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Exhibit 10

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (“Agreement”) is made 21st, 2008, between
Teltronics, Inc., a Delaware corporation with is principal office at
_____________________ ("Seller") and John Mitchell, an individual residing at
10019 Laurel Valley Ave Cir., Bradenton, Florida 34202 and Chris R. Fickey, an
individual residing at 9007 60th Avenue E., Bradenton, Florida 34202 (each
individual referred to as “Buyer” and collectively as “Buyers”).
 
RECITALS
 
WHEREAS as an inducement for Seller to transfer all of its ownership interest in
Teltronics Direct, Inc. (the “Company”) to Buyers, Buyers agree to purchase all
of Seller’s ownership interest in the Company, continue to operate the Corporate
business in the normal course under a new company name (excluding any reference
or use of “Teltronics” in such new name) and faithfully and completely abide by
and perform each of Buyers’ covenants and obligations set forth in this
Agreement; and
 
WHEREAS, the Seller desires to complete the transfer of all of its ownership
interest in the Company to Buyers upon the terms and conditions of this
Agreement;
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, it is agreed as follows:
 
AGREEMENT
 
1.    Sale and Purchase. (a) Seller hereby sells, conveys, transfers and
delivers to the Buyers without recourse and the Buyers purchase and accept from
Seller a total of eighty five (85) shares of the Company’s Common Stock par
value of $1.00 per share (the “Stock”) which represents all of Seller’s
ownership interest in the Company.
 
2.    Purchase Price. Buyers shall pay Eighty-Seven Thousand Eight Hundred
Thirty-Seven and 61/100 ($87,837.61) in U.S. Dollars (the “Purchase Price”) to
the Seller in accordance with the terms of a Promissory Note which shall be
executed by each Buyer concurrently with the execution of this
Agreement.  Buyers’ payment of the Purchase Price shall be secured pursuant to
(i)the terms of the Stock Pledge Agreement which shall be executed by the
parties concurrently with the execution of this Agreement and (ii) the terms of
Guaranty and Security Agreement which the Buyers shall cause the Company to
execute concurrently with the execution of this Agreement..
 
The Purchase Price is based upon the inventory transfer price set for in Exhibit
1 and the intercompany debt set forth in Exhibit 2 hereto.
 
    3.    Deliveries.
 
          (a)    Seller has delivered to Buyers the following:
 
(1)    Stock Certificates. Certificates representing all of the Stock, endorsed
to the Buyers, which shall transfer to the Buyers title to such Stock.   The
Buyers agree that delivery of the Stock shall be made to and held by the Seller
under the Stock Pledge Agreement (“Stock Pledge Agreement”) until Seller
receives payment in full of the outstanding principal of the Stock Purchase
Price and any interest then accrued pursuant to the Promissory Note.
 

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             (2)    Resignations. Written resignations of officers and directors
of the Company who are employed by Seller
 
(b)   Buyers shall deliver to Seller the Purchase Price pursuant the Promissory
Note executed and delivered by Buyers to Seller on the date first set forth
above.
 
    4.    Buyers’ Grant of First Right of Approval to Seller.  
 
(a)    For a period of the five (5) years from the date first set forth above,
neither Buyer may sell, assign, pledge, encumber, give, devise or otherwise
dispose of any interest in any Company stock, whether voluntarily, by operation
of law or otherwise to or for the benefit of any entity or individual including
the Company (a Transfer), unless he or it has first complied with all applicable
provisions of this paragraph 4.
 
(b)    Offer Notice . At least 45 days prior to making any Transfer, the
Buyer(s) proposing to make a Transfer (the Transferring Buyer) shall deliver a
written notice (the Offer Notice) to Seller. The Offer Notice shall disclose in
reasonable detail the identity of the prospective transferee(s), the number of
shares of the stock to be transferred (the Offered Stock), the consideration
offered, and the proposed terms and conditions of the Transfer; provided, that
if the consideration being offered to the Transferring Buyer consists in whole
or in part of something other than U.S. dollars, then the notice shall also
contain a good faith estimate of the value of the consideration in U.S. dollars
and an explanation of the manner in which the estimate was made.
 
(c)    Option. Seller may elect to purchase all or any portion of the Offered
Stock at the price per share and on the terms specified in the Offer Notice by
delivering written notice of Seller’s election to the Transferring Buyer within
thirty (30) days after the delivery of the Offer Notice.
 
(d)    If Seller has elected to purchase all or any portion of the Offered Stock
from the Transferring Buyer, the transfer will be consummated as soon as
practicable after the delivery of the election notices, but in any event within
thirty (30) days after the identity of the transferees has been determined (the
Election Period).
 
(e)    If Seller has not elected to purchase all of the Offered Stock on or
before the end of the Election Period, the Transferring Buyer may, within ninety
(90) days after the expiration of the Election Period, transfer the remaining
Offered Stock to the transferee(s) specified in the Offer Notice at a price not
less than the price per share specified in the Offer Notice and on terms no less
favorable to the Transferring Buyer in any material respect than the terms
specified in the Offer Notice. If the Transferring Buyer does not transfer all
of such Offered Stock to the transferee(s) specified in the Offer Notice within
such ninety (90) day period, the Transferring Buyer may not transfer any such
Offered Stock without first having complied with all applicable provisions of
this Agreement.
 
(f)    At Seller’s sole discretion, the certificates of Stock to be delivered
hereunder shall include the legend set forth below.  Further, Buyers shall
promptly at the request of Seller, which request may be made at any time, submit
the certificates for all of other shares of Company stock owned by them to the
Seller for endorsement on the face of each certificate of such legend:
 
Any sale, assignment, transfer, pledge or other disposition of the shares of the
stock represented by this certificate is restricted by, and subject to, the
terms and provisions of a Stock Purchase Agreement, dated _____________, 2008 a
copy of which is on file with the Secretary of the Company.
 
 
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5.    Other Documents.  (a) Simultaneously with execution of this Agreement,
Seller and/or Buyers have executed and delivered the following documents;
 
          (1)    Promissory Note.  The Promissory Note pursuant to section 2
herein.
 
             (2)    Termination of Shareholder Agreement. A termination of the
Shareholder Agreement among Company, Seller and Buyer dated January, 2008.
 
  (3)    Stock Pledge Agreement. The Stock Pledge Agreement.
 
  (4)    Amendment to Articles of Incorporation. Documents to change the
Company’s name to be filed by Seller with the State of Florida, Division of
Corporations.
  (5)    Termination of Administrative Services Agreement.  A termination of the
Administrative Services Agreement between Seller and Company dated January,
2008.
 
  (6)    Distribution Agreement.  Distribution agreement for Company’s purchase
and resale of Seller’s product and services.
 
  (7)    Support Agreement. Support Agreement for Company’s purchase of Seller’s
second-level support to facilitate Company’s fulfillment of Company’s Warranty
and Support Obligations.
 
  (8)    Restrictive Covenants and Confidentiality.  Buyers have executed and
delivered with this Agreement Non-Solicitation and Confidentiality Agreements.
 
  (9)    General Release.  Buyers have executed and delivered to Seller General
Releases.
 
        (b) Simultaneously with execution of this Agreement, Buyers have caused
the Company to execute and deliver the following documents to Seller:
 
  (1)    Guaranty and Security Agreement by Company for John Mitchell
    
  (2)    Guaranty and Security Agreement by Company for Chris R. Fickey
 
6.    Representation by Buyers.  Buyers represent and warrant to the Seller as
follows:
 
         (a)    They are acquiring the Stock for their own account as principal,
for investment and not with a view to resale or distribution of all or any part
of such Stock.
   (b)    They have sufficient knowledge and expertise in financial and business
matters to evaluate the merits and risks of this investment, that  they have had
an opportunity to review the books and records of account of the Company, and to
ask questions of, and receive answers from, appropriate representatives of the
Company and the Company's operations, capitalization and bank financing, and to
obtain such additional information as they deem necessary to make a fully
informed decision as to  purchase of the Stock.
 
   (c)    They recognize that this investment involves a high degree of
risk.   They have taken full cognizance of, and understand such risk fully.
 
   (d)    They fully understand and agree that they must bear the economic risk
of their purchase for an indefinite period of time because, among other reasons,
the Stock has not been registered under the Securities Act of 1933 (the "Act"),
and, therefore, cannot be sold, pledged,
 
 
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assigned or otherwise disposed of unless they are subsequently registered under
the Act or an exemption from such registration is available.
 
    (e)    They understand that no Federal or State agency has passed upon
the  Stock or made any finding or determination as to the fairness of their
investment.
 
    (f)    They are aware that they may not be able to sell or dispose of the
Stock and that they must not purchase the Stock, unless they are able to bear
the economic risks of their investment for an indefinite period of time.  They
understand that their right to transfer the Stock will be restricted as set
forth by Federal and State Securities Laws; that such laws impose strict
limitations upon such transfer; and that the Seller is under no obligation to
register the Stock in connection with the subsequent transfer thereof by them or
to aid them in obtaining any exemption from such registration.
 
    (g)    They acknowledge that the certificates representing the Stock shall
contain a legend on the face thereof restricting transfer of the Stock as
described above.

7.           Reserved

8.    Organization, Management and Control of the Company
 
(a)    Buyers acknowledge that due to the low volume of sales revenue throughout
2008, the management of the Company elected to terminate the Company work force
and in connection with such employee terminations, entered into separation and
release agreements (“Separation Agreements”) with all such employees which
obligate the Company to make lump sum separation payments to such employee in
exchange for their releases of Company from any and all claims of liability
arising from such employment terminations.  Buyers shall cause the Company to
fulfill all separation payments due and owing to each former employee pursuant
to the terms and conditions of his or her Separation Agreement notwithstanding
the fact the Company may elect to re-hire such former employee and Buyers agree
to cause the Company to not condition the re-hire of any such former employee on
his or her repayment, forfeiture or waiver of any such separation payments.
 
(b)    Seller agrees to license to Buyers and Buyers agree to license from
Seller certain office space (Licensed Space), the size and location of which
shall be determined and subject to change by Seller at its sole discretion
within Seller’s facility in Sarasota Florida through August 31, 2008 rent
free.  Buyers agree to occupy and use the Licensed Space solely for the purpose
of conducting the general operation of the Company’s business and to vacate the
Licensed Space prior to September 1, 2008.  Buyers agree to be responsible for
all costs and expenses associated with their occupancy and use of such Licensed
Space and expressly agree that occupancy or use of the Licensed Space by Buyers
shall not constitute any leasehold interest.
 
(c)    Buyers shall cause the Company to manage and operate its business in the
ordinary and usual course including the distribution of Seller’s Cerato SE, ME,
and Vision IP products and services in the State of Florida, pursuant to the
terms of Seller’s non exclusive distribution agreement for a period of 1 year
and at Seller’s then current commercial prices and credit terms.
 
 
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(d)    Buyers shall cause the Company to fulfill (i) any proposals listed in
Exhibit 3 for the distribution and support of Seller products issued by the
Company, which proposals continue to be in effect on or after the date first set
forth above; and (ii) any Company Warranty and Support for all Seller Products
sold by Company. Company Warranty and Support Obligations existing as of the the
date first set forth above are listed in Exhibit 4.
 
(e)    A list of Company customers is set forth in Exhibit 5 to this Agreement.
 
9.    Indemnification.
 
(a)   (1)    Buyers, jointly and severally, hereby covenant and agree to defend,
indemnify and hold harmless Seller, its shareholders, officers, directors,
agents and employees, from and against any and all losses, costs, expenses,
liabilities, claims, demands, judgments and settlements of every nature that are
incurred by any and all of them, including without limitation the cost of
defense thereof and reasonable attorney fees, accountant fees and witness fees
incurred which arise out of (a) the breach, or if the subject of a third-party
claim, alleged breach, by Buyers of any agreement  pursuant to this Agreement,
(b) the non-performance, or if the subject of a third-party claim, alleged
non-performance, partial or total, of any covenant made by Buyers pursuant to
this Agreement, (c) all liabilities, or if the subject of a third-party claim,
alleged liabilities, of Buyers arising by reason of actions taken (or not taken)
by Buyers (d) the operation of the Company prior to, on and after the date of
this Agreement;  and or (e) any claim by any former employee or employee of
Company, resulting from any act, obligation, or omission occurring prior to, on
or after the date of this Agreement in connection with any such former
employee’s or employee’s employment, termination or separation therefrom, or
terms of such employment, including any employment agreement, or employee
benefit or any state, federal or local statute, regulation, public policy,
contract or tort principle in any way governing or regulating any such former
employee's or employee’s employment, terms of employment, including any
employment agreement, or termination by Company. The above stated
indemnification obligations shall not include any costs or damages caused by the
negligence of Seller.
 
(2)    Method of Asserting Claims. (a) If any person or entity who or which is
entitled to seek indemnification under subparagraph (a)(1)(an Indemnified Party
) receives notice of the assertion or commencement of any third-party claim
against such Indemnified Party with respect to which the person or entity
against whom or which such indemnification is being sought (an Indemnifying
Party ) is obligated to provide indemnification under this Agreement, the
Indemnified Party will give the Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than twenty (20) days after receipt
of written notice of a third-party claim. The notice by the Indemnified Party
will describe the third-party claim in reasonable detail and will include copies
of all available material written evidence thereof. The Indemnifying Party will
have the right to participate in or, by giving written notice to the Indemnified
Party, to assume, the defense of any third-party claim at the Indemnifying
Party’s own expense and by the Indemnifying Party’s own counsel (reasonably
satisfactory to the Indemnified Party) and the Indemnified Party will cooperate
in good faith in that defense.
 
If, within ten (10) days after giving notice of a third-party claim to an
Indemnifying Party pursuant to subparagraph (a)(1), an Indemnified Party
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of the third-party claim as provided in the
last sentence of subparagraph (a)(2), the Indemnifying Party will not be liable
for any legal expenses subsequently incurred by the Indemnified Party in
connection with the
 
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defense thereof; provided, however, that if the Indemnifying Party fails to take
reasonable steps necessary to defend diligently the third-party claim within ten
(10) days after receiving written notice from the Indemnified Party that the
Indemnified Party reasonably believes the Indemnifying Party has failed to take
those steps, the Indemnified Party may assume its own defense, and the
Indemnifying Party will be liable for all reasonable costs and expenses paid or
incurred in connection therewith. Without the prior written consent of the
Indemnified Party, the Indemnifying Party will not enter into any settlement of
any third-party claim which would lead to liability or create any financial or
other obligation on the part of the Indemnified Party for which the Indemnified
Party is not entitled to indemnification hereunder, or which provides for
injunctive or other non-monetary relief applicable to the Indemnified Party, or
which does not include an unconditional release of all Indemnified Parties. If a
firm offer is made to settle a third-party claim without leading to liability or
the creation of a financial or other obligation on the part of the Indemnified
Party for which the Indemnified Party is not entitled to indemnification
hereunder and the Indemnifying Party desires to accept and agree to that firm
offer, the Indemnifying Party will give written notice to the Indemnified Party
to that effect. If the Indemnified Party fails to consent to that firm offer
within ten (10) days after its receipt of the notice, the Indemnified Party may
continue to contest or defend the third-party claim and, in such event, the
maximum liability of the Indemnifying Party as to the third-party claim will not
exceed the amount of that firm offer. The Indemnified Party will provide the
Indemnifying Party with reasonable access during normal business hours to books,
records and employees of the Indemnified Party necessary in connection with the
Indemnifying Party’s defense of any third-party claim which is the subject of a
claim for indemnification by an Indemnified Party hereunder.
 
(3)    Any claim by an Indemnified Party on account of damages which does not
result from a third-party claim (a Direct Claim) will be asserted by giving the
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than twenty (20) days after the Indemnified Party becomes aware of the
Direct Claim. That notice by the Indemnified Party will describe the Direct
Claim in reasonable detail, will include copies of all available material
written evidence thereof and will indicate the estimated amount, if reasonably
practicable, of damages that have been or may be sustained by the Indemnified
Party. The Indemnifying Party will have a period of ten (10) days within which
to respond in writing to the Direct Claim. If the Indemnifying Party does not so
respond within such ten (10) day period, the Indemnifying Party will be deemed
to have accepted the accuracy of the information set forth in that claim, in
which event the Indemnified Party will be free to pursue such remedies as may be
available to the Indemnified Party on the terms and subject to the provisions of
this Agreement.
 
(4)    A failure to give timely notice or to include any specified information
in any notice as provided in subparagraphs (a)(1), (2) or (3), will not affect
the rights or obligations of any party hereunder, except and only to the extent
that, as a result of that failure, any party which was entitled to receive that
notice was deprived of its right to recover any payment under its applicable
insurance coverage or was otherwise materially prejudiced as a result of that
failure.
 
(b)    Buyers hereby acknowledge and agree that the indemnification provisions
under this paragraph 9 are in addition to and do not waive, amend or modify the
indemnification obligations of Buyer under Article VIII of the Asset Purchase
Agreement dated December 19, 2007
 
10.    Notices. All notices, requests, demands, and other communications which
are required or may be given under this Agreement shall be in writing, unless
otherwise specified in this
 
 
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Agreement, and shall be deemed to have been duly given if delivered personally
or sent by certified mail, return receipt requested, postage prepaid, addressed
as follows:

If to Seller, to:
Teltronics, Inc.
2150 Whitfield Industrial Way
Sarasota, Florida 34243
Attention:  Ewen Cameron, President

With a copy to:
Blair & Roach, LLP
2645 Sheridan Drive
Tonawanda, New York 14150
Attention:  John N. Blair, Esq.

If to Buyer (John Mitchell), to:
John Mitchell
10019 Laurel Valley Ave Cir.
Bradenton, Florida 34202

Esq.

If to Buyer (Chris R. Fickey), to:
Chris R. Fickey
9007 60th Avenue E.
Bradenton, Florida 34202

or to such other addresses any party shall have specified by notice in writing
to the other.
 
11.    Effectively Date for Accounting and Tax purposes.  Buyers and Seller
agree that for purposed of accounting and tax purposes, this Agreement is
effective July 31, 2008
 
12.    Expenses. Seller and Buyers shall pay their, its or his own expenses
incidental to the preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby.
 
13.    Contents of Agreement; Parties in Interest.  This Agreement, together
with all Exhibits atttached hereto and the documents referenced herein, sets
forth the entire understanding of the parties with respect to the transactions
contemplated hereby. This Agreement may not be amended or modified except by
written instrument duly executed by all of the parties.
 
14.    Assignment and Binding Effect . This Agreement may not be assigned by any
party without the prior written consent of the other parties. Subject to the
foregoing, all of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of each party.
 
15.    Waiver . Each party at any time may only waive any term or provision of
this
 
 
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Agreement to the benefit of which it is entitled, by a duly executed written
instrument.
 
16.    Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and in accordance with the law of the State
of Florida.
 
17.    Taxes.  As of July 31, 2008 the Company is not in default in the filing
of any Tax Return relating or pertaining to income, gross receipts, stamp,
occupation, sales or use taxes incurred in connection with the operation of the
Company’s business.
 
Any taxes in the nature of sales or transfer tax and any stock transfer tax,
payable on the sale or transfer of all or any portion of the Stock or the
consummation of any other transaction contemplated hereby shall be paid by
Buyers. Buyers will fully indemnify and hold harmless the Teltronics for any
such taxes, interest and penalties.
 
18.    Headings. The paragraph and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning and
interpretation of this Agreement.
 
19.    Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
 
20.    Company Furniture. Company furniture is listed in Exhibit 6 to this
Agreement
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
 

 

 
Teltronics, Inc.
 
By:  /s/ Ewen R. Cameron
 
Ewen R. Cameron
President and CEO
 
   
/s/ John Mitchell
 
John Mitchell
 
 
 
/s/ Chris R. Fickey
 
Chris R. Fickey

 
 
 
 
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