Option and the Exercise Price
shall be appropriately adjusted to prevent dilution or enlargement of the rights
of Holder so that, thereafter, this Option shall be exercisable for the
securities, cash and/or other property that would have been received in respect
of the Option Shares if this Option had been exercised in full immediately prior
to such event. Such adjustments shall be made successively whenever any event
described in the foregoing sentence occurs.

         5. FRACTIONAL OPTION SHARES. The Company shall not be required to issue
fractions of Option Shares upon exercise of this Option or to distribute
certificates that evidence fractional Option Shares. All fractions of Option
Shares to which Holder would otherwise be entitled shall be aggregated and in
lieu of such remaining fractional Option Share, there shall be paid to Holder at
the time this Option is exercised as herein provided an amount in cash equal to
the stated fraction of the fair market value of an Option Share as determined in
good faith by the Board of Directors of the Company.

         6. RESERVATION AND ISSUANCE OF OPTION SHARES. The Company represents
and warrants that (a) there have been reserved, and the Company shall at all
times keep reserved, out of its authorized Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase
represented by this Option, and (b) there are no restrictions in the Company's
articles of incorporation or bylaws that prevent the Company from issuing shares
of its Common Stock for the purpose of enabling it to satisfy any obligation to
issue Option Shares upon exercise of this Option in accordance with its terms.
The Company covenants and agrees that it will not amend its articles of
incorporation or bylaws in any manner, or take any other action, that could
adversely affect the Company's ability to issue Option Shares upon exercise of
this Option.

         The Company further represents and warrants that all shares of its
Common Stock issued upon exercise of this Option will, upon issuance in
accordance with the terms of this Option, (a) be legally issued and free from
all taxes, liens, charges, encumbrances and security interests created by the
Company with respect to the issuance thereof and (b) be duly and validly issued,
fully paid and nonassessable Common Stock as to which no holder shall have any
liability other than Holder's payment of the Exercise Price.

         7. MUTILATED OR MISSING OPTION CERTIFICATES. If this Option is
mutilated, lost, stolen or destroyed, the Company shall issue and deliver, in
exchange and substitution for and upon cancellation of the mutilated Option, or
in lieu of and substitution for the lost, stolen or destroyed Option, a new
option in substantially the same form as this Option and representing an option
to purchase an equivalent number of Option Shares, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of this
Option and an indemnity or bond, if requested, satisfactory to the Company.
Holder shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.

         8. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Option Shares issuable upon the exercise of this
Option; PROVIDED, HOWEVER, that the Company shall not be required to pay any tax

                                       3
<PAGE>

or taxes that may be payable in respect of any transfer involved in the issuance
of any options or any Option Share certificates in a name other than that of
Holder, and the Company shall not be required to issue or deliver such Option
Share certificates unless and until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

         9. CERTAIN NOTICES TO HOLDER. Upon any adjustment to the number of
Option Shares issuable pursuant to exercise of this Option or to the Exercise
Price pursuant to SECTION 4, the Company, within fifteen (15) calendar days
thereafter, shall cause to be given to Holder, at his address appearing on the
Company's records, written notice of such adjustments in accordance with this
SECTION 9. Where appropriate such notice may be given in advance and included as
part of the notice required to be mailed under the other provisions of this
SECTION 9. If:

            (a) The Company authorizes the issuance or distribution of
         securities or assets to holders of its shares of Common Stock or makes
         any distribution (other than cash dividends) to the holders of its
         shares of Common Stock;

            (b) The Company becomes a party to any consolidation or merger for
         which approval of any shareholder of the Company is required, conveys
         or transfers all or substantially all of its properties, assets, or
         business, shall engage in any reorganization or recapitalization or
         makes any tender or exchange offer for shares of its Common Stock;

            (c) The Company becomes subject to voluntary or involuntary
         dissolution, liquidation or winding up; or

            (d) The Company proposes to take any other action that would require
         an adjustment of the Exercise Price pursuant to SECTION 4;

then the Company shall cause to be given to Holder at his address appearing on
the Company's records, at least fifteen (15) calendar days prior to the
applicable record date hereinafter specified, a written notice in accordance
with this SECTION 9 stating (i) the date as of which the holders of record of
Common Stock to be entitled to receive any such securities or assets are to be
determined, (ii) the initial expiration date set forth in any tender or exchange
offer made by the Company for shares of its Common Stock or (iii) the date on
which any such consolidation or merger, conveyance, transfer, reorganization or
recapitalization, dissolution, liquidation or winding up is expected to become
effective or consummated, and the date as of which it is expected that holders
of record of Common Stock shall be entitled to exchange such Common Stock for
securities or other property that may be deliverable upon such consolidation or
merger, conveyance, transfer, reorganization or recapitalization, dissolution,
liquidation or winding up. The failure to give the notice required by this
SECTION 9 or any defect therein shall not affect the legality or validity of any
distribution, right, option, consolidation, conveyance, transfer,
reorganization, dissolution, liquidation or winding up or the vote upon any
action.

                                       4
<PAGE>

         Nothing contained in this Option shall be construed as conferring upon
Holder the right to vote or to consent or to receive notice as a shareholder in
respect of any rights or other matter whatsoever as a shareholder of the
Company, or any other rights or liabilities as a shareholder of the Company.

         10. NONTRANSFERABILITY OF OPTION. Except by will, the laws of descent
and distribution or qualified domestic relations order, this Option is not
transferable by Holder.

         11. NOTICES. Any notice or demand authorized by this Option to be given
or made by Holder to or on the Company shall be sufficiently given or made if
personally delivered or sent by first class United States mail, by overnight
courier guaranteeing next-day delivery, or by facsimile confirmed by letter,
addressed (until another address is given in writing by the Company) to the
Office.

         Any notice pursuant to this Option to be given by the Company to Holder
shall be sufficiently given if personally delivered or sent by first class
United States mail, by overnight courier guaranteeing next-day delivery, or by
facsimile confirmed by letter, addressed (until another address is filed in
writing by Holder with the Company) to the address specified in the Company's
records.

         12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Option without the consent or concurrence of Holder in
order to cure any ambiguity, manifest error or other mistake in this Option.

         13. TERMINATION OF SERVICE.

            (a) GENERAL. If Holder's services to the Company pursuant to the
         Service Agreement are terminated ("SERVICE TERMINATION") for any other
         reason than for Good Cause (as that term is defined in the Service
         Agreement) or voluntary resignation by Holder, then Holder may at any
         time within three months after the effective date of the Service
         Termination exercise the Option to the extent that Holder was entitled
         to exercise the Option at the date of Service Termination, provided
         that in no event shall the Option be exercisable after the Expiration
         Date. If Service Termination occurs for Good Cause or due to voluntary
         resignation by Holder, Holder may at any time within 30 days after the
         effective date of such Service Termination exercise the Option to the
         extent that Holder was entitled to exercise the Option at the effective
         date of such Service Termination, provided that in no event shall the
         Option, or any part thereof, be exercisable after the Expiration Date.

            (b) DEATH OR DISABILITY OF HOLDER. In the event of the death or
         Disability (as that term is defined in Section 22(e)(3) of the Internal
         Revenue Code of 1986, as amended) of Holder within a period during
         which the Option, or any part thereof, could have been exercised by
         Holder, including three months after the effective date of Service
         Termination for any other reason than for Good Cause or voluntary
         resignation (the "OPTION PERIOD"), the Option shall lapse unless it is
         exercised within the Option Period and in no event later than twelve
         months after the date of the Holder's death or Disability by Holder or
         Holder's legal representative or representatives in the case of a

                                       5
<PAGE>

         Disability or, in the case of death, by the person or persons entitled
         to do so under Holder's last will and testament or if Holder fails to
         make a testamentary disposition of the Option or shall die intestate,
         by the person or persons entitled to receive the Option under the
         applicable laws of descent and distribution. An Option may be exercised
         following the death or Disability of Holder only if the Option was
         exercisable by Holder immediately prior to his death or Disability. In
         no event shall the Option be exercisable after the Expiration Date. The
         Company shall have the right to require evidence satisfactory to it of
         the rights of any person or persons seeking to exercise the Option
         under this SECTION 13 to exercise the Option.

         14. ACCELERATION OF VESTING. If the Company undertakes to (i) sell,
lease, exchange, convey or otherwise dispose of all or substantially all of its
property or business, or (ii) merge into or consolidate with any other entity
(other than a wholly-owned subsidiary of the Company), or effect any transaction
(including a merger or other reorganization) or series of related transactions,
in which more than 50% of the voting power of the Company is disposed of, then
all of the Option Shares shall become automatically vested and exercisable
immediately prior to such event.

         15. SUCCESSORS. All the representations, warranties, agreements,
covenants and provisions of this Option by or for the benefit of the Company or
Holder shall bind and inure to the benefit of their respective permitted heirs,
successors and assigns hereunder.

         16. GOVERNING LAW. This Option shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be
construed in accordance with the internal laws of the State of California
without regard to conflicts of laws principles.

         17. BENEFITS OF THIS AGREEMENT. Nothing in this Option shall be
construed to give to any person or entity other than the Company and Holder any
legal or equitable right, remedy or claim under this Option, and this Option
shall be for the sole and exclusive benefit of the Company and Holder, except as
otherwise provided in SECTION 15.

         18. INVALIDITY OF PROVISIONS. If any provision of this Option is or
becomes invalid, illegal or unenforceable in any respect, such provision shall
be deemed amended to the extent necessary to cause it to express the intent of
the parties to the maximum possible extent and be valid legal and enforceable.
The invalidity or deemed amendment of such provision shall not affect the
validity, legality or enforceability of any other provision hereof.

         19. NO IMPAIRMENT. The Company will not, by amendment of its articles
of incorporation or through any reorganization, recapitalization transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the provisions
of this Option and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of Holder against impairment.

                                       6
<PAGE>

         20. SECTION HEADINGS. The section headings contained in this Option are
for convenience only and shall be without substantive meaning or content.

         The Company has caused this Option to be duly executed as of the day
and year first above written.

                                             TELENETICS CORPORATION



                                             By:   /S/ Michael A. Armani
                                                   -----------------------------
                                                   Michael A. Armani, President

                                       7
<PAGE>

                             TELENETICS CORPORATION

                           NON-QUALIFIED STOCK OPTION

                              ELECTION TO PURCHASE

         The undersigned hereby irrevocably elects to purchase ____________
Option Shares issuable upon the exercise of the Non-Qualified Stock Option dated
January 7, 2000 ("OPTION"), and requests that certificates for such Option
Shares be issued and delivered as follows:

ISSUE TO:          _____________________________________________________________
                   (Name)

                   _____________________________________________________________
                   (Address, including Zip Code)

                   _____________________________________________________________
                   (Social Security or Tax Identification Number)

DELIVER TO:        _____________________________________________________________
                   (Name)

                   at __________________________________________________________
                      (Address, including Zip Code)

         If the number of Option Shares hereby exercised is less than all the
Option Shares represented by the Option, the undersigned requests that a new
option representing the number of Option Shares not exercised be issued and
delivered as set forth above or otherwise as the undersigned shall direct in
writing.

         In full payment of the purchase price of the Option Shares being issued
upon exercise of the Option and transfer taxes, if any, the undersigned hereby
tenders payment of $_____________ by cash, check or money order payable in
United States currency to the order of Telenetics Corporation.

Dated: __________                  _____________________________________________
                                   (Signature)

                                   (Signature must conform in all respects to
                                   name of holder as specified on the face of
                                   the Option.)

                                   PLEASE INSERT SOCIAL SECURITY OR TAX
                                   IDENTIFICATION NUMBER OF HOLDER

<PAGE>

                                    EXHIBIT A
                                    ---------

                         FORM OF RESTRICTED STOCK LETTER

         THE UNDERSIGNED (hereinafter referred to as "PURCHASER") is exercising
the Non-Qualified Stock Option tendered with this Restricted Stock Letter, and
in connection with such exercise, makes the following representations and
warranties to Telenetics Corporation (the "COMPANY") with the knowledge and
intent that the Company shall be entitled to rely thereon in delivering shares
of the Company's Common Stock ("SHARES") to Purchaser upon exercise of the
Non-Qualified Stock Option:

         1. Purchaser is acquiring the Shares for investment for Purchaser's own
account, and not with a view to or for sale in connection with any distribution
thereof. Purchaser understands that the Shares to be purchased have not been
registered pursuant to the Securities Act of 1933, as amended (the "ACT"), and
the offer and sale of the Shares is intended to be exempt from registration
under the Act, which exemption depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of Purchaser's representations
as expressed herein.

         2. Purchaser is an "accredited investor" as defined in the rules and
regulations of the Act and Purchaser has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of Purchaser's investment in the Shares, and Purchaser is capable of
bearing the economic risks of such investment, including the risk of loss of
Purchaser's entire investment in the Shares.

         3. Purchaser acknowledges that the Company has made available to
Purchaser or Purchaser's agents all documents and information relating to an
investment in the Shares requested by or on behalf of Purchaser.

         4. All Shares issued on delivery of this Restricted Stock Letter shall
bear the legend set forth in SECTION 3 of the annexed Non-Qualified Stock Option
and the Shares received on delivery of this Restricted Stock Letter shall be
subject to the restrictions set forth therein.

         Executed ______________________

                                            Purchaser:__________________________



                                            Signature:__________________________




                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated January 7,
2000, is made and entered into by and between Telenetics Corporation, a
California corporation ("Company"), and Edward L. Didion ("Holder").

                                    RECITALS

         A. Holder has been issued 337,500 shares (the "Shares") of the
Company's common stock, no par value (the "Common Stock"), pursuant to the terms
and conditions of that certain Stock Purchase Agreement dated of even date
herein between the Company, Holder and other shareholders of eflex Wireless,
Inc. (the "Stock Purchase Agreement").

         B. Holder has been issued options (the "Options") to purchase up to
150,000 shares (the "Option Shares") of Common Stock pursuant to the terms and
conditions of that certain Consulting Agreement dated of even date herewith
between the Company and Holder (the "Consulting Agreement").

         C. In accordance with the requirements of the Stock Purchase Agreement
and Consulting Agreement, the Company desires to provide Holder with
registration rights with respect to the Shares and the Option Shares issuable to
Holder upon the exercise of the Options upon the terms and conditions
hereinafter set forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions hereinafter set forth, the parties hereto hereby
agree as follows:

1.       DEFINITIONS.

         1.1 "COMMON STOCK" shall mean the Common Stock, no par value per share,
of the Company.

         1.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

         1.3 "OPTION SHARES" shall have the meaning set forth in the Recitals to
this Agreement.

         1.4 "REGISTRABLE SECURITIES" shall mean (i) the Shares, (ii) the Option
Shares and (iii) any securities issued or issuable with respect to such Shares
or Option Shares by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consideration or other
reorganization. As to any particular Registrable Securities, once issued, such
shares shall cease to be Registrable Securities when (a) such shares shall have
been registered under the Securities Act, the registration statement with
respect to the sale of such shares shall have become effective under the
Securities Act and such shares shall have been disposed of pursuant to such
effective registration statement, (b) such shares shall have been distributed
pursuant to Rule 144 (or any similar provision relating to the disposition of

<PAGE>

securities then in force) under the Securities Act, (c) such shares shall have
been otherwise transferred, new certificates or other evidences of ownership for
them not bearing a legend restricting further transfer and not subject to any
stop-transfer order or other restrictions on transfer shall have been delivered
by the Company and subsequent disposition of such shares shall not require
registration or qualification of such shares under the Securities Act or any
state securities laws then in force, or (d) such shares shall cease to be
outstanding.


         1.5 "REGISTRATION EXPENSES" shall have the meaning set forth in Section
3.3.

         1.6 "SEC" shall mean the Securities and Exchange Commission. ---

         1.7 "SECURITIES ACT" shall mean the Securities Act of 1993, as amended.

         1.8 "SHARES" shall have the meaning set forth in the recitals to this
Agreement.

2. REGISTRATION UPON OCCURRENCE OF CERTAIN EVENT.

         2.1 REGISTRATION OBLIGATION. The Company anticipates filing with the
SEC on or before June 1, 2000 a registration statement covering, among other
securities, the Registrable Securities in the manner described in Section 3
hereof. Should the Company not file such a registration statement on or before
June 1, 2000, then the Company shall use its best efforts to file with the SEC
on or before June 15, 2000 a registration statement with respect to the
Registrable Securities in the manner described in Section 4 hereof and use its
best efforts to cause such registration statement to become effective as soon as
possible thereafter.

         2.2 REGISTRATION EXPENSES. The Company will pay all Registration
Expenses (as defined in Section 3.3) in connection with a registration effected
pursuant to this Section 2, whether or not such registration becomes effective
under the Securities Act.

         2.3 EFFECTIVE REGISTRATION STATEMENT. A registration pursuant to this
Section 2 will not be deemed to have been effected unless the registration
statement relating thereto has become effective under the Securities Act;
PROVIDED, HOWEVER, that if, after such registration statement has become
effective, the offering of Registrable Shares pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected.

         2.4 PRIORITY IN DEMAND REGISTRATION. If a registration pursuant to this
Agreement involves an underwritten offering and the managing underwriter advises
the Company in writing that, in its opinion, the number of securities which the
Company, Holder and any other persons intend to include in such registration
exceeds the number which would have an adverse effect on such offering,
including the price at which such securities can be sold, the Company will
include in such registration (i) first, all the securities the Company proposes
to sell for its own account, (ii) second, a number of such securities equal to
the number, in the opinion of such underwriters, which can be sold without
having the adverse effect referred to above, such amount to be allocated pro
rata among Holder and other persons having similar registration rights on the
basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

                                      -2-
<PAGE>

3. INCIDENTAL REGISTRATION.

         3.1 REGISTRATION RIGHTS. If the Company at any time proposes to
register any of its securities under the Securities Act (other than a
registration on Form S-4 or registration on Form S-8 in connection with the
Company's stock option plan that would require qualification in California of
the shares of common stock covered by such registration, or any successor or
similar forms or a registration in connection with any merger of the Company
with and into a company subject to the reporting requirements of the Exchange
Act), whether or not for sale for its own account, in a manner which would
permit registration of the Registrable Securities for sale to the public under
the Securities Act, the Company shall offer Holder the opportunity to include in
such registration statement any or all of its Registrable Securities. The
Company will use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by Holder, to the extent requisite to permit the
disposition (in accordance with such intended methods thereof) of the
Registrable Securities so to be registered; PROVIDED, that if such registration
involves an underwritten offering, Holder (and any other non-Company participant
in such registration) must offer and sell the Registrable Securities in a manner
as contemplated in the registration statement and as reasonably determined by
the Company and the underwriters selected by the Company. The Company will pay
all Registration Expenses (as hereinafter defined) in connection with each
registration of Registrable Securities effected pursuant to this Agreement.

         3.2 PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Agreement involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
which the Company, Holder and any other persons intend to include in such
registration exceeds the number which would have an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such registration (i) first, all the securities the Company
proposes to sell for its own account, (ii) second, a number of such securities
equal to the number, in the opinion of such underwriters, which can be sold
without having the adverse effect referred to above, such amount to be allocated
pro rata among Holder and other persons having similar registration rights on
the basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

         3.3 REGISTRATION EXPENSES. As used in this Agreement, "Registration
Expenses" shall mean all expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all SEC, stock
exchange, National Association of Securities Dealers, Inc. or Nasdaq
registration and filing fees and expenses, fees and expenses of compliance with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the Company in connection with blue sky
qualification of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and all independent certified public accountants (including the
expenses of any annual audit, special audit or "cold comfort" letters required
by or incident to such performance and compliance), securities acts liability
insurance (if the Company so desires), the reasonable fees and expenses of any
special experts retained by the Company in connection with such registration,
and fees and expenses of other persons retained by the Company.


                                      -3-
<PAGE>

4. REGISTRATION PROCEDURE. In effecting the registration of the Registrable
Securities as provided in this Agreement, the Company shall, at its sole
expense:

                  (a) Prepare and file with the SEC a registration statement
         with respect to the Registrable Securities and use its best efforts to
         cause such registration statement to become effective; provided,
         however, that before filing with the SEC a registration statement or
         prospectus or any amendments or supplements thereto, the Company will
         (i) furnish to counsel selected by Holder copies of all such documents
         proposed to be filed, which documents will be subject to the review of
         such counsel, and (ii) notify Holder of any stop order issued or
         threatened by the SEC and take all reasonable actions required to
         prevent the entry of such stop order or to remove it if entered;

                  (b) Prepare and file with the SEC such amendments and
         supplements to such registration statement and the prospectus used in
         connection with such registration statement as may be necessary to keep
         such registration statement effective for a period of nine (9) months
         thereafter or such shorter period which will terminate when all
         Registrable Securities covered by such registration statement have been
         sold, and comply with the provisions of the Act with respect to the
         disposition of all the Registrable Securities covered by such
         registration statement during such period;

                  (c) Furnish to Holder copies of the registration statement,
         each amendment and supplement thereto (in each case including all
         exhibits thereto), the prospectus included in such registration
         statement (including each preliminary prospectus and including a
         sufficient number of copies of the final prospectus) in conformity with
         the requirements of the Securities Act and such other documents as
         Holder may reasonably request in order to facilitate the disposition of
         the Registrable Securities owned by Holder;

                  (d) Use its best efforts to register or qualify the
         Registrable Securities under such other securities or blue sky laws of
         such jurisdictions as shall be reasonably requested by Holder and do
         any and all other acts and things which may be reasonably necessary or
         advisable to enable Holder to consummate the disposition in such
         jurisdictions of the Registrable Securities owned by Holder; provided,
         that the Company shall not be required in connection therewith or as a
         condition thereto to (i) qualify generally to do business in any
         jurisdiction where it would not otherwise be required to qualify but
         for this paragraph (d), (ii) subject itself to taxation in any such
         jurisdiction, or (iii) file a general consent to service of process in
         any such jurisdiction;

                  (e) Use its best efforts to cause the Registrable Securities
         covered by such registration statement to be registered with or
         approved by such other governmental agencies or authorities as may be
         necessary by virtue of the business and operations of the Company to
         enable Holder to consummate the disposition of such Registrable
         Securities;

                  (f) Immediately notify Holder at any time when a prospectus
         relating thereto is required to be delivered under the Securities Act,
         of the happening of any event as a result of which the prospectus
         included in such registration statement contains an untrue statement of
         a material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not
         misleading and the Company will promptly prepare and furnish to Holder
         a supplement or amendment to such prospectus so that, as thereafter
         delivered to the purchasers of such Registrable Securities, such
         prospectus will not contain an 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 not misleading;

                                      -4-
<PAGE>

                  (g) Enter into such customary agreements and take all such
         other actions as Holder reasonably requests in order to expedite or
         facilitate the disposition of such Registrable Securities, including
         customary indemnification;

                  (h) Make available for inspection by Holder and any attorney,
         accountant or other agent retained by Holder (collectively, the
         "Inspectors"), all financial and other records, pertinent corporate
         documents and properties of the Company as shall be reasonably
         necessary to enable them to exercise their due diligence
         responsibility, and cause the Company's officers, directors and
         employees to supply all information reasonably requested by any such
         Inspector in connection with such registration statement; and

                  (i) Otherwise use its best efforts to comply with all
         applicable rules and regulations of the SEC.

         The Company may require Holder to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.

         Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph 4(f), Holder will
forthwith discontinue disposition of Registrable Securities, pursuant to the
registration statement covering such Registrable Securities until Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph 4(f), and, if so directed by the Company, Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph 4(b) shall
be extended by the greater of (i) three months or (ii) the number of days during
the period from and including the date of the giving of such notice pursuant to
paragraph 4(f) to and including the date when Holder shall have received the
copies of the supplemented or amended prospectus contemplated by paragraph 4(f).

5. INDEMNIFICATION.


         5.1 INDEMNIFICATION BY THE COMPANY. In connection with the registration
of the Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will, and it hereby does, indemnify and hold harmless, to
the full extent permitted by law, Holder, each other person who participates as
an underwriter in the offering or sale of such securities and each other person,
if any, who controls Holder or any such underwriter within the meaning of the

                                      -5-
<PAGE>

Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with the Company's prior written consent) to which Holder or any such
underwriter or controlling person may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) or expenses arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse Holder and each such underwriter and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending such loss, claim, liability, action
or proceedings; provided, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expenses arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by Holder or underwriter or controlling person specifically stating
that it is for use in the preparation thereof; and provided, further, that the
Company will not be liable to Holder or any person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
person, if any, who controls such underwriter within the meaning of the


                                      -6-
<PAGE>

Securities Act, under the indemnity agreement in this Section 5.1 with respect
to any preliminary prospectus as then amended or supplemented as the case may
be, to the extent that any such loss, claim, damage or liability of Holder,
underwriter or controlling person results from the fact that Holder or
underwriter or controlling person sold Registrable Securities to a person to
whom there was not sent or give, at or prior to the written confirmation of such
sale, a copy of the final prospectus (including any documents incorporated by
reference therein), whichever is most recent, if the Company has previously
furnished copies thereof to Holder or underwriter or controlling person and such
final prospectus, as then amended or supplemented, has corrected any such
misstatement or omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Holder or any
underwriter or controlling person and shall survive the transfer of such
securities by Holder.

         5.2 INDEMNIFICATION BY HOLDER. The Company may require, as a condition
to including the Registrable Securities in any registration statement filed in
accordance with this Agreement, that the Company shall have received an
undertaking reasonably satisfactory to it from Holder or any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5.1) the Company and its controlling persons and all other
prospective sellers and their respective controlling persons with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instruction duly
executed by Holder or underwriter specifically stating that it is for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or Holder
and shall survive the transfer of such securities by Holder; provided, however,
that Holder shall not be liable to the Company under this Section 5.2 for any
amounts exceeding the product of the purchase price per Registrable Security and
the number of Registrable Securities being sold pursuant to such registration
statement or prospectus by Holder.

         5.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; provided, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Section 5, except to the extent that the indemnifying party
is actually materially prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof, and the indemnifying party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.

         5.4 OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding Sections 5.1, 5.2 and 5.3 (with appropriate modifications) shall
be give by the Company and Holder with respect to any required registration or
other qualification of securities under any federal or state law or regulation
of governmental authority other than the Securities Act.

6. RULE 144. The Company hereby covenants that the Company shall file in a
timely manner all reports required to be filed by it under the Securities Act
and the Exchange Act (to the extent the Company is subject to the Exchange Act)
and the rules and regulations adopted by the SEC thereunder, and it will take
such further action as Holder may reasonably request, all to the extent required
from time to time to enable Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions

                                      -7-
<PAGE>

provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC relating to the disposition of securities. Upon the request of Holder,
the Company will deliver to Holder a written statement as to whether it has
complied with such requirements, in addition, the Company hereby agrees that for
a period of nine months following the date on which a registration statement
filed pursuant to this Agreement shall have become effective, the Company shall
not deregister such securities under Section 12 of the Exchange Act (even if
then permitted to do so pursuant to the Exchange Act and the rules and
regulations promulgated thereunder).

7. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into any
agreement with respect to any of its securities which is inconsistent with the
rights granted to Holder in this Agreement.

8. REMEDIES. The Company acknowledges and agrees that in the event of any breach
of this Agreement by it, Holder would be irreparably harmed and could not be
made whole by monetary damages. The Company accordingly agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate and that Holder, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to compel specific performance
of this Agreement in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction for such action.

9. SALE WITHOUT REGISTRATION. At the time of any transfer of any Registrable
Securities which shall not be registered under the Securities Act, the Company
may require, as a condition of allowing such transfer, that Holder or the
transferee furnish to the Company: (a) such information as is reasonably
necessary in order to establish that such transfer may be made without
registration under the Securities Act; and (b) at the expense of Holder or the
transferee, an opinion of counsel, satisfactory in form and substance to the
Company, to the effect that such transfer may be made without registration under
the Securities Act; provided, that nothing contained in this Section 9 shall
relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to these registration rights
provisions.

10. GENERAL PROVISIONS.

         10.1 WAIVERS. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action or compliance with any representation,
warranty, covenant, or agreement contained herein or in any ancillary document.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other or subsequent breach.
The waiver by any party of any of the conditions precedent to its respective
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement.

         10.2 NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered personally, by courier service, telecopied, or
mailed by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so delivered or mailed:

                                      -8-
<PAGE>

                       (a) if to the Company:

                           Telenetics Corporation
                           25111 Arctic Ocean
                           Lake Forest, California  92630
                           Attn: Michael A. Armani

                           With a copy to:

                           Rutan & Tucker, L.L.P.
                           611 Anton Boulevard, Suite 1400
                           Costa Mesa, California  92626
                           Attn: Larry A. Cerutti, Esq.

                       (b) if to Holder:

                           Edward L. Didion
                           9828 Gallagher Road
                           Dover, Florida 33527

or to such other address as any of the above shall have specified by notice
hereunder. Notices delivered personally, by mail or telecopied shall be deemed
communicated as of actual receipt.

         10.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes any and all prior agreements and undertakings, oral or
written, concerning the subject matter hereof. This Agreement may not be changed
or terminated orally, and may only be changed or terminated by a writing signed
by the party against whom such change or termination is sought.

         10.4 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns. Except
as set forth in the prior sentence, nothing in this Agreement, expressed or
implied, is intended to or shall confer on any person other than the parties
hereto any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.

         10.5 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

         10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.

         10.7 RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular include the plural, and in the plural
include the singular, and words of the masculine gender include the feminine and
the neuter, and, when the sense so indicates, words of the neuter gender may
refer to any gender.

                                      -9-
<PAGE>

         10.8 ASSIGNMENT. For purposes of this Agreement, the term "Holder"
shall include any heir, successor or assign who obtains any Registrable
Securities from the Holder listed on the signature page hereof.

         10.9 REGISTRATION OF ADDITIONAL STOCK. The Company and Holder agree to
review the securities law issues relating to the registration of Holder's
portion of the Additional Stock (as that term is defined in the Stock Purchase
Agreement) and, to the extent possible, agree to revise this Agreement to
include within the definition of Registrable Securities hereunder, Holder's
portion of the Additional Stock.

         10.10 GOVERNING LAW; VENUE. The validity, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California. Any
action commenced hereunder shall be conducted before a court of appropriate
jurisdiction in Orange County, California.

         10.11 COOPERATION. The parties agree to execute such further documents
and take such further actions as necessary to carry out the provisions of this
Agreement and to fully accomplish its purpose and intent.

         10.13 SET-OFF. Each party hereto shall be entitled to set-off against
any amount it may owe to any other party under this Agreement or any other
agreement executed in connection herewith any and all amounts that are due to
that party by such other party under or in connection with the terms of this
Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                      -10-
<PAGE>




         10.14 TIME OF ESSENCE. Time is of essence in connection with the
performance of this Agreement.


         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and date first above written.

                                   TELENETICS CORPORATION


                                   By: /S/ Michael A. Armani
                                       --------------------------------
                                       Michael A. Armani, President



                                   HOLDER:


                                       /S/ Edward L. Didion
                                       --------------------------------
                                       Edward L. Didion, an individual






                                      -11-



                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated January 7,
2000, is made and entered into by and between Telenetics Corporation, a
California corporation ("Company"), and John D. McLean ("Holder").

                                    RECITALS

         A. Holder has been issued 75,000 shares (the "Shares") of the Company's
common stock, no par value (the "Common Stock"), pursuant to the terms and
conditions of that certain Stock Purchase Agreement dated of even date herein
between the Company, Holder and other shareholders of eflex Wireless, Inc. (the
"Stock Purchase Agreement").

         B. Holder has been issued options (the "Options") to purchase up to
300,000 shares (the "Option Shares") of Common Stock pursuant to the terms and
conditions of that certain Employment Agreement dated of even date herewith
between the Company and Holder (the "Employment Agreement").

         C. In accordance with the requirements of the Stock Purchase Agreement
and Employment Agreement, the Company desires to provide Holder with
registration rights with respect to the Shares and the Option Shares issuable to
Holder upon the exercise of the Options upon the terms and conditions
hereinafter set forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions hereinafter set forth, the parties hereto hereby
agree as follows:

1. DEFINITIONS.

         1.1 "COMMON STOCK" shall mean the Common Stock, no par value per share,
of the Company.

         1.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

         1.3 "OPTION SHARES" shall have the meaning set forth in the Recitals to
this Agreement.

         1.4 "REGISTRABLE SECURITIES" shall mean (i) the Shares, (ii) the Option
Shares and (iii) any securities issued or issuable with respect to such Shares
or Option Shares by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consideration or other
reorganization. As to any particular Registrable Securities, once issued, such
shares shall cease to be Registrable Securities when (a) such shares shall have
been registered under the Securities Act, the registration statement with
respect to the sale of such shares shall have become effective under the
Securities Act and such shares shall have been disposed of pursuant to such
effective registration statement, (b) such shares shall have been distributed
pursuant to Rule 144 (or any similar provision relating to the disposition of


<PAGE>

securities then in force) under the Securities Act, (c) such shares shall have
been otherwise transferred, new certificates or other evidences of ownership for
them not bearing a legend restricting further transfer and not subject to any
stop-transfer order or other restrictions on transfer shall have been delivered
by the Company and subsequent disposition of such shares shall not require
registration or qualification of such shares under the Securities Act or any
state securities laws then in force, or (d) such shares shall cease to be
outstanding.

         1.5 "REGISTRATION EXPENSES" shall have the meaning set forth in Section
3.3.

         1.6 "SEC" shall mean the Securities and Exchange Commission.

         1.7 "SECURITIES ACT" shall mean the Securities Act of 1993, as amended.

         1.8 "SHARES" shall have the meaning set forth in the recitals to this
Agreement.

2. REGISTRATION UPON OCCURRENCE OF CERTAIN EVENT.

         2.1 REGISTRATION OBLIGATION. The Company anticipates filing with the
SEC on or before June 1, 2000 a registration statement covering, among other
securities, the Registrable Securities in the manner described in Section 3
hereof. Should the Company not file such a registration statement on or before
June 1, 2000, then the Company shall use its best efforts to file with the SEC
on or before June 15, 2000 a registration statement with respect to the
Registrable Securities in the manner described in Section 4 hereof and use its
best efforts to cause such registration statement to become effective as soon as
possible thereafter.

         2.2 REGISTRATION EXPENSES. The Company will pay all Registration
Expenses (as defined in Section 3.3) in connection with a registration effected
pursuant to this Section 2, whether or not such registration becomes effective
under the Securities Act.

         2.3 EFFECTIVE REGISTRATION STATEMENT. A registration pursuant to this
Section 2 will not be deemed to have been effected unless the registration
statement relating thereto has become effective under the Securities Act;
PROVIDED, HOWEVER, that if, after such registration statement has become
effective, the offering of Registrable Shares pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected.

         2.4 PRIORITY IN DEMAND REGISTRATION. If a registration pursuant to this
Agreement involves an underwritten offering and the managing underwriter advises
the Company in writing that, in its opinion, the number of securities which the
Company, Holder and any other persons intend to include in such registration
exceeds the number which would have an adverse effect on such offering,
including the price at which such securities can be sold, the Company will
include in such registration (i) first, all the securities the Company proposes
to sell for its own account, (ii) second, a number of such securities equal to
the number, in the opinion of such underwriters, which can be sold without
having the adverse effect referred to above, such amount to be allocated pro
rata among Holder and other persons having similar registration rights on the
basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

                                      -2-
<PAGE>

3. INCIDENTAL REGISTRATION.

         3.1 REGISTRATION RIGHTS. If the Company at any time proposes to
register any of its securities under the Securities Act (other than a
registration on Form S-4 or registration on Form S-8 in connection with the
Company's stock option plan that would require qualification in California of
the shares of common stock covered by such registration, or any successor or
similar forms or a registration in connection with any merger of the Company
with and into a company subject to the reporting requirements of the Exchange
Act), whether or not for sale for its own account, in a manner which would
permit registration of the Registrable Securities for sale to the public under
the Securities Act, the Company shall offer Holder the opportunity to include in
such registration statement any or all of its Registrable Securities. The
Company will use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by Holder, to the extent requisite to permit the
disposition (in accordance with such intended methods thereof) of the
Registrable Securities so to be registered; PROVIDED, that if such registration
involves an underwritten offering, Holder (and any other non-Company participant
in such registration) must offer and sell the Registrable Securities in a manner
as contemplated in the registration statement and as reasonably determined by
the Company and the underwriters selected by the Company. The Company will pay
all Registration Expenses (as hereinafter defined) in connection with each
registration of Registrable Securities effected pursuant to this Agreement.

         3.2 PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Agreement involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
which the Company, Holder and any other persons intend to include in such
registration exceeds the number which would have an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such registration (i) first, all the securities the Company
proposes to sell for its own account, (ii) second, a number of such securities
equal to the number, in the opinion of such underwriters, which can be sold
without having the adverse effect referred to above, such amount to be allocated
pro rata among Holder and other persons having similar registration rights on
the basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

         3.3 REGISTRATION EXPENSES. As used in this Agreement, "Registration
Expenses" shall mean all expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all SEC, stock
exchange, National Association of Securities Dealers, Inc. or Nasdaq
registration and filing fees and expenses, fees and expenses of compliance with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the Company in connection with blue sky
qualification of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and all independent certified public accountants (including the
expenses of any annual audit, special audit or "cold comfort" letters required
by or incident to such performance and compliance), securities acts liability
insurance (if the Company so desires), the reasonable fees and expenses of any
special experts retained by the Company in connection with such registration,
and fees and expenses of other persons retained by the Company.

                                      -3-
<PAGE>

4. REGISTRATION PROCEDURE. In effecting the registration of the Registrable
Securities as provided in this Agreement, the Company shall, at its sole
expense:

                  (a) Prepare and file with the SEC a registration statement
         with respect to the Registrable Securities and use its best efforts to
         cause such registration statement to become effective; provided,
         however, that before filing with the SEC a registration statement or
         prospectus or any amendments or supplements thereto, the Company will
         (i) furnish to counsel selected by Holder copies of all such documents
         proposed to be filed, which documents will be subject to the review of
         such counsel, and (ii) notify Holder of any stop order issued or
         threatened by the SEC and take all reasonable actions required to
         prevent the entry of such stop order or to remove it if entered;

                  (b) Prepare and file with the SEC such amendments and
         supplements to such registration statement and the prospectus used in
         connection with such registration statement as may be necessary to keep
         such registration statement effective for a period of nine (9) months
         thereafter or such shorter period which will terminate when all
         Registrable Securities covered by such registration statement have been
         sold, and comply with the provisions of the Act with respect to the
         disposition of all the Registrable Securities covered by such
         registration statement during such period;

                  (c) Furnish to Holder copies of the registration statement,
         each amendment and supplement thereto (in each case including all
         exhibits thereto), the prospectus included in such registration
         statement (including each preliminary prospectus and including a
         sufficient number of copies of the final prospectus) in conformity with
         the requirements of the Securities Act and such other documents as
         Holder may reasonably request in order to facilitate the disposition of
         the Registrable Securities owned by Holder;

                  (d) Use its best efforts to register or qualify the
         Registrable Securities under such other securities or blue sky laws of
         such jurisdictions as shall be reasonably requested by Holder and do
         any and all other acts and things which may be reasonably necessary or
         advisable to enable Holder to consummate the disposition in such
         jurisdictions of the Registrable Securities owned by Holder; provided,
         that the Company shall not be required in connection therewith or as a
         condition thereto to (i) qualify generally to do business in any
         jurisdiction where it would not otherwise be required to qualify but
         for this paragraph (d), (ii) subject itself to taxation in any such
         jurisdiction, or (iii) file a general consent to service of process in
         any such jurisdiction;

                  (e) Use its best efforts to cause the Registrable Securities
         covered by such registration statement to be registered with or
         approved by such other governmental agencies or authorities as may be
         necessary by virtue of the business and operations of the Company to
         enable Holder to consummate the disposition of such Registrable
         Securities;

                  (f) Immediately notify Holder at any time when a prospectus
         relating thereto is required to be delivered under the Securities Act,
         of the happening of any event as a result of which the prospectus
         included in such registration statement contains an untrue statement of
         a material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not

                                      -4-
<PAGE>

         misleading and the Company will promptly prepare and furnish to Holder
         a supplement or amendment to such prospectus so that, as thereafter
         delivered to the purchasers of such Registrable Securities, such
         prospectus will not contain an 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 not misleading;

                  (g) Enter into such customary agreements and take all such
         other actions as Holder reasonably requests in order to expedite or
         facilitate the disposition of such Registrable Securities, including
         customary indemnification;

                  (h) Make available for inspection by Holder and any attorney,
         accountant or other agent retained by Holder (collectively, the
         "Inspectors"), all financial and other records, pertinent corporate
         documents and properties of the Company as shall be reasonably
         necessary to enable them to exercise their due diligence
         responsibility, and cause the Company's officers, directors and
         employees to supply all information reasonably requested by any such
         Inspector in connection with such registration statement; and

                  (i) Otherwise use its best efforts to comply with all
         applicable rules and regulations of the SEC.

         The Company may require Holder to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.

         Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph 4(f), Holder will
forthwith discontinue disposition of Registrable Securities, pursuant to the
registration statement covering such Registrable Securities until Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph 4(f), and, if so directed by the Company, Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph 4(b) shall
be extended by the greater of (i) three months or (ii) the number of days during
the period from and including the date of the giving of such notice pursuant to
paragraph 4(f) to and including the date when Holder shall have received the
copies of the supplemented or amended prospectus contemplated by paragraph 4(f).

5. INDEMNIFICATION.

         5.1 INDEMNIFICATION BY THE COMPANY. In connection with the registration
of the Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will, and it hereby does, indemnify and hold harmless, to
the full extent permitted by law, Holder, each other person who participates as
an underwriter in the offering or sale of such securities and each other person,
if any, who controls Holder or any such underwriter within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,



                                      -5-
<PAGE>

joint or several, and expenses (including any amounts paid in any settlement
effected with the Company's prior written consent) to which Holder or any such
underwriter or controlling person may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) or expenses arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse Holder and each such underwriter and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending such loss, claim, liability, action
or proceedings; provided, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expenses arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by Holder or underwriter or controlling person specifically stating
that it is for use in the preparation thereof; and provided, further, that the
Company will not be liable to Holder or any person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 5.1 with respect
to any preliminary prospectus as then amended or supplemented as the case may
be, to the extent that any such loss, claim, damage or liability of Holder,
underwriter or controlling person results from the fact that Holder or
underwriter or controlling person sold Registrable Securities to a person to
whom there was not sent or give, at or prior to the written confirmation of such
sale, a copy of the final prospectus (including any documents incorporated by
reference therein), whichever is most recent, if the Company has previously
furnished copies thereof to Holder or underwriter or controlling person and such
final prospectus, as then amended or supplemented, has corrected any such
misstatement or omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Holder or any
underwriter or controlling person and shall survive the transfer of such
securities by Holder.

         5.2 INDEMNIFICATION BY HOLDER. The Company may require, as a condition
to including the Registrable Securities in any registration statement filed in
accordance with this Agreement, that the Company shall have received an
undertaking reasonably satisfactory to it from Holder or any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5.1) the Company and its controlling persons and all other
prospective sellers and their respective controlling persons with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instruction duly
executed by Holder or underwriter specifically stating that it is for use in the

                                      -6-
<PAGE>

preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or Holder
and shall survive the transfer of such securities by Holder; provided, however,
that Holder shall not be liable to the Company under this Section 5.2 for any
amounts exceeding the product of the purchase price per Registrable Security and
the number of Registrable Securities being sold pursuant to such registration
statement or prospectus by Holder.

         5.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; provided, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Section 5, except to the extent that the indemnifying party
is actually materially prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof, and the indemnifying party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.

         5.4 OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding Sections 5.1, 5.2 and 5.3 (with appropriate modifications) shall
be give by the Company and Holder with respect to any required registration or
other qualification of securities under any federal or state law or regulation
of governmental authority other than the Securities Act.

6. RULE 144. The Company hereby covenants that the Company shall file in a
timely manner all reports required to be filed by it under the Securities Act
and the Exchange Act (to the extent the Company is subject to the Exchange Act)
and the rules and regulations adopted by the SEC thereunder, and it will take
such further action as Holder may reasonably request, all to the extent required


                                      -7-
<PAGE>

from time to time to enable Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC relating to the disposition of securities. Upon the request of Holder,
the Company will deliver to Holder a written statement as to whether it has
complied with such requirements, in addition, the Company hereby agrees that for
a period of nine months following the date on which a registration statement
filed pursuant to this Agreement shall have become effective, the Company shall
not deregister such securities under Section 12 of the Exchange Act (even if
then permitted to do so pursuant to the Exchange Act and the rules and
regulations promulgated thereunder).

7. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into any
agreement with respect to any of its securities which is inconsistent with the
rights granted to Holder in this Agreement.

8. REMEDIES. The Company acknowledges and agrees that in the event of any breach
of this Agreement by it, Holder would be irreparably harmed and could not be
made whole by monetary damages. The Company accordingly agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate and that Holder, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to compel specific performance
of this Agreement in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction for such action.

9. SALE WITHOUT REGISTRATION. At the time of any transfer of any Registrable
Securities which shall not be registered under the Securities Act, the Company
may require, as a condition of allowing such transfer, that Holder or the
transferee furnish to the Company: (a) such information as is reasonably
necessary in order to establish that such transfer may be made without
registration under the Securities Act; and (b) at the expense of Holder or the
transferee, an opinion of counsel, satisfactory in form and substance to the
Company, to the effect that such transfer may be made without registration under
the Securities Act; provided, that nothing contained in this Section 9 shall
relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to these registration rights
provisions.

10. GENERAL PROVISIONS.

         10.1 WAIVERS. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action or compliance with any representation,
warranty, covenant, or agreement contained herein or in any ancillary document.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other or subsequent breach.
The waiver by any party of any of the conditions precedent to its respective
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement.

         10.2 NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered personally, by courier service, telecopied, or
mailed by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so delivered or mailed:

                                      -8-
<PAGE>

                   (a)     if to the Company:

                           Telenetics Corporation
                           25111 Arctic Ocean
                           Lake Forest, California  92630
                           Attn: Michael A. Armani

                           With a copy to:

                           Rutan & Tucker, L.L.P.
                           611 Anton Boulevard, Suite 1400
                           Costa Mesa, California  92626
                           Attn: Larry A. Cerutti, Esq.

                   (b)     if to Holder:

                           John D. McLean
                           400 Thornwyck Trail
                           Roswell, Georgia 30076

or to such other address as any of the above shall have specified by notice
hereunder. Notices delivered personally, by mail or telecopied shall be deemed
communicated as of actual receipt.

         10.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes any and all prior agreements and undertakings, oral or
written, concerning the subject matter hereof. This Agreement may not be changed
or terminated orally, and may only be changed or terminated by a writing signed
by the party against whom such change or termination is sought.

         10.4 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns. Except
as set forth in the prior sentence, nothing in this Agreement, expressed or
implied, is intended to or shall confer on any person other than the parties
hereto any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.

         10.5 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

         10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.

         10.7 RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular include the plural, and in the plural
include the singular, and words of the masculine gender include the feminine and
the neuter, and, when the sense so indicates, words of the neuter gender may
refer to any gender.

                                      -9-
<PAGE>

         10.8 ASSIGNMENT. For purposes of this Agreement, the term "Holder"
shall include any heir, successor or assign who obtains any Registrable
Securities from the Holder listed on the signature page hereof.

         10.9 REGISTRATION OF ADDITIONAL STOCK. The Company and Holder agree to
review the securities law issues relating to the registration of Holder's
portion of the Additional Stock (as that term is defined in the Stock Purchase
Agreement) and, to the extent possible, agree to revise this Agreement to
include within the definition of Registrable Securities hereunder, Holder's
portion of the Additional Stock.

         10.10 GOVERNING LAW; VENUE. The validity, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California. Any
action commenced hereunder shall be conducted before a court of appropriate
jurisdiction in Orange County, California.

         10.11 COOPERATION. The parties agree to execute such further documents
and take such further actions as necessary to carry out the provisions of this
Agreement and to fully accomplish its purpose and intent.

         10.12 ATTORNEYS' FEES. The prevailing party in any proceedings arising
in connection with this Agreement shall be entitled to reimbursement for his or
its reasonable costs incurred in connection therewith, including attorneys'
fees.

         10.13 SET-OFF. Each party hereto shall be entitled to set-off against
any amount it may owe to any other party under this Agreement or any other
agreement executed in connection herewith any and all amounts that are due to
that party by such other party under or in connection with the terms of this
Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                      -10-
<PAGE>



         10.14 TIME OF ESSENCE. Time is of essence in connection with the
performance of this Agreement.


         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and date first above written.


                                   TELENETICS CORPORATION


                                   By: /s/ Michael A. Armani
                                      ------------------------------------
                                      Michael A. Armani, President



                                   HOLDER:


                                       /s/ John D. McLean
                                      ------------------------------------
                                      John D. McLean, an individual


                                      -11-



                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated January 7,
2000, is made and entered into by and between Telenetics Corporation, a
California corporation ("Company"), and Saunders & Parker, Inc., a Texas
corporation ("Holder").

                                    RECITALS

         A. Holder has been issued options (the "Options") to purchase up to
600,000 shares (the "Option Shares") of the Company's common stock, no par value
(the "Common Stock"), pursuant to the terms and conditions of that certain
Consulting Agreement dated of even date herewith between the Company and Holder
(the "Consulting Agreement"), which is being entered into in connection with the
closing ("Closing") of that certain Stock Purchase Agreement dated of even date
herein between the Company and the shareholders of eflex Wireless, Inc. (the
"Stock Purchase Agreement").

         B. In connection with the Closing, the Company desires to provide
Holder with registration rights with respect to the Option Shares issuable to
Holder upon the exercise of the Options upon the terms and conditions
hereinafter set forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions hereinafter set forth, the parties hereto hereby
agree as follows:

1. DEFINITIONS.

         1.1 "COMMON STOCK" shall mean the Common Stock, no par value per share,
of the Company.

         1.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

         1.3 "OPTION SHARES" shall have the meaning set forth in the Recitals to
this Agreement.

         1.4 "REGISTRABLE SECURITIES" shall mean (i) the Option Shares and (ii)
any securities issued or issuable with respect to such Option Shares by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consideration or other reorganization. As to any
particular Registrable Securities, once issued, such shares shall cease to be
Registrable Securities when (a) such shares shall have been registered under the
Securities Act, the registration statement with respect to the sale of such

                                      -1-
<PAGE>

shares shall have become effective under the Securities Act and such shares
shall have been disposed of pursuant to such effective registration statement,
(b) such shares shall have been distributed pursuant to Rule 144 (or any similar
provision relating to the disposition of securities then in force) under the
Securities Act, (c) such shares shall have been otherwise transferred, new
certificates or other evidences of ownership for them not bearing a legend
restricting further transfer and not subject to any stop-transfer order or other
restrictions on transfer shall have been delivered by the Company and subsequent
disposition of such shares shall not require registration or qualification of
such shares under the Securities Act or any state securities laws then in force,
or (d) such shares shall cease to be outstanding.

         1.5 "REGISTRATION EXPENSES" shall have the meaning set forth in Section
3.3.

         1.6 "SEC" shall mean the Securities and Exchange Commission.

         1.7 "SECURITIES ACT" shall mean the Securities Act of 1993, as amended.

2. REGISTRATION UPON OCCURRENCE OF CERTAIN EVENT.

         2.1 REGISTRATION OBLIGATION. The Company anticipates filing with the
SEC on or before June 1, 2000 a registration statement covering, among other
securities, the Registrable Securities in the manner described in Section 3
hereof. Should the Company not file such a registration statement on or before
June 1, 2000, then the Company shall use its best efforts to file with the SEC
on or before June 15, 2000 a registration statement with respect to the
Registrable Securities in the manner described in Section 4 hereof and use its
best efforts to cause such registration statement to become effective as soon as
possible thereafter.

         2.2 REGISTRATION EXPENSES. The Company will pay all Registration
Expenses (as defined in Section 3.3) in connection with a registration effected
pursuant to this Section 2, whether or not such registration becomes effective
under the Securities Act.

         2.3 EFFECTIVE REGISTRATION STATEMENT. A registration pursuant to this
Section 2 will not be deemed to have been effected unless the registration
statement relating thereto has become effective under the Securities Act;
PROVIDED, HOWEVER, that if, after such registration statement has become
effective, the offering of Registrable Shares pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected.

         2.4 PRIORITY IN DEMAND REGISTRATION. If a registration pursuant to this
Agreement involves an underwritten offering and the managing underwriter advises
the Company in writing that, in its opinion, the number of securities which the
Company, Holder and any other persons intend to include in such registration
exceeds the number which would have an adverse effect on such offering,
including the price at which such securities can be sold, the Company will
include in such registration (i) first, all the securities the Company proposes
to sell for its own account, (ii) second, a number of such securities equal to
the number, in the opinion of such underwriters, which can be sold without
having the adverse effect referred to above, such amount to be allocated pro
rata among Holder and other persons having similar registration rights on the
basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

3. INCIDENTAL REGISTRATION.

         3.1 REGISTRATION RIGHTS. If the Company at any time proposes to
register any of its securities under the Securities Act (other than a
registration on Form S-4 or registration on Form S-8 in connection with the
Company's stock option plan that would require qualification in California of
the shares of common stock covered by such registration, or any successor or

                                       -2-
<PAGE>

similar forms or a registration in connection with any merger of the Company
with and into a company subject to the reporting requirements of the Exchange
Act), whether or not for sale for its own account, in a manner which would
permit registration of the Registrable Securities for sale to the public under
the Securities Act, the Company shall offer Holder the opportunity to include in
such registration statement any or all of its Registrable Securities. The
Company will use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by Holder, to the extent requisite to permit the
disposition (in accordance with such intended methods thereof) of the
Registrable Securities so to be registered; PROVIDED, that if such registration
involves an underwritten offering, Holder (and any other non-Company participant
in such registration) must offer and sell the Registrable Securities in a manner
as contemplated in the registration statement and as reasonably determined by
the Company and the underwriters selected by the Company. The Company will pay
all Registration Expenses (as hereinafter defined) in connection with each
registration of Registrable Securities effected pursuant to this Agreement.

         3.2 PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Agreement involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
which the Company, Holder and any other persons intend to include in such
registration exceeds the number which would have an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such registration (i) first, all the securities the Company
proposes to sell for its own account, (ii) second, a number of such securities
equal to the number, in the opinion of such underwriters, which can be sold
without having the adverse effect referred to above, such amount to be allocated
pro rata among Holder and other persons having similar registration rights on
the basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

         3.3 REGISTRATION EXPENSES. As used in this Agreement, "Registration
Expenses" shall mean all expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all SEC, stock
exchange, National Association of Securities Dealers, Inc. or Nasdaq
registration and filing fees and expenses, fees and expenses of compliance with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the Company in connection with blue sky
qualification of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and all independent certified public accountants (including the
expenses of any annual audit, special audit or "cold comfort" letters required
by or incident to such performance and compliance), securities acts liability
insurance (if the Company so desires), the reasonable fees and expenses of any
special experts retained by the Company in connection with such registration,
and fees and expenses of other persons retained by the Company.

4. REGISTRATION PROCEDURE. In effecting the registration of the Registrable
Securities as provided in this Agreement, the Company shall, at its sole
expense:

                  (a) Prepare and file with the SEC a registration statement
         with respect to the Registrable Securities and use its best efforts to
         cause such registration statement to become effective; provided,

                                       -3-
<PAGE>

         however, that before filing with the SEC a registration statement or
         prospectus or any amendments or supplements thereto, the Company will
         (i) furnish to counsel selected by Holder copies of all such documents
         proposed to be filed, which documents will be subject to the review of
         such counsel, and (ii) notify Holder of any stop order issued or
         threatened by the SEC and take all reasonable actions required to
         prevent the entry of such stop order or to remove it if entered;

                  (b) Prepare and file with the SEC such amendments and
         supplements to such registration statement and the prospectus used in
         connection with such registration statement as may be necessary to keep
         such registration statement effective for a period of nine (9) months
         thereafter or such shorter period which will terminate when all
         Registrable Securities covered by such registration statement have been
         sold, and comply with the provisions of the Act with respect to the
         disposition of all the Registrable Securities covered by such
         registration statement during such period;

                  (c) Furnish to Holder copies of the registration statement,
         each amendment and supplement thereto (in each case including all
         exhibits thereto), the prospectus included in such registration
         statement (including each preliminary prospectus and including a
         sufficient number of copies of the final prospectus) in conformity with
         the requirements of the Securities Act and such other documents as
         Holder may reasonably request in order to facilitate the disposition of
         the Registrable Securities owned by Holder;

                  (d) Use its best efforts to register or qualify the
         Registrable Securities under such other securities or blue sky laws of
         such jurisdictions as shall be reasonably requested by Holder and do
         any and all other acts and things which may be reasonably necessary or
         advisable to enable Holder to consummate the disposition in such
         jurisdictions of the Registrable Securities owned by Holder; provided,
         that the Company shall not be required in connection therewith or as a
         condition thereto to (i) qualify generally to do business in any
         jurisdiction where it would not otherwise be required to qualify but
         for this paragraph (d), (ii) subject itself to taxation in any such
         jurisdiction, or (iii) file a general consent to service of process in
         any such jurisdiction;

                  (e) Use its best efforts to cause the Registrable Securities
         covered by such registration statement to be registered with or
         approved by such other governmental agencies or authorities as may be
         necessary by virtue of the business and operations of the Company to
         enable Holder to consummate the disposition of such Registrable
         Securities;

                  (f) Immediately notify Holder at any time when a prospectus
         relating thereto is required to be delivered under the Securities Act,
         of the happening of any event as a result of which the prospectus
         included in such registration statement contains an untrue statement of
         a material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not

                                      -4-
<PAGE>

         misleading and the Company will promptly prepare and furnish to Holder
         a supplement or amendment to such prospectus so that, as thereafter
         delivered to the purchasers of such Registrable Securities, such
         prospectus will not contain an 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 not misleading;

                  (g) Enter into such customary agreements and take all such
         other actions as Holder reasonably requests in order to expedite or
         facilitate the disposition of such Registrable Securities, including
         customary indemnification;

                  (h) Make available for inspection by Holder and any attorney,
         accountant or other agent retained by Holder (collectively, the
         "Inspectors"), all financial and other records, pertinent corporate
         documents and properties of the Company as shall be reasonably
         necessary to enable them to exercise their due diligence
         responsibility, and cause the Company's officers, directors and
         employees to supply all information reasonably requested by any such
         Inspector in connection with such registration statement; and

                  (i) Otherwise use its best efforts to comply with all
         applicable rules and regulations of the SEC.

         The Company may require Holder to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.

         Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph 4(f), Holder will
forthwith discontinue disposition of Registrable Securities, pursuant to the
registration statement covering such Registrable Securities until Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph 4(f), and, if so directed by the Company, Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph 4(b) shall
be extended by the greater of (i) three months or (ii) the number of days during
the period from and including the date of the giving of such notice pursuant to
paragraph 4(f) to and including the date when Holder shall have received the
copies of the supplemented or amended prospectus contemplated by paragraph 4(f).

5. INDEMNIFICATION.

         5.1 INDEMNIFICATION BY THE COMPANY. In connection with the registration
of the Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will, and it hereby does, indemnify and hold harmless, to
the full extent permitted by law, Holder, each other person who participates as
an underwriter in the offering or sale of such securities and each other person,
if any, who controls Holder or any such underwriter within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with the Company's prior written consent) to which Holder or any such
underwriter or controlling person may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) or expenses arising out of or are


                                       -5-
<PAGE>

based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse Holder and each such underwriter and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending such loss, claim, liability, action
or proceedings; provided, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expenses arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by Holder or underwriter or controlling person specifically stating
that it is for use in the preparation thereof; and provided, further, that the
Company will not be liable to Holder or any person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 5.1 with respect
to any preliminary prospectus as then amended or supplemented as the case may
be, to the extent that any such loss, claim, damage or liability of Holder,
underwriter or controlling person results from the fact that Holder or
underwriter or controlling person sold Registrable Securities to a person to
whom there was not sent or give, at or prior to the written confirmation of such
sale, a copy of the final prospectus (including any documents incorporated by
reference therein), whichever is most recent, if the Company has previously
furnished copies thereof to Holder or underwriter or controlling person and such
final prospectus, as then amended or supplemented, has corrected any such
misstatement or omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Holder or any
underwriter or controlling person and shall survive the transfer of such
securities by Holder.

         5.2 INDEMNIFICATION BY HOLDER. The Company may require, as a condition
to including the Registrable Securities in any registration statement filed in
accordance with this Agreement, that the Company shall have received an
undertaking reasonably satisfactory to it from Holder or any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5.1) the Company and its controlling persons and all other
prospective sellers and their respective controlling persons with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instruction duly
executed by Holder or underwriter specifically stating that it is for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity shall remain in full force and effect


                                       -6-
<PAGE>

regardless of any investigation made by or on behalf of the Company or Holder
and shall survive the transfer of such securities by Holder; provided, however,
that Holder shall not be liable to the Company under this Section 5.2 for any
amounts exceeding the product of the purchase price per Registrable Security and
the number of Registrable Securities being sold pursuant to such registration
statement or prospectus by Holder.

         5.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; provided, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Section 5, except to the extent that the indemnifying party
is actually materially prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof, and the indemnifying party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.

         5.4 OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding Sections 5.1, 5.2 and 5.3 (with appropriate modifications) shall
be give by the Company and Holder with respect to any required registration or
other qualification of securities under any federal or state law or regulation
of governmental authority other than the Securities Act.

6. RULE 144. The Company hereby covenants that the Company shall file in a
timely manner all reports required to be filed by it under the Securities Act
and the Exchange Act (to the extent the Company is subject to the Exchange Act)
and the rules and regulations adopted by the SEC thereunder, and it will take
such further action as Holder may reasonably request, all to the extent required
from time to time to enable Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended


                                       -7-
<PAGE>

from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC relating to the disposition of securities. Upon the request of Holder,
the Company will deliver to Holder a written statement as to whether it has
complied with such requirements, in addition, the Company hereby agrees that for
a period of nine months following the date on which a registration statement
filed pursuant to this Agreement shall have become effective, the Company shall
not deregister such securities under Section 12 of the Exchange Act (even if
then permitted to do so pursuant to the Exchange Act and the rules and
regulations promulgated thereunder).

7. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into any
agreement with respect to any of its securities which is inconsistent with the
rights granted to Holder in this Agreement.

8. REMEDIES. The Company acknowledges and agrees that in the event of any breach
of this Agreement by it, Holder would be irreparably harmed and could not be
made whole by monetary damages. The Company accordingly agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate and that Holder, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to compel specific performance
of this Agreement in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction for such action.

9. SALE WITHOUT REGISTRATION. At the time of any transfer of any Registrable
Securities which shall not be registered under the Securities Act, the Company
may require, as a condition of allowing such transfer, that Holder or the
transferee furnish to the Company: (a) such information as is reasonably
necessary in order to establish that such transfer may be made without
registration under the Securities Act; and (b) at the expense of Holder or the
transferee, an opinion of counsel, satisfactory in form and substance to the
Company, to the effect that such transfer may be made without registration under
the Securities Act; provided, that nothing contained in this Section 9 shall
relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to these registration rights
provisions.

10. GENERAL PROVISIONS.

         10.1 WAIVERS. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action or compliance with any representation,
warranty, covenant, or agreement contained herein or in any ancillary document.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other or subsequent breach.
The waiver by any party of any of the conditions precedent to its respective
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement.

         10.2 NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered personally, by courier service, telecopied, or
mailed by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so delivered or mailed:

                                       -8-
<PAGE>

                     (a)   if to the Company:
                           Telenetics Corporation
                           25111 Arctic Ocean
                           Lake Forest, California  92630
                           Attn: Michael A. Armani

                           With a copy to:

                           Rutan & Tucker, L.L.P.
                           611 Anton Boulevard, Suite 1400
                           Costa Mesa, California  92626
                           Attn: Larry A. Cerutti, Esq.

                     (b)   if to Holder:

                           Saunders & Parker, Inc.
                           5735 Prestwick Lane
                           Dallas, Texas 75252
                           Attn: William C. Saunders

                           With a copy to:

                           Munsch Hardt Kopf & Harr, P.C.
                           4000 Fountain Place
                           1445 Ross Avenue
                           Dallas, Texas 75202
                           Attn: Sally A. Schreiber, Esq.

or to such other address as any of the above shall have specified by notice
hereunder. Notices delivered personally, by mail or telecopied shall be deemed
communicated as of actual receipt.

         10.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes any and all prior agreements and undertakings, oral or
written, concerning the subject matter hereof. This Agreement may not be changed
or terminated orally, and may only be changed or terminated by a writing signed
by the party against whom such change or termination is sought.

         10.4 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns. Except
as set forth in the prior sentence, nothing in this Agreement, expressed or
implied, is intended to or shall confer on any person other than the parties
hereto any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.

                                       -9-
<PAGE>

         10.5 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

         10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.

         10.7 RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular include the plural, and in the plural
include the singular, and words of the masculine gender include the feminine and
the neuter, and, when the sense so indicates, words of the neuter gender may
refer to any gender.

         10.8 ASSIGNMENT. For purposes of this Agreement, the term "Holder"
shall include any heir, successor or assign who obtains any Registrable
Securities from the Holder listed on the signature page hereof.

         10.9 GOVERNING LAW; VENUE. The validity, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California. Any
action commenced hereunder shall be conducted before a court of appropriate
jurisdiction in Orange County, California.

         10.10 COOPERATION. The parties agree to execute such further documents
and take such further actions as necessary to carry out the provisions of this
Agreement and to fully accomplish its purpose and intent.

         10.11 ATTORNEYS' FEES. The prevailing party in any proceedings arising
in connection with this Agreement shall be entitled to reimbursement for his or
its reasonable costs incurred in connection therewith, including attorneys'
fees.

         10.12 SET-OFF. Each party hereto shall be entitled to set-off against
any amount it may owe to any other party under this Agreement or any other
agreement executed in connection herewith any and all amounts that are due to
that party by such other party under or in connection with the terms of this
Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -10-
<PAGE>


         10.13 TIME OF ESSENCE. Time is of essence in connection with the
performance of this Agreement.


         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and date first above written.


                                       TELENETICS CORPORATION


                                       By: /s/ Michael A. Armani
                                          -------------------------------
                                          Michael A. Armani, President



                                        HOLDER:


                                        SAUNDERS AND PARKER, INC.,
                                        a Texas corporation


                                        By: /s/ William C. Saunders
                                           -----------------------------
                                           William C. Saunders

                                        Its: Co-President
                                             ---------------------------


                                         By: /s/ Terry S. Parker
                                            ----------------------------
                                            Terry S. Parker

                                         Its: Co-President
                                              --------------------------


                                      -11-




                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated January 7,
2000, is made and entered into by and between Telenetics Corporation, a
California corporation ("Company"), and T. Keith Odom ("Holder").

                                    RECITALS

         A. Holder has been issued options (the "Options") to purchase up to
100,000 shares (the "Option Shares") of the Company's common stock, no par value
(the "Common Stock"), pursuant to the terms and conditions of that certain
Employment Agreement dated of even date herewith between the Company and Holder
(the "Employment Agreement"), which is being entered into in connection with the
closing ("Closing") of that certain Stock Purchase Agreement dated of even date
herein between the Company, Holder and the shareholders of eflex Wireless, Inc.
(the "Stock Purchase Agreement").

         B. In connection with the Closing, the Company desires to provide
Holder with registration rights with respect to the Option Shares issuable to
Holder upon the exercise of the Options upon the terms and conditions
hereinafter set forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions hereinafter set forth, the parties hereto hereby
agree as follows:

1. DEFINITIONS.

         1.1 "COMMON STOCK" shall mean the Common Stock, no par value per share,
of the Company.

         1.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

         1.3 "OPTION SHARES" shall have the meaning set forth in the Recitals to
this Agreement.

         1.4 "REGISTRABLE SECURITIES" shall mean (i) the Option Shares and (ii)
any securities issued or issuable with respect to such Option Shares by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consideration or other reorganization. As to any
particular Registrable Securities, once issued, such shares shall cease to be
Registrable Securities when (a) such shares shall have been registered under the
Securities Act, the registration statement with respect to the sale of such
shares shall have become effective under the Securities Act and such shares
shall have been disposed of pursuant to such effective registration statement,


<PAGE>

(b) such shares shall have been distributed pursuant to Rule 144 (or any similar
provision relating to the disposition of securities then in force) under the
Securities Act, (c) such shares shall have been otherwise transferred, new
certificates or other evidences of ownership for them not bearing a legend
restricting further transfer and not subject to any stop-transfer order or other
restrictions on transfer shall have been delivered by the Company and subsequent
disposition of such shares shall not require registration or qualification of
such shares under the Securities Act or any state securities laws then in force,
or (d) such shares shall cease to be outstanding.

         1.5 "REGISTRATION EXPENSES" shall have the meaning set forth in Section
3.3.

         1.6 "SEC" shall mean the Securities and Exchange Commission.

         1.7 "SECURITIES ACT" shall mean the Securities Act of 1993, as amended.

         1.8 "SHARES" shall have the meaning set forth in the recitals to this
Agreement.

2. REGISTRATION UPON OCCURRENCE OF CERTAIN EVENT.

         2.1 REGISTRATION OBLIGATION. The Company anticipates filing with the
SEC on or before June 1, 2000 a registration statement covering, among other
securities, the Registrable Securities in the manner described in Section 3
hereof. Should the Company not file such a registration statement on or before
June 1, 2000, then the Company shall use its best efforts to file with the SEC
on or before June 15, 2000 a registration statement with respect to the
Registrable Securities in the manner described in Section 4 hereof and use its
best efforts to cause such registration statement to become effective as soon as
possible thereafter.

         2.2 REGISTRATION EXPENSES. The Company will pay all Registration
Expenses (as defined in Section 3.3) in connection with a registration effected
pursuant to this Section 2, whether or not such registration becomes effective
under the Securities Act.

         2.3 EFFECTIVE REGISTRATION STATEMENT. A registration pursuant to this
Section 2 will not be deemed to have been effected unless the registration
statement relating thereto has become effective under the Securities Act;
PROVIDED, HOWEVER, that if, after such registration statement has become
effective, the offering of Registrable Shares pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected.

         2.4 PRIORITY IN DEMAND REGISTRATION. If a registration pursuant to this
Agreement involves an underwritten offering and the managing underwriter advises
the Company in writing that, in its opinion, the number of securities which the
Company, Holder and any other persons intend to include in such registration
exceeds the number which would have an adverse effect on such offering,
including the price at which such securities can be sold, the Company will
include in such registration (i) first, all the securities the Company proposes
to sell for its own account, (ii) second, a number of such securities equal to
the number, in the opinion of such underwriters, which can be sold without
having the adverse effect referred to above, such amount to be allocated pro
rata among Holder and other persons having similar registration rights on the
basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

3. INCIDENTAL REGISTRATION.

                                      -2-
<PAGE>

         3.1 REGISTRATION RIGHTS. If the Company at any time proposes to
register any of its securities under the Securities Act (other than a
registration on Form S-4 or registration on Form S-8 in connection with the
Company's stock option plan that would require qualification in California of
the shares of common stock covered by such registration, or any successor or
similar forms or a registration in connection with any merger of the Company
with and into a company subject to the reporting requirements of the Exchange
Act), whether or not for sale for its own account, in a manner which would
permit registration of the Registrable Securities for sale to the public under
the Securities Act, the Company shall offer Holder the opportunity to include in
such registration statement any or all of its Registrable Securities. The
Company will use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by Holder, to the extent requisite to permit the
disposition (in accordance with such intended methods thereof) of the
Registrable Securities so to be registered; PROVIDED, that if such registration
involves an underwritten offering, Holder (and any other non-Company participant
in such registration) must offer and sell the Registrable Securities in a manner
as contemplated in the registration statement and as reasonably determined by
the Company and the underwriters selected by the Company. The Company will pay
all Registration Expenses (as hereinafter defined) in connection with each
registration of Registrable Securities effected pursuant to this Agreement.

         3.2 PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Agreement involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
which the Company, Holder and any other persons intend to include in such
registration exceeds the number which would have an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such registration (i) first, all the securities the Company
proposes to sell for its own account, (ii) second, a number of such securities
equal to the number, in the opinion of such underwriters, which can be sold
without having the adverse effect referred to above, such amount to be allocated
pro rata among Holder and other persons having similar registration rights on
the basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

         3.3 REGISTRATION EXPENSES. As used in this Agreement, "Registration
Expenses" shall mean all expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all SEC, stock
exchange, National Association of Securities Dealers, Inc. or Nasdaq
registration and filing fees and expenses, fees and expenses of compliance with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the Company in connection with blue sky
qualification of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and all independent certified public accountants (including the
expenses of any annual audit, special audit or "cold comfort" letters required
by or incident to such performance and compliance), securities acts liability
insurance (if the Company so desires), the reasonable fees and expenses of any
special experts retained by the Company in connection with such registration,
and fees and expenses of other persons retained by the Company.

4. REGISTRATION PROCEDURE. In effecting the registration of the Registrable
Securities as provided in this Agreement, the Company shall, at its sole
expense:

                                      -3-
<PAGE>

                  (a) Prepare and file with the SEC a registration statement
         with respect to the Registrable Securities and use its best efforts to
         cause such registration statement to become effective; provided,
         however, that before filing with the SEC a registration statement or
         prospectus or any amendments or supplements thereto, the Company will
         (i) furnish to counsel selected by Holder copies of all such documents
         proposed to be filed, which documents will be subject to the review of
         such counsel, and (ii) notify Holder of any stop order issued or
         threatened by the SEC and take all reasonable actions required to
         prevent the entry of such stop order or to remove it if entered;

                  (b) Prepare and file with the SEC such amendments and
         supplements to such registration statement and the prospectus used in
         connection with such registration statement as may be necessary to keep
         such registration statement effective for a period of nine (9) months
         thereafter or such shorter period which will terminate when all
         Registrable Securities covered by such registration statement have been
         sold, and comply with the provisions of the Act with respect to the
         disposition of all the Registrable Securities covered by such
         registration statement during such period;

                  (c) Furnish to Holder copies of the registration statement,
         each amendment and supplement thereto (in each case including all
         exhibits thereto), the prospectus included in such registration
         statement (including each preliminary prospectus and including a
         sufficient number of copies of the final prospectus) in conformity with
         the requirements of the Securities Act and such other documents as
         Holder may reasonably request in order to facilitate the disposition of
         the Registrable Securities owned by Holder;

                  (d) Use its best efforts to register or qualify the
         Registrable Securities under such other securities or blue sky laws of
         such jurisdictions as shall be reasonably requested by Holder and do
         any and all other acts and things which may be reasonably necessary or
         advisable to enable Holder to consummate the disposition in such
         jurisdictions of the Registrable Securities owned by Holder; provided,
         that the Company shall not be required in connection therewith or as a
         condition thereto to (i) qualify generally to do business in any
         jurisdiction where it would not otherwise be required to qualify but
         for this paragraph (d), (ii) subject itself to taxation in any such
         jurisdiction, or (iii) file a general consent to service of process in
         any such jurisdiction;

                  (e) Use its best efforts to cause the Registrable Securities
         covered by such registration statement to be registered with or
         approved by such other governmental agencies or authorities as may be
         necessary by virtue of the business and operations of the Company to
         enable Holder to consummate the disposition of such Registrable
         Securities;

                  (f) Immediately notify Holder at any time when a prospectus
         relating thereto is required to be delivered under the Securities Act,
         of the happening of any event as a result of which the prospectus
         included in such registration statement contains an untrue statement of
         a material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not


                                      -4-
<PAGE>

         misleading and the Company will promptly prepare and furnish to Holder
         a supplement or amendment to such prospectus so that, as thereafter
         delivered to the purchasers of such Registrable Securities, such
         prospectus will not contain an 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 not misleading;

                  (g) Enter into such customary agreements and take all such
         other actions as Holder reasonably requests in order to expedite or
         facilitate the disposition of such Registrable Securities, including
         customary indemnification;

                  (h) Make available for inspection by Holder and any attorney,
         accountant or other agent retained by Holder (collectively, the
         "Inspectors"), all financial and other records, pertinent corporate
         documents and properties of the Company as shall be reasonably
         necessary to enable them to exercise their due diligence
         responsibility, and cause the Company's officers, directors and
         employees to supply all information reasonably requested by any such
         Inspector in connection with such registration statement; and

                  (i) Otherwise use its best efforts to comply with all
         applicable rules and regulations of the SEC.

         The Company may require Holder to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.

         Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph 4(f), Holder will
forthwith discontinue disposition of Registrable Securities, pursuant to the
registration statement covering such Registrable Securities until Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph 4(f), and, if so directed by the Company, Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph 4(b) shall
be extended by the greater of (i) three months or (ii) the number of days during
the period from and including the date of the giving of such notice pursuant to
paragraph 4(f) to and including the date when Holder shall have received the
copies of the supplemented or amended prospectus contemplated by paragraph 4(f).

5. INDEMNIFICATION.

         5.1 INDEMNIFICATION BY THE COMPANY. In connection with the registration
of the Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will, and it hereby does, indemnify and hold harmless, to
the full extent permitted by law, Holder, each other person who participates as
an underwriter in the offering or sale of such securities and each other person,
if any, who controls Holder or any such underwriter within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with the Company's prior written consent) to which Holder or any such
underwriter or controlling person may become subject under the Securities Act,


                                      -5-
<PAGE>

common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) or expenses arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse Holder and each such underwriter and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending such loss, claim, liability, action
or proceedings; provided, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expenses arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by Holder or underwriter or controlling person specifically stating
that it is for use in the preparation thereof; and provided, further, that the
Company will not be liable to Holder or any person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 5.1 with respect
to any preliminary prospectus as then amended or supplemented as the case may
be, to the extent that any such loss, claim, damage or liability of Holder,
underwriter or controlling person results from the fact that Holder or
underwriter or controlling person sold Registrable Securities to a person to
whom there was not sent or give, at or prior to the written confirmation of such
sale, a copy of the final prospectus (including any documents incorporated by
reference therein), whichever is most recent, if the Company has previously
furnished copies thereof to Holder or underwriter or controlling person and such
final prospectus, as then amended or supplemented, has corrected any such
misstatement or omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Holder or any
underwriter or controlling person and shall survive the transfer of such
securities by Holder.

         5.2 INDEMNIFICATION BY HOLDER. The Company may require, as a condition
to including the Registrable Securities in any registration statement filed in
accordance with this Agreement, that the Company shall have received an
undertaking reasonably satisfactory to it from Holder or any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5.1) the Company and its controlling persons and all other
prospective sellers and their respective controlling persons with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instruction duly
executed by Holder or underwriter specifically stating that it is for use in the


                                      -6-
<PAGE>

preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or Holder
and shall survive the transfer of such securities by Holder; provided, however,
that Holder shall not be liable to the Company under this Section 5.2 for any
amounts exceeding the product of the purchase price per Registrable Security and
the number of Registrable Securities being sold pursuant to such registration
statement or prospectus by Holder.

5.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party
hereunder of written notice of the commencement of any action or proceeding with
respect to which a claim for indemnification may be made pursuant to this
Section 5, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, promptly give written notice to the latter
of the commencement of such action; provided, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subsections of this
Section 5, except to the extent that the indemnifying party is actually
materially prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof, and the indemnifying party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.

         5.4 OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding Sections 5.1, 5.2 and 5.3 (with appropriate modifications) shall
be give by the Company and Holder with respect to any required registration or
other qualification of securities under any federal or state law or regulation
of governmental authority other than the Securities Act.

6. RULE 144. The Company hereby covenants that the Company shall file in a
timely manner all reports required to be filed by it under the Securities Act
and the Exchange Act (to the extent the Company is subject to the Exchange Act)
and the rules and regulations adopted by the SEC thereunder, and it will take
such further action as Holder may reasonably request, all to the extent required
from time to time to enable Holder to sell Registrable Securities without


                                      -7-
<PAGE>

registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC relating to the disposition of securities. Upon the request of Holder,
the Company will deliver to Holder a written statement as to whether it has
complied with such requirements, in addition, the Company hereby agrees that for
a period of nine months following the date on which a registration statement
filed pursuant to this Agreement shall have become effective, the Company shall
not deregister such securities under Section 12 of the Exchange Act (even if
then permitted to do so pursuant to the Exchange Act and the rules and
regulations promulgated thereunder).

7. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into any
agreement with respect to any of its securities which is inconsistent with the
rights granted to Holder in this Agreement.

8. REMEDIES. The Company acknowledges and agrees that in the event of any breach
of this Agreement by it, Holder would be irreparably harmed and could not be
made whole by monetary damages. The Company accordingly agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate and that Holder, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to compel specific performance
of this Agreement in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction for such action.

9. SALE WITHOUT REGISTRATION. At the time of any transfer of any Registrable
Securities which shall not be registered under the Securities Act, the Company
may require, as a condition of allowing such transfer, that Holder or the
transferee furnish to the Company: (a) such information as is reasonably
necessary in order to establish that such transfer may be made without
registration under the Securities Act; and (b) at the expense of Holder or the
transferee, an opinion of counsel, satisfactory in form and substance to the
Company, to the effect that such transfer may be made without registration under
the Securities Act; provided, that nothing contained in this Section 9 shall
relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to these registration rights
provisions.

10. GENERAL PROVISIONS.

         10.1 WAIVERS. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action or compliance with any representation,
warranty, covenant, or agreement contained herein or in any ancillary document.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other or subsequent breach.
The waiver by any party of any of the conditions precedent to its respective
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement.

         10.2 NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered personally, by courier service, telecopied, or
mailed by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so delivered or mailed:

                                      -8-
<PAGE>

                  (a)      if to the Company:

                           Telenetics Corporation
                           25111 Arctic Ocean
                           Lake Forest, California  92630
                           Attn: Michael A. Armani

                           With a copy to:

                           Rutan & Tucker, L.L.P.
                           611 Anton Boulevard, Suite 1400
                           Costa Mesa, California  92626
                           Attn: Larry A. Cerutti, Esq.

                  (b)      if to Holder:

                           T. Keith Odom
                           8831 Treasure Bayou
                           Riverside, Florida 33569

or to such other address as any of the above shall have specified by notice
hereunder. Notices delivered personally, by mail or telecopied shall be deemed
communicated as of actual receipt.

         10.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes any and all prior agreements and undertakings, oral or
written, concerning the subject matter hereof. This Agreement may not be changed
or terminated orally, and may only be changed or terminated by a writing signed
by the party against whom such change or termination is sought.

         10.4 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns. Except
as set forth in the prior sentence, nothing in this Agreement, expressed or
implied, is intended to or shall confer on any person other than the parties
hereto any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.

         10.5 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

         10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.

         10.7 RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular include the plural, and in the plural
include the singular, and words of the masculine gender include the feminine and
the neuter, and, when the sense so indicates, words of the neuter gender may
refer to any gender.

                                      -9-
<PAGE>

         10.8 ASSIGNMENT. For purposes of this Agreement, the term "Holder"
shall include any heir, successor or assign who obtains any Registrable
Securities from the Holder listed on the signature page hereof.

         10.9 GOVERNING LAW; VENUE. The validity, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California. Any
action commenced hereunder shall be conducted before a court of appropriate
jurisdiction in Orange County, California.

         10.10 COOPERATION. The parties agree to execute such further documents
and take such further actions as necessary to carry out the provisions of this
Agreement and to fully accomplish its purpose and intent.

         10.11 ATTORNEYS' FEES. The prevailing party in any proceedings arising
in connection with this Agreement shall be entitled to reimbursement for his or
its reasonable costs incurred in connection therewith, including attorneys'
fees.

         10.12 SET-OFF. Each party hereto shall be entitled to set-off against
any amount it may owe to any other party under this Agreement or any other
agreement executed in connection herewith any and all amounts that are due to
that party by such other party under or in connection with the terms of this
Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -10-
<PAGE>



         10.13 TIME OF ESSENCE. Time is of essence in connection with the
performance of this Agreement.


         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and date first above written.


                                    TELENETICS CORPORATION


                                    By: /s/ Michael A. Armani
                                       ----------------------------------
                                       Michael A. Armani, President



                                    HOLDER:


                                        /s/ T. Keith Odom
                                       ----------------------------------
                                       T. Keith Odom, an individual


                                      -11-




                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated January 7,
2000, is made and entered into by and between Telenetics Corporation, a
California corporation ("Company"), and Terry S. Parker ("Holder").

                                    RECITALS

         A. Holder has been issued 168,750 shares (the "Shares") of the
Company's common stock, no par value (the "Common Stock"), pursuant to the terms
and conditions of that certain Stock Purchase Agreement dated of even date
herein between the Company, Holder and other shareholders of eflex Wireless,
Inc. (the "Stock Purchase Agreement").

         B. In accordance with the requirements of the Stock Purchase Agreement,
the Company desires to provide Holder with registration rights with respect to
the Shares upon the terms and conditions hereinafter set forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions hereinafter set forth, the parties hereto hereby
agree as follows:

1. DEFINITIONS.

         1.1 "COMMON STOCK" shall mean the Common Stock, no par value per share,
of the Company.

         1.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

         1.3 "REGISTRABLE SECURITIES" shall mean (i) the Shares and (ii) any
securities issued or issuable with respect to such Shares by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consideration or other reorganization. As to any
particular Registrable Securities, once issued, such shares shall cease to be
Registrable Securities when (a) such shares shall have been registered under the
Securities Act, the registration statement with respect to the sale of such
shares shall have become effective under the Securities Act and such shares
shall have been disposed of pursuant to such effective registration statement,
(b) such shares shall have been distributed pursuant to Rule 144 (or any similar
provision relating to the disposition of securities then in force) under the
Securities Act, (c) such shares shall have been otherwise transferred, new
certificates or other evidences of ownership for them not bearing a legend
restricting further transfer and not subject to any stop-transfer order or other
restrictions on transfer shall have been delivered by the Company and subsequent
disposition of such shares shall not require registration or qualification of
such shares under the Securities Act or any state securities laws then in force,
or (d) such shares shall cease to be outstanding.

                                      -1-
<PAGE>

         1.4 "REGISTRATION EXPENSES" shall have the meaning set forth in Section
3.3.

         1.5 "SEC" shall mean the Securities and Exchange Commission.

         1.6 "SECURITIES ACT" shall mean the Securities Act of 1993, as amended.

         1.7 "SHARES" shall have the meaning set forth in the recitals to this
Agreement.

2. REGISTRATION UPON OCCURRENCE OF CERTAIN EVENT.

         2.1 REGISTRATION OBLIGATION. The Company anticipates filing with the
SEC on or before June 1, 2000 a registration statement covering, among other
securities, the Registrable Securities in the manner described in Section 3
hereof. Should the Company not file such a registration statement on or before
June 1, 2000, then the Company shall use its best efforts to file with the SEC
on or before June 15, 2000 a registration statement with respect to the
Registrable Securities in the manner described in Section 4 hereof and use its
best efforts to cause such registration statement to become effective as soon as
possible thereafter.

         2.2 REGISTRATION EXPENSES. The Company will pay all Registration
Expenses (as defined in Section 3.3) in connection with a registration effected
pursuant to this Section 2, whether or not such registration becomes effective
under the Securities Act.

         2.3 EFFECTIVE REGISTRATION STATEMENT. A registration pursuant to this
Section 2 will not be deemed to have been effected unless the registration
statement relating thereto has become effective under the Securities Act;
PROVIDED, HOWEVER, that if, after such registration statement has become
effective, the offering of Registrable Shares pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected.

         2.4 PRIORITY IN DEMAND REGISTRATION. If a registration pursuant to this
Agreement involves an underwritten offering and the managing underwriter advises
the Company in writing that, in its opinion, the number of securities which the
Company, Holder and any other persons intend to include in such registration
exceeds the number which would have an adverse effect on such offering,
including the price at which such securities can be sold, the Company will
include in such registration (i) first, all the securities the Company proposes
to sell for its own account, (ii) second, a number of such securities equal to
the number, in the opinion of such underwriters, which can be sold without
having the adverse effect referred to above, such amount to be allocated pro
rata among Holder and other persons having similar registration rights on the
basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

3. INCIDENTAL REGISTRATION.

         3.1 REGISTRATION RIGHTS. If the Company at any time proposes to
register any of its securities under the Securities Act (other than a
registration on Form S-4 or registration on Form S-8 in connection with the
Company's stock option plan that would require qualification in California of
the shares of common stock covered by such registration, or any successor or
similar forms or a registration in connection with any merger of the Company
with and into a company subject to the reporting requirements of the Exchange
Act), whether or not for sale for its own account, in a manner which would


                                      -2-
<PAGE>

permit registration of the Registrable Securities for sale to the public under
the Securities Act, the Company shall offer Holder the opportunity to include in
such registration statement any or all of its Registrable Securities. The
Company will use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by Holder, to the extent requisite to permit the
disposition (in accordance with such intended methods thereof) of the
Registrable Securities so to be registered; PROVIDED, that if such registration
involves an underwritten offering, Holder (and any other non-Company participant
in such registration) must offer and sell the Registrable Securities in a manner
as contemplated in the registration statement and as reasonably determined by
the Company and the underwriters selected by the Company. The Company will pay
all Registration Expenses (as hereinafter defined) in connection with each
registration of Registrable Securities effected pursuant to this Agreement.

         3.2 PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Agreement involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
which the Company, Holder and any other persons intend to include in such
registration exceeds the number which would have an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such registration (i) first, all the securities the Company
proposes to sell for its own account, (ii) second, a number of such securities
equal to the number, in the opinion of such underwriters, which can be sold
without having the adverse effect referred to above, such amount to be allocated
pro rata among Holder and other persons having similar registration rights on
the basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

         3.3 REGISTRATION EXPENSES. As used in this Agreement, "Registration
Expenses" shall mean all expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all SEC, stock
exchange, National Association of Securities Dealers, Inc. or Nasdaq
registration and filing fees and expenses, fees and expenses of compliance with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the Company in connection with blue sky
qualification of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and all independent certified public accountants (including the
expenses of any annual audit, special audit or "cold comfort" letters required
by or incident to such performance and compliance), securities acts liability
insurance (if the Company so desires), the reasonable fees and expenses of any
special experts retained by the Company in connection with such registration,
and fees and expenses of other persons retained by the Company.

4. REGISTRATION PROCEDURE. In effecting the registration of the Registrable
Securities as provided in this Agreement, the Company shall, at its sole
expense:

                  (a) Prepare and file with the SEC a registration statement
         with respect to the Registrable Securities and use its best efforts to
         cause such registration statement to become effective; provided,
         however, that before filing with the SEC a registration statement or
         prospectus or any amendments or supplements thereto, the Company will


                                      -3-
<PAGE>

         (i) furnish to counsel selected by Holder copies of all such documents
         proposed to be filed, which documents will be subject to the review of
         such counsel, and (ii) notify Holder of any stop order issued or
         threatened by the SEC and take all reasonable actions required to
         prevent the entry of such stop order or to remove it if entered;

                  (b) Prepare and file with the SEC such amendments and
         supplements to such registration statement and the prospectus used in
         connection with such registration statement as may be necessary to keep
         such registration statement effective for a period of nine (9) months
         thereafter or such shorter period which will terminate when all
         Registrable Securities covered by such registration statement have been
         sold, and comply with the provisions of the Act with respect to the
         disposition of all the Registrable Securities covered by such
         registration statement during such period;

                  (c) Furnish to Holder copies of the registration statement,
         each amendment and supplement thereto (in each case including all
         exhibits thereto), the prospectus included in such registration
         statement (including each preliminary prospectus and including a
         sufficient number of copies of the final prospectus) in conformity with
         the requirements of the Securities Act and such other documents as
         Holder may reasonably request in order to facilitate the disposition of
         the Registrable Securities owned by Holder;

                  (d) Use its best efforts to register or qualify the
         Registrable Securities under such other securities or blue sky laws of
         such jurisdictions as shall be reasonably requested by Holder and do
         any and all other acts and things which may be reasonably necessary or
         advisable to enable Holder to consummate the disposition in such
         jurisdictions of the Registrable Securities owned by Holder; provided,
         that the Company shall not be required in connection therewith or as a
         condition thereto to (i) qualify generally to do business in any
         jurisdiction where it would not otherwise be required to qualify but
         for this paragraph (d), (ii) subject itself to taxation in any such
         jurisdiction, or (iii) file a general consent to service of process in
         any such jurisdiction;

                  (e) Use its best efforts to cause the Registrable Securities
         covered by such registration statement to be registered with or
         approved by such other governmental agencies or authorities as may be
         necessary by virtue of the business and operations of the Company to
         enable Holder to consummate the disposition of such Registrable
         Securities;

                  (f) Immediately notify Holder at any time when a prospectus
         relating thereto is required to be delivered under the Securities Act,
         of the happening of any event as a result of which the prospectus
         included in such registration statement contains an untrue statement of
         a material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not
         misleading and the Company will promptly prepare and furnish to Holder
         a supplement or amendment to such prospectus so that, as thereafter
         delivered to the purchasers of such Registrable Securities, such
         prospectus will not contain an 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 not misleading;

                                      -4-
<PAGE>

                  (g) Enter into such customary agreements and take all such
         other actions as Holder reasonably requests in order to expedite or
         facilitate the disposition of such Registrable Securities, including
         customary indemnification;

                  (h) Make available for inspection by Holder and any attorney,
         accountant or other agent retained by Holder (collectively, the
         "Inspectors"), all financial and other records, pertinent corporate
         documents and properties of the Company as shall be reasonably
         necessary to enable them to exercise their due diligence
         responsibility, and cause the Company's officers, directors and
         employees to supply all information reasonably requested by any such
         Inspector in connection with such registration statement; and

                  (i) Otherwise use its best efforts to comply with all
         applicable rules and regulations of the SEC.

         The Company may require Holder to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.

         Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph 4(f), Holder will
forthwith discontinue disposition of Registrable Securities, pursuant to the
registration statement covering such Registrable Securities until Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph 4(f), and, if so directed by the Company, Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph 4(b) shall
be extended by the greater of (i) three months or (ii) the number of days during
the period from and including the date of the giving of such notice pursuant to
paragraph 4(f) to and including the date when Holder shall have received the
copies of the supplemented or amended prospectus contemplated by paragraph 4(f).

5. INDEMNIFICATION.

         5.1 INDEMNIFICATION BY THE COMPANY. In connection with the registration
of the Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will, and it hereby does, indemnify and hold harmless, to
the full extent permitted by law, Holder, each other person who participates as
an underwriter in the offering or sale of such securities and each other person,
if any, who controls Holder or any such underwriter within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with the Company's prior written consent) to which Holder or any such
underwriter or controlling person may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) or expenses arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material


                                      -5-
<PAGE>

fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse Holder and each such underwriter and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending such loss, claim, liability, action
or proceedings; provided, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expenses arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by Holder or underwriter or controlling person specifically stating
that it is for use in the preparation thereof; and provided, further, that the
Company will not be liable to Holder or any person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 5.1 with respect
to any preliminary prospectus as then amended or supplemented as the case may
be, to the extent that any such loss, claim, damage or liability of Holder,
underwriter or controlling person results from the fact that Holder or
underwriter or controlling person sold Registrable Securities to a person to
whom there was not sent or give, at or prior to the written confirmation of such
sale, a copy of the final prospectus (including any documents incorporated by
reference therein), whichever is most recent, if the Company has previously
furnished copies thereof to Holder or underwriter or controlling person and such
final prospectus, as then amended or supplemented, has corrected any such
misstatement or omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Holder or any
underwriter or controlling person and shall survive the transfer of such
securities by Holder.

         5.2 INDEMNIFICATION BY HOLDER. The Company may require, as a condition
to including the Registrable Securities in any registration statement filed in
accordance with this Agreement, that the Company shall have received an
undertaking reasonably satisfactory to it from Holder or any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5.1) the Company and its controlling persons and all other
prospective sellers and their respective controlling persons with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instruction duly
executed by Holder or underwriter specifically stating that it is for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or Holder
and shall survive the transfer of such securities by Holder; provided, however,
that Holder shall not be liable to the Company under this Section 5.2 for any
amounts exceeding the product of the purchase price per Registrable Security and
the number of Registrable Securities being sold pursuant to such registration
statement or prospectus by Holder.

                                      -6-
<PAGE>

         5.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; provided, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Section 5, except to the extent that the indemnifying party
is actually materially prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof, and the indemnifying party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.

         5.4 OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding Sections 5.1, 5.2 and 5.3 (with appropriate modifications) shall
be give by the Company and Holder with respect to any required registration or
other qualification of securities under any federal or state law or regulation
of governmental authority other than the Securities Act.

6. RULE 144. The Company hereby covenants that the Company shall file in a
timely manner all reports required to be filed by it under the Securities Act
and the Exchange Act (to the extent the Company is subject to the Exchange Act)
and the rules and regulations adopted by the SEC thereunder, and it will take
such further action as Holder may reasonably request, all to the extent required
from time to time to enable Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC relating to the disposition of securities. Upon the request of Holder,
the Company will deliver to Holder a written statement as to whether it has
complied with such requirements, in addition, the Company hereby agrees that for


                                      -7-
<PAGE>

a period of nine months following the date on which a registration statement
filed pursuant to this Agreement shall have become effective, the Company shall
not deregister such securities under Section 12 of the Exchange Act (even if
then permitted to do so pursuant to the Exchange Act and the rules and
regulations promulgated thereunder).

7. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into any
agreement with respect to any of its securities which is inconsistent with the
rights granted to Holder in this Agreement.

8. REMEDIES. The Company acknowledges and agrees that in the event of any breach
of this Agreement by it, Holder would be irreparably harmed and could not be
made whole by monetary damages. The Company accordingly agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate and that Holder, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to compel specific performance
of this Agreement in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction for such action.

9. SALE WITHOUT REGISTRATION. At the time of any transfer of any Registrable
Securities which shall not be registered under the Securities Act, the Company
may require, as a condition of allowing such transfer, that Holder or the
transferee furnish to the Company: (a) such information as is reasonably
necessary in order to establish that such transfer may be made without
registration under the Securities Act; and (b) at the expense of Holder or the
transferee, an opinion of counsel, satisfactory in form and substance to the
Company, to the effect that such transfer may be made without registration under
the Securities Act; provided, that nothing contained in this Section 9 shall
relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to these registration rights
provisions.

10. GENERAL PROVISIONS.

         10.1 WAIVERS. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action or compliance with any representation,
warranty, covenant, or agreement contained herein or in any ancillary document.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other or subsequent breach.
The waiver by any party of any of the conditions precedent to its respective
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement.

         10.2 NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered personally, by courier service, telecopied, or
mailed by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so delivered or mailed:

                  (a)      if to the Company:

                           Telenetics Corporation
                           25111 Arctic Ocean
                           Lake Forest, California  92630
                           Attn: Michael A. Armani

                                      -8-
<PAGE>

                           With a copy to:

                           Rutan & Tucker, L.L.P.
                           611 Anton Boulevard, Suite 1400
                           Costa Mesa, California  92626
                           Attn: Larry A. Cerutti, Esq.

                  (b)      if to Holder:

                           Terry S. Parker
                           8463 North 1175 West
                           Monticello, Indiana 47960

                           With a copy to:

                           Munsch Hardt Kopf & Harr, P.C.
                           4000 Fountain Place
                           1445 Ross Avenue
                           Dallas, Texas 75202
                           Attn: Sally A. Schreiber, Esq.
                           Telecopier: (214) 978-4323


or to such other address as any of the above shall have specified by notice
hereunder. Notices delivered personally, by mail or telecopied shall be deemed
communicated as of actual receipt.

         10.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes any and all prior agreements and undertakings, oral or
written, concerning the subject matter hereof. This Agreement may not be changed
or terminated orally, and may only be changed or terminated by a writing signed
by the party against whom such change or termination is sought.

         10.4 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns. Except
as set forth in the prior sentence, nothing in this Agreement, expressed or
implied, is intended to or shall confer on any person other than the parties
hereto any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.

         10.5 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

         10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.

                                      -9-
<PAGE>

         10.7 RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular include the plural, and in the plural
include the singular, and words of the masculine gender include the feminine and
the neuter, and, when the sense so indicates, words of the neuter gender may
refer to any gender.

         10.8 ASSIGNMENT. For purposes of this Agreement, the term "Holder"
shall include any heir, successor or assign who obtains any Registrable
Securities from the Holder listed on the signature page hereof.

         10.9 REGISTRATION OF ADDITIONAL STOCK. The Company and Holder agree to
review the securities law issues relating to the registration of Holder's
portion of the Additional Stock (as that term is defined in the Stock Purchase
Agreement) and, to the extent possible, agree to revise this Agreement to
include within the definition of Registrable Securities hereunder, Holder's
portion of the Additional Stock.

         10.10 GOVERNING LAW; VENUE. The validity, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California. Any
action commenced hereunder shall be conducted before a court of appropriate
jurisdiction in Orange County, California.

         10.11 COOPERATION. The parties agree to execute such further documents
and take such further actions as necessary to carry out the provisions of this
Agreement and to fully accomplish its purpose and intent.

         10.12 ATTORNEYS' FEES. The prevailing party in any proceedings arising
in connection with this Agreement shall be entitled to reimbursement for his or
its reasonable costs incurred in connection therewith, including attorneys'
fees.

         10.12 ATTORNEYS' FEES. The prevailing party in any proceedings arising
in connection with this Agreement shall be entitled to reimbursement for his or
its reasonable costs incurred in connection therewith, including attorneys'
fees.

         10.13 SET-OFF. Each party hereto shall be entitled to set-off against
any amount it may owe to any other party under this Agreement or any other
agreement executed in connection herewith any and all amounts that are due to
that party by such other party under or in connection with the terms of this
Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                      -10-
<PAGE>



         10.14 TIME OF ESSENCE. Time is of essence in connection with the
performance of this Agreement.


         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and date first above written.

                                    TELENETICS CORPORATION


                                    By: /s/ Michael A. Armani
                                        -------------------------------
                                        Michael A. Armani, President



                                     HOLDER:


                                        /s/ Terry S. Parker
                                        -------------------------------
                                        Terry S. Parker, an individual


                                      -11-



                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated January 7,
2000, is made and entered into by and between Telenetics Corporation, a
California corporation ("Company"), and William C. Saunders ("Holder").

                                    RECITALS

         A. Holder has been issued 168,750 shares (the "Shares") of the
Company's common stock, no par value (the "Common Stock"), pursuant to the terms
and conditions of that certain Stock Purchase Agreement dated of even date
herein between the Company, Holder and other shareholders of eflex Wireless,
Inc. (the "Stock Purchase Agreement").

         B. In accordance with the requirements of the Stock Purchase Agreement,
the Company desires to provide Holder with registration rights with respect to
the Shares upon the terms and conditions hereinafter set forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions hereinafter set forth, the parties hereto hereby
agree as follows:

1. DEFINITIONS.

1.1 "COMMON STOCK" shall mean the Common Stock, no par value per share, of the
Company.

         1.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

         1.3 "REGISTRABLE SECURITIES" shall mean (i) the Shares and (ii) any
securities issued or issuable with respect to such Shares by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consideration or other reorganization. As to any
particular Registrable Securities, once issued, such shares shall cease to be
Registrable Securities when (a) such shares shall have been registered under the
Securities Act, the registration statement with respect to the sale of such
shares shall have become effective under the Securities Act and such shares
shall have been disposed of pursuant to such effective registration statement,
(b) such shares shall have been distributed pursuant to Rule 144 (or any similar
provision relating to the disposition of securities then in force) under the
Securities Act, (c) such shares shall have been otherwise transferred, new
certificates or other evidences of ownership for them not bearing a legend
restricting further transfer and not subject to any stop-transfer order or other
restrictions on transfer shall have been delivered by the Company and subsequent
disposition of such shares shall not require registration or qualification of
such shares under the Securities Act or any state securities laws then in force,
or (d) such shares shall cease to be outstanding.

                                      -1-
<PAGE>

         1.4 "REGISTRATION EXPENSES" shall have the meaning set forth in Section
3.3.

         1.5 "SEC" shall mean the Securities and Exchange Commission.

         1.6 "SECURITIES ACT" shall mean the Securities Act of 1993, as amended.

         1.7 "SHARES" shall have the meaning set forth in the recitals to this
Agreement.

2. REGISTRATION UPON OCCURRENCE OF CERTAIN EVENT.

         2.1 REGISTRATION OBLIGATION. The Company anticipates filing with the
SEC on or before June 1, 2000 a registration statement covering, among other
securities, the Registrable Securities in the manner described in Section 3
hereof. Should the Company not file such a registration statement on or before
June 1, 2000, then the Company shall use its best efforts to file with the SEC
on or before June 15, 2000 a registration statement with respect to the
Registrable Securities in the manner described in Section 4 hereof and use its
best efforts to cause such registration statement to become effective as soon as
possible thereafter.

         2.2 REGISTRATION EXPENSES. The Company will pay all Registration
Expenses (as defined in Section 3.3) in connection with a registration effected
pursuant to this Section 2, whether or not such registration becomes effective
under the Securities Act.

         2.3 EFFECTIVE REGISTRATION STATEMENT. A registration pursuant to this
Section 2 will not be deemed to have been effected unless the registration
statement relating thereto has become effective under the Securities Act;
PROVIDED, HOWEVER, that if, after such registration statement has become
effective, the offering of Registrable Shares pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected.

         2.4 PRIORITY IN DEMAND REGISTRATION. If a registration pursuant to this
Agreement involves an underwritten offering and the managing underwriter advises
the Company in writing that, in its opinion, the number of securities which the
Company, Holder and any other persons intend to include in such registration
exceeds the number which would have an adverse effect on such offering,
including the price at which such securities can be sold, the Company will
include in such registration (i) first, all the securities the Company proposes
to sell for its own account, (ii) second, a number of such securities equal to
the number, in the opinion of such underwriters, which can be sold without
having the adverse effect referred to above, such amount to be allocated pro
rata among Holder and other persons having similar registration rights on the
basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

3. INCIDENTAL REGISTRATION.

         3.1 REGISTRATION RIGHTS. If the Company at any time proposes to
register any of its securities under the Securities Act (other than a
registration on Form S-4 or registration on Form S-8 in connection with the
Company's stock option plan that would require qualification in California of
the shares of common stock covered by such registration, or any successor or
similar forms or a registration in connection with any merger of the Company
with and into a company subject to the reporting requirements of the Exchange
Act), whether or not for sale for its own account, in a manner which would


                                      -2-
<PAGE>

permit registration of the Registrable Securities for sale to the public under
the Securities Act, the Company shall offer Holder the opportunity to include in
such registration statement any or all of its Registrable Securities. The
Company will use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by Holder, to the extent requisite to permit the
disposition (in accordance with such intended methods thereof) of the
Registrable Securities so to be registered; PROVIDED, that if such registration
involves an underwritten offering, Holder (and any other non-Company participant
in such registration) must offer and sell the Registrable Securities in a manner
as contemplated in the registration statement and as reasonably determined by
the Company and the underwriters selected by the Company. The Company will pay
all Registration Expenses (as hereinafter defined) in connection with each
registration of Registrable Securities effected pursuant to this Agreement.

         3.2 PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Agreement involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
which the Company, Holder and any other persons intend to include in such
registration exceeds the number which would have an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such registration (i) first, all the securities the Company
proposes to sell for its own account, (ii) second, a number of such securities
equal to the number, in the opinion of such underwriters, which can be sold
without having the adverse effect referred to above, such amount to be allocated
pro rata among Holder and other persons having similar registration rights on
the basis of the relative number of securities Holder and other persons have
requested or are required to be included in such registration.

         3.3 REGISTRATION EXPENSES. As used in this Agreement, "Registration
Expenses" shall mean all expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all SEC, stock
exchange, National Association of Securities Dealers, Inc. or Nasdaq
registration and filing fees and expenses, fees and expenses of compliance with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the Company in connection with blue sky
qualification of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and all independent certified public accountants (including the
expenses of any annual audit, special audit or "cold comfort" letters required
by or incident to such performance and compliance), securities acts liability
insurance (if the Company so desires), the reasonable fees and expenses of any
special experts retained by the Company in connection with such registration,
and fees and expenses of other persons retained by the Company.

4. REGISTRATION PROCEDURE. In effecting the registration of the Registrable
Securities as provided in this Agreement, the Company shall, at its sole
expense:

                  (a) Prepare and file with the SEC a registration statement
         with respect to the Registrable Securities and use its best efforts to
         cause such registration statement to become effective; provided,
         however, that before filing with the SEC a registration statement or
         prospectus or any amendments or supplements thereto, the Company will
         (i) furnish to counsel selected by Holder copies of all such documents
         proposed to be filed, which documents will be subject to the review of


                                      -3-
<PAGE>

         such counsel, and (ii) notify Holder of any stop order issued or
         threatened by the SEC and take all reasonable actions required to
         prevent the entry of such stop order or to remove it if entered;

                  (b) Prepare and file with the SEC such amendments and
         supplements to such registration statement and the prospectus used in
         connection with such registration statement as may be necessary to keep
         such registration statement effective for a period of nine (9) months
         thereafter or such shorter period which will terminate when all
         Registrable Securities covered by such registration statement have been
         sold, and comply with the provisions of the Act with respect to the
         disposition of all the Registrable Securities covered by such
         registration statement during such period;

                  (c) Furnish to Holder copies of the registration statement,
         each amendment and supplement thereto (in each case including all
         exhibits thereto), the prospectus included in such registration
         statement (including each preliminary prospectus and including a
         sufficient number of copies of the final prospectus) in conformity with
         the requirements of the Securities Act and such other documents as
         Holder may reasonably request in order to facilitate the disposition of
         the Registrable Securities owned by Holder;

                  (d) Use its best efforts to register or qualify the
         Registrable Securities under such other securities or blue sky laws of
         such jurisdictions as shall be reasonably requested by Holder and do
         any and all other acts and things which may be reasonably necessary or
         advisable to enable Holder to consummate the disposition in such
         jurisdictions of the Registrable Securities owned by Holder; provided,
         that the Company shall not be required in connection therewith or as a
         condition thereto to (i) qualify generally to do business in any
         jurisdiction where it would not otherwise be required to qualify but
         for this paragraph (d), (ii) subject itself to taxation in any such
         jurisdiction, or (iii) file a general consent to service of process in
         any such jurisdiction;

                  (e) Use its best efforts to cause the Registrable Securities
         covered by such registration statement to be registered with or
         approved by such other governmental agencies or authorities as may be
         necessary by virtue of the business and operations of the Company to
         enable Holder to consummate the disposition of such Registrable
         Securities;

                  (f) Immediately notify Holder at any time when a prospectus
         relating thereto is required to be delivered under the Securities Act,
         of the happening of any event as a result of which the prospectus
         included in such registration statement contains an untrue statement of
         a material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not
         misleading and the Company will promptly prepare and furnish to Holder
         a supplement or amendment to such prospectus so that, as thereafter
         delivered to the purchasers of such Registrable Securities, such
         prospectus will not contain an 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 not misleading;

                                      -4-
<PAGE>

                  (g) Enter into such customary agreements and take all such
         other actions as Holder reasonably requests in order to expedite or
         facilitate the disposition of such Registrable Securities, including
         customary indemnification;

                  (h) Make available for inspection by Holder and any attorney,
         accountant or other agent retained by Holder (collectively, the
         "Inspectors"), all financial and other records, pertinent corporate
         documents and properties of the Company as shall be reasonably
         necessary to enable them to exercise their due diligence
         responsibility, and cause the Company's officers, directors and
         employees to supply all information reasonably requested by any such
         Inspector in connection with such registration statement; and

                  (i) Otherwise use its best efforts to comply with all
         applicable rules and regulations of the SEC.

         The Company may require Holder to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.

         Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph 4(f), Holder will
forthwith discontinue disposition of Registrable Securities, pursuant to the
registration statement covering such Registrable Securities until Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph 4(f), and, if so directed by the Company, Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph 4(b) shall
be extended by the greater of (i) three months or (ii) the number of days during
the period from and including the date of the giving of such notice pursuant to
paragraph 4(f) to and including the date when Holder shall have received the
copies of the supplemented or amended prospectus contemplated by paragraph 4(f).

5. INDEMNIFICATION.

         5.1 INDEMNIFICATION BY THE COMPANY. In connection with the registration
of the Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will, and it hereby does, indemnify and hold harmless, to
the full extent permitted by law, Holder, each other person who participates as
an underwriter in the offering or sale of such securities and each other person,
if any, who controls Holder or any such underwriter within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with the Company's prior written consent) to which Holder or any such
underwriter or controlling person may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) or expenses arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material


                                      -5-
<PAGE>

fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse Holder and each such underwriter and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending such loss, claim, liability, action
or proceedings; provided, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expenses arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by Holder or underwriter or controlling person specifically stating
that it is for use in the preparation thereof; and provided, further, that the
Company will not be liable to Holder or any person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 5.1 with respect
to any preliminary prospectus as then amended or supplemented as the case may
be, to the extent that any such loss, claim, damage or liability of Holder,
underwriter or controlling person results from the fact that Holder or
underwriter or controlling person sold Registrable Securities to a person to
whom there was not sent or give, at or prior to the written confirmation of such
sale, a copy of the final prospectus (including any documents incorporated by
reference therein), whichever is most recent, if the Company has previously
furnished copies thereof to Holder or underwriter or controlling person and such
final prospectus, as then amended or supplemented, has corrected any such
misstatement or omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Holder or any
underwriter or controlling person and shall survive the transfer of such
securities by Holder.

         5.2 INDEMNIFICATION BY HOLDER. The Company may require, as a condition
to including the Registrable Securities in any registration statement filed in
accordance with this Agreement, that the Company shall have received an
undertaking reasonably satisfactory to it from Holder or any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5.1) the Company and its controlling persons and all other
prospective sellers and their respective controlling persons with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instruction duly
executed by Holder or underwriter specifically stating that it is for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or Holder
and shall survive the transfer of such securities by Holder; provided, however,
that Holder shall not be liable to the Company under this Section 5.2 for any
amounts exceeding the product of the purchase price per Registrable Security and
the number of Registrable Securities being sold pursuant to such registration
statement or prospectus by Holder.

                                      -6-
<PAGE>

         5.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; provided, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Section 5, except to the extent that the indemnifying party
is actually materially prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof, and the indemnifying party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.

         5.4 OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding Sections 5.1, 5.2 and 5.3 (with appropriate modifications) shall
be give by the Company and Holder with respect to any required registration or
other qualification of securities under any federal or state law or regulation
of governmental authority other than the Securities Act.

6. RULE 144. The Company hereby covenants that the Company shall file in a
timely manner all reports required to be filed by it under the Securities Act
and the Exchange Act (to the extent the Company is subject to the Exchange Act)
and the rules and regulations adopted by the SEC thereunder, and it will take
such further action as Holder may reasonably request, all to the extent required
from time to time to enable Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC relating to the disposition of securities. Upon the request of Holder,
the Company will deliver to Holder a written statement as to whether it has
complied with such requirements, in addition, the Company hereby agrees that for
a period of nine months following the date on which a registration statement
filed pursuant to this Agreement shall have become effective, the Company shall


                                      -7-
<PAGE>

not deregister such securities under Section 12 of the Exchange Act (even if
then permitted to do so pursuant to the Exchange Act and the rules and
regulations promulgated thereunder).

7. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into any
agreement with respect to any of its securities which is inconsistent with the
rights granted to Holder in this Agreement.

8. REMEDIES. The Company acknowledges and agrees that in the event of any breach
of this Agreement by it, Holder would be irreparably harmed and could not be
made whole by monetary damages. The Company accordingly agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate and that Holder, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to compel specific performance
of this Agreement in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction for such action.

9. SALE WITHOUT REGISTRATION. At the time of any transfer of any Registrable
Securities which shall not be registered under the Securities Act, the Company
may require, as a condition of allowing such transfer, that Holder or the
transferee furnish to the Company: (a) such information as is reasonably
necessary in order to establish that such transfer may be made without
registration under the Securities Act; and (b) at the expense of Holder or the
transferee, an opinion of counsel, satisfactory in form and substance to the
Company, to the effect that such transfer may be made without registration under
the Securities Act; provided, that nothing contained in this Section 9 shall
relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to these registration rights
provisions.

10. GENERAL PROVISIONS.

         10.1 WAIVERS. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action or compliance with any representation,
warranty, covenant, or agreement contained herein or in any ancillary document.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other or subsequent breach.
The waiver by any party of any of the conditions precedent to its respective
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement.

         10.2 NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered personally, by courier service, telecopied, or
mailed by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so delivered or mailed:

                  (a)      if to the Company:

                           Telenetics Corporation
                           25111 Arctic Ocean
                           Lake Forest, California  92630
                           Attn: Michael A. Armani

                                      -8-
<PAGE>

                           With a copy to:

                           Rutan & Tucker, L.L.P.
                           611 Anton Boulevard, Suite 1400
                           Costa Mesa, California  92626
                           Attn: Larry A. Cerutti, Esq.

                  (b)      if to Holder:

                           William C. Saunders
                           5735 Prestwick Lane
                           Dallas, Texas 75252

                           With a copy to:

                           Munsch Hardt Kopf & Harr, P.C.
                           4000 Fountain Place
                           1445 Ross Avenue
                           Dallas, Texas 75202
                           Attn: Sally A. Schreiber, Esq.
                           Telecopier: (214) 978-4323

or to such other address as any of the above shall have specified by notice
hereunder. Notices delivered personally, by mail or telecopied shall be deemed
communicated as of actual receipt.

         10.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes any and all prior agreements and undertakings, oral or
written, concerning the subject matter hereof. This Agreement may not be changed
or terminated orally, and may only be changed or terminated by a writing signed
by the party against whom such change or termination is sought.

         10.4 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns. Except
as set forth in the prior sentence, nothing in this Agreement, expressed or
implied, is intended to or shall confer on any person other than the parties
hereto any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.

         10.5 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

         10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.

                                      -9-
<PAGE>

         10.7 RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular include the plural, and in the plural
include the singular, and words of the masculine gender include the feminine and
the neuter, and, when the sense so indicates, words of the neuter gender may
refer to any gender.

         10.8 ASSIGNMENT. For purposes of this Agreement, the term "Holder"
shall include any heir, successor or assign who obtains any Registrable
Securities from the Holder listed on the signature page hereof.

         10.9 REGISTRATION OF ADDITIONAL STOCK. The Company and Holder agree to
review the securities law issues relating to the registration of Holder's
portion of the Additional Stock (as that term is defined in the Stock Purchase
Agreement) and, to the extent possible, agree to revise this Agreement to
include within the definition of Registrable Securities hereunder, Holder's
portion of the Additional Stock.

         10.10 GOVERNING LAW; VENUE. The validity, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California. Any
action commenced hereunder shall be conducted before a court of appropriate
jurisdiction in Orange County, California.

         10.11 COOPERATION. The parties agree to execute such further documents
and take such further actions as necessary to carry out the provisions of this
Agreement and to fully accomplish its purpose and intent. 10.12 ATTORNEYS' FEES.
The prevailing party in any proceedings arising in connection with this
Agreement shall be entitled to reimbursement for his or its reasonable costs
incurred in connection therewith, including attorneys' fees.

         10.12 ATTORNEYS' FEES. The prevailing party in any proceedings arising
in connection with this Agreement shall be entitled to reimbursement for his or
its reasonable costs incurred in connection therewith, including attorneys'
fees.

         10.13 SET-OFF. Each party hereto shall be entitled to set-off against
any amount it may owe to any other party under this Agreement or any other
agreement executed in connection herewith any and all amounts that are due to
that party by such other party under or in connection with the terms of this
Agreement.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                      -10-
<PAGE>




         10.14 TIME OF ESSENCE. Time is of essence in connection with the
performance of this Agreement.


         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and date first above written.

                                    TELENETICS CORPORATION


                                    By: /s/ Michael A. Armani
                                        --------------------------------------
                                        Michael A. Armani, President



                                     HOLDER:


                                        /s/ William C. Saunders
                                        --------------------------------------
                                        William C. Saunders, an individual


                                      -11-


                              CONSULTING AGREEMENT


         THIS CONSULTING AGREEMENT (this "AGREEMENT") is made and entered into
as of this 7th day of January, 2000 (the "EFFECTIVE DATE"), by and between
Telenetics Corporation, a California corporation with offices at 25111 Arctic
Ocean, Lake Forest, California 92630 (the "COMPANY"), and Edward L. Didion, an
individual who resides at the address set forth on the signature page hereof
("CONSULTANT"), who may be collectively referred to as the "PARTIES."

                                 R E C I T A L S

         A. The Company, Consultant and certain other individuals have entered
into a Stock Purchase Agreement of even date herewith (the "STOCK PURCHASE
AGREEMENT") pursuant to which the Company is purchasing all of the outstanding
capital stock of eflex Wireless, Inc., a Delaware corporation ("EFLEX").

         B. The parties acknowledge that Consultant currently acts as a
consultant to eflex and has abilities and expertise that are unique and valuable
to the Company and, in connection with the Stock Purchase Agreement, the Company
desires to retain Consultant to provide certain consulting services for the
Company, and Consultant is willing to provide the consulting services requested
by the Company.

         C. The Company and Consultant have determined that such engagement of
Consultant is mutually beneficial and should be subject to a mutually acceptable
written agreement, and that the retention by eflex of the Consultant as a
consultant is being terminated concurrently with the effectiveness of this
Agreement.

                                A G R E E M E N T

         NOW, THEREFORE, in consideration of the foregoing premises, the
following mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the Parties hereto, the Parties hereto agree, intending
to be legally bound, as follows:

1. SERVICES TO BE PERFORMED BY CONSULTANT.

         1.1 SCOPE AND NATURE OF SERVICES. Commencing on the Effective Date, the
Company agrees to engage Consultant, and Consultant agrees to offer Consultant's
services to the Company, as a consultant. Consultant agrees to render
Consultant's best business expertise, advice and services to the directors,
executive officers, managers or employees of the Company as the Company may
reasonably request concerning the business of the Company including, without
limitation, the business of eflex. Consultant shall render such services at such
locations as the Company, within its sole discretion, deems appropriate
(recognizing that the Consultant is based in the Tampa area and that is where
the majority of the services are to be performed). This Agreement shall not be
construed as obligating the Company to request any amount (or any specific
amount) of consulting services from Consultant.

                                       1
<PAGE>

         1.2 METHOD OF PERFORMING SERVICES. Consultant shall provide the
consulting services to the Company promptly upon request by the Company during
the term of this Agreement, and it shall be the duty of Consultant in providing
these consulting services to make periodic reports to the Company, from time to
time, as the Company may deem appropriate.

         1.3 PLACE OF WORK. The consulting services described herein will be
carried out at such reasonable locations as may be agreed upon by the Company
and Consultant from time to time. If the Company determines that it is in the
best interest of the Company for the consulting services described herein to be
carried out at the facilities of the Company, such services shall be performed
at the facilities of the Company and the Company shall provide Consultant with
such entry and access to the facilities of the Company (during normal business
hours, unless otherwise authorized by the Company) to the extent necessary to
allow Consultant to perform Consultant's obligations under this Agreement.

2. TERM AND TERMINATION.

         2.1 TERM. The term of this Agreement (the "TERM") shall be from the
Effective Date until this Agreement is terminated by either Party upon 30 days'
prior written notice to the other Party; PROVIDED, HOWEVER, that this Agreement
may be terminated by the Company for Good Cause (as defined below) effective
upon delivery of written notice to Consultant given at any time. "GOOD CAUSE"
shall exist if:

                  (a) Consultant is arrested for domestic violence or for any
         other reason or is charged with a crime;

                  (b) Consultant in bad faith commits any act (including, but
         not limited to, any act that would constitute fraud, misappropriation,
         dishonesty, or embezzlement) or in bad faith omits to take any action
         to the material detriment of the Company or any of its affiliates;

                  (c) Consultant intentionally commits during the Term of this
         Agreement any act of material misconduct (including, but not limited
         to, sexual harassment, racial vilification, or unlawful
         discrimination);

                  (d) Consultant fails or refuses to perform consulting duties
         assigned to him by the Company and fails to correct such breach within
         five days after notice is given to Consultant by the Company of such
         breach;

                  (e) Consultant becomes physically or mentally incapacitated or
         disabled or otherwise unable fully to discharge his duties hereunder
         for a period of more than 30 consecutive days or more than 45 days
         within any two-month period;

                  (f) In the opinion of a medical doctor retained by the
         Company, after a physical examination and reasonable diagnostic
         procedures, Consultant is found to be addicted to any drug, including
         alcohol;

                                       2
<PAGE>

                  (g) Consultant breaches any term of this Agreement and fails
         to correct such breach within five days after notice is given to
         Consultant by the Company of such breach; or

                  (h) Consultant attempts to resign in anticipation of discharge
         for any reason mentioned in SECTION 2.1(a) through SECTION 2.1(g), or
         the Company accepts Consultant's resignation in lieu of making a
         termination for any reason mentioned in SECTION 2.1(a) through SECTION
         2.1(g).

         2.2 EFFECT OF TERMINATION. Consultant agrees that in connection with
the termination of this Agreement for any reason, Consultant shall only be
entitled receive the pro rata share of the consulting fee earned prior to the
termination in accordance with SECTION 3.1, plus reimbursement in accordance
with SECTIONS 3.3 AND 3.4 for materials and travel expenses incurred prior to
the termination. Such payments described in this SECTION 2.2 shall be the
exclusive and sole remedy of Consultant for any termination of this Agreement,
and Consultant covenants not to assert or pursue any other remedies, at law or
in equity, with respect to any termination of this Agreement. In addition, the
Parties agree that if Consultant is terminated for Good Cause, any and all
unexercised options granted to Consultant pursuant to this Agreement, whether
vested or unvested, shall immediately terminate and be of no further force or
effect.

3. CONSIDERATION AND PAYMENTS.

         In consideration of the consulting services to be provided by
Consultant pursuant to this Agreement:

         3.1 CONSULTING FEE. The Company shall pay Consultant a consulting fee
of $9,583.33 per month, which amount shall be payable in advance in monthly
installments commencing on January 15, 2000 and shall be prorated for any
partial month occurring during the Term of this Agreement.

         3.2 OPTIONS. Concurrently with the execution of this Agreement,
Consultant shall receive an option to purchase shares of Common Stock of the
Company, a copy of which option shall be attached hereto as EXHIBIT A and
incorporated herein by reference.

         3.3 COST OF MATERIALS. If Consultant shall reasonably determine that
Consultant will be unable to perform the consulting services under this
Agreement without procuring certain materials with an aggregate cost exceeding
$100, Consultant shall promptly notify the Company in writing of its need to
procure such materials and the date by which such materials must be received by
Consultant. Upon receipt of such notice from Consultant, the Company shall
thereafter have the option to either procure the materials itself or, in the
alternative, authorize Consultant to procure the materials directly. If the
Company should elect to authorize Consultant to procure the materials directly,
it shall notify Consultant of such election, and the Company agrees to reimburse
Consultant within 10 business days of its receipt of a separate invoice from
Consultant for Consultant' actual cost of the materials as authorized by the


                                       3
<PAGE>

Company.

         3.4 TRAVEL EXPENSES. Upon submission of a separate monthly invoice, the
Company shall also reimburse Consultant for all travel-related expenses
reasonably incurred by Consultant in connection with this Agreement and
authorized in advance in writing by the Company, including, without limitation,
air fare, hotel and rental car expenditures. However, unless explicitly approved
by the Company in writing, the Company will not reimburse Consultant for
expenses incurred in traveling from Consultant's office or residence to the
Company or from the Company to Consultant's office or residence. The Company
agrees to pay the amounts due under this SECTION 3.4 on or before the 30th day
of the month following the month of submission of such invoice.

4. NONDISCLOSURE AND CONFIDENTIALITY.

         In the course of Consultant providing the consulting services under
this Agreement, Consultant will have access to the Company's trade secrets,
proprietary information and confidential information, the use, application or
disclosure of any of which will cause substantial and possible irreparable
damage to the business and asset value of the Company. Accordingly, Consultant
accepts and agrees to be bound by the following provisions:

         4.1 DEFINITIONS. For the purposes of this Agreement, the following
definitions apply:


                  (a) "TRADE SECRETS" shall specifically include, but are not
         limited to, plans, customer lists, compilations, program devices,
         formulas, designs, ideas, concepts, prototypes, drawings, methods,
         techniques, systems, processes, procedures, computer software, programs
         or codes, whether tangible or intangible, and whether or how stored,
         compiled or memorialized physically, electronically, graphically,
         photographically or in writing (including, without limitation, source
         and object codes, flow charts, algorithms, coding sheets, doctrines,
         subroutines, compilers, assemblers, design concepts and related
         documentation and manuals), discoveries, hardware, machines and devices
         whether patentable or not, including, without limitation, the nature
         and results of technical and nontechnical research and development
         activities, "know-how," schematics, parts lists and specifications; and
         all inventions and ideas which the Company obtains from a third party
         and which are derived from and related to Consultant's access to or
         knowledge of any of the above. Trade Secrets also includes any
         information described above which the Company treats as proprietary or
         designates as a Trade Secret, whether or not owned or developed by the
         Company or Consultant. Trade Secrets also include any information
         described in this paragraph (a) which the Company obtains from another
         party which the Company treats as proprietary or designates as Trade
         Secrets, whether or not owned or developed by the Company.

                  (b) "CONFIDENTIAL INFORMATION" shall mean any data, materials
         or information, other than Trade Secrets, that is of value to the
         Company and is not generally known to competitors of the Company.
         Confidential Information shall include, but not be limited to, the
         identity of various suppliers, information about the Company's
         executives and employees, financial information, business and marketing
         plans, marketing techniques, price lists, pricing policies and the
         Company's business methods. Confidential Information also includes any
         information described above which the Company obtains from a third
         party and which the Company treats as proprietary or designates as
         Confidential Information, whether or not owned by or developed by the
         Company.

                                       4
<PAGE>

         Anything in this Agreement to the contrary notwithstanding, Trade
Secrets and Confidential Information shall not include information which is (i)
lawfully disclosed to Consultant by a third party unrelated to the Company, (ii)
generally known in the telemetry services industry other than by the
unauthorized actions of Consultant, or (iii) in the public domain other than by
the unauthorized actions of Consultant.

         4.2 PROPRIETARY INFORMATION. Consultant hereby acknowledges that all
Trade Secrets and Confidential Information are the exclusive property of the
Company. Specifically, Consultant acknowledges and agrees that all Trade Secrets
and Confidential Information which Consultant has developed, or in which
Consultant has participated in the development, while engaged by the Company or,
which Consultant participates in the development in the future during the term
of its engagement by the Company shall be the exclusive property of the Company
and Consultant shall have no ownership interest therein. Consultant further
agrees that it will not, directly or indirectly, incorporate any Trade Secrets
or Confidential Information, or any part thereof, into any system, product,
service or other item later designed or prepared by Consultant for any party or
parties other than the Company.

         4.3 PROHIBITION ON USE OF TRADE SECRETS. Consultant shall not, directly
or indirectly, in any manner or form use, disclose, provide or otherwise make
available in any manner in whole or in part any Trade Secrets during the period
Consultant has access to the Trade Secrets and thereafter, other than to the
Company's employees in the scope of their employment, or to other consultants
performing services for the Company in connection with the consulting services
performed by Consultant hereunder.

         4.4 PROHIBITION ON USE OF CONFIDENTIAL INFORMATION. Consultant shall
not, directly or indirectly, in any manner or form use, disclose, provide or
otherwise make available in any manner in whole or in part any Confidential
Information during the period Consultant has access to the Confidential
Information and thereafter, other than to the Company's employees in the scope
of their employment, or to other consultants performing services for the Company
in connection with the consulting services performed by Consultant hereunder.

         4.5 NONCOMPETITION AND NONSOLICITATION. Consultant expressly promises
and agrees that Consultant will fully comply with the covenants and provisions
contained in SECTION 7 of the Stock Purchase Agreement, which provisions are
incorporated herein by reference, as if such provisions were set forth in full
herein.

         4.6 PROHIBITION ON REPRODUCTION. Consultant shall have no right to
print or copy, directly or indirectly, in whole or in part, any Trade Secrets or
Confidential Information or any documentation pertaining thereto, except as
required to perform Consultant's responsibilities hereunder.

         4.7 PROTECTIVE MEASURES. Consultant shall take all necessary and
appropriate action, whether by instruction, agreement or otherwise to ensure the
protection, confidentiality and security of the Trade Secrets and Confidential
Information and to satisfy Consultant's obligations under this Agreement. The
standard of care which Consultant shall employ shall conform at least to
industry standards and shall be adequate to ensure the protection,
confidentiality and security of the Trade Secrets and Confidential Information.


                                       5
<PAGE>

Consultant agrees that Consultant's obligations with respect to the
confidentiality and security of all materials disclosed to Consultant under the
terms of this Agreement shall survive the termination of this or any agreement
or relationship between the Company and Consultant or the performance of
consulting services by Consultant on behalf of the Company.

         4.8 RETURN OF MATERIALS. All notes, data, reference materials,
sketches, disks, memoranda, tapes, manuals, files, documentation and records
contained in any medium (written document, electronic or otherwise) in any way
relating to any of the Trade Secrets or Confidential Information or the
Company's business shall belong exclusively to the Company and Consultant agrees
to turn over to the Company all copies of such materials in its possession at
the request of the Company or, in the absence of such a request, upon the
termination of Consultant's consulting services for the Company within three
business days of such termination. Consultant further agrees, upon request by
the Company, to promptly remove from Consultant's possession and dominion and
return to the Company or positively destroy any software programs or data
entered into Consultant's computer or libraries pertaining to the Trade Secrets
and Confidential Information.

5. OWNERSHIP AND COPYRIGHT.

         The Company reserves the right to approve or reject any such employee,
contractor or agent, such approval not to be unreasonably withheld. The Company
shall own all right, title and interest in and to all work product created by
Consultant hereunder, including all copyrights and proprietary rights therein.
Consultant expressly acknowledges that the Parties have agreed that all
copyrightable aspects of each of Consultant's work products hereunder and all
work in process are to be considered "works made for hire" within the meaning of
the Copyright Act of 1976, as amended (the "Act"), and that the Company is the
"author" within the meaning of the Act. All such copyrightable works, as well as
all copies of such works in whatever medium fixed or embodied, shall be owned
exclusively by the Company at its creation, and Consultant hereby expressly
disclaims any interest in any of them. Consultant expressly acknowledges that
Consultant is not a joint author and that all work product and all work in
process created by Consultant hereunder are not joint works under the Act.

         If (and to the extent) that the work product and work in process
created by Consultant hereunder or any part or element thereof is found as a
matter of law not to be a "work made for hire" within the meaning of the Act,
Consultant hereby conveys and assigns to the Company the sole and exclusive
right, title and interest in the ownership and patent rights to all such work in
process and work product created hereunder, and all copies of any of them,
without further consideration, and agrees to assist the Company, at the expense
of the Company, to register, and from time to time to enforce, all patents,
copyrights and other rights and protection relating to the work product and work
in process created hereunder in any and all countries. To that end, Consultant
agrees to execute and deliver all documents requested by the Company in
connection therewith, and irrevocably designates and appoints the Company as
Consultant's agent and attorney-in-fact to act for and in Consultant's behalf
and stead to execute, register and file any such applications, and to do all
other lawfully permitted acts to further the registration, prosecution and
issuance of patents, copyrights or similar protection with the same legal force
and effect as if executed by Consultant.

                                       6
<PAGE>

         Any ideas, conception, know-how or techniques relating to the work
product and work in process developed by Consultant hereunder shall also be the
sole and exclusive property of the Company.

         The Company shall own each invention, including inventions relating to
an appearance design, developed under this Agreement, including applications
filed thereon and patents issued thereon. Consultant hereby assigns to the
Company, its successors and assignees, any such invention together with the
right to seek protection by obtaining patent rights therefor worldwide and to
claim all rights of priority thereunder, and the same shall become and remain
the Company's property whether or not such protection is sought. Consultant
shall, upon the Company's request and expense, cause patent applications to be
filed thereon, through solicitors or patent attorneys designated by the Company
and forthwith assign all such applications to the Company, its successors and
assignees. Consultant shall give the Company and attorneys all reasonable
assistance in connection with the preparation and prosecution of any such patent
applications and shall cause to be executed all such assignments and other
instruments and documents as the Company may consider necessary or appropriate
to carry out the intent of this SECTION 5.

6. EMPLOYEES AND AGENTS OF CONSULTANT.

         Except as otherwise approved by the Company in writing, Consultant
shall provide the Company with ten days' advance notice prior to employing or
retaining any employee, subcontractor, or agent to assist with or contribute to
Consultant's duties, obligation or performance hereunder. The Company reserves
the right to approve or reject any such employee, contractor or agent, such
approval not to be unreasonably withheld. Consultant agrees that it shall have
and maintain, for so long as this Agreement is in effect, written agreements
with all employees, subcontractors or agents engaged by Consultant who assist
with or contribute to Consultant's duties, obligations or performance hereunder.
Such written agreements shall contain provisions sufficient to establish the
rights and benefits contemplated by, and to assure compliance with this
Agreement, including, but not limited to, the provisions of SECTIONS 4 AND 5,
above. Consultant shall furnish the Company with copies of such written
agreements and shall cause such subcontractors, employees and agents to execute
and deliver such further certificates, acknowledgments, waivers and assignments
as may be appropriate to give effect to the foregoing.

7. APPLICABILITY TO PRIOR DEALINGS.

         Consultant hereby acknowledges that Consultant and Consultant's
employees and agents may have had access to Trade Secrets and Confidential
Information prior to the effective date of this Agreement. Consultant hereby
agrees that any Trade Secrets and Confidential Information Consultant and
Consultant's employees and agents may have acquired prior to the effective date
of this Agreement shall be subject to the terms and conditions of SECTIONS 4 AND
5 above, and that Consultant shall cause each of Consultant's employees and
agents to treat such Trade Secrets and Confidential Information accordingly.

                                       7
<PAGE>

8. SURVIVAL OF OBLIGATIONS BEYOND TERMINATION.

         The obligations of Consultant under SECTIONS 4 THROUGH 7 and the
warranties and remedies under SECTIONS 9 THROUGH 12 shall not terminate upon the
termination of this Agreement, but, rather, shall continue in effect thereafter.

9. INJUNCTIVE RELIEF.

         Consultant hereby acknowledges and agrees that any violations of
SECTIONS 4 THROUGH 7, 10 AND 14 will cause damage to the Company in an amount or
amounts difficult to ascertain and any remedies at law for such damages will be
inadequate. Accordingly, in addition to any other relief to which the Company
may be entitled at law or in equity, the Company shall be entitled to temporary
and/or permanent injunctive or other equitable relief from any such breach or
threatened breach by Consultant without proof of actual damages that have been
or may be caused to the Company by such breach or threatened breach.

10. WARRANTY.

         10.1 EXPRESS WARRANTIES. As of the date hereof and as of all dates
prior to the expiration of this Agreement, Consultant warrants and represents to
the Company the following:

                  10.1.1 DISCLOSURE BY CONSULTANT. Consultant hereby
         acknowledges that the Company does not wish to receive from Consultant
         any information not owned by the Company which may be considered
         confidential or proprietary to Consultant or to any third party. Any
         information or materials disclosed or to be disclosed by Consultant to
         the Company is not confidential or proprietary to Consultant or to any
         third party. Accordingly, no obligation of any kind is assumed by or to
         be implied against the Company by virtue of this Agreement or the
         relationship between the Parties hereunder or with respect to any
         information received (in whatever form or whenever received) from
         Consultant relating to the subject matter hereof, and the Company will
         be free to reproduce and to use and disclose to others such information
         without limitation. Neither this Agreement nor the relationship between
         the Parties, will impair the right of the Company to develop, make,
         use, procure, or market products or services now or in the future which
         may be competitive with those offered by Consultant, nor require the
         Company to disclose any planning or other information to Consultant.
         Consultant covenants and agrees not to incorporate into any work
         performed or created hereunder any material owned or copyrighted or
         confidential to any third party.

                  10.1.2 AUTHORITY. Consultant has the authority to enter into
         this Agreement. The execution of this Agreement by Consultant and the
         performance of the services contemplated hereunder do not (and will
         not) violate any other agreement, policy or order to which Consultant
         is subject.

         10.2 BREACH OF WARRANTY. If Consultant is in breach of any warranty or
representation under this Agreement, the Company shall have all rights and
remedies available to it in law and in equity.

                                       8
<PAGE>

11. STATUS AS INDEPENDENT CONTRACTOR.

         The Parties are entering into this Agreement as independent contractors
and no employment relationship, partnership, joint venture or other association
shall be deemed created by this Agreement.

         11.1 TAXES. The Company shall pay Consultant directly, without payroll
deductions of any kind whatsoever, all monies which may become due and payable
hereunder, as, when, and to the extent those payments become payable. Consultant
shall have the entire responsibility to discharge all the obligations under
federal, state or local laws, regulations or orders now or hereafter in effect,
relating to taxes, unemployment compensation or insurance (including, but not
limited to, the Unemployment Insurance Code of the State of California), social
security, worker's compensation, disability pensions and tax withholdings
(collectively, "TAX OBLIGATIONS"). Consultant shall fully indemnify the Company
from and against all liabilities, obligations, damages, assessments, penalties,
interest, costs (including, without limitation, any attorneys' fees) and other
expenses incurred by the Company resulting from Consultant's failure to properly
discharge its Tax Obligations or otherwise arising out of or related to the
engagement of Consultant by the Company pursuant to this Agreement.

         11.2 AUTHORITY. Consultant is not authorized to bind the Company or to
incur any obligation or liability on behalf of the Company except as expressly
authorized by the Company in writing.

         11.3 BENEFITS. Consultant acknowledges that the Company shall not be
providing health insurance, retirement plan contributions, workers' compensation
or other benefits to Consultant and/or Consultant's employees, if any, and
Consultant shall be solely responsible for obtaining and/or providing such
benefits.

         11.4 METHODS. Except as otherwise provided herein, Consultant shall be
free to pursue whatever means Consultant chooses in performing the services
described herein. The Company recognizes that this is not an exclusive agreement
and the Consultant may perform services for other parties.

12. GENERAL PROVISIONS.

         12.1 ATTORNEYS' FEES AND COSTS. In any suit, action or proceeding
(including arbitration) arising out of or related to the Agreement or the
transactions contemplated hereby, including any appeals (an "ACTION"), the
non-prevailing party in that Action shall pay to the prevailing party a
reasonable sum for ordinary and necessary attorneys', paralegals', accountants'
and experts' fees and costs incurred in connection with prosecuting or defending
the Action and/or enforcing any judgment, order, ruling, or award (collectively,
a "DECISION") granted therein, in addition to any damages and costs which the
prevailing party otherwise would be entitled. Any Decision entered in the Action
shall contain a specific provision providing for the recovery of reasonable
attorneys', paralegals', accountants' and experts' fees and costs incurred in
enforcing the Decision. The court or arbitrator may fix the amount of reasonable
attorneys', paralegals', accountants' and experts' fees and costs on the request
of either party. For the purposes of this SECTION 12.1, all attorneys',


                                       9
<PAGE>

paralegals', accountants' and experts' fees and costs shall include, but not be
limited to, fees and costs incurred in the following: (i) postjudgment motions
and collection actions; (ii) contempt proceedings; (iii) garnishment, levy, and
debtor and third party examinations; (iv) discovery; and (v) bankruptcy.

         12.2 NOTICES. All notices, demands or other communications which are
required or are permitted to be given in this Agreement shall be in writing and
shall be deemed to have been sufficiently given (i) upon personal delivery, (ii)
the third business day following due deposit in the United States mail, postage
prepaid, and sent certified mail, return receipt requested, correctly addressed
or (iii) when receipt is acknowledged if sent via facsimile transmission as
follows: If to the Company, to the address set forth in the introductory
paragraph of this Agreement. If to Consultant, to the address set forth below
Consultant's signature at the end of this Agreement. If notice is sent to the
Company, a copy shall be sent to:

                         Larry A. Cerutti, Esq.
                         Rutan & Tucker, LLP
                         611 Anton Boulevard, 14th Floor
                         Costa Mesa, California 92626
                         Telephone: (714) 641-5100
                         Facsimile: (714) 546-9035

         Either party may give written notice of a change of address by
certified mail, return receipt requested, and after notice of such change has
been received, any notice shall be given to such party in the manner above
described at such new address.

         12.3 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.

         12.4 WAIVER AND AMENDMENT. This Agreement may be amended, supplemented,
modified and/or rescinded only through an express written instrument signed by
both Parties or their respective successors and assigns. Either party may
specifically and expressly waive in writing any portion of this Agreement or any
breach hereof, but no such waiver shall constitute a further or continuing
waiver of any preceding or succeeding breach of the same or any other provision.
The consent by one party to any act for which such consent was required shall
not be deemed to imply consent or waiver of the necessity of obtaining such
consent for the same or similar acts in the future.

         12.5 SEVERABILITY. Each provision of this Agreement is intended to be
severable. If any covenant, condition or other provision contained in this
Agreement is held to be invalid, void or illegal by any court of competent
jurisdiction, such provision shall be deemed severable from the remainder of
this Agreement and shall in no way affect, impair or invalidate any other
covenant, condition or other provision contained in this Agreement. If such
condition, covenant or other provision shall be deemed invalid due to its scope
or breadth, such covenant, condition or other provision shall be deemed valid to
the extent of the scope or breadth permitted by law.

                                       10
<PAGE>

         12.6 GOVERNING LAW. All matters relating to or arising out of this
Agreement, whether in contract, tort or otherwise, shall be governed by and
interpreted in accordance with the laws of the State of California, including
all matters of construction, validity, performance and enforcement, without
giving effect to principles of conflict of laws. The Parties hereby consent, in
any dispute, action, litigation, arbitration or other proceeding concerning this
Agreement, to the jurisdiction of the state or federal courts of California,
with the County of Orange being the sole venue for the bringing of the action or
proceeding.

         12.7 ASSIGNABILITY. Because the Company has agreed to retain the
services of Consultant based on an investigation of Consultant's capabilities,
the importance of Consultant's services to the ongoing business of the Company
and the personal relationship that has evolved between the Parties, neither this
Agreement nor any interest herein shall be assignable (voluntarily,
involuntarily, by judicial process or otherwise), in whole or in part, by
Consultant without the prior written consent of the Company. Any attempt at such
an assignment without such consent shall be void and, at the option of the
Company, shall be an incurable breach of this Agreement resulting in the
immediate termination of this Agreement.

         12.8 INTERPRETATION. The language in all parts of this Agreement shall
be in all cases construed simply according to its fair meaning and not strictly
for or against any party. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice versa, and
each gender will include any other gender. The captions of the Sections and
Subsections of this Agreement are for convenience only and shall not affect the
construction or interpretation of any of the provisions of this Agreement.

         12.9 INTEGRATION. This Agreement, together with the exhibits and
schedules hereto, incorporate the entire understanding of the parties with
respect to the subject matter hereof and supersede all previous oral and written
and all contemporaneous oral negotiations, commitments, writings, and
understandings. In addition, the parties expressly agree that this Agreement
supersedes and replaces the Employment and Noncompetition Agreement dated as of
June 1, 1999 between Consultant and eflex, as successor to Residential Utility
Meter Service's, Inc., a Florida corporation (the "EFLEX EMPLOYMENT AGREEMENT"),
and that the eflex Employment Agreement is of no further force or effect.

         12.10 SURVIVABILITY. All covenants, agreements, representations and
warranties made by the Consultant shall survive the termination of this
Agreement.

         12.11 FURTHER ASSURANCES. In addition to the documents and instruments
to be delivered as provided in this Agreement, each of the Parties shall, from
time to time at the request of the other party, execute and deliver to the other
party such other documents and shall take such other action as may be necessary
or proper to more effectively carry out the terms of this Agreement.



                                       11
<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the date first set forth above.

                                       TELENETICS CORPORATION


                                       By: /s/ Michael A. Armani
                                          -----------------------------------
                                           Michael A. Armani, President


                                       CONSULTANT:


                                       /s/ Edward L. Didion
                                       --------------------------------------
                                       Edward L. Didion, an individual

                                       9828 GALLAGHER ROAD
                                       --------------------------------------
                                       Street Address

                                       DOVER, FLORIDA  33527
                                       --------------------------------------
                                       City, State, Zip Code

                                       --------------------------------------
                                       Business Telephone Number

                                       --------------------------------------
                                       Business Facsimile Number

                                       --------------------------------------
                                       Social Security or Federal Tax
                                       Identification Number




                                       12
<PAGE>


                                    EXHIBIT A
                                    ---------


                         Copy of Stock Option Agreement



                                       13


                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of this
7th day of January, 2000 (the "EFFECTIVE DATE"), by and between TELENETICS
CORPORATION, a California corporation (the "COMPANY"), and JOHN D. McLEAN
("EMPLOYEE").

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

         A. The Company, Employee and certain other individuals have entered
into a Stock Purchase Agreement of even date herewith (the "STOCK PURCHASE
AGREEMENT") pursuant to which the Company is purchasing all of the outstanding
capital stock of eflex Wireless, Inc., a Delaware corporation ("EFLEX").

         B. The parties acknowledge that Employee is currently employed by eflex
and has abilities and expertise that are unique and valuable to the Company and,
in connection with the Stock Purchase Agreement, the Company desires to retain
the services of Employee, and Employee wishes to accept such employment.

         C. The Company and Employee have determined that such engagement of
Employee is mutually beneficial and should be subject to a mutually acceptable
written agreement, and that Employee's employment by eflex shall be terminated
concurrently with the effectiveness of this Agreement.

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

         NOW, THEREFORE, in consideration of the foregoing premises, the
following mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties hereto agree, intending
to be legally bound, as follows:

1. EMPLOYMENT.


         Employee agrees to serve the Company as President of the Company's
telemetry division or in such other capacities with a similar level of executive
responsibilities as may be requested from time to time by the Board of Directors
of the Company (the "BOARD"). Employee's office will be located in the Tampa,
Florida area and/or the Atlanta, Georgia area, as the Company may in its sole
and absolute discretion determine. During the term of this Agreement, Employee
will devote his full time, care and exclusive attention to, and use his best
efforts to advance, the business and welfare of eflex and the Company. During
the term of this Agreement, Employee will not engage in any other business
activity or occupation, whether or not such business activity or occupation is
pursued for gain, profit or other pecuniary advantage; PROVIDED, HOWEVER, that
nothing contained in this Agreement shall be deemed to prevent or limit the
right of Employee to invest any of his surplus funds in any partnership,
corporation or other entity or venture not directly competitive with eflex or
the Company. Employee represents and warrants to the Company that he is not a
party to or bound by any presently effective agreement or contract, whether of

                                       1
<PAGE>

employment or otherwise, with any third person or entity that would in any way
restrict or prohibit Employee from undertaking or performing his obligations on
the terms and conditions set forth in this Agreement. Employee covenants with
the Company that he shall not, during the Term, enter into any such agreement,
contract or understanding described in this SECTION 1 so as to cause the
Company, eflex or any of the Company's other subsidiaries or affiliated
companies, to be liable in connection therewith.

2. EMPLOYMENT TERM.

         The Company agrees to employ Employee, and Employee agrees to serve, on
the terms and conditions of this Agreement, for a period commencing on the
Effective Date and continuing for a period of three years unless terminated
earlier pursuant to the terms of this Agreement (the "TERM").

3. COMPENSATION AND BENEFITS.

         The Company shall pay to Employee for his services, and Employee agrees
to accept as his full compensation under this Agreement, the following:

         3.1 BASE SALARY. The Company shall pay Employee a base salary of
$16,666.67 per month (the "BASE SALARY"). The Base Salary shall be earned and
payable at such intervals and otherwise in such manner as is consistent with the
normal payroll practices of the Company for remuneration of its employees, less
such deductions or amounts to be withheld as shall be required by applicable
law.

         3.2 INCENTIVE COMPENSATION. In addition to the Base Salary, Employee
shall be eligible to receive additional compensation ("BONUS") of up to
$75,000.00 per year, which shall be earned and payable, if at all, at the times
and in the amounts determined by the Board, in its sole discretion, based upon
Employee's achievement of mutually agreeable goals and objectives set by the
Company and Employee at the beginning of each year of the Term.

         3.3 OPTIONS. As additional compensation, concurrently with the
execution of this Agreement, Employee shall receive an option to purchase shares
of Common Stock of the Company, a copy of which option shall be attached hereto
as EXHIBIT A and incorporated herein by reference.

         3.4 OTHER BENEFITS. During the Term, except as may be otherwise
provided herein, Employee shall be eligible to participate in all group
insurance plans and shall be entitled to other employee benefits, including
vacation (a minimum of three weeks per year) and holiday pay, that the Company,
in its sole and absolute discretion, may provide from time to time to other
employees of the Company with similar duties and responsibilities; PROVIDED,
HOWEVER, that the Company shall not be required to provide medical coverage
prior to June 1, 2000, and the Company shall thereafter only be required to
cover Employee's share of the premiums due under Employee's GTE Retiree Medical
Plan during the remainder of the Term, with such payments by the Company not to
exceed $2,000 during the first year of the Term and $4,000 during each remaining
year of the Term.

                                       2
<PAGE>

         3.5 REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall, during the
Term, reimburse Employee for all reasonable documented business expenses
actually and necessarily incurred by Employee in the course of, and in
connection with, his employment by the Company pursuant to this Agreement.
Employee shall keep detailed and accurate records of expenses incurred in
connection with his employment by the Company, and reimbursement therefor shall
be made in accordance with policies and procedures established by the Company's
management from time to time.

4. TERMINATION. Anything in this Agreement to the contrary notwithstanding:

         4.1 GOOD CAUSE. Employee's employment may be terminated by the Company
for Good Cause (as defined below) effective upon delivery of written notice to
Employee given at any time. "GOOD CAUSE" shall exist if:

                  (a) Employee is convicted of a felony, or a misdemeanor
         constituting moral turpitude;

                  (b) Employee in bad faith commits any act (including, but not
         limited to, any act that would constitute fraud, misappropriation,
         dishonesty, or embezzlement) or in bad faith omits to take any action
         to the material detriment of the Company or any of its affiliates;

                  (c) Employee intentionally commits during the course of his
         employment any act of material misconduct (including, but not limited
         to, sexual harassment, racial vilification, or unlawful
         discrimination);

                  (d) Employee fails or refuses to perform duties assigned to
         him by the Company and fails to correct such breach within five days
         after notice is given to Employee by the Company of such breach;

                  (e) Employee becomes physically or mentally incapacitated or
         disabled or otherwise unable fully to discharge his duties hereunder
         for a period of more than 30 consecutive days or more than 45 days
         within any two-month period; (f) In the opinion of a medical doctor
         retained by the Company, after a physical examination and reasonable
         diagnostic procedures, Employee is found to be addicted to any drug,
         including alcohol;

                  (g) Employee breaches any term of this Agreement and fails to
         correct such breach within five days after notice is given to Employee
         by the Company of such breach; or

                  (h) Employee resigns in anticipation of discharge for any
         reason mentioned in SECTION 4.1(a) through SECTION 4.1(g), or the
         Company accepts Employee's resignation in lieu of a formal discharge
         for any reason mentioned in SECTION 4.1(a) through SECTION 4.1(g).

                                       3
<PAGE>

         4.2 TERMINATION FOR GOOD CAUSE, UPON DEATH OR BY VOLUNTARY RESIGNATION.
If Employee is terminated for Good Cause, dies during the Term or resigns other
than as described in SECTION 4.1(h), Employee's employment shall terminate on
such date, whereupon Employee (or in the case of Employee's death, Employee's
estate) shall be entitled to receive Employee's Base Salary through the date of
termination, plus any other accrued but unpaid benefits or compensation due
pursuant to this Agreement. In addition, if termination of this Agreement occurs
due to Employee's death, Employee's estate shall also be entitled to receive any
earned and unpaid Bonus, pro rated to the date of Employee's death and payable
at such time as the Bonus would otherwise have been paid if Employee's death had
not occurred.

         4.3 EARLY TERMINATION. The Company may, in its sole and absolute
discretion, terminate Employee's employment without Good Cause at any time, and
Employee may terminate Employee's employment within 30 days after the
implementation by the Company of any material reduction in Employee's level of
executive responsibilities (an "EARLY TERMINATION"), by delivery of written
notice to the other party. If an Early Termination occurs, then the Company
shall pay to Employee upon the effective date of the Early Termination (the
"EARLY TERMINATION DATE") Employee's Base Salary accrued up to such Early
Termination Date, plus any other accrued but unpaid benefits or compensation due
pursuant to this Agreement. In addition, for the period commencing on the Early
Termination Date and ending on the date the Term otherwise would have expired
pursuant to SECTION 2, the Company shall pay to Employee as liquidated damages
his Base Salary for such period, at such intervals and otherwise in such manner
as Base Salary would have been paid if Employee had remained in the active
service of the Company.

         4.4 EFFECT OF TERMINATION. Employee agrees that the payments
contemplated by this SECTION 4 shall constitute the exclusive and sole remedy of
Employee for any termination of this Agreement, and Employee covenants not to
assert or pursue any other remedies, at law or in equity, with respect to any
termination of this Agreement.

5. PROPRIETARY INFORMATION AND INVENTIONS.

         5.1 EMPLOYEE ACKNOWLEDGMENTS. Employee recognizes that the Company is
engaged in a continuous program of research, development, design and production
respecting its business, present and future, and understands that as part of his
employment by the Company or any of its subsidiaries or affiliates, he is, or
may be expected, to make new contributions and inventions of value to the
Company or any of its subsidiaries or affiliates. Employee understands that his
employment by the Company or any of its subsidiaries or affiliates creates in
him a duty of trust and confidentiality to the Company or any of its
subsidiaries or affiliates with respect to any information (i) related,
applicable or useful to the business of the Company or any of its subsidiaries
or affiliates, including the Company's or any of its subsidiaries' or
affiliates' anticipated research and development; (ii) resulting from tasks
assigned to Employee by the Company or any of its subsidiaries or affiliates;
(iii) resulting from the use of equipment, supplies or facilities owned, leased
or contracted for by the Company or any of its subsidiaries or affiliates; or
(iv) related, applicable or useful to the business of any client or customer of
(A) the Company or (B) any of the Company's subsidiaries or affiliates, which
may be made known to him by the Company or any of the Company's subsidiaries or
affiliates, or by any client or customer of (A) the Company or (B) any of the
Company's subsidiaries or affiliates, or learned by him during the Term.

                                       4
<PAGE>

         5.2 ASSIGNMENT OF PROPRIETARY INFORMATION AND INVENTIONS TO THE
COMPANY. Employee agrees that all Proprietary Information (as defined on EXHIBIT
B hereto) and Inventions (as defined on EXHIBIT B hereto) shall be the sole
property of the Company and its assigns, and the Company and its assigns shall
be the sole owner of all patents, trademarks, service marks, copyrights and
other rights (collectively referred to herein as "RIGHTS") pertaining to
Proprietary Information and Inventions in any part of the world. Employee hereby
assigns to the Company any rights he may have or acquire in Proprietary
Information or Inventions or Rights pertaining to Proprietary Information or
Inventions or Rights. Employee further agrees as to all Proprietary Information
or Inventions to assist the Company or any person designated by it in every
proper way to obtain and from time to time enforce Rights relating to said
Proprietary Information or Inventions in any and all countries. Employee shall
execute all documents for use in applying for, obtaining and enforcing such
Rights on such Proprietary Information or Inventions as the Company may desire,
together with any assignments thereof to the Company or persons designated by
it. Employee's obligation to assist the Company or any person designated by it
in obtaining and enforcing Rights relating to Proprietary Information or
Inventions shall continue beyond the date of the termination of this Agreement
(the "TERMINATION DATE"), but the Company shall compensate Employee at a
reasonable rate after the Termination Date for time actually spent by Employee
upon the Company's request for such assistance. In the event the Company is
unable, after reasonable effort, to secure Employee's signature on any document
or documents needed to apply for or to enforce any Right relating to Proprietary
Information or to an Invention, whether because of Employee's physical or mental
incapacity or for any other reason whatsoever, Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as his agents and attorneys-in-fact to act on his behalf and in his stead in the
execution and filing of any such application and in furthering the application
for and enforcement of Rights with the same legal force and effect as if such
acts were performed by Employee. Employee hereby acknowledges that all original
works of authorship which are made by Employee (solely or jointly with others)
within the scope of his employment and which are protectable by copyright are
"works for hire" as that term is defined in the United States Copyright Act (17
USCA Section 101).

         5.3 DISCLOSURE OF DISCOVERIES, ETC. TO THE COMPANY. Employee will
promptly and from time to time disclose in writing to the Company, and the
Company hereby agrees to receive such disclosures in confidence, all
discoveries, developments, designs, improvements, inventions, formulas, software
programs, processes, techniques, know-how, negative know-how and data, whether
or not patentable or registrable under patent, copyright or similar statutes, or
reduced to practice, made, conceived or learned by Employee, either alone or
jointly with others during the Term, for the purpose of permitting the Company
to determine whether they constitute Inventions. In order to facilitate the
complete and accurate disclosures described above, Employee agrees to maintain
complete written records of all Inventions, and of all work, study and
investigation done by him during the Term, which records shall be the property
of the Company.

                                       5
<PAGE>

         5.4 EMPLOYEE ACTS. Employee shall not knowingly do anything to imperil
the validity of any such patent, design or protection or any application
therefor and shall, at the reasonable cost of the Company, render all possible
assistance to the Company both in obtaining and maintaining such patent, design
or other protection, and Employee shall not, either during the Term or
thereafter, exploit or make public or disclose any such Invention or give any
information in respect thereof except to the Company or as it may direct.

         5.5 CONFIDENTIALITY. Employee will keep all Proprietary Information,
Inventions and Rights in the strictest confidence and trust, and Employee will
not disclose, use or induce or assist in the use or disclosure of any
Proprietary Information, Inventions or Rights pertaining to Proprietary
Information, or anything related thereto except as (i) may be necessary in the
ordinary course of performing his duties as an employee of the Company, (ii) may
be required by law, (iii) authorized by the Board, (iv) such Proprietary
Information, Inventions or Rights are or become available to the general public
though no fault of Employee or are disclosed to Employee without restriction on
disclosure by a third party who had the lawful right to make such disclosure.
Employee recognizes that the Company has received and in the future will receive
from third parties their confidential or proprietary information subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. Employee agrees that he owes
the Company and such third parties a duty to hold all such confidential or
proprietary information in the strictest confidence, and he shall not disclose,
use or induce or assist in the use or disclosure of any such confidential or
proprietary information without the prior express written consent of the
Company, except as may be necessary in the ordinary course of performing his
duties as an employee of the Company consistent with the Company's agreement
with such third party or as required by law. The covenants and agreements
contained in this SECTION 5.5 shall survive the expiration or other termination
of this Agreement.

         5.6 NONCOMPETITION; NONSOLICITATION. Employee expressly promises and
agrees that he will fully comply with the covenants and provisions contained in
SECTION 7 of the Stock Purchase Agreement, which provisions are incorporated
herein by reference, as if such provisions were set forth in full herein.

         5.7 DELIVERY OF MATERIALS TO THE COMPANY. Upon the termination of the
Term, Employee shall deliver to the Company all devices, records, sketches,
reports, proposals, lists, correspondence, equipment, documents, photographs,
photostats, negatives, undeveloped film, notes, drawings, specifications, tape
recordings or other electronic recordings, programs, data and other materials or
property of any nature belonging to the Company or pertaining to Employee's work
with the Company. Employee shall not take with him any of the foregoing or any
reproduction of any of the foregoing.

         5.8 PRIOR INVENTIONS OF EMPLOYEE. Listed in ITEM 1 of EXHIBIT C
attached hereto are all inventions or improvements relevant to the subject
matter of Employee's employment which have been made, conceived of or first
reduced to practice by Employee alone or jointly with others prior to the Term
and which Employee desires to remove from the operation of this Agreement.
Employee represents and warrants that such list is complete. If there is no such
list in ITEM 1 of EXHIBIT C, Employee represents and warrants that he has made
no such inventions or improvements prior to the Term.

                                       6
<PAGE>

         5.9 PRIOR CONFIDENTIALITY AGREEMENTS. Employee represents and warrants
that his performance of all of the terms and provisions of this Agreement as an
employee of the Company does not and will not breach any agreement to keep in
confidence proprietary information acquired by Employee in confidence or in
trust prior to his employment by the Company. Employee also represents and
warrants that he has not entered into, and covenants that he will not enter
into, any agreement, either written or oral, in conflict herewith.

         5.10 MATERIALS OR DOCUMENTS OF A FORMER EMPLOYER. Employee represents
and warrants to and covenants with the Company that he has not brought and will
not bring with him to the Company, or use in his employment with the Company,
any materials or documents of a former employer (which term, for purposes of
this SECTION 5, shall also include persons, firms, corporations and other
entities for which Employee has acted as an independent contractor or
consultant), other than materials and documents of eflex relating to its
business and acquired by the Company under the Stock Purchase Agreement, which
are not generally available to the public, unless he has obtained express
written authorization from any such former employer for their possession and
use. The materials or documents of a former employer (other than eflex) which
are not generally available to the public but which he will bring to the Company
for use in his employment are identified in ITEM 2 of EXHIBIT C attached hereto.
As to each such item, Employee represents and warrants that he has obtained
prior to the effective date of his employment hereunder express written
authorization for their possession and use in his service to the Company.
Employee also understands that, in his service to the Company, he is not to
breach any obligation of confidentiality that he has to former employers, and he
shall fulfill all such obligations during his employment hereunder.

         5.11 SERVICES PROVIDED AS A CONSULTANT; DELIVERY OF THE TERMINATION
CERTIFICATE BY EMPLOYEE. The terms and conditions of this SECTION 5 shall apply
to any period, if any, during which Employee performs services for the Company
as a consultant or independent contractor, as well as any time during which he
is employed directly by the Company. Upon the termination of the Term, Employee
agrees to sign and deliver the "Termination Certificate" attached hereto as
EXHIBIT D. Employee's failure to sign such Termination Certificate, however,
shall not affect his obligations under this Agreement, nor shall it affect the
Company's obligations, if any, to Employee under this Agreement.

6. REMEDIES; LIQUIDATED DAMAGES PAID BY EMPLOYEE.

         If Employee commits a breach, or threatens to commit a breach, of any
of the provisions of SECTION 5 hereof, the Company shall have, among other
rights, (i) the right to have such provisions specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company, and (ii)
the right to require Employee to account for and pay over to the Company all
compensation or profits derived or received by Employee as a result of any
breach of any of the provisions of such SECTION 5, and Employee hereby agrees to
account for and pay over such compensation or profits to the Company. The
invalidity or unenforceability of all or any portion of SECTION 5 shall not
affect the validity or enforceability of any other provision or portion hereof
or thereof, and if any provision or portion of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable or
otherwise invalid as written, then each such provision or portion shall be
enforced and validated to the full extent permitted by law.

                                       7
<PAGE>

7. SUCCESSORS AND ASSIGNS.

         This Agreement shall be binding upon and inure to the benefit of the
Company and its respective successors and assigns and shall be binding upon and
inure to the benefit of Employee and his executors and administrators. This
Agreement, and Employee's rights and obligations hereunder, may not be assigned
by Employee. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company to assume expressly and to agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

8. WAIVER OF BREACH.

         The waiver by the Company or Employee of a breach of any provision of
this Agreement by the other party shall not be construed as a waiver of any
subsequent breach of the same provision or of any other provision of this
Agreement.

9. NOTICES.

         All notices, requests, demands and other communications submitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or by express service or if mailed by first-class registered
mail, return receipt requested, postage and registry fees prepaid, and addressed
as follows:

          (a)      If to the Company:   Telenetics Corporation
                                        25111 Arctic Ocean
                                        Lake Forest, California 92630
                                        Attn: President

                   with a copy to:      Larry A. Cerutti, Esq.
                                        Rutan & Tucker, LLP
                                        611 Anton Blvd., 14th Floor
                                        Costa Mesa, California 92626

          (b)      If to Employee:      John D. McLean
                                        400 Thornwyck Trail
                                        Roswell, Georgia 30076

or at such other address as either party shall furnish to the other pursuant to
this provision.

10. MISCELLANEOUS.

         10.1 ACKNOWLEDGMENTS. The parties hereto agree and acknowledge that the
damages that would be suffered by a nonbreaching party as a result of any breach
of the provisions of SECTION 5 may not be calculable and that an award of a
monetary judgment for such a breach would be an inadequate remedy. Consequently,
a nonbreaching party shall have the right, in addition to any other rights it
may have, to obtain, in any court of competent jurisdiction, injunctive relief
to restrain any breach or threatened breach of any provision of SECTION 5 or


                                       8
<PAGE>

otherwise to specifically enforce any of the provisions hereof. This remedy is
in addition to damages directly or indirectly suffered by a nonbreaching party
and reasonable attorneys' fees. The parties hereto agree that the restraint,
duration and area for which the covenants in SECTION 5 are to be effective are
reasonable in light of the business and activities of the parties hereto. In the
event that any court finally determines that the time period or the geographic
scope of any such covenant is unreasonable or excessive and any covenant is to
that extent made unenforceable, the parties agree that the restrictions in
SECTION 5 shall remain in full force and effect for the greatest time period and
within the greatest geographic area that would not render it unenforceable. The
parties intend that each of the covenants in SECTION 5 shall be deemed to be a
separate covenant.

         10.2 INDEPENDENT COVENANT. All of the covenants in SECTIONS 5 shall be
construed as an agreement independent of any other provision of this Agreement,
and the existence of any claim or cause of action of a nonbreaching party
against a breaching party, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by any party of such
covenants.

11. MISCELLANEOUS.

         (a) This Agreement, together with the exhibits and schedules hereto,
incorporate the entire understanding of the parties with respect to the subject
matter hereof and supersede all previous oral and written and all
contemporaneous oral negotiations, commitments, writings, and understandings. In
addition, the parties expressly agree that this Agreement supersedes and
replaces the Employment and Noncompetition Agreement dated as of June 1, 1999
between Employee and eflex, as successor to Residential Utility Meter Service's,
Inc., a Florida corporation (the "EFLEX EMPLOYMENT AGREEMENT"), and that the
eflex Employment Agreement is of no further force or effect.

         (b) This Agreement shall be governed by, and construed in accordance
with, the laws of California without regard to its conflict of laws statutes, as
if this Agreement were executed and performed entirely within California. The
parties hereby consent, in any dispute, action, litigation or other proceeding
concerning this Agreement, to the jurisdiction of the state or federal courts
having jurisdiction over and located in Orange County, California.

         (c) The invalidity of any section, provision or portion of this
Agreement shall not affect the validity of any other section, provision or
portion of this Agreement, and each such section, provision or portion shall be
enforced to the full extent permitted by law. This Agreement may not be modified
or amended, or any term or provision hereof waived or discharged, except by a
written instrument signed by the party against which such amendment,
modification, waiver or discharge is sought to be enforced. The headings of this
Agreement are for the purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.


                                       9
<PAGE>


         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.

      THE COMPANY:                    TELENETICS CORPORATION,
                                      a California corporation


                                      By: /s/ Michael A. Armani
                                         ------------------------------------
                                         Michael A. Armani, President


      EMPLOYEE:                           /s/ John D. McLean
                                         ------------------------------------
                                         John D. McLean


                                       10
<PAGE>



                                    EXHIBIT A
                                    ---------


                         Copy of Stock Option Agreement


                                (attached hereto)


                                       11
<PAGE>


                                    EXHIBIT B
                                    ---------



"PROPRIETARY INFORMATION" DEFINED:
- ---------------------------------

         For purposes of this Agreement, "PROPRIETARY INFORMATION" shall mean
information that has been created, discovered, developed or otherwise become
known to Employee or the Company or in which property rights have been assigned
or otherwise conveyed to Employee or the Company, which Employee may have
learned or discovered, or may make, learn of or discover while in employment of
the Company, whether before the commencement of this Agreement or during the
term hereof, which information has material economic value or potential material
economic value to the business in which the Company is or will be engaged.
Proprietary Information shall include, but not be limited to, trade secrets,
processes, formulas, data, know-how, negative know-how, improvements,
discoveries, developments, designs, ideas, Inventions, techniques, all technical
data, customer and supplier lists, and any modifications or enhancements
thereto, programs and information (whether or not in writing) which have actual
or potential economic value to the Company, together with any copyright or
patent therein. For purposes of this Agreement, Proprietary Information shall
not include information that has become public knowledge through legal means
without fault by Employee, or is already public knowledge prior to disclosure of
the same by the Company and/or its subsidiaries or affiliates to Employee.

"INVENTIONS" DEFINED:
- --------------------

         For purposes of this Agreement, "Inventions" shall mean all
discoveries, developments, designs, improvements, inventions, formulas, software
programs, processes, techniques, know-how, negative know-how and data, whether
or not patentable or registrable under patent, copyright or similar statutes,
that are related to or useful in the business or future business of the Company
or result from use of premises or other property owned, leased or contracted for
by the Company. Without limiting the generality of the foregoing, Inventions
shall also include anything that derives actual or potential economic value from
not being generally known to the public or to other persons who can obtain
economic value from its disclosure or use.


                                       12
<PAGE>


                                    EXHIBIT C
                                    ---------



ITEM 1:

         The following is a complete list of all inventions or improvements
relevant to the subject matter of Employee's employment by the Company that have
been made or conceived of or first reduced to practice by Employee alone or
jointly with others prior to his employment by the Company:



                                      None.







ITEM 2:

         The following is a complete list of all materials and documents of a
former employer that are not generally available to the public that Employee
will bring or have brought to the Company or have used or will use in his
employment by the Company:



                                      None.


                                       13
<PAGE>


                                    EXHIBIT D
                                    ---------


                            TERMINATION CERTIFICATION



I certify as follows:

         1. When I signed the attached Employment Agreement (the "Agreement"), I
read and understood the terms of the Agreement.

         2. I hereby acknowledge that I have fully complied with the terms of
the Agreement, including, without limitation, the disclosure and assignment to
Telenetics Corporation (or its successors or assigns) (the "Company") of any
Inventions covered by that Agreement, and the return of any documents and other
materials of any nature relating to my employment with the Company.

         3. I hereby acknowledge and agree to comply with my continuing
obligations under this Agreement, including, without limitation, my obligation
not to use for personal benefit or to disclose to others any Proprietary
Information of the Company.

         4. I understand and acknowledge that should I fail to comply with my
obligations under the Agreement, the Company shall have the right to injunctive
relief against me, including, without limitation, an injunction prohibiting me
from disclosing Proprietary Information to a third party.

Dated as of: ___________________


                                            ------------------------------
                                            Signature of Employee


                                            ------------------------------
                                            Print Name



                                       14


                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of this
7th day of January, 2000 (the "EFFECTIVE DATE"), by and between TELENETICS
CORPORATION, a California corporation (the "COMPANY"), and T. KEITH ODOM
("EMPLOYEE").

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

         A. The Company, Employee and certain other individuals have entered
into a Stock Purchase Agreement of even date herewith (the "STOCK PURCHASE
AGREEMENT") pursuant to which the Company is purchasing all of the outstanding
capital stock of eflex Wireless, Inc., a Delaware corporation ("EFLEX").

         B. The parties acknowledge that Employee is currently employed by eflex
and has abilities and expertise that are unique and valuable to the Company and,
in connection with the Stock Purchase Agreement, the Company desires to retain
the services of Employee, and Employee wishes to accept such employment.

         C. The Company and Employee have determined that such engagement of
Employee is mutually beneficial and should be subject to a mutually acceptable
written agreement, and that Employee's employment by eflex shall be terminated
concurrently with the effectiveness of this Agreement.

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

         NOW, THEREFORE, in consideration of the foregoing premises, the
following mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties hereto agree, intending
to be legally bound, as follows:

1.       EMPLOYMENT.

         Employee agrees to serve the Company in such capacities as may be
requested from time to time by the Board of Directors of the Company (the
"BOARD"). Employee's office will be located in the Tampa, Florida area and/or
such other locations as the Company may in its sole and absolute discretion
determine. During the term of this Agreement, Employee will devote his full
time, care and exclusive attention to, and use his best efforts to advance, the
business and welfare of eflex and the Company. During the term of this
Agreement, Employee will not engage in any other business activity or
occupation, whether or not such business activity or occupation is pursued for
gain, profit or other pecuniary advantage; PROVIDED, HOWEVER, that nothing
contained in this Agreement shall be deemed to prevent or limit the right of
Employee to invest any of his surplus funds in any partnership, corporation or
other entity or venture not directly competitive with eflex or the Company.
Employee represents and warrants to the Company that he is not a party to or


                                       1
<PAGE>

bound by any presently effective agreement or contract, whether of employment or
otherwise, with any third person or entity that would in any way restrict or
prohibit Employee from undertaking or performing his obligations on the terms
and conditions set forth in this Agreement. Employee covenants with the Company
that he shall not, during the Term, enter into any such agreement, contract or
understanding described in this SECTION 1 so as to cause the Company, eflex or
any of the Company's other subsidiaries or affiliated companies, to be liable in
connection therewith.

2.       EMPLOYMENT TERM.

         The Company agrees to employ Employee, and Employee agrees to serve, on
the terms and conditions of this Agreement, for a period commencing on the
Effective Date and continuing for a period of three years unless terminated
earlier pursuant to the terms of this Agreement (the "TERM").

3.       COMPENSATION AND BENEFITS.

         The Company shall pay to Employee for his services, and Employee agrees
to accept as his full compensation under this Agreement, the following:

         3.1 BASE SALARY. The Company shall pay Employee a base salary of
$7,083.00 per month (the "BASE SALARY"). The Base Salary shall be earned and
payable at such intervals and otherwise in such manner as is consistent with the
normal payroll practices of the Company for remuneration of its employees, less
such deductions or amounts to be withheld as shall be required by applicable
law.

         3.2 INCENTIVE COMPENSATION. In addition to the Base Salary, Employee
shall be eligible to receive additional compensation ("BONUS") of up to
$15,000.00 per year, which shall be earned and payable, if at all, at the times
and in the amounts determined by the Board, in its sole discretion, based upon
Employee's achievement of mutually agreeable goals and objectives set by the
Company and Employee at the beginning of each year of the Term.

         3.3 OPTIONS. As additional compensation, concurrently with the
execution of this Agreement, Employee shall receive an option to purchase shares
of Common Stock of the Company, a copy of which option shall be attached hereto
as EXHIBIT A and incorporated herein by reference.

         3.4 SIGNING BONUS. As additional compensation, Employee shall receive a
signing bonus of $10,000, which amount shall be paid to Employee within 120 days
following the Effective Date.

         3.5 OTHER BENEFITS. During the Term, except as may be otherwise
provided herein, Employee shall be eligible to participate in all group
insurance plans and shall be entitled to other employee benefits, including
vacation and holiday pay, that the Company, in its sole and absolute discretion,
may provide from time to time to other employees of the Company with similar
duties and responsibilities.

                                       2
<PAGE>

         3.6 REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall, during the
Term, reimburse Employee for all reasonable documented business expenses
actually and necessarily incurred by Employee in the course of, and in
connection with, his employment by the Company pursuant to this Agreement;
PROVIDED, HOWEVER, that such expenses must be approved in advance by the
Company. Employee shall keep detailed and accurate records of expenses incurred
in connection with his employment by the Company, and reimbursement therefor
shall be made in accordance with policies and procedures established by the
Company's management from time to time.

4. TERMINATION. Anything in this Agreement to the contrary notwithstanding:

         4.1 GOOD CAUSE. Employee's employment may be terminated by the Company
for Good Cause (as defined below) effective upon delivery of written notice to
Employee given at any time. "GOOD CAUSE" shall exist if:

                  (a) Employee is convicted of a felony, or a misdemeanor
         constituting moral turpitude;

                  (b) Employee in bad faith commits any act (including, but not
         limited to, any act that would constitute fraud, misappropriation,
         dishonesty, or embezzlement) or in bad faith omits to take any action
         to the material detriment of the Company or any of its affiliates;

                  (c) Employee intentionally commits during the course of his
         employment any act of material misconduct (including, but not limited
         to, sexual harassment, racial vilification, or unlawful
         discrimination);

                  (d) Employee fails or refuses to perform duties assigned to
         him by the Company and fails to correct such breach within five days
         after notice is given to Employee by the Company of such breach;

                  (e) Employee becomes physically or mentally incapacitated or
         disabled or otherwise unable fully to discharge his duties hereunder
         for a period of more than 30 consecutive days or more than 45 days
         within any two-month period;

                  (f) In the opinion of a medical doctor retained by the
         Company, after a physical examination and reasonable diagnostic
         procedures, Employee is found to be addicted to any drug, including
         alcohol;

                  (g) Employee breaches any term of this Agreement and fails to
         correct such breach within five days after notice is given to Employee
         by the Company of such breach; or

                  (h) Employee resigns in anticipation of discharge for any
         reason mentioned in SECTION 4.1(a) through SECTION 4.1(g), or the
         Company accepts Employee's resignation in lieu of a formal discharge
         for any reason mentioned in SECTION 4.1(a) through SECTION 4.1(g).

                                       3
<PAGE>

         4.2 TERMINATION FOR GOOD CAUSE, UPON DEATH OR BY VOLUNTARY RESIGNATION.
If Employee is terminated for Good Cause, dies during the Term or resigns other
than as described in SECTION 4.1(h), Employee's employment shall terminate on
such date, whereupon Employee (or in the case of Employee's death, Employee's
estate) shall be entitled to receive Employee's Base Salary through the date of
termination, plus any other accrued but unpaid benefits or compensation due
pursuant to this Agreement.

         4.3 EARLY TERMINATION. The Company may, in its sole and absolute
discretion, terminate Employee's employment without Good Cause at any time (an
"EARLY TERMINATION"). If the Company elects an Early Termination of Employee,
the Company shall pay to Employee upon the effective date of the Early
Termination (the "EARLY TERMINATION DATE") Employee's Base Salary accrued up to
such Early Termination Date, plus any other accrued but unpaid benefits or
compensation due pursuant to this Agreement. In addition, for the period
commencing on the Early Termination Date and ending on the date the Term
otherwise would have expired pursuant to SECTION 2, the Company shall pay to
Employee as liquidated damages his Base Salary for such period, at such
intervals and otherwise in such manner as Base Salary would have been paid if
Employee had remained in the active service of the Company.

         4.4 EFFECT OF TERMINATION. Employee agrees that the payments
contemplated by this SECTION 4 shall constitute the exclusive and sole remedy of
Employee for any termination of this Agreement, and Employee covenants not to
assert or pursue any other remedies, at law or in equity, with respect to any
termination of this Agreement.

5. PROPRIETARY INFORMATION AND INVENTIONS.

         5.1 EMPLOYEE ACKNOWLEDGMENTS. Employee recognizes that the Company is
engaged in a continuous program of research, development, design and production
respecting its business, present and future, and understands that as part of his
employment by the Company or any of its subsidiaries or affiliates, he is, or
may be expected, to make new contributions and inventions of value to the
Company or any of its subsidiaries or affiliates. Employee understands that his
employment by the Company or any of its subsidiaries or affiliates creates in
him a duty of trust and confidentiality to the Company or any of its
subsidiaries or affiliates with respect to any information (i) related,
applicable or useful to the business of the Company or any of its subsidiaries
or affiliates, including the Company's or any of its subsidiaries' or
affiliates' anticipated research and development; (ii) resulting from tasks
assigned to Employee by the Company or any of its subsidiaries or affiliates;
(iii) resulting from the use of equipment, supplies or facilities owned, leased
or contracted for by the Company or any of its subsidiaries or affiliates; or
(iv) related, applicable or useful to the business of any client or customer of
(A) the Company or (B) any of the Company's subsidiaries or affiliates, which
may be made known to him by the Company or any of the Company's subsidiaries or
affiliates, or by any client or customer of (A) the Company or (B) any of the
Company's subsidiaries or affiliates, or learned by him during the Term.

         5.2 ASSIGNMENT OF PROPRIETARY INFORMATION AND INVENTIONS TO THE
COMPANY. Employee agrees that all Proprietary Information (as defined on EXHIBIT
B hereto) and Inventions (as defined on EXHIBIT B hereto) shall be the sole
property of the Company and its assigns, and the Company and its assigns shall
be the sole owner of all patents, trademarks, service marks, copyrights and


                                       4
<PAGE>

other rights (collectively referred to herein as "RIGHTS") pertaining to
Proprietary Information and Inventions in any part of the world. Employee hereby
assigns to the Company any rights he may have or acquire in Proprietary
Information or Inventions or Rights pertaining to Proprietary Information or
Inventions or Rights. Employee further agrees as to all Proprietary Information
or Inventions to assist the Company or any person designated by it in every
proper way to obtain and from time to time enforce Rights relating to said
Proprietary Information or Inventions in any and all countries. Employee shall
execute all documents for use in applying for, obtaining and enforcing such
Rights on such Proprietary Information or Inventions as the Company may desire,
together with any assignments thereof to the Company or persons designated by
it. Employee's obligation to assist the Company or any person designated by it
in obtaining and enforcing Rights relating to Proprietary Information or
Inventions shall continue beyond the date of the termination of this Agreement
(the "TERMINATION DATE"), but the Company shall compensate Employee at a
reasonable rate after the Termination Date for time actually spent by Employee
upon the Company's request for such assistance. In the event the Company is
unable, after reasonable effort, to secure Employee's signature on any document
or documents needed to apply for or to enforce any Right relating to Proprietary
Information or to an Invention, whether because of Employee's physical or mental
incapacity or for any other reason whatsoever, Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as his agents and attorneys-in-fact to act on his behalf and in his stead in the
execution and filing of any such application and in furthering the application
for and enforcement of Rights with the same legal force and effect as if such
acts were performed by Employee. Employee hereby acknowledges that all original
works of authorship which are made by Employee (solely or jointly with others)
within the scope of his employment and which are protectable by copyright are
"works for hire" as that term is defined in the United States Copyright Act (17
USCA Section 101).

         5.3 DISCLOSURE OF DISCOVERIES, ETC. TO THE COMPANY. Employee will
promptly and from time to time disclose in writing to the Company, and the
Company hereby agrees to receive such disclosures in confidence, all
discoveries, developments, designs, improvements, inventions, formulas, software
programs, processes, techniques, know-how, negative know-how and data, whether
or not patentable or registrable under patent, copyright or similar statutes, or
reduced to practice, made, conceived or learned by Employee, either alone or
jointly with others during the Term, for the purpose of permitting the Company
to determine whether they constitute Inventions. In order to facilitate the
complete and accurate disclosures described above, Employee agrees to maintain
complete written records of all Inventions, and of all work, study and
investigation done by him during the Term, which records shall be the property
of the Company.

         5.4 EMPLOYEE ACTS. Employee shall not knowingly do anything to imperil
the validity of any such patent, design or protection or any application
therefor and shall, at the reasonable cost of the Company, render all possible
assistance to the Company both in obtaining and maintaining such patent, design
or other protection, and Employee shall not, either during the Term or
thereafter, exploit or make public or disclose any such Invention or give any
information in respect thereof except to the Company or as it may direct.

                                       5
<PAGE>

         5.5 CONFIDENTIALITY. Employee will keep all Proprietary Information,
Inventions and Rights in the strictest confidence and trust, and Employee will
not disclose, use or induce or assist in the use or disclosure of any
Proprietary Information, Inventions or Rights pertaining to Proprietary
Information, or anything related thereto except as (i) may be necessary in the
ordinary course of performing his duties as an employee of the Company, (ii) may
be required by law, (iii) authorized by the Board, (iv) such Proprietary
Information, Inventions or Rights are or become available to the general public
though no fault of Employee or are disclosed to Employee without restriction on
disclosure by a third party who had the lawful right to make such disclosure.
Employee recognizes that the Company has received and in the future will receive
from third parties their confidential or proprietary information subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. Employee agrees that he owes
the Company and such third parties a duty to hold all such confidential or
proprietary information in the strictest confidence, and he shall not disclose,
use or induce or assist in the use or disclosure of any such confidential or
proprietary information without the prior express written consent of the
Company, except as may be necessary in the ordinary course of performing his
duties as an employee of the Company consistent with the Company's agreement
with such third party or as required by law. The covenants and agreements
contained in this SECTION 5.5 shall survive the expiration or other termination
of this Agreement.

         5.6 NONCOMPETITION; NONSOLICITATION. Employee expressly promises and
agrees that he will fully comply with the covenants and provisions contained in
EXHIBIT E attached hereto and incorporated herein by reference, as if such
provisions were set forth in full herein.

         5.7 DELIVERY OF MATERIALS TO THE COMPANY. Upon the termination of the
Term, Employee shall deliver to the Company all devices, records, sketches,
reports, proposals, lists, correspondence, equipment, documents, photographs,
photostats, negatives, undeveloped film, notes, drawings, specifications, tape
recordings or other electronic recordings, programs, data and other materials or
property of any nature belonging to the Company or pertaining to Employee's work
with the Company. Employee shall not take with him any of the foregoing or any
reproduction of any of the foregoing.

         5.8 PRIOR INVENTIONS OF EMPLOYEE. Listed in ITEM 1 of EXHIBIT C
attached hereto are all inventions or improvements relevant to the subject
matter of Employee's employment which have been made, conceived of or first
reduced to practice by Employee alone or jointly with others prior to the Term
and which Employee desires to remove from the operation of this Agreement.
Employee represents and warrants that such list is complete. If there is no such
list in ITEM 1 of EXHIBIT C, Employee represents and warrants that he has made
no such inventions or improvements prior to the Term.

         5.9 PRIOR CONFIDENTIALITY AGREEMENTS. Employee represents and warrants
that his performance of all of the terms and provisions of this Agreement as an
employee of the Company does not and will not breach any agreement to keep in
confidence proprietary information acquired by Employee in confidence or in
trust prior to his employment by the Company. Employee also represents and
warrants that he has not entered into, and covenants that he will not enter
into, any agreement, either written or oral, in conflict herewith.

                                       6
<PAGE>

         5.10 MATERIALS OR DOCUMENTS OF A FORMER EMPLOYER. Employee represents
and warrants to and covenants with the Company that he has not brought and will
not bring with him to the Company, or use in his employment with the Company,
any materials or documents of a former employer (which term, for purposes of
this SECTION 5, shall also include persons, firms, corporations and other
entities for which Employee has acted as an independent contractor or
consultant), other than materials and documents of eflex relating to its
business and acquired by the Company under the Stock Purchase Agreement, which
are not generally available to the public, unless he has obtained express
written authorization from any such former employer for their possession and
use. The materials or documents of a former employer (other than eflex) which
are not generally available to the public but which he will bring to the Company
for use in his employment are identified in ITEM 2 of EXHIBIT C attached hereto.
As to each such item, Employee represents and warrants that he has obtained
prior to the effective date of his employment hereunder express written
authorization for their possession and use in his service to the Company.
Employee also understands that, in his service to the Company, he is not to
breach any obligation of confidentiality that he has to former employers, and he
shall fulfill all such obligations during his employment hereunder.

         5.11 SERVICES PROVIDED AS A CONSULTANT; DELIVERY OF THE TERMINATION
CERTIFICATE BY EMPLOYEE. The terms and conditions of this SECTION 5 shall apply
to any period, if any, during which Employee performs services for the Company
as a consultant or independent contractor, as well as any time during which he
is employed directly by the Company. Upon the termination of the Term, Employee
agrees to sign and deliver the "Termination Certificate" attached hereto as
EXHIBIT D. Employee's failure to sign such Termination Certificate, however,
shall not affect his obligations under this Agreement, nor shall it affect the
Company's obligations, if any, to Employee under this Agreement.

6. REMEDIES; LIQUIDATED DAMAGES PAID BY EMPLOYEE.

         If Employee commits a breach, or threatens to commit a breach, of any
of the provisions of SECTION 5 hereof, the Company shall have, among other
rights, (i) the right to have such provisions specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company, and (ii)
the right to require Employee to account for and pay over to the Company all
compensation or profits derived or received by Employee as a result of any
breach of any of the provisions of such SECTION 5, and Employee hereby agrees to
account for and pay over such compensation or profits to the Company. The
invalidity or unenforceability of all or any portion of SECTION 5 shall not
affect the validity or enforceability of any other provision or portion hereof
or thereof, and if any provision or portion of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable or
otherwise invalid as written, then each such provision or portion shall be
enforced and validated to the full extent permitted by law.

7. SUCCESSORS AND ASSIGNS.

         This Agreement shall be binding upon and inure to the benefit of the
Company and its respective successors and assigns and shall be binding upon and
inure to the benefit of Employee and his executors and administrators. This
Agreement, and Employee's rights and obligations hereunder, may not be assigned
by Employee. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company to assume expressly and to agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

                                       7
<PAGE>

8. WAIVER OF BREACH.

         The waiver by the Company or Employee of a breach of any provision of
this Agreement by the other party shall not be construed as a waiver of any
subsequent breach of the same provision or of any other provision of this
Agreement.

9. NOTICES.

         All notices, requests, demands and other communications submitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or by express service or if mailed by first-class registered
mail, return receipt requested, postage and registry fees prepaid, and addressed
as follows:

               (a)      If to the Company:   Telenetics Corporation
                                             25111 Arctic Ocean
                                             Lake Forest, California 92630
                                             Attn: President

                        with a copy to:      Larry A. Cerutti, Esq.
                                             Rutan & Tucker, LLP
                                             611 Anton Blvd., 14th Floor
                                             Costa Mesa, California 92626

               (b)      If to Employee:      T. Keith Odom
                                             8831 Treasure Bayou
                                             Riverside, Florida 33569

or at such other address as either party shall furnish to the other pursuant to
this provision.

10. MISCELLANEOUS.

         10.1 ACKNOWLEDGMENTS. The parties hereto agree and acknowledge that the
damages that would be suffered by a nonbreaching party as a result of any breach
of the provisions of SECTION 5 may not be calculable and that an award of a
monetary judgment for such a breach would be an inadequate remedy. Consequently,
a nonbreaching party shall have the right, in addition to any other rights it
may have, to obtain, in any court of competent jurisdiction, injunctive relief
to restrain any breach or threatened breach of any provision of SECTION 5 or
otherwise to specifically enforce any of the provisions hereof. This remedy is
in addition to damages directly or indirectly suffered by a nonbreaching party
and reasonable attorneys' fees. The parties hereto agree that the restraint,
duration and area for which the covenants in SECTION 5 are to be effective are
reasonable in light of the business and activities of the parties hereto. In the
event that any court finally determines that the time period or the geographic
scope of any such covenant is unreasonable or excessive and any covenant is to


                                       8
<PAGE>

that extent made unenforceable, the parties agree that the restrictions in
SECTION 5 shall remain in full force and effect for the greatest time period and
within the greatest geographic area that would not render it unenforceable. The
parties intend that each of the covenants in SECTION 5 shall be deemed to be a
separate covenant.

         10.2 INDEPENDENT COVENANT. All of the covenants in SECTIONS 5 shall be
construed as an agreement independent of any other provision of this Agreement,
and the existence of any claim or cause of action of a nonbreaching party
against a breaching party, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by any party of such
covenants.

         10.3 OTHER MISCELLANEOUS.

                  (a) This Agreement, together with the Stock Purchase Agreement
and the exhibits and schedules hereto and thereto, incorporate the entire
understanding of the parties with respect to the subject matter hereof and
supersede all previous oral and written and all contemporaneous oral
negotiations, commitments, writings, and understandings. In addition, the
parties expressly agree that this Agreement supersedes and replaces any previous
employment arrangements with eflex, and that such previous employment
arrangements are of no further force or effect.

                  (b) This Agreement shall be governed by, and construed in
accordance with, the laws of California without regard to its conflict of laws
statutes, as if this Agreement were executed and performed entirely within
California. The parties hereby consent, in any dispute, action, litigation or
other proceeding concerning this Agreement, to the jurisdiction of the state or
federal courts having jurisdiction over and located in Orange County,
California.

                  (c) The invalidity of any section, provision or portion of
this Agreement shall not affect the validity of any other section, provision or
portion of this Agreement, and each such section, provision or portion shall be
enforced to the full extent permitted by law. This Agreement may not be modified
or amended, or any term or provision hereof waived or discharged, except by a
written instrument signed by the party against which such amendment,
modification, waiver or discharge is sought to be enforced. The headings of this
Agreement are for the purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.


                                       9
<PAGE>


         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.

      THE COMPANY:                   TELENETICS CORPORATION,
                                     a California corporation


                                     By: /s/ Michael A. Armani
                                        --------------------------------------
                                        Michael A. Armani, President


      EMPLOYEE:                         /s/ T. Keith Odom
                                        --------------------------------------
                                        T. Keith Odom


                                       10
<PAGE>


                                    EXHIBIT A
                                    ---------


                         Copy of Stock Option Agreement


                                (attached hereto)


<PAGE>


                                    EXHIBIT B
                                    ---------



"PROPRIETARY INFORMATION" DEFINED:
- ---------------------------------

         For purposes of this Agreement, "PROPRIETARY INFORMATION" shall mean
information that has been created, discovered, developed or otherwise become
known to Employee or the Company or in which property rights have been assigned
or otherwise conveyed to Employee or the Company, which Employee may have
learned or discovered, or may make, learn of or discover while in employment of
the Company, whether before the commencement of this Agreement or during the
term hereof, which information has material economic value or potential material
economic value to the business in which the Company is or will be engaged.
Proprietary Information shall include, but not be limited to, trade secrets,
processes, formulas, data, know-how, negative know-how, improvements,
discoveries, developments, designs, ideas, Inventions, techniques, all technical
data, customer and supplier lists, and any modifications or enhancements
thereto, programs and information (whether or not in writing) which have actual
or potential economic value to the Company, together with any copyright or
patent therein. For purposes of this Agreement, Proprietary Information shall
not include information that has become public knowledge through legal means
without fault by Employee, or is already public knowledge prior to disclosure of
the same by the Company and/or its subsidiaries or affiliates to Employee.

"INVENTIONS" DEFINED:
- --------------------

         For purposes of this Agreement, "INVENTIONS" shall mean all
discoveries, developments, designs, improvements, inventions, formulas, software
programs, processes, techniques, know-how, negative know-how and data, whether
or not patentable or registrable under patent, copyright or similar statutes,
that are related to or useful in the business or future business of the Company
or result from use of premises or other property owned, leased or contracted for
by the Company. Without limiting the generality of the foregoing, Inventions
shall also include anything that derives actual or potential economic value from
not being generally known to the public or to other persons who can obtain
economic value from its disclosure or use.


                                       11
<PAGE>


                                    EXHIBIT C
                                    ---------



ITEM 1:

         The following is a complete list of all inventions or improvements
relevant to the subject matter of Employee's employment by the Company that have
been made or conceived of or first reduced to practice by Employee alone or
jointly with others prior to his employment by the Company:



                                      None.






ITEM 2:

         The following is a complete list of all materials and documents of a
former employer that are not generally available to the public that Employee
will bring or have brought to the Company or have used or will use in his
employment by the Company:


                                      None.



                                       12
<PAGE>



                                    EXHIBIT D
                                    ---------


                            TERMINATION CERTIFICATION



I certify as follows:

         1. When I signed the attached Employment Agreement (the "Agreement"), I
read and understood the terms of the Agreement.

         2. I hereby acknowledge that I have fully complied with the terms of
the Agreement, including, without limitation, the disclosure and assignment to
Telenetics Corporation (or its successors or assigns) (the "Company") of any
Inventions covered by that Agreement, and the return of any documents and other
materials of any nature relating to my employment with the Company.

         3. I hereby acknowledge and agree to comply with my continuing
obligations under this Agreement, including, without limitation, my obligation
not to use for personal benefit or to disclose to others any Proprietary
Information of the Company.

         4. I understand and acknowledge that should I fail to comply with my
obligations under the Agreement, the Company shall have the right to injunctive
relief against me, including, without limitation, an injunction prohibiting me
from disclosing Proprietary Information to a third party.

Dated as of: ___________________


                                    --------------------------------------
                                         Signature of Employee


                                    --------------------------------------
                                         Print Name


                                       13
<PAGE>


                                    EXHIBIT E
                                    ---------


                 NON-COMPETITION AND NON-SOLICITATION COVENANTS

         DEFINITIONS. For purposes of this EXHIBIT E, the following terms shall
have the following meanings:

         "BUSINESS" shall mean the development, production, manufacture, sale,
lease or distribution of the Technology and/or products and services relating to
the Technology, as developed, in development or conducted by eflex as of, or
immediately preceding the date of this Agreement, or conducted, developed or in
development by the Company or by eflex or their respective affiliates,
successors or assigns during the Non-Competition Period, the Employee
Non-Solicitation Period or the Customer Non-Solicitation Period;

         "BUSINESS TERRITORY" shall mean the world, including all countries and
political subdivisions thereof.

         "COMPETE" shall mean, with respect to the Business: (i) managing,
supervising or otherwise participating in a management or sales capacity; or
(ii) otherwise managing, operating, controlling, participating in the ownership,
management or control of, or being connected with or having any interest in, as
a stockholder, agent, partner, lender, consultant, advisor or otherwise, any
business or person that provides goods, products or services competitive with
those provided by the Business; provided, however, that nothing contained herein
will prohibit Employee from owning less than one percent of any class of
securities listed on a national securities exchange or traded publicly in the
over-the-counter market or from performing his duties in accordance with the
terms of this Agreement.

         "CUSTOMER NON-SOLICITATION PERIOD" shall mean the period commencing on
the Effective Date and continuing for a period of two years after the
termination of this Agreement or Employee's employment relationship with the
Company, eflex or any of their respective successors, assigns, subsidiaries or
affiliates; provided, however, that the Customer Non-Solicitation Period shall
be extended by the number of days in which Employee is or was engaged in
activities constituting a breach of PARAGRAPH 3 below.

         The term "CUSTOMERS" shall mean any person that, as of or immediately
preceding the date of this Agreement, or during the Non-Competition Period, the
Employee Non-Solicitation Period or the Customer Non-Solicitation Period, is or
was a client or customer of the Company, eflex or any of their respective
subsidiaries or affiliates.

         The words "DIRECTLY OR INDIRECTLY," as they modify the word "Compete"
or "Competing," shall mean: (i) acting as an agent, representative, consultant,
officer, director, member, independent contractor or employee of any person that
is Competing with the Business; (ii) participating in any such Competing person
or enterprise as an owner, partner, limited partner, joint venturer, member,
creditor or shareholder (except as expressly permitted herein); or (iii)
communicating to any such Competing person or enterprise the names or addresses
or any other information concerning any Customer or any other confidential
information of the Business.

                                       14
<PAGE>

         "EMPLOYEES" shall mean: (i) any employee of the Company, eflex or any
of their respective subsidiaries or affiliates as of, or immediately prior to
the date of this Agreement or during the Non-Competition Period, the Employee
Non-Solicitation Period or the Customer Non-Solicitation Period; or (ii) any
former employee of the Company, eflex or any of their respective subsidiaries or
affiliates whose employment with the Company, eflex or any of their respective
successors, assigns, subsidiaries or affiliates ceased less than one year before
the date of co-venturing, solicitation, inducement or recruitment.

         "EMPLOYEE NON-SOLICITATION PERIOD" shall mean the period commencing on
the Effective Date and continuing for a period of two years after the
termination of Employee's employment or consulting relationship with the
Company, eflex or any of their respective successors, assigns, subsidiaries or
affiliates; provided, however, that the Employee Non-Solicitation Period shall
be extended by the number of days in which Employee is or was engaged in
activities constituting a breach of PARAGRAPH 2 below.

         "NON-COMPETITION PERIOD" shall mean the period commencing on the
Effective Date and continuing for a period of two years after the termination of
Employee's employment or consulting relationship with the Company, eflex or any
of their respective successors, assigns, subsidiaries or affiliates; provided,
however, that the Non-Competition Period shall be extended by the number of days
in which Employee is or was engaged in activities constituting a breach of
PARAGRAPH 1 below.

         The term "PERSON" shall mean any natural person, firm, partnership,
association, corporation, company, limited liability company, limited
partnership, trust, business trust, Governmental Entity or other entity.

         The term "PROSPECTIVE CUSTOMER" shall mean any person that the Company,
eflex or any of their respective subsidiaries or affiliates has contacted, or
has developed a strategy or plan to contact, for the purpose of acquiring such
person as a customer or client during the period from January 1, 1999 through
the expiration of the Customer Non-Solicitation Period.

         "TECHNOLOGY" shall have the definition set forth in the Stock Purchase
Agreement.
          1)  NON-COMPETITION. During the Non-Competition Period, Employee shall
              not, and shall not permit any of Employee's affiliates to,
              directly or indirectly Compete with the Business in the Business
              Territory.

          2)  NON-SOLICITATION OF EMPLOYEES. Employee recognizes that the
              Employees are a valuable resource of eflex or the Company.
              Accordingly, during the Employee Non-Solicitation Period, Employee
              shall not, either alone or in conjunction with any other person or
              entity, directly or indirectly go into business with any Employee
              or solicit, induce or recruit any Employee to leave the employ of
              eflex, the Company, or any of their respective successors,
              assigns, subsidiaries or affiliates.

          3)  NON-SOLICITATION OF CUSTOMERS. Employee recognizes that the
              Customers and Prospective Customers are a valuable resource of
              eflex and the Company. Accordingly, during the Customer
              Non-Solicitation Period, Employee shall not, either alone or in
              conjunction with any other person or entity, directly or


                                       15
<PAGE>

              indirectly call on, solicit, take away, accept as a client,
              customer or prospective client or customer, or attempt to call on,
              solicit, take away, accept as a client, customer or prospective
              client or customer a Customer or Prospective Customer for the
              purpose of Competing with the Business.

          4)  ADDITIONAL AGREEMENTS. Employee hereby expressly agrees and
              acknowledges that:


                           (i) eflex and the Company have protectable business
         interests throughout the Business Territory, and that competition with
         and against such business interests would be harmful to eflex or the
         Company, as the case may be;

                           (ii) the covenants contained in this EXHIBIT E are
         reasonable as to time and geographical area and do not place any
         unreasonable burden upon Employee's ability to earn a livelihood;

                           (iii) the public will not be harmed as a result of
         enforcement of the covenants contained in this EXHIBIT E;

                           (iv) the personal legal counsel for Employee has
         reviewed the covenants contained in this EXHIBIT E, and/or Employee has
         had ample opportunity but has knowingly and willingly declined to take
         advantage of such opportunity for his personal legal counsel to review
         the covenants contained in this EXHIBIT E;

                           (v) the parties have entered into the covenants
         contained herein in connection with and as a condition precedent to the
         consummation of the Stock Purchase Agreement, pursuant to which the
         Company shall acquire eflex; the agreements, actions, covenants, and
         promises contained herein are intended to protect and ensure the value
         of Business, including its goodwill, which actions, covenants, and
         promises are a material consideration to the Company in connection with
         the Agreement; and, to the extent that the laws of any jurisdiction in
         which this Agreement shall be interpreted, construed, and/or enforced
         distinguish between covenants given in connection with the sale of a
         business and its goodwill and covenants given in connection with
         employment, this covenant will be given the broader interpretation
         customarily given to covenants in connection with the sale of a
         business and the transfer of goodwill to the Company, notwithstanding
         any employment or engagement as a consultant of Employee by eflex or
         the Company following the Closing;

                           (vi) the Company and Employee each agree that the
         provisions of this EXHIBIT E shall survive the execution and
         termination of this Agreement; and

                           (vii) Employee understands and agrees to each and
         every term and condition contained in this EXHIBIT E.

          5)  REMEDIES; ENFORCEABILITY. Employee recognizes and acknowledges
              that irreparable damage will result to the Company in the event of
              a breach by Employee or any of Employee's affiliates of the
              provisions of this EXHIBIT E, and, accordingly, in the event of
              such a breach, the Company will be entitled, in addition to any
              other legal or equitable damages and remedies to which it may be

                                       16
<PAGE>

              entitled or which may be available, to an injunction to restrain
              the violation thereof. If any provision of this EXHIBIT E shall be
              adjudicated by a court of competent jurisdiction to be invalid or
              unenforceable because of the scope, duration, area of its
              applicability, or any other reason, the court making such
              determination will have the power to modify such scope, duration,
              or area, or all of them, or to strike an invalid or unenforceable
              provision, in whole or in part, to the extent necessary to make
              such scope, duration, area, or provision valid and enforceable.



                                       17


                              CONSULTING AGREEMENT


         THIS CONSULTING AGREEMENT (this "AGREEMENT") is made and entered into
as of this 7th day of January, 2000 (the "EFFECTIVE DATE"), by and between
Telenetics Corporation, a California corporation with offices at 25111 Arctic
Ocean, Lake Forest, California 92630 (the "COMPANY"), and SAUNDERS & PARKER,
INC., a Texas corporation with offices at the address set forth on the signature
page hereof ("CONSULTANT"), who may be collectively referred to as the
"PARTIES."

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

         A. The Company, William C. Saunders and Terry S. Parker, who are the
principals of Consultant (the "PRINCIPALS"), and certain other individuals have
entered into a Stock Purchase Agreement of even date herewith (the "STOCK
PURCHASE AGREEMENT") pursuant to which the Company is purchasing all of the
outstanding capital stock of eflex Wireless, Inc., a Delaware corporation
("EFLEX").

         B. The parties acknowledge that Consultant currently acts as a
consultant to eflex and has abilities and expertise that are unique and valuable
to the Company and, in connection with the Stock Purchase Agreement, the Company
desires to retain Consultant to provide certain consulting services for the
Company, and Consultant is willing to provide the consulting services requested
by the Company.

         C. The Company and Consultant have determined that such engagement of
Consultant is mutually beneficial and should be subject to a mutually acceptable
written agreement, and that the retention by eflex of the Consultant as a
consultant is being terminated concurrently with the effectiveness of this
Agreement.

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

         NOW, THEREFORE, in consideration of the foregoing premises, the
following mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the Parties hereto, the Parties hereto agree, intending
to be legally bound, as follows:

1. SERVICES TO BE PERFORMED BY CONSULTANT.

         1.1 SCOPE AND NATURE OF SERVICES. Commencing on the Effective Date, the
Company agrees to engage Consultant, and Consultant agrees to offer Consultant's
services to the Company, as a consultant. Consultant agrees to render
Consultant's best business expertise, advice and services to the directors,
executive officers, managers or employees of the Company as the Company may
reasonably request concerning the business of the Company including, without
limitation, the business of eflex. Consultant shall render such services at such
locations as the Company, within its sole discretion, deems appropriate. This
Agreement shall not be construed as obligating the Company to request any amount
(or any specific amount) of consulting services from Consultant.
<PAGE>

         1.2 METHOD OF PERFORMING SERVICES. Consultant shall provide the
consulting services to the Company promptly upon request by the Company during
the term of this Agreement, and it shall be the duty of Consultant in providing
these consulting services to make periodic reports to the Company, from time to
time, as the Company may deem appropriate.

         1.3 PLACE OF WORK. The consulting services described herein will be
carried out at such reasonable locations as may be agreed upon by the Company
and Consultant from time to time; provided, however, that no Principal shall be
required by the Company to relocate his home in order to perform services
hereunder. If the Company determines that it is in the best interest of the
Company for the consulting services described herein to be carried out at the
facilities of the Company, such services shall be performed at the facilities of
the Company and the Company shall provide Consultant with such entry and access
to the facilities of the Company (during normal business hours, unless otherwise
authorized by the Company) to the extent necessary to allow Consultant to
perform Consultant's obligations under this Agreement. Except as provided above,
it will be the responsibility of the Consultant to obtain adequate work and
administrative space at Consultant's expense.

2. TERM AND TERMINATION.

         2.1 TERM. The term of this Agreement (the "TERM") shall commence on the
Effective Date and shall continue for a period of five years unless terminated
earlier pursuant to the terms of this Agreement. This Agreement may be
terminated by the Company for Good Cause (as defined below) effective upon
delivery of written notice to Consultant given at any time. "GOOD CAUSE" shall
exist if:

                  (a) A Principal is convicted of a felony, or a misdemeanor
         constituting moral turpitude;

                  (b) A Principal in bad faith commits any act (including, but
         not limited to, any act that would constitute fraud, misappropriation,
         dishonesty, or embezzlement) or in bad faith omits to take any action
         to the material detriment of the Company or any of its affiliates;

                  (c) A Principal intentionally commits during the Term of this
         Agreement any act of material misconduct (including, but not limited
         to, sexual harassment, racial vilification, or unlawful
         discrimination);

                  (d) Consultant fails or refuses to perform consulting duties
         assigned to Consultant by the Company and fails to correct such breach
         within five days after notice is given to Consultant by the Company of
         such breach;

                  (e) Consultant becomes unable fully to discharge its duties
         hereunder for a period of more than 30 consecutive days or more than 45
         days within any two-month period;

                                       2
<PAGE>

(f)      In the opinion of a medical doctor retained by the Company, after a
         physical examination and reasonable diagnostic procedures, a Principal
         is found to be addicted to any drug, including alcohol;

(g)      Consultant breaches any term of this Agreement and fails to correct
         such breach within five days after notice is given to Consultant by the
         Company of such breach; or

(h)      Consultant attempts to resign in anticipation of discharge for any
         reason mentioned in SECTION 2.1(a) through SECTION 2.1(g), or the
         Company accepts Consultant's resignation in lieu of making a
         termination for any reason mentioned in SECTION 2.1(a) through SECTION
         2.1(g).

         2.2 EFFECT OF TERMINATION. Consultant agrees that in connection with
the termination of this Agreement for any reason, except as set forth in SECTION
2.3, Consultant shall only be entitled to receive the pro rata share of the
consulting fee earned prior to the termination in accordance with SECTION 3.1,
plus reimbursement in accordance with SECTIONS 3.3 AND 3.4 for materials and
travel expenses incurred prior to the termination. Such payments described in
this SECTION 2.2 and in SECTION 2.3, if applicable, shall be the exclusive and
sole remedy of Consultant for any termination of this Agreement, and Consultant
covenants not to assert or pursue any other remedies, at law or in equity, with
respect to any termination of this Agreement.

         2.3 EARLY TERMINATION. Consultant may terminate this Agreement by
delivery of written notice to the Company if the Company breaches any term of
this Agreement and fails to correct such breach within thirty days after notice
of such breach is received by the Company from Consultant. In the event of such
termination, the Company shall pay to Consultant as liquidated damages the
consulting fee for the period commencing on the day following the date of
termination and ending on the date the Term otherwise would have expired
pursuant to SECTION 2.1, at such intervals and otherwise in such manner as such
consulting fee would have been paid if Consultant would have remained in the
active service of the Company.

3. CONSIDERATION AND PAYMENTS.

         In consideration of the consulting services to be provided by
Consultant pursuant to this Agreement:

         3.1 CONSULTING FEE. The Company shall pay Consultant a consulting fee
of $4,166.67 per month, which consulting fee shall be increased to $8,333.33 per
month for each month of the Term following the month in which the Company
receives at least $2,500,000 in gross proceeds from the sale of equity
securities of the Company for the account of the Company. The consulting fee
shall be payable in advance in monthly installments commencing on January 15,
2000 and shall be prorated for any partial month occurring during the Term of
this Agreement.

         3.2 OPTIONS. Concurrently with the execution of this Agreement,
Consultant shall receive an option to purchase shares of Common Stock of the
Company, a copy of which options shall be attached hereto as EXHIBIT A and
incorporated herein by reference.

                                       3
<PAGE>

         3.3 COST OF MATERIALS. If Consultant shall reasonably determine that
Consultant will be unable to perform the consulting services under this
Agreement without procuring certain materials with an aggregate cost exceeding
$100, Consultant shall promptly notify the Company in writing of its need to
procure such materials and the date by which such materials must be received by
Consultant. Upon receipt of such notice from Consultant, the Company shall
thereafter have the option to either procure the materials itself or, in the
alternative, authorize Consultant to procure the materials directly. If the
Company should elect to authorize Consultant to procure the materials directly,
it shall notify Consultant of such election, and the Company agrees to reimburse
Consultant within 10 business days of its receipt of a separate invoice from
Consultant for Consultant' actual cost of the materials as authorized by the
Company.

         3.4 TRAVEL EXPENSES. Upon submission of a separate monthly invoice, the
Company shall also reimburse Consultant for all travel-related expenses
reasonably incurred by Consultant in connection with this Agreement, including
without limitation, air fare, hotel and rental car expenditures. The Company
agrees to pay the amounts due under this Section 3.4 on or before the 30th day
of the month following the month of submission of such invoice.

4. NONDISCLOSURE AND CONFIDENTIALITY.

         In the course of Consultant providing the consulting services under
this Agreement, Consultant will have access to the Company's trade secrets,
proprietary information and confidential information, the use, application or
disclosure of any of which will cause substantial and possible irreparable
damage to the business and asset value of the Company. Accordingly, Consultant
accepts and agrees to be bound by the following provisions:

         4.1 DEFINITIONS. For the purposes of this Agreement, the following
definitions apply:

                  (a) "TRADE SECRETS" shall specifically include, but are not
         limited to, the Company's plans, customer lists, compilations, program
         devices, formulas, designs, ideas, concepts, prototypes, drawings,
         methods, techniques, systems, processes, procedures, computer software,
         programs or codes, whether tangible or intangible, and whether or how
         stored, compiled or memorialized physically, electronically,
         graphically, photographically or in writing (including, without
         limitation, source and object codes, flow charts, algorithms, coding
         sheets, doctrines, subroutines, compilers, assemblers, design concepts
         and related documentation and manuals), discoveries, hardware, machines
         and devices whether patentable or not, including, without limitation,
         the nature and results of technical and nontechnical research and
         development activities, "know-how," schematics, parts lists and
         specifications. Trade Secrets also includes any information described
         above which the Company treats as proprietary or designates as a Trade
         Secret, whether or not owned or developed by the Company or Consultant.
         Trade Secrets also include any information described in this paragraph
         (a) which the Company obtains from another party which the Company
         treats as proprietary or designates as Trade Secrets, whether or not
         owned or developed by the Company.

                                       4
<PAGE>

                  (b) "CONFIDENTIAL INFORMATION" shall mean any data, materials
         or information, other than Trade Secrets, that is of value to the
         Company and is not generally known to competitors of the Company.
         Confidential Information shall include, but not be limited to, the
         identity of various suppliers, information about the Company's
         executives and employees, financial information, business and marketing
         plans, marketing techniques, price lists, pricing policies and the
         Company's business methods. Confidential Information also includes any
         information described above which the Company obtains from a third
         party and which the Company treats as proprietary or designates as
         Confidential Information, whether or not owned by or developed by the
         Company.

         Anything in this Agreement to the contrary notwithstanding, Trade
Secrets and Confidential Information shall not include information which is (i)
lawfully disclosed to Consultant by a third party unrelated to the Company, (ii)
generally known in the telemetry services industry other than by the
unauthorized actions of Consultant, or (iii) in the public domain other than by
the unauthorized actions of Consultant.

         4.2 PROPRIETARY INFORMATION. Consultant hereby acknowledges that all
Trade Secrets and Confidential Information are the exclusive property of the
Company. Specifically, Consultant acknowledges and agrees that all Trade Secrets
and Confidential Information which Consultant has developed, or in which
Consultant has participated in the development, while engaged by the Company or,
which Consultant participates in the development in the future during the term
of its engagement by the Company shall be the exclusive property of the Company
and Consultant shall have no ownership interest therein. Consultant further
agrees that it will not, directly or indirectly, incorporate any Trade Secrets
or Confidential Information, or any part thereof, into any system, product,
service or other item later designed or prepared by Consultant for any party or
parties other than the Company.

         4.3 PROHIBITION ON USE OF TRADE SECRETS. Consultant shall not, directly
or indirectly, in any manner or form use, disclose, provide or otherwise make
available in any manner in whole or in part any Trade Secrets during the period
Consultant has access to the Trade Secrets and thereafter, other than to the
Company's employees in the scope of their employment, or to other consultants
performing services for the Company in connection with the consulting services
performed by Consultant hereunder.

         4.4 PROHIBITION ON USE OF CONFIDENTIAL INFORMATION. Consultant shall
not, directly or indirectly, in any manner or form use, disclose, provide or
otherwise make available in any manner in whole or in part any Confidential
Information during the period Consultant has access to the Confidential
Information and thereafter, other than to the Company's employees in the scope
of their employment, or to other consultants performing services for the Company
in connection with the consulting services performed by Consultant hereunder.

         4.5 NONCOMPETITION AND NONSOLICITATION. Consultant expressly promises
and agrees that Consultant will fully comply with the covenants and provisions
contained in SECTION 7 of the Stock Purchase Agreement, which provisions are
incorporated herein by reference, as if such provisions were set forth in full
herein.

         4.6 PROHIBITION ON REPRODUCTION. Consultant shall have no right to
print or copy, directly or indirectly, in whole or in part, any Trade Secrets or
Confidential Information or any documentation pertaining thereto, except as
required to perform Consultant's responsibilities hereunder.

                                       5
<PAGE>

         4.7 PROTECTIVE MEASURES. Consultant shall take all necessary and
appropriate action, whether by instruction, agreement or otherwise to ensure the
protection, confidentiality and security of the Trade Secrets and Confidential
Information and to satisfy Consultant's obligations under this Agreement. The
standard of care which Consultant shall employ shall conform at least to
industry standards and shall be adequate to ensure the protection,
confidentiality and security of the Trade Secrets and Confidential Information.
Consultant agrees that Consultant's obligations with respect to the
confidentiality and security of all materials disclosed to Consultant under the
terms of this Agreement shall survive the termination of this or any agreement
or relationship between the Company and Consultant or the performance of
consulting services by Consultant on behalf of the Company.

         4.8 RETURN OF MATERIALS. All notes, data, reference materials,
sketches, disks, memoranda, tapes, manuals, files, documentation and records
contained in any medium (written document, electronic or otherwise) in any way
relating to any of the Trade Secrets or Confidential Information or the
Company's business shall belong exclusively to the Company and Consultant agrees
to turn over to the Company all copies of such materials in its possession at
the request of the Company or, in the absence of such a request, upon the
termination of Consultant's consulting services for the Company within three
business days of such termination. Consultant further agrees, upon request by
the Company, to promptly remove from Consultant's possession and dominion and
return to the Company or positively destroy any software programs or data
entered into Consultant's computer or libraries pertaining to the Trade Secrets
and Confidential Information.

5. INTENTIONALLY OMITTED.

6. EMPLOYEES AND AGENTS OF CONSULTANT.

         Except as otherwise approved by the Company in writing, Consultant
shall provide the Company with ten days' advance notice prior to employing or
retaining any employee, subcontractor, or agent (other than the Principals) to
assist with or contribute to Consultant's duties, obligation or performance
hereunder. The Company reserves the right to approve or reject any such
employee, contractor or agent, such approval not to be unreasonably withheld.
Consultant agrees that it shall have and maintain, for so long as this Agreement
is in effect, written agreements with all employees, subcontractors or agents
engaged by Consultant who assist with or contribute to Consultant's duties,
obligations or performance hereunder. Such written agreements shall contain
provisions sufficient to establish the rights and benefits contemplated by, and
to assure compliance with this Agreement, including, but not limited to, the
provisions of SECTIONS 4 AND 5, above. Consultant shall furnish the Company with
copies of such written agreements and shall cause such subcontractors, employees
and agents to execute and deliver such further certificates, acknowledgments,
waivers and assignments as may be appropriate to give effect to the foregoing.

                                       6
<PAGE>

7. APPLICABILITY TO PRIOR DEALINGS.

         Consultant hereby acknowledges that Consultant and Consultant's
employees and agents may have had access to Trade Secrets and Confidential
Information prior to the effective date of this Agreement. Consultant hereby
agrees that any Trade Secrets and Confidential Information Consultant and
Consultant's employees and agents may have acquired prior to the effective date
of this Agreement shall be subject to the terms and conditions of SECTIONS 4 AND
5 above, and that Consultant shall cause each of Consultant's employees and
agents to treat such Trade Secrets and Confidential Information accordingly.

8. SURVIVAL OF OBLIGATIONS BEYOND TERMINATION.

         The obligations of Consultant under SECTIONS 4 THROUGH 7 and the
warranties and remedies under SECTIONS 9 THROUGH 12 shall not terminate upon the
termination of this Agreement, but, rather, shall continue in effect thereafter.

9. INJUNCTIVE RELIEF.

         Consultant hereby acknowledges and agrees that any violations of
SECTIONS 4,5,6 AND 7 will cause damage to the Company in an amount or amounts
difficult to ascertain and any remedies at law for such damages will be
inadequate. Accordingly, in addition to any other relief to which the Company
may be entitled at law or in equity, the Company shall be entitled to temporary
and/or permanent injunctive or other equitable relief from any such breach or
threatened breach by Consultant without proof of actual damages that have been
or may be caused to the Company by such breach or threatened breach.

10. WARRANTY.

         10.1 EXPRESS WARRANTIES. As of the date hereof and as of all dates
prior to the expiration of this Agreement, Consultant warrants and represents to
the Company the following:

                  10.1.1 DISCLOSURE BY CONSULTANT. Consultant hereby
         acknowledges that the Company does not wish to receive from Consultant
         any information not owned by the Company which may be considered
         confidential or proprietary to Consultant or to any third party. Any
         information or materials disclosed or to be disclosed by Consultant to
         the Company is not confidential or proprietary to Consultant or to any
         third party. Accordingly, no obligation of any kind is assumed by or to
         be implied against the Company by virtue of this Agreement or the
         relationship between the Parties hereunder or with respect to any
         information received (in whatever form or whenever received) from
         Consultant relating to the subject matter hereof, and the Company will
         be free to reproduce and to use and disclose to others such information
         without limitation. Neither this Agreement nor the relationship between
         the Parties, will impair the right of the Company to develop, make,
         use, procure, or market products or services now or in the future which
         may be competitive with those offered by Consultant, nor require the
         Company to disclose any planning or other information to Consultant.
         Consultant covenants and agrees not to incorporate into any work
         performed or created hereunder any material owned or copyrighted or
         confidential to any third party.

                                       7
<PAGE>

                  10.1.2 AUTHORITY. Consultant has the authority to enter into
         this Agreement. The execution of this Agreement by Consultant and the
         performance of the services contemplated hereunder do not (and will
         not) violate any other agreement, policy or order to which Consultant
         is subject.

         10.2 BREACH OF WARRANTY. If Consultant is in breach of any warranty or
representation under this Agreement, the Company shall have all rights and
remedies available to it in law and in equity.

11. STATUS AS INDEPENDENT CONTRACTOR.

         The Parties are entering into this Agreement as independent contractors
and no employment relationship, partnership, joint venture or other association
shall be deemed created by this Agreement.

         11.1 TAXES. The Company shall pay Consultant directly, without payroll
deductions of any kind whatsoever, all monies which may become due and payable
hereunder, as, when, and to the extent those payments become payable. Consultant
shall have the entire responsibility to discharge all the obligations under
federal, state or local laws, regulations or orders now or hereafter in effect,
relating to taxes, unemployment compensation or insurance (including, but not
limited to, the Unemployment Insurance Code of the State of California), social
security, worker's compensation, disability pensions and tax withholdings
(collectively, "TAX OBLIGATIONS"). Consultant shall fully indemnify the Company
from and against all liabilities, obligations, damages, assessments, penalties,
interest, costs (including, without limitation, any attorneys' fees) and other
expenses incurred by the Company resulting from Consultant's failure to properly
discharge its Tax Obligations or otherwise arising out of or related to the
engagement of Consultant by the Company pursuant to this Agreement.

         11.2 AUTHORITY. Consultant is not authorized to bind the Company or to
incur any obligation or liability on behalf of the Company except as expressly
authorized by the Company in writing.

         11.3 BENEFITS. Consultant acknowledges that the Company shall not be
providing health insurance, retirement plan contributions, workers' compensation
or other benefits to Consultant and/or Consultant's employees, if any, and
Consultant shall be solely responsible for obtaining and/or providing such
benefits.

         11.4 METHODS. Except as otherwise provided herein, Consultant shall be
free to pursue whatever means Consultant chooses in performing the services
described herein. The Company recognizes that this is not an exclusive agreement
and the Consultant may perform services for other parties.

         11.5 TRAINING. Consultant shall be responsible for providing, at
Consultant's expense, any training or continuing education required by
Consultant and/or Consultant's employees, if any, unless such training or
continuing education is specifically requested by the Company. If the Company
requests Consultant and/or Consultant's employees to obtain specific training or
continuing education, the Company shall be responsible for the expense of such
training and/or continuing education.

                                       8
<PAGE>

12. GENERAL PROVISIONS.

         12.1 ATTORNEYS' FEES AND COSTS. In any suit, action or proceeding
(including arbitration) arising out of or related to the Agreement or the
transactions contemplated hereby, including any appeals (an "ACTION"), the
non-prevailing party in that Action shall pay to the prevailing party a
reasonable sum for ordinary and necessary attorneys', paralegals', accountants'
and experts' fees and costs incurred in connection with prosecuting or defending
the Action and/or enforcing any judgment, order, ruling, or award (collectively,
a "DECISION") granted therein, in addition to any damages and costs which the
prevailing party otherwise would be entitled. Any Decision entered in the Action
shall contain a specific provision providing for the recovery of reasonable
attorneys', paralegals', accountants' and experts' fees and costs incurred in
enforcing the Decision. The court or arbitrator may fix the amount of reasonable
attorneys', paralegals', accountants' and experts' fees and costs on the request
of either party. For the purposes of this SECTION 12.1, all attorneys',
paralegals', accountants' and experts' fees and costs shall include, but not be
limited to, fees and costs incurred in the following: (i) postjudgment motions
and collection actions; (ii) contempt proceedings; (iii) garnishment, levy, and
debtor and third party examinations; (iv) discovery; and (v) bankruptcy.

         12.2 NOTICES. All notices, demands or other communications which are
required or are permitted to be given in this Agreement shall be in writing and
shall be deemed to have been sufficiently given (i) upon personal delivery, (ii)
the third business day following due deposit in the United States mail, postage
prepaid, and sent certified mail, return receipt requested, correctly addressed
or (iii) when receipt is acknowledged if sent via facsimile transmission as
follows: If to the Company, to the address set forth in the introductory
paragraph of this Agreement. If to Consultant, to the address set forth below
Consultant's signature at the end of this Agreement. If notice is sent to the
Company, a copy shall be sent to:

                                    Larry A. Cerutti, Esq.
                                    Rutan & Tucker, LLP
                                    611 Anton Boulevard, 14th Floor
                                    Costa Mesa, California 92626
                                    Telephone: (714) 641-5100
                                    Facsimile: (714) 546-9035

If notice is sent to Consultant, a copy shall be sent to:

                                    Sally A. Schreiber, Esq.
                                    Munsch Hardt Kopf & Harr, P.C.
                                    4000 Fountain Place
                                    1445 Ross Avenue
                                    Dallas, Texas  75202
                                    Telephone: (214) 855-7598
                                    Facsimile: (214) 978-4323

         Either party may give written notice of a change of address by
certified mail, return receipt requested, and after notice of such change has
been received, any notice shall be given to such party in the manner above
described at such new address.

                                       9
<PAGE>

         12.3 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.

         12.4 WAIVER AND AMENDMENT. This Agreement may be amended, supplemented,
modified and/or rescinded only through an express written instrument signed by
both Parties or their respective successors and assigns. Either party may
specifically and expressly waive in writing any portion of this Agreement or any
breach hereof, but no such waiver shall constitute a further or continuing
waiver of any preceding or succeeding breach of the same or any other provision.
The consent by one party to any act for which such consent was required shall
not be deemed to imply consent or waiver of the necessity of obtaining such
consent for the same or similar acts in the future.

         12.5 SEVERABILITY. Each provision of this Agreement is intended to be
severable. If any covenant, condition or other provision contained in this
Agreement is held to be invalid, void or illegal by any court of competent
jurisdiction, such provision shall be deemed severable from the remainder of
this Agreement and shall in no way affect, impair or invalidate any other
covenant, condition or other provision contained in this Agreement. If such
condition, covenant or other provision shall be deemed invalid due to its scope
or breadth, such covenant, condition or other provision shall be deemed valid to
the extent of the scope or breadth permitted by law.

         12.6 GOVERNING LAW. All matters relating to or arising out of this
Agreement, whether in contract, tort or otherwise, shall be governed by and
interpreted in accordance with the laws of the State of California, including
all matters of construction, validity, performance and enforcement, without
giving effect to principles of conflict of laws. The Parties hereby consent, in
any dispute, action, litigation, arbitration or other proceeding concerning this
Agreement, to the jurisdiction of the state or federal courts of California,
with the County of Orange being the sole venue for the bringing of the action or
proceeding.

         12.7 ASSIGNABILITY. Because the Company has agreed to retain the
services of Consultant based on an investigation of Consultant's capabilities,
the importance of Consultant's services to the ongoing business of the Company
and the personal relationship that has evolved between the Parties, neither this
Agreement nor any interest herein shall be assignable (voluntarily,
involuntarily, by judicial process or otherwise), in whole or in part, by
Consultant without the prior written consent of the Company. Any attempt at such
an assignment without such consent shall be void and, at the option of the
Company, shall be an incurable breach of this Agreement resulting in the
immediate termination of this Agreement.

         12.8 INTERPRETATION. The language in all parts of this Agreement shall
be in all cases construed simply according to its fair meaning and not strictly
for or against any party. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice versa, and
each gender will include any other gender. The captions of the Sections and
Subsections of this Agreement are for convenience only and shall not affect the
construction or interpretation of any of the provisions of this Agreement.

                                       10
<PAGE>

         12.9 INTEGRATION. This Agreement, together with the exhibits and
schedules hereto, incorporate the entire understanding of the parties with
respect to the subject matter hereof and supersede all previous oral and written
and all contemporaneous oral negotiations, commitments, writings, and
understandings. In addition, the parties expressly agree that this Agreement
supersedes and replaces the Consulting Agreement dated as of June 1, 1999
between Consultant and eflex, as successor to Residential Utility Meter
Service's, Inc., a Florida corporation (the "EFLEX CONSULTING AGREEMENT"), and
that the eflex Consulting Agreement is of no further force or effect.

         12.10 SURVIVABILITY. All covenants, agreements, representations and
warranties made by the Consultant shall survive the termination of this
Agreement.

         12.11 FURTHER ASSURANCES. In addition to the documents and instruments
to be delivered as provided in this Agreement, each of the Parties shall, from
time to time at the request of the other party, execute and deliver to the other
party such other documents and shall take such other action as may be necessary
or proper to more effectively carry out the terms of this Agreement.

[remainder of page intentionally left blank]



                                       11
<PAGE>


IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
date first set forth above.


                                   TELENETICS CORPORATION,
                                   a California corporation


                                   By: /s/ Michael A. Armani
                                      ----------------------------------
                                      Michael A. Armani, President


                                   SAUNDERS & PARKER, INC.,
                                   a Texas corporation


                                   By: /s/ William C. Saunders
                                      ----------------------------------
                                      William C. Saunders

                                      Its: Co-President
                                          ------------------------------


                                   By: /s/ Terry S. Parker
                                      ----------------------------------
                                      Terry S. Parker

                                      Its: Co-President
                                          ------------------------------


                                      ----------------------------------
                                      Street Address


                                      ----------------------------------
                                      City, State, Zip Code


                                      ----------------------------------
                                      Business Telephone Number


                                      ----------------------------------
                                      Business Facsimile Number


                                      ----------------------------------
                                      Social Security or Federal Tax
                                      Identification Number


                                       12
<PAGE>


                                    EXHIBIT A
                                    ---------


                         Copy of Stock Option Agreement


                                       13

                                 PROMISSORY NOTE

$107,500                          Dallas, Texas                  January 7, 2000

         FOR VALUE RECEIVED, the undersigned, Telenetics Corporation, a
California corporation ("MAKER"), hereby unconditionally promises to pay to the
order of John D. McLean, an individual ("LENDER"), or other holder of this Note
(Lender or such holder being called "PAYEE"), at 400 Thornwyck Trail, Roswell,
Georgia 30076, or at such other address given by Payee to Maker, the principal
sum of One Hundred Seven Thousand Five Hundred Dollars ($107,500) interest
thereon at the rate of 10% per annum. All payments of interest shall be computed
on the per annum basis of a 360-day year composed of twelve 30-day months.

         1. POST-MATURITY INTEREST. The entire unpaid principal balance of this
Note from day to day outstanding shall, from and after maturity, bear interest
at the highest lawful rate.

         2. PAYMENT TERMS. The principal of and interest on this Note shall be
paid as follows:


                  (a) Principal of and interest on this Note shall be due and
         payable in full on May 7, 2000.

                  (b) Maker shall have the right to prepay all or any part of
         this Note, without premium or penalty, prior to the date of maturity.

         3. APPLICATION OF PAYMENTS. All payments and prepayments on this Note
shall be applied first to accrued but unpaid interest and then to unpaid
principal in inverse order of maturity.

         4. SECURITY. Payment of this Note is secured as set forth in that
certain Stock Pledge Agreement (herein so called) and that certain Guaranty
(herein so called), each dated the date of this Note and executed by Michael A.
Armani ("ARMANI").

         5. COSTS OF COLLECTION. If this Note is placed in the hands of an
attorney for collection, Maker agrees to pay the reasonable attorneys' fees and
costs of collection of the holder hereof.

         6. EVENTS OF DEFAULT AND REMEDIES. The entire unpaid principal balance
of, and all accrued and unpaid interest on, this Note shall immediately become
due and payable at the option of Payee upon the occurrence of one or more of the
following events of default (individually and collectively, hereinafter called a
"DEFAULT"):

                  (a) The failure or refusal of Maker to pay all or any part of
         the principal of or accrued interest on this Note as and when the same
         becomes due and payable in accordance with the terms hereof, and the
         continuation of such failure or refusal for a period of ten days after
         notice thereof to Maker from Payee; or

                  (b) Maker shall (i) voluntarily seek, consent to, or acquiesce
         in the benefit or benefits of the Bankruptcy Code of the United States
         of America or any other applicable liquidation, conservatorship,
         bankruptcy, moratorium, rearrangement, receivership, insolvency,
         reorganization, suspension of payments, or similar debtor relief law
         from time to time in effect affecting the rights of creditors generally
         ("DEBTOR RELIEF LAWS") or dissolve or liquidate, or (ii) be made the
         subject of any proceeding provided for by any Debtor Relief Law that
         could suspend or otherwise affect any of the rights of the holder


                                     Page 1

<PAGE>


         hereof; PROVIDED, HOWEVER, if such proceeding described in this clause
         (ii) is withdrawn or dismissed within 60 days from the date of the
         institution of such proceeding, then such event shall no longer be
         deemed a Default hereunder; or

                  (c) The failure of Armani to deliver the Collateral (as
         defined in the Stock Pledge Agreement) pursuant to and as required by
         the Stock Pledge Agreement by the close of business on January 17,
         2000, or the failure of any of the representations or warranties made
         by Armani in the Stock Pledge Agreement to be true and correct when
         made; or

                  (d) The failure or refusal by Maker to perform any of its
         obligations under this Note (other than those described in (a)
         immediately above) if such failure or refusal continues for a period of
         30 days after notice thereof to Maker from Payee; or

                  (e) The occurrence of a default under the Stock Pledge
         Agreement or the Guaranty or any other document, instrument, or
         agreement executed to provide a guaranty of or security for this Note
         (each, a "NOTE DOCUMENT").

         In the event a Default shall have occurred and be continuing, Payee may
proceed to protect and enforce its rights hereunder and under the Note Documents
either by suit in equity and/or by action at law, or by other appropriate
proceedings, whether for the specific performance of any covenant or agreement
contained herein or in any of the Note Documents or in aid of the exercise of
any power or right granted by this Note or any of the Note Documents or to
enforce any other legal or equitable right of Payee.

         7. USURY SAVINGS CLAUSE. Regardless of any provision contained in this
Note or any of the other Note Documents, (a) Payee shall never be deemed to have
contracted for or be entitled to receive, collect, or apply as interest on this
Note any amount in excess of the maximum rate of non-usurious interest permitted
by applicable law; (b) in no event shall Maker be obligated to pay interest
exceeding such maximum legal rate; and (c) all agreements, conditions, or
stipulations, if any, that may in any event or contingency whatsoever operate to
bind, obligate, or compel Maker to pay a rate of interest exceeding the maximum
legal rate shall be without binding force or effect, at law or in equity, to the
extent only of the excess of interest over such maximum legal rate. If any
interest is charged in excess of the maximum legal rate (hereinafter referred to
as "EXCESS"), Maker acknowledges and stipulates that any such charge shall be
the result of an accidental and bona fide error, and such Excess shall be first
applied to reduce the principal then unpaid hereunder; second, applied to any
other obligation of Maker to Payee, and third, returned to Maker, it being the
intention of the parties hereto not to enter at any time into an usurious or
other illegal relationship. Maker recognizes that such an unintentional result
could inadvertently occur. By the execution of this Note, Maker covenants that
(a) the credit or return of any Excess shall constitute the acceptance by Maker
of such Excess and (b) Maker shall not seek or pursue any other remedy, legal or
equitable, against Payee or any holder hereof based, in whole or in part, upon
the charging or receiving of any interest in excess of the maximum legal rate.
For the purpose of determining whether or not any Excess has been contracted
for, charged, or received by Payee, Payee and Maker shall, to the maximum,
extent permitted by applicable law, (a) characterize any non-principal payment
(other than payments that are expressly designated as interest payments under
this Note) as an expense, fee, or premium and not as interest; (b) exclude the
effects of voluntary prepayments; and (c) spread, amortize, prorate, and
allocate all interest at any time contracted for, charged, or received by Payee
in equal parts during the entire term of this Note.

                                     Page 2

<PAGE>


         8. WAIVERS. Maker and each surety, endorser, guarantor, and other party
liable for the payment of any sums of money payable on this Note severally waive
presentment and demand for payment, protest, and notice of protest and
nonpayment and agree that their liability on this Note shall not be affected by
any renewal or extension in the time of payment hereof or by any release or
change in any security for the payment of this Note, regardless of the number of
such renewals, extensions, releases, or changes.

         9. BUSINESS DAYS. In any case where a payment of principal or interest
hereon is due on a day which is not a Business Day, Maker shall be entitled to
delay such payment until the next succeeding Business Day, but interest shall
continue to accrue until the payment is, in fact, made. As used herein,
"BUSINESS DAY" means every day other than a Saturday, Sunday, or other day on
which national banks in the State of Texas are not required to be open for
business.

                                      Maker:


                                      TELENETICS CORPORATION

                                      By: /s/ Michael A. Armani
                                         ----------------------------------
                                         Michael A. Armani, President





                                     Page 3



                              SHAREHOLDER AGREEMENT

         This Shareholder Agreement (the "Agreement") is made and entered into
as of January 7, 2000, by and among Telenetics Corporation, a California
corporation (the "Company"), Michael A. Armani ("Armani"), Dr. George Levy
("Levy"), Shala Shashani ("Shashani"), Thomas Povinelli ("Povinelli"), Ed
Finamore ("Finamore"), Terry S. Parker ("Parker"), William C. Saunders
("Saunders"), John D. McLean ("McLean") and Edward L. Didion ("Didion"). Armani,
Levy, Shashani, Povinelli and Finamore are referred to herein collectively as
the "Company Directors." Parker, Saunders, McLean and Didion are referred to
herein collectively as the "eflex Shareholders."

         The Company and the eflex Shareholders are parties to a Stock Purchase
Agreement dated the date hereof (the "Stock Purchase Agreement") pursuant to
which the Company purchased all of the outstanding capital stock of eflex
Wireless, Inc. from the eflex Shareholders in exchange for the Base Stock and
Additional Stock, if any (as those terms are defined in the Stock Purchase
Agreement). Section 4.7 of the Stock Purchase Agreement requires (a) that the
Company seek ratification of its shareholders at the Company's next Annual
Meeting of Shareholders (the "Annual Meeting") of the contemplated issuance of
the Final Shares (as defined in the Stock Purchase Agreement) of Additional
Stock, and (b) that the parties hereto execute and deliver this Agreement.

         NOW THEREFORE, on the basis of the preceding facts and in consideration
of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned parties hereby agree as follows:

         1. VOTING AGREEMENT. From and after the date hereof, each of the
undersigned will vote his or her shares of Common Stock owned as of the record
date for the Annual Meeting, and will take all other necessary or desirable
actions within his or her control (whether in his or her capacity as a
shareholder, director, or officer of the Company, whichever is applicable), and
the Company will take all necessary and desirable actions within its control, in
order to cause, the ratification by the Company's shareholders of the
contemplated issuance of the Final Shares of the Additional Stock.

2.       Miscellaneous.

                  (a) AMENDMENT AND WAIVER. Any provision of this Agreement may
be modified, amended or waived only with the written consent of all parties
hereto.

                  (b) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement and without invalidating such
provision in any other jurisdiction.


<PAGE>

                  (c) COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.

                  (d) DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

                  (e) GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and schedules
hereto will be governed by the internal law, and not the law of conflicts, of
California.

         IN WITNESS WHEREOF, the undersigned have executed this Shareholder
Agreement as of the date first written above.



         TELENETICS CORPORATION



         By: /s/ Michael A. Armani
            --------------------------------------
             Michael A. Armani, President



         /s/ Michael A. Armani
         -----------------------------------------
         Michael A. Armani



         /s/ Dr. George Levy
         -----------------------------------------
         Dr. George Levy



         /s/ Shala Shashani
         -----------------------------------------
         Shala Shashani



         /s/ Thomas Povinelli
         -----------------------------------------
         Thomas Povinelli



         /s/ Ed Finamore
         -----------------------------------------
         Ed Finamore

                                      -2-
<PAGE>


         /s/ Terry S. Parker
         -----------------------------------------
         Terry S. Parker



         /s/ William C. Saunders
         -----------------------------------------
         William C. Saunders



         /s/ John D. McLean
         -----------------------------------------
         John D. McLean



         /s/ Edward L. Didion
         -----------------------------------------
         Edward L. Didion



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