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Exhibit 10.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAYNOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT ANDSUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITHREGARD THERETO, OR (II) IN THE OPINION OF COUNSEL ACCEPTABLE TO THECOMPANY, REGISTRATION UNDER THE ACT AND SUCH APPLICABLE STATESECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSEDTRANSFER.
Warrant No. S-2
**AMENDED AND RESTATED STOCK PURCHASE WARRANT**
     This Amended and Restated Stock Purchase Warrant is issued this 2nd day of Mayl, 2002, by TELTRONICS, INC., a Delaware corporation (the "*Company*"), to FINOVA MEZZANINE CAPITAL INC. ("FINOVA") (formerly SIRROM CAPITAL CORPORATION d/b/a TANDEM CAPITAL, a Tennessee corporation ("*Tandem*" which, together with any subsequent assignee or transferee hereof is hereinafter referred to collectively as "*Holder*" or "*Holders*").
     WHEREAS, the Company had issued a Stock Purchase Warrant on February 26, 1998 to FINOVA and the parties wishes to amend certain provisions hereof.
**AGREEMENT:**
**     1.     Issuance of Warrant; Term.**  For and in consideration of FINOVA making loans tothe Company and certain of its subsidiaries pursuant to the terms of one or more Secured PromissoryNotes, (together with any and all extensions, replacements and renewals thereof, the "*Notes*") and aLoan and Security Agreement, dated February 26, 1998 (as amended, supplemented or otherwisemodified from time to time, the "*Loan Agreement*"), and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Company hereby grants to Holder theright to purchase Three Hundred Sixty-Five Thousand (365,000) shares of the Company's commonstock, par value $.001 per share  (the "*Common Stock*").  The shares of Common Stock issuable uponexercise of this Warrant are hereinafter referred to as the "*Shares*."  The number of such shares and theExercise Price (as defined below) are subject to adjustment as provided herein.  As used herein, theterm "*Warrant*" includes this Warrant and any warrants delivered in exchange therefor as providedherein, and the term "*Warrant Issue Date*" shall mean February 26, 1998.  This Warrant shall beexercisable at any time and from time to time during the term commencing on the date hereof andending at 5:00 p.m. Eastern time on February 26, 2004.
**     2.     Exercise Price.  The exercise price (the "*Exercise Price*") per share for which all orany of the Shares may be purchased pursuant to the terms of this Warrant shall be One Dollar andNo/100ths ($1.00), as adjusted from time to time pursuant to Section 7 hereof.
     **3.     Exercise.
          **(a)**     **Manner of Exercise.**This Warrant may be exercised by the Holder hereof(but only on the conditions hereinafter set forth) as to all or any increment or increments of onethousand (1,000) Shares (or the balance of the Shares if less than 1,000), upon delivery to the

Company at the following address:  2150 Whitfield Industrial Way, Sarasota, Florida 34243 or suchother address as the Company shall designate in a written notice to the Holder hereof, of the Notice ofExercise in the form of Annex A hereto, duly completed and executed on behalf of the Holder, togetherwith this Warrant and payment to the Company of the aggregate Exercise Price of the Shares sopurchased.  The Exercise Price shall be payable, at the option of the Holder, (i) by certified or bankcheck, (ii) by the surrender by the Holder for cancellation of Debentures or any portion thereof havingan outstanding principal balance at least equal to the aggregate Exercise Price, or (iii) by a combinationof (i) and (ii) above.  Upon exercise of this Warrant as aforesaid, the Company shall as promptly aspracticable, and in any event within ten (10) days thereafter, execute and deliver to the Holder of thisWarrant a certificate or certificates for the total number of whole Shares for which this Warrant isbeing exercised in such names and denominations as are requested by such Holder.  If this Warrantshall be exercised with respect to less than all of the Shares, the Holder shall be entitled to receive anew Warrant covering the number of Shares in respect of which this Warrant shall not have beenexercised, which new Warrant shall in all other respects be identical to this Warrant.  The Companycovenants and agrees that it will pay when due any and all state and federal issue taxes which may bepayable in respect of the issuance of this Warrant or the issuance of any Shares upon exercise of thisWarrant.
          **(b)**     **Conversion Rights.**In lieu of exercising this Warrant pursuant to Section 3(a)above, the Holder shall have the right to require the Company to convert this Warrant, in whole or inpart and at any time or times into Shares (the "*Conversion Right*"), upon delivery to the Company at itsaddress in Section 3(a) or such other address as the Company shall designate in a written notice to theHolder hereof, of the Notice of Exercise, with the election to convert duly completed and executed onbehalf of the Holder, together with this Warrant.  Upon exercise of the Conversion Right, the Companyshall deliver to the Holder (without payment by the Holder of any Exercise Price) that number ofShares which is equal to the quotient obtained by dividing (x) the net value of the number of Sharesinto which this Warrant is being converted at the time the Conversion Right is exercised (determinedby subtracting the aggregate Exercise Price for the Shares into which this Warrant is being convertedimmediately prior to the exercise of the Conversion Right from a number equal to the product of (i) theFair Market Value (as such term is defined in Section 7(e)) per share as at such time, multiplied by (ii)that number of Shares purchasable upon exercise of this Warrant (or portion hereof that is beingconverted at the time the Conversion Right is exercised) immediately prior to the exercise of theConversion Right (taking into account all applicable adjustments pursuant to Section 7)), by (y) the FairMarket Value per share.  Any references in any Warrants to the "exercise" of this Warrant, and the useof the term exercise herein, shall be deemed to include (without limitation) any exercise of theConversion Right.
     **4.     Covenants and Conditions.  The above provisions are subject to the following:
**          (a)     Securities Laws Compliance.**Neither this Warrant nor the Shares have beenregistered under the Securities Act of 1933, as amended ("*Securities Act*") or any state securities laws("*Blue Sky Laws*").  This Warrant has been acquired for investment purposes and not with a view todistribution or resale in violation of the registration provisions of the Securities Act; except for thetransfer of the Warrant to one or more wholly-owned subsidiaries of FINOVA Mezzanine Capital Inc.,which subsidiary(s) shall be an "accredited investor," as defined in Rule 501(a) under the SecuritiesAct, this Warrant may not be sold or otherwise transferred without (i) an effective registrationstatement for such Warrant under the Securities Act and such applicable Blue Sky Laws, or (ii) anopinion of counsel, which opinion and counsel shall be reasonably satisfactory to the Company and itscounsel, that registration is not required under the Securities Act or under any

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applicable Blue Sky Laws (the Company hereby acknowledges that Harwell, Howard, Hyne, Gabbert & Manner, P.C. isacceptable counsel).  Transfer of the Shares issued upon the exercise of this Warrant shall be restrictedin the same manner and to the same extent as the Warrant and the certificates representing such Sharesshall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THISCERTIFICATE HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), ORANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BETRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDERTHE ACT AND SUCH APPLICABLE STATE SECURITIES LAWSSHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR(II) IN THE OPINION OF COUNSEL ACCEPTABLE TO THECOMPANY, REGISTRATION UNDER SUCH ACT AND SUCHAPPLICABLE STATE SECURITIES LAWS IS NOT REQUIREDIN CONNECTION WITH SUCH PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other documents and instruments ascounsel for the Company reasonably deems necessary to effect the compliance of the issuance of thisWarrant and any Shares of Common Stock issued upon exercise hereof with applicable federal andstate securities laws, including, if requested, completing and executing a representation letter in theform attached hereto as Annex C.
          **(b)**     **Covenants of the Company.**The Company covenants and agrees that allshares of Common Stock which may be issued upon exercise of this Warrant will, upon issuance andpayment therefor, be legally and validly issued and outstanding, fully paid and nonassessable, free fromall taxes, liens, charges with respect to the issuance thereof.  The Company further covenants that itshall at all times during the term of this Warrant reserve and keep available for issuance upon theexercise of this Warrant such number of authorized but unissued shares of Common Stock as will besufficient to permit the exercise in full of this Warrant and, from time to time, will take all stepsnecessary to amend its Certificate of Incorporation to provide sufficient reserves of shares of itsCommon Stock for issuance upon exercise of the Warrant.
**     5.     Transfer of Warrant.
          **(a)**     **Warrant Register.**The Company will maintain a warrant register containingthe names and address of the Holder or Holders.  Any Holder of this Warrant or any portion thereofmay change its address as shown on the warrant register by written notice to the Company requestingsuch change.  Any notice or written communication required or permitted to be given to the Holdermay be delivered or given by registered or certified mail to such Holder as shown on the warrantregister and at the address shown on the warrant register.  Until this Warrant is transferred on thewarrant register of the Company, the Company may treat the Holder as shown on the warrant registeras the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.
          **(b)**     **Transferability.**Subject to compliance with the provisions of Section 4(a)hereof, this Warrant may be transferred, in whole or in part, to any person, by presentation of theWarrant to the Company together with the Notice of Assignment in the form of Annex B hereto, dulyendorsed for transfer.  Upon such presentation for transfer, the Company shall promptly execute and

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deliver a new Warrant or Warrants in the form hereof in the name of the assignee(s) and in thedenominations specified in such instructions in the Assignment Form.  The Company shall pay allexpenses incurred by it in connection with the preparation, issuance and delivery of new Warrantsunder this Section 5.
     **6.     Warrant Holder Not Shareholder; Rights Offering.  Except as otherwise providedherein, this Warrant does not confer upon the Holder, as such, any right whatsoever as a shareholder ofthe Company.  Notwithstanding the foregoing, if the Company should offer to all of the Company'sshareholders the right to purchase any securities of the Company, then all Shares of Common Stockthat are subject to this Warrant shall be deemed to be outstanding and owned by the Holder and theHolder shall be entitled to participate in such rights offering.
     **7.     Adjustment of Exercise Price and Number of Shares Issuable.**The Exercise Price and the number of shares purchasable hereunder are subject to adjustment from time to time asfollows:
          **(a)**     **Stock Splits, Recapitalization, Etc.**If all or any portion of this Warrant shallbe exercised subsequent to any stock split, stock dividend, recapitalization, combination of shares ofthe Company, or other similar event occurring after the date hereof, then the Holder exercising thisWarrant shall receive, for the aggregate price paid upon such exercise, the aggregate number and classof shares which such Holder would have received if this Warrant had been exercised immediately priorto the record date for such stock split, stock dividend, recapitalization, combination of shares, or othersimilar event.
          **(b)**     **Merger, Etc.**If the Company at any time merges or consolidates with or intoany other corporation or enters into a similar transaction (other than a merger in which the Company isthe surviving corporation and in connection with which there is no reclassification or other change inthe Common Stock or other securities of the Company or any issuance of stock, securities or propertyto the holders of its outstanding shares of Common Stock), then the Company shall notify the Holder ofany such event and, effective upon the record or other date of determination of persons affected by suchmerger, consolidation or similar transaction, the securities which the Holder would be entitled toreceive on the exercise hereof shall include the kind and amount of securities, cash and property thatwould have been held by the Holder if on such determination date the Holder had been the holder ofrecord of the securities, cash and properties issuable upon exercise of the Warrant on suchdetermination date (or the right thereto prior to the effective date thereof).  In the event of any merger,consolidation or similar transaction referred to above in this Section 7(b), the Company shall, and shallcause any successor corporation as a condition precedent to such transaction to, execute and deliver toeach Holder a new Warrant (i) providing that the owner of such Warrant, upon exercise thereof, shallhave the right to purchase the securities as adjusted as described above, and (ii) containing provisionsfor subsequent adjustments in a manner and on terms as nearly equivalent as may be practicable to theadjustments provided for in this Section 7(b).
**          (c)     Adjustment on Certain Dilutive Issues.**
                    **(i)     Definitions.**   For purposes of this Section 7(c), the followingdefinitions apply:                         **(1)**     "*Options*" shall mean rights, options, or warrants tosubscribe for, purchase or otherwise acquire either Common Stock or Convertible

4Securities (as defined below), except for (A) currently exercisable options to purchasean aggregate of 4,000 shares of Common Stock outstanding on the Original WarrantIssue Date (the "*Outstanding Options*"); (B) rights or options to acquire up to anaggregate of 1,250,000 shares of Common Stock which may be granted to employees,directors or consultants to the Company pursuant to the Company's 1995 IncentiveStock Option Plan, provided that the exercise price for all options granted after theWarrant Issue Date shall be no less than the Fair Market Value (as defined in Section7(e) below) on the date of grant (the "*Plan Options*"); and (C) warrants to purchase anaggregate of 890,000 shares of Common Stock granted and reserved for issuance onthe Original Issue Date (the "*Current Warrants*").                         **(2)**     "*Convertible Securities*" shall mean any evidences ofindebtedness, shares of stock (other than Common Stock and the Company's Series BConvertible Preferred Stock (the "*Series B Preferred*")) or other securities convertibleinto or exchangeable for Common Stock.                         **(3)**     "*Additional Shares of Common Stock*"  shall mean allshares of Common Stock issued (or deemed to be issued pursuant to Section 7(c)(iii))by the Corporation after Warrant Issue Date, other than shares of Common Stockissued or issuable upon *(i)* conversion of shares of Series B Preferred Stock or as adividend or distribution on Series B Preferred Stock; *(ii)* the exercise of theOutstanding Options; *(iii)* the exercise of any Plan Options; *(iv)*the conversion of anyof the 1,000,000 shares of Non-Voting Common Stock into no more than 1,000,000shares of Common Stock pursuant to the Agreement of Sale, dated March 27, 1996,among Interactive Solutions, LLC, its members and ISL, Inc. as amended; or *(v)* theexercise of the Current Warrants.
                    **(ii)     Adjustment of Exercise Price.**  In the event that theconsideration per share (determined pursuant to Section 7(c)(v) hereof) for an Additional Share ofCommon Stock issued or deemed to be issued by the Company is less than the Fair Market Value (asdefined in Section 7(e) hereof) on the date of the issue of such Additional Share of Common Stock,then the Exercise Price and the number of shares shall be adjusted as provided herein.
                    **(iii)     Issue of Options and Convertible Securities.**   In the eventthe Company at any time or from time to time after the Warrant Issue Date shall issue any Options orConvertible Securities or shall fix a record date for the determination of holders of any class ofsecurities then entitled to receive any such Options or Convertible Securities, then the maximumnumber of shares (as set forth in the instrument relating thereto without regard to any provisionscontained therein for a subsequent adjustment of such number) of Common Stock issuable upon theexercise of such Options or, in the case of Convertible Securities and Options therefor, the conversionor exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stockissued as of the time of such issue or, in case such a record date shall have been fixed, as of the close ofbusiness on such record date, provided that Additional Shares of Common Stock shall not be deemedto have been issued unless the consideration per share (determined pursuant to Section 7(c)(v) hereof)of such Additional Shares of Common Stock would be less than the Fair Market Value (as defined inSection 7(e) hereof) on the date of such issue, or such record date, as the case may be, and providedthat in any such case in which Additional Shares of Common Stock are deemed to be issued:
5                         **(1)**     no further adjustments in the Exercise Priceshall be made upon the subsequent issue of Convertible Securities or shares ofCommon Stock upon the exercise of such Options or conversion or exchange of suchConvertible Securities;                         **(2)**     if such Options or Convertible Securities bytheir terms provide, with the passage of time or otherwise, for any increase or decreasein the consideration payable to the Company, or decrease or increase in the number ofshares of Common Stock issuable upon the exercise, conversion or exchange thereof,the Exercise Price computed upon the original issue thereof (or upon the occurrence ofa record date with respect thereto), and any subsequent adjustments based thereon,shall, upon any such increase or decrease becoming effective, be recomputed to reflectsuch increase or decrease insofar as it affects such Options or the rights of conversionor exchange under such Convertible Securities, provided, however, that no suchadjustment of the Exercise Price shall affect Common Stock previously issued uponexercise or conversion of this Warrant;                         **(3)**     upon the expiration of any such Options or any rights ofconversion or exchange under such Convertible Securities that shall not have beenexercised, the Exercise Price computed upon the original issue thereof (or upon theoccurrence of a record date with respect thereto), and any subsequent adjustmentsbased thereon, shall, upon such expiration, be recomputed as if:                              **(a)**     in the case of Convertible Securities orOptions for Common Stock, the only Additional Shares of Common Stock issued werethe shares of Common Stock, if any, actually issued upon the exercise of such Optionsor the conversion or exchange of such Convertible Securities and the considerationreceived therefor was the consideration actually received by the Company for the issueof all such Options, whether or not exercised, plus the consideration actually receivedby the Company upon such exercise, or for the issue of all such Convertible Securitiesthat were actually converted or exchanged, plus the additional consideration, if any,actually received by the Company upon such conversion or exchange, and                              **(b)**     in the case of Options for ConvertibleSecurities, only the Convertible Securities, if any, actually issued upon the exercisethereof were issued at the time of issue of such Options, and the consideration receivedby the Company for the Additional Shares of Common Stock deemed to have been thenissued was the consideration actually received by the Company for the issue of all suchOptions, whether or not exercised, plus the consideration deemed to have beenreceived by the Company (determined pursuant to Section 7(c)(v)) upon the issue ofthe Convertible Securities with respect to which such Options were actually exercised;                         **(4)**     no readjustment pursuant to Section 7(c)(iii)(2)or (3) above shall have the effect of increasing the Exercise Price to an amount whichexceeds the lower of (a) the Exercise Price prior to the initial adjustment to which thereadjustment applies, or (b) the Exercise Price that would have resulted from any
6issuance of Additional Shares of Common Stock between the date of the initialadjustment date and such readjustment date; and                         **(5)**     in the event of any change in the number ofshares of Common Stock issuable upon the exercise, conversion or exchange of anyOption or Convertible Security, including, but not limited to, a change resulting fromthe antidilution provisions thereof, the Exercise Price then in effect shall forthwith bereadjusted to such Exercise Price as would have been obtained had the adjustmentwhich was initially made upon the issuance of such unexercised Option or unconvertedConvertible Security, been made upon the basis of such subsequent change, but nofurther adjustment shall be made for the actual issuance of Common Stock upon theexercise or conversion of any such Option or Convertible Security.
                    **(iv)**     **Adjustment of Exercise Price Upon Issuance of Additional Shares ofCommon Stock.**  In the event the Company at any time after the  Warrant Issue Date shall issueAdditional Shares of Common Stock (including Additional Shares of Common Stock deemed to beissued pursuant to Section 7(c)(iii)), without consideration or for a consideration per share less than theFair Market Value (as defined in Section 7(e) below) on the date of such issue, then and in such event,the Conversion Price shall be reduced to a price (calculated to the nearest cent) equal to either (A) theper share consideration for such Additional Shares of Common Stock (or deemed Additional Shares ofCommon Stock) pursuant to Section 5(e)(iii), or (B) in the case of Additional Shares of Common Stockissued (or deemed to have been issued) without consideration, the par value of the Common Stock.
     The provisions of this Section 7(c)(iv) do not apply if the provisions of any of Section 7(a) or(b) apply.
                    **(v)     Determination of Consideration.**  The consideration receivedby the Company for the issue of any Additional Shares of Common Stock shall be computed asfollows:                         **(1)     Cash, Property, and Other Consideration.**Such consideration shall:                              **(a)**     insofar as it consists of cash, becomputed as the aggregate amount of cash received by the Company excludingamounts paid or payable for accrued interest or accrued dividends;                              **(b)**     insofar as it consists of property, services, or other consideration other than cash, be computed at the fair value thereof at the time ofsuch issue, as determined in good faith by the Board of Directors; and                              **(c)**     in the event Additional Shares of CommonStock are issued together with other shares or securities or other assets of the Companyfor consideration which covers both, be the proportion of the consideration so received,computed as provided in clauses (a) and (b) above, as is determined in good faith bythe Board of Directors.
7                         **(2)     Options and Convertible Securities.**  Theconsideration per share received by the Company for Additional Shares of CommonStock deemed to have been issued pursuant to Options and Convertible Securities,shall be deemed to be the sum of the consideration paid for such Option or ConvertibleSecurity, if any, plus the lowest consideration per share then payable upon the exerciseof Options, as set forth in the instruments relating to such Options or ConvertibleSecurities, without regard to any provision contained therein designed to protect againstdilution.  If Options or Convertible Securities are issued together with other securitiesor instruments of the Company, the Board of Directors shall determine in good faith theamount of consideration paid for such Option or Convertible Securities.
          **(d)     Certificate as to Adjustments.**  In each case of any adjustment orreadjustment pursuant to Section 7(a)-(c) of the Exercise Price or the number of shares issuablepursuant to this Warrant, the Company shall forthwith notify the Holder or Holders of this Warrant ofeach such adjustment, setting forth in reasonable detail the event requiring the adjustment and themethod by which such adjustment was calculated.
          **(e)     No Fractional Shares; Fair Market Value.**If any adjustment pursuant toSection 7(a) - (c) would create a fractional share of Common Stock or a right to acquire a fractionalshare of Common Stock, such fractional share shall be disregarded and the number of shares subject tothis Warrant shall be the next higher number of shares, rounding all fractions upward. "*Fair MarketValue*" per share of Common Stock shall mean (i) in the case of a security listed or admitted to tradingon any securities exchange, the last reported sale price, regular way (as determined in accordance withthe practices of such exchange), on such day, or if no sale takes place on such day, the average of theclosing bid and asked prices on such day (and in the case of a security traded on more than one nationalsecurities exchange, at such price or such average, upon the exchange on which the volume of tradingduring the last calendar year was the greatest), (ii) in the case of a security not then listed or admitted totrading on any securities exchange, the last reported sale price on such day, or if no sale takes place onsuch day, the average of the closing bid and asked prices on such day, as reported by a reputablequotation service designated by the Company, (iii) in the case of a security not then listed or admittedto trading on any securities exchange and as to which no such reported sale price or bid and askedprices are available, the average of the reported high bid and low asked prices on such day, as reportedby a reputable quotation service, or the *Wall Street Journal*, or if there are no bids and asked prices onsuch day, the average of the high bid and low asked prices, as so reported, on the most recent day (notmore than 30 days prior to the date in question) for which prices have been so reported, and (iv) in thecase of a security determined by the Company's Board of Directors as not having an active quotedmarket or in the case of other property, such fair market value as shall be determined by the Board ofDirectors.
     **8.     Certain Notices.**  In case at any time the Company shall propose to:
          **(a)**     declare any cash dividend upon its Common Stock;
          **(b)**     declare any dividend upon its Common Stock payable in stock or make any special dividend or other distribution to the holders of its Common Stock;
          **(c)**     offer for subscription to the holders of any of its Common Stock any additionalshares of stock in any class or series or other rights;
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          **(d)**     reorganize, or reclassify the capital stock of the Company, or consolidate, merge or otherwise combine with, or sell of all or substantially all of its assets to, another corporation;
          **(e)**     voluntarily dissolve, liquidate or wind up of the affairs of the Company; or
          **(f)**     redeem or purchase any shares of its capital stock or securities convertible into its capital stock;
     then, in any one or more of said cases, the Company shall give to the Holder of the Warrant, bycertified or registered mail, (i) at least twenty (20) days' prior written notice of the date on which thebooks of the Company shall close or a record shall be taken for such dividend, distribution orsubscription rights or for determining rights to vote in respect of any such reorganization,reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, and (ii) in the caseof such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or windingup, at least twenty (20) days' prior written notice of the date when the same shall take place.  Anynotice required by clause (i) shall also specify, in the case of any such dividend, distribution orsubscription rights, the date on which the holders of Common Stock shall be entitled thereto, and anynotice required by clause (ii) shall specify the date on which the holders of Common Stock shall beentitled to exchange their Common Stock for securities or other property deliverable upon suchreorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, asthe case may be.  For the purposes of this Warrant notice shall be given as follows:
 

The Address of Holder is:	FINOVA Mezzanine Capital Inc.Suite 200500 Church StreetNashville, TN 37219Attention:  Kathleen KingTelecopy No. 615/726-1208
 

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with a copy to:FINOVA Mezzanine Capital Inc.Legal DepartmentSuite 200500 Church StreetNashville, TN 37219Attention: Philip S. ClarkTelecopy No. 615/256-9958
The Address of Company is:Teltronics, Inc.2150 Whitfield Industrial WaySarasota, Florida  34243Attention: Ewen CameronTelecopy No. 941/751-7724
with a copy to:Blair & Roach2645 Sheridan DriveTonawanda, New York 14150Attention: John BlairTelecopy No. 716-834-9197
     **9.     Registration Rights.**The shares of Common Stock issuable upon exercise of this Warrant shall be "Registrable Securities" under that certain Registration Rights Agreement, datedFebruary 26, 1998, between the Company and FINOVA, and the Holder of this Warrant shall beentitled to the benefits, and subject to the obligations, of the Registration Rights Agreement inaccordance with its terms.
     **10.     Governing Law and Amendments*.*The corporate law of Delaware shall govern all issues concerning the relative rights of the Company and the holders of its Common Stock.  In all other matters, this Warrant shall be construed and enforced under the laws of the State of Tennessee.  No amendment or modification hereof shall be effective except in a writing executed by each of the Company and the Holder.
     **11.     Equity Participation.  This Warrant is issued in connection with the Debenture Purchase Agreement.  It is intended that this Warrant constitute an equity participation under andpursuant to T.C.A. 47-24-101, et seq. and that equity participation be permitted under said statutesand not constitute interest on the Debenture.  If under any circumstances whatsoever, fulfillment of anyobligation of this Warrant, the Debenture Purchase Agreement, or any other agreement or documentexecuted in connection with the Debenture Purchase Agreement, shall violate the lawful limit of anyapplicable usury statute or any other applicable law with regard to obligations of like character andamount, then the obligation to be fulfilled shall be reduced to such lawful limit, such that in no eventshall there occur, under this Warrant, the Debenture Purchase Agreement, or any other document orinstrument executed in connection with the Debenture Purchase Agreement, any violation of suchlawful limit, but such obligation shall be fulfilled to the lawful limit.  If any sum is collected in excessof the lawful limit, such excess shall be applied to reduce the principal amount of the Debenture.
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[SIGNATURE PAGE TO STOCK PURCHASE WARRANT (LOAN)]****
     **IN WITNESS WHEREOF,**Teltronics, Inc. has caused this Warrant to be executed by its duly authorized officer as of the date first above written. **TELTRONICS, INC.**By:  /s/ Ewen R. Cameron          Ewen Cameron, President
HOLDER:
**SIRROM CAPITAL CORPORATIONd/b/a TANDEM CAPITAL**
By:       /s/ Myles A. MacDonaldName:    Myles A. MacDonaldIts:        Vice President

**ANNEX A**
**NOTICE OF EXERCISE**
To:     TELTRONICS, INC.(1)     The undersigned hereby:
          **[Initial and complete one]**
(a)     _____	elects to purchase __________ shares of Common Stock of TELTRONICS, INC., pursuant to the provisions of Section 3(a) of the attached Warrant, and tenders herewith payment of the purchase price in full for suchshares in the amount of $____________; or
(b)     _____	elects to exercise this Warrant for the purchase of __________shares of Common Stock, pursuant to the conversion right set forth in Section3(c) of the attached Warrant.
(2)     In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Common Stock to be issued upon conversion thereof are being acquired solely for theaccount of the undersigned, and for investment, and that the undersigned will not offer, sell orotherwise dispose of any such shares of Common Stock except under circumstances that willnot result in a violation of the Securities Act of 1933, as amended, or any applicable statesecurities laws.
(3)     Please issue a certificate(s) representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: (Name) (Name)(4)     Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: (Name)(Date)(Signature)
A-1
**ANNEX B**
**ASSIGNMENT FORM**
     FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells,assigns and transfers unto the Assignee named below all of the rights of the undersigned under thewithin Warrant, with respect to the number of shares of Common Stock set forth below:Name of AsigneeAddressNo. of Shares
and does hereby irrevocably constitute and appoint Attorney __________________ to make suchtransfer on the books of TELTRONICS, INC., maintained for the purpose, with full power ofsubstitution in the premises.
     The undersigned also represents that, by assignment hereof, the Assignee acknowledges thatthis Warrant and the shares of stock to be issued upon exercise hereof or conversion thereof are beingacquired for investment and that the Assignee will not offer, sell or otherwise dispose of this Warrantor any shares of stock to be issued upon exercise hereof or conversion thereof except undercircumstances which will not result in a violation of the Securities Act of 1933, as amended (the"Securities Act"), or any state securities laws.  Further, the Assignee has acknowledged that uponexercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a formsatisfactory to the Company, that the shares of stock so purchased are being acquired for investmentand not with a view toward distribution or resale in violation of the registration provisions of theSecurities Act or any state securities laws.
Dated:  __________________________
							____________________________________Signature of Holder                         
B-1**************