Exhibit 10.3 Pledge Agreement


    Exhibit
      3

    


    PLEDGE
      AGREEMENT

    


    


    THIS
      PLEDGE AGREEMENT (this “Agreement”),
      dated
      March 29, 2007, is made by and between IHL
      INVESTMENTS, LLC,
      a
      Delaware limited liability company (“Pledgor”),
      in
      favor of HARRIS
      CORPORATION,
      a
      Delaware corporation (“Pledgee”).

     

    W I T N E S S E T H:

     

    WHEREAS,
      Pledgor, pursuant to a certain Stock Purchase Agreement of even date herewith
      (the “Stock
      Purchase Agreement”)
      by and
      among Pledgor and Pledgee, is purchasing FORTY THOUSAND (40,000) shares of
      Series C Preferred stock, par value $0.001 in Teltronics, Inc., a Delaware
      corporation (“Teltronics”)
      (the
“Series C Stock”);

     

    WHEREAS,
      Pledgor has executed a certain Secured Promissory Note of even date herewith,
      in
      the principal amount of $400,000 (as amended, supplemented or modified from
      time
      to time, the “Note”);

     

    WHEREAS,
      Pledgor acknowledges that, by reason of the foregoing, it will receive
      substantial economic and other benefits from Pledgee and acknowledges that
      without this Agreement, Pledgee would be unwilling to accept the Note;
      and

     

    WHEREAS,
      as consideration for the execution of this Agreement by the Pledgee, and to
      further secure the obligations of the Pledgee under the Note, Pledgor agrees
      to
      pledge and grant to Pledgee a security interest in (i)10,000 shares of the
      Series C Stock (the “Stock”), (ii) any other interest in Teltronics now owned or
      hereafter acquired by Pledgor, and (iii) Distributions (as defined below)
      to Pledgor of or from Teltronics (each, a “Pledged
      Interest”
and,
      collectively, the “Pledged
      Interests”).
      

     

    NOW
      THEREFORE, in consideration of the premises and the mutual covenants contained
      herein, and for other good and valuable consideration, the receipt and
      sufficiency whereof are hereby acknowledged, the parties hereto hereby covenant
      and agree as follows:

     

    Section
      1.    Pledge.

     

    (a)    Pledgor
      hereby pledges, assigns, hypothecates, delivers, sets over and grants to Pledgee
      a lien on and first priority security interest in and to all right, title and
      interest of Pledgor in the Pledged Interests, any certificates, instruments
      or
      documents representing the same, all options and other rights, contractual
      or
      otherwise, in respect thereof (including, without limitation, any registration
      rights) and all dividends, distributions, liquidation proceeds, cash,
      instruments and other property (including, without limitation, additional stock
      or securities distributed in respect of any Pledged Interests by way of stock
      splits, spin-offs, reclassification, combination, consolidation, merger or
      similar arrangement) to which Pledgor is entitled with respect to the Pledged
      Interests, whether or not received by or otherwise distributed to Pledgor,
      whether such dividends, distributions, liquidation proceeds, cash, instruments
      and other property are paid or distributed by Teltronics in respect of operating
      profits, sales, exchanges, refinancing,

     

    
      
        
        

      

      
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condemnations
        or insured losses of the assets of Teltronics, the liquidation of Teltronics’
assets and affairs, management fees, guaranteed payments, repayment of loans,
        reimbursement of expenses or otherwise (collectively, the “Distributions”)
        in
        respect of or in exchange for any or all of the Pledged Interests, and Pledgor’s
        rights, remedies and benefits under the Organizational Documents of Teltronics,
        all rights and powers of Pledgor arising under the Organizational Documents
        of
        Teltronics or under law, including, without limitation, all rights of Pledgor
        to
        vote on any matter specified therein or under law; all rights of Pledgor
        to
        cause an assignee to be substituted as shareholder, in Teltronics in the
        place
        and stead of Pledgor; all rights, remedies, powers, privileges, security
        interests, liens, and claims of Pledgor for damages arising out of or for
        breach
        of or default under the Organizational Documents of Teltronics; all rights
        of
        Pledgor to access to the books and records of Teltronics and to other
        information concerning or affecting Teltronics. The security interests, rights,
        remedies and benefits of Pledgee granted by this Section 1(a)
        and all
        proceeds thereof are hereinafter collectively referred to as the “Pledged
        Collateral.”
        Pledgor irrevocably and unconditionally waives all rights, if any, which
        may
        exist in its favor to purchase or acquire any of the Pledged Collateral to
        the
        extent the same may arise as a result of the pledge thereof effected hereby,
        or
        the acquisition or disposition thereof by Pledgee or any other Person pursuant
        to the rights and remedies afforded Pledgee hereunder or any exercise thereof.
        “Organizational
        Documents”
shall
        mean with respect to Teltronics, its Certificate of Incorporation and Bylaws,
        and with respect to Pledgor, its Certificate of Organization and Operating
        Agreement and any exhibits or schedules thereto (as amended, supplemented
        or
        modified from time to time).

    

     

    (b)    Concurrently
      herewith, Pledgor is receiving and will cause delivery to Pledgee an
“Agreement
      and Acknowledgment of Pledge”
in
      substantially in the form of Exhibit A
      hereto
      duly executed and delivered by Teltronics.

     

    Section
      2.    Security
      for Obligations.
      This
      Agreement secures (i) the full and prompt payment when due, whether at the
      respective stated maturity dates, by acceleration or otherwise, of all
      obligations and any other amounts due or to become due under the Note, whether
      for principal, interest, fees, expenses or otherwise, (ii) any and all
      obligations of Pledgor now or hereafter existing under this Agreement, and
      (iii)
      any and all other obligations of Pledgor to Pledgee now or hereafter existing
      (all such obligations being hereinafter collectively referred to as the
“Obligations”).

     

    Section
      3.    Delivery
      of Pledged Collateral. 

     

    (a) Concurrent
      with this Agreement: (i) the Pledged Interests shall be delivered, transferred
      to or placed under the control of the Pledgee by Pledgor by certificates,
      instruments, or other documents now or hereafter representing or evidencing
      the
      Pledged Collateral (“Certificates”)
      and, as
      appropriate, shall be accompanied by duly executed instruments of transfer
      or
      assignment in blank, all in form and substance reasonably satisfactory to
      Pledgee; (ii) Pledgor shall deliver to Pledgee such Uniform Commercial Code
      financing statements, executed by Pledgor and in a form ready for filing, as
      may
      be necessary or desirable to perfect and/or evidence the security interests
      in
      the Pledged Collateral granted to Pledgee pursuant to this Agreement; and
      (iii) Pledgor shall deliver satisfactory evidence to Pledgee in its sole
      discretion that all other filings, recordings, registrations and other actions
      Pledgee deems necessary or desirable to establish, preserve and perfect the
      security interests and other rights granted to Pledgee pursuant to this
      Agreement shall have been made.

     

     

    
      
        
        

      

      
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    (b)    If
      Pledgor shall acquire (by purchase, Distribution or otherwise) any additional
      securities or ownership interest of any kind or nature in, or rights to
      Distributions from, or relating to, Teltronics (collectively, “Securities”)
      at any
      time or from time to time after the date hereof, Pledgor will forthwith pledge
      and deliver such Securities (and all certificates or instruments representing
      such Securities) as collateral with Pledgee and deliver to Pledgee the other
      documents and evidence described in the preceding Section 3(a) to effect any
      transfer thereof as required hereby, together with a certificate executed by
      Pledgor describing such Securities and certifying that the same have been duly
      pledged with Pledgee hereunder.

     

    (c)    If
      Pledgor shall come into possession of any Distribution, including any dividends,
      distributions, liquidation proceeds, cash or other property paid or distributed
      with respect to the Stock at any time or from time to time after the date
      hereof, Pledgor shall surrender such Distributions to Pledgee who may apply
      any
      such Distributions to any portion of the Obligations then due or hold such
      Distributions as part of the Pledged Collateral. 

     

    (d)    Pledgee
      shall have the right to appoint one or more agents for the purpose of retaining
      physical possession of any of the Pledged Collateral, which may be held (in
      the
      discretion of Pledgee) in the name of Pledgor, or endorsed or assigned in blank
      or in favor of Pledgee or any nominee or nominees of Pledgee or any agent
      appointed by Pledgee in accordance herewith.

     

    Section
      4.    Voting
      Power, Etc.
      Notwithstanding anything to the contrary contained in Section 1
      hereof,
      provided that no Event of Default (as hereinafter defined) shall have occurred
      and be continuing, but subject in all respects to the terms, conditions,
      prohibitions or limitations on the actions of Pledgor as a shareholder of
      Teltronics provided in the Organizational Documents of Teltronics, Pledgor
      shall
      be entitled to exercise all voting, consensual and other powers of ownership
      pertaining to the Pledged Collateral (including, without limitation, to make
      determinations, to exercise any election (including, without limitation,
      election of remedies) or option, and to give or receive any notice, consent,
      amendment, waiver, approval or other rights described in Section 1
      hereof),
provided
      that no
      ratification shall be given, nor any power pertaining to the Pledged Collateral
      exercised, nor any other action taken, which would violate or be inconsistent
      with the terms of this Agreement or which would have the effect of impairing
      the
      position or interests of Pledgee, or, in each case, in such a manner as would
      reasonably be expected to have an adverse effect on the ability of Pledgor
      to
      perform its obligations hereunder. If any of the foregoing rights are exercised
      by Pledgor, Pledgor shall promptly give written notice to Pledgee of its
      exercise of such right. Upon the occurrence of any Event of Default and for
      so
      long as such Event of Default is continuing, Pledgee shall have the sole and
      exclusive right to exercise all voting, consensual and other powers of ownership
      pertaining to the Pledged Collateral.

     

    Section
      5.    No
      Assumption.
      Notwithstanding anything contained herein to the contrary, whether or not an
      Event of Default shall have occurred, and whether or not Pledgee elects to
      foreclose or otherwise realize on its security interest in the Pledged
      Collateral as set forth herein or exercise any of its rights under this
      Agreement or otherwise, neither this Agreement, receipt by Pledgee of any
      Distributions, the foreclosure or other realization by Pledgee of the security
      interest in the Pledged Collateral nor any exercise by Pledgee of any of its
      rights under this Agreement or otherwise, shall in any way be deemed to obligate
      Pledgee to assume any of Pledgor’s obligations, duties, expenses or liabilities
      with respect to the Pledged Collateral or any agreement relating

     

    
      
        
        

      

      
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thereto,
        and in the event of any such foreclosure, realization or other exercise of
        rights, Pledgor shall remain bound and obligated to perform such obligations
        and
        Pledgee shall not be deemed to have assumed any of such
        obligations.

    

     

    Section
      6.    Events
      of Default.
      The
      occurrence of any of the following events shall constitute an “Event
      of Default”
under
      this Agreement: (a) Pledgor shall at any time fail timely to perform or comply
      with any provision of this Agreement after Pledgor actually obtains knowledge
      of
      such default or after notice of such default and a cure period of ten (10)
      days
      during which to cure such default; (b) any of the representations or
      warranties made by Pledgor in this Agreement shall be, or at any time shall
      become, false or inaccurate in any material respect after Pledgor actually
      obtains knowledge of such default or after notice of such default and a cure
      period of ten (10) days during which to cure such default; or (c) if there
      shall
      occur any Event of Default under the Note.

     

    Section
      7.    Representations,
      Warranties and Covenants.
      Pledgor
      represents and warrants to, and agrees with, Pledgee as follows:

     

    (a)    Pledgor
      is a duly formed limited liability company under the laws of the State of
      Delaware, validly existing and in good standing under the laws of the State
      of
      Delaware, and has full power and authority to execute and deliver to Pledgee
      this Agreement, to own its properties and to perform the obligations and carry
      out the duties imposed upon Pledgor by this Agreement. Pledgor is not required
      by applicable law to be authorized to do business in any other
      jurisdiction.

     

    (b)    Pledgor
      is, and at all times will be, the only record and beneficial owner of the
      Pledged Collateral. Pledgor will defend Pledgee’s right, title and interest in
      and to the Pledged Collateral pledged by it pursuant hereto against the claims
      and demands of any third party. The costs and expenses incurred by Pledgor
      to
      defend Pledgee’s rights, title and interests in and to the Pledged Collateral,
      shall be borne solely and exclusively by Pledgor.

     

    (c)    Pledgor’s
      rights to Distributions, if any, under the Organizational Documents of
      Teltronics are not subject to any defense, offset, counterclaim or contingency
      whatsoever. Giving effect to the aforesaid grants and pledges to Pledgee and
      the
      deliveries required hereunder, Pledgee has, as of the date of this Agreement,
      and, as to any Pledged Collateral acquired from time to time after such date,
      shall have, a valid, perfected and continuing first priority lien upon and
      security interest in the Pledged Collateral; provided,
      however,
      that no
      representation or warranty is made with respect to the perfected status of
      the
      security interest of Pledgee in the proceeds of the Pledged Collateral
      consisting of “cash proceeds” or “non-cash proceeds” as defined in the Uniform
      Commercial Code in effect in the State of Delaware (the “Code”).

     

    (d)    Pledgor
      agrees to pay, and to save Pledgee harmless from, any and all liabilities with
      respect to, or resulting from any delay in paying, any and all stamps, excise,
      sales or other taxes which may be payable or determined to be payable with
      respect to any of the Pledged Collateral or in connection with any of the
      transactions contemplated by this Agreement or the exercise by Pledgee of any
      right or remedy granted to it.

     

    
      
        
        

      

      
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    (e)    Pledgor
      shall not transfer any of the Pledged Collateral until payment or satisfaction
      in full of the Obligations.

     

    (f)    This
      Agreement and each provision herein has been duly authorized, executed and
      delivered by Pledgor and constitutes the legal, valid and binding obligation
      of
      Pledgor, enforceable against Pledgor in accordance with its terms.

     

    (g)    The
      principal place of business and chief executive office of Pledgor and the
      principal place where Pledgor’s records concerning the Pledged Collateral are
      kept, is the Pledgor’s address provided in this Agreement. Pledgor will not
      change such principal place of business or remove such records nor will Pledgor
      move its principal place of business from such address unless it shall provide
      Pledgee with at least thirty (30) days’ prior written notice thereof and there
      shall have been taken such action, satisfactory to Pledgee, as may be necessary
      to maintain the security interest of Pledgee hereunder at all times fully
      perfected and in full force and effect. Pledgor shall not change its name unless
      it shall have given Pledgee at least thirty (30) days’ prior written notice of
      any such proposed change and shall have taken such action, satisfactory to
      Pledgee, as may be necessary to maintain the security interest of Pledgee in
      the
      Pledged Collateral at all times fully perfected and in full force and
      effect.

     

    (h)    Pledgor
      has delivered to Pledgee true, correct and complete copies of all of the
      Organizational Documents of Pledgor, and Pledgor shall not permit or consent
      to
      any amendments thereto without the prior written consent of Pledgee. The
      Organizational Documents of Pledgor have been duly executed and delivered by
      Pledgor and the shareholders, directors, members, managers, officers,
      incorporators, or organizers, as the case may be, of Pledgor and constitute
      the
      legal, valid and binding obligations of such parties enforceable in accordance
      with their respective terms. Pledgor has the full power and authority to own
      its
      property and to carry on its business as now being conducted, and has the power
      and authority to execute and deliver and to perform its Obligations hereunder
      and under any of the other documents to which it is a party.

     

    The
      representations, warranties and covenants set forth in this Section 7
      shall
      survive the execution and delivery of this Agreement.

     

    Section
      8.    Further
      Assurances.
      Pledgor
      agrees that at any time and from time to time Pledgor will promptly execute
      and
      deliver all further instruments and documents, and take all further action,
      that
      may be reasonably necessary or desirable, or that Pledgee may request, in order
      to perfect and protect any security interest granted or purported to be granted
      or to enable Pledgee to exercise and enforce its rights and remedies hereunder
      with respect to any Pledged Collateral.

     

    Section
      9.     Distributions.
      

     

    (a)    Upon
      the
      occurrence and continuation of an Event of Default:

     

    (i)    All
      rights of Pledgor to receive Distributions and any and all proceeds from the
      sale or other disposition of the Pledged Collateral (or any portion thereof)
      which Pledgor would otherwise be authorized to receive and retain shall cease,
      and all such rights shall thereupon become vested in Pledgee, who shall
      thereupon have the sole right to receive and hold as Pledged Collateral such
      Distributions and proceeds.

     

    
      
        
        

      

      
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    (ii)    All
      Distributions and proceeds which are received by Pledgor contrary to the
      provisions of paragraph (a) of this Section 9
      shall be
      received in trust for the benefit of Pledgee, shall be segregated from other
      funds of Pledgor and shall be forthwith paid over to Pledgee as Pledged
      Collateral in the same form as so received (with any necessary
      endorsement).

     

    (iii)    All
      Distributions received by Pledgor in a partial or total liquidation of
      Teltronics shall, in the event that any of the Obligations remain outstanding
      at
      the time of such partial or total liquidation, be paid to Pledgee and applied
      by
      Pledgee to such outstanding Obligations. 

     

    Section
      10.    Transfers
      and Other Liens; Additional Interests.
      Pledgor
      agrees, so long as any of the Obligations are outstanding, not to:

     

    (a)    sell,
      transfer or otherwise dispose of, or grant any option or similar right with
      respect to, any of the Pledged Collateral; or

     

    (b)    create
      or
      permit to exist any lien, security interest or other charge or encumbrance
      upon
      or with respect to any of the Pledged Collateral; or

     

    (c)    sell,
      transfer or otherwise dispose of, or grant an option or similar right with
      respect to, the thirty thousand shares of Series C Preferred Stock not
      constituting the Pledged Collateral until the Note is fully paid.  

     

    Section
      11.    Appointment
      of Attorney-in-Fact.
      Pledgor
      hereby appoints Pledgee the attorney-in-fact for Pledgor, with full authority
      in
      the place and stead of Pledgor and in the name of Pledgor or otherwise, from
      time to time in Pledgee’s discretion to take any action and to execute any
      instrument which Pledgee may deem necessary or advisable to accomplish the
      purposes of this Agreement, including, without limitation, to receive, endorse
      and collect all Distributions and any instruments made payable to Pledgor
      representing any dividend, interest payment or other Distributions in respect
      of
      the Pledged Collateral or any part thereof and to give full discharge for the
      same. Pledgor agrees that the foregoing power constitutes a power coupled with
      an interest which may not be revoked and which shall survive until all of the
      Obligations shall have been indefeasibly paid in full and satisfied, provided
      that except with respect to the execution and filing of the Uniform Commercial
      Code Financing Statements, this paragraph shall not be effective until the
      occurrence of an Event of Default.

     

    Section
      12.    Pledgee
      to Perform.
      If
      Pledgor fails to perform any agreement contained herein, Pledgee may itself
      perform, or cause performance of, such agreement, and the expenses of Pledgee
      incurred in connection therewith shall be payable by Pledgor in accordance
      with
Section 17
      hereof.

     

    Section
      13.    Remedies
      Upon Default.
      Upon the
      occurrence of any Event of Default:

     

    (a)    Pledgee
      may, without any notice to Pledgor of the occurrence of such Event of Default,
      except as otherwise expressly required under the Note, exercise in respect
      of
      the Pledged Collateral, in addition to the other rights and remedies provided
      for herein or otherwise available to Pledgee, all the rights and remedies of
      a
      secured party under the Code in 

     

    
      
        
        

      

      
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effect
        at
        that time, and Pledgee may also, without notice except as specified below,
        sell
        the Pledged Collateral or any part thereof in one or more parcels at public
        or
        private sale, at any exchange, broker’s board or at any of Pledgee’s offices or
        elsewhere, for cash, on credit or for future delivery, and upon such other
        terms
        as Pledgee may deem commercially reasonable. Pledgor agrees that, to the
        extent
        notice of sale shall be required by law, at least ten (10) business days
        notice
        to Pledgor of the time and place of any public sale or the time after which
        any
        private sale is to be made shall constitute reasonable notification. Pledgee
        shall not be obligated to make any sale of Pledged Collateral regardless
        of
        notice of sale having been given. Pledgee may adjourn any public or private
        sale
        from time to time by announcement at the time and place fixed therefor, and
        such
        sale may, without further notice, be made at the time and place to which
        it was
        so adjourned.

    

     

    (b)    Pledgee
      may transfer all or any part of the Pledged Collateral into Pledgee’s name or
      the name of its nominee or nominees, by endorsing the Certificates.

     

    (c)    Pledgee
      may vote all or any part of the Pledged Collateral (whether or not transferred
      into the name of Pledgee) and give all consents, waivers and ratifications
      in
      respect of the Pledged Collateral and otherwise act with respect thereto as
      though it were the outright owner thereof (Pledgor hereby irrevocably
      constituting and appointing Pledgee the proxy and attorney-in-fact of Pledgor,
      with full power of substitution to do so).

     

    (d)    Any
      Pledged Collateral or proceeds thereof held by Pledgee as Pledged Collateral
      and
      all proceeds thereof received by Pledgee in respect of any sale of, collection
      from or other realization upon all or any part of the Pledged Collateral may,
      in
      the discretion of Pledgee, be held by Pledgee as collateral for, and/or then
      or
      at any time thereafter, be applied (after payment of any amounts payable to
      Pledgee pursuant to Section 17
      hereof),
      in whole or in part by Pledgee for the benefit of Pledgor, against all or any
      part of the Obligations and in such order as Pledgee shall elect. Any surplus
      of
      such Pledged Collateral or proceeds thereof held by Pledgee and remaining after
      payment or satisfaction in full of all of the Obligations and the expenses
      referred to in Section 17
      hereof
      shall be delivered or paid over to Pledgor or to whomsoever may be lawfully
      entitled to receive such surplus.

     

    (e)    Each
      right, power and remedy of Pledgee provided for in this Agreement or now or
      hereafter existing at law or in equity or by statute shall be cumulative and
      concurrent and shall be in addition to every other such right, power or remedy.
      The exercise or beginning of the exercise by Pledgee of any one or more of
      the
      rights, powers or remedies provided for in this Agreement now or hereafter
      existing at law or in equity or by statute or otherwise shall not preclude
      the
      simultaneous or later exercise by Pledgee of all such other rights, powers
      or
      remedies, and no failure or delay on the part of Pledgee to exercise any such
      right, power or remedy shall operate as a waiver thereof.

     

    Section
      14.    Jurisdiction,
      Venue, Service of Process.
      ANY
      LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT SHALL BE BROUGHT,
      AT
      PLEDGEE’S OPTION, ONLY IN THE COURTS OF THE STATE OF FLORIDA, BREVARD COUNTY OR
      THE MIDDLE DISTRICT OF FLORIDA. PLEDGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT
      OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION
      OF THE AFORESAID COURTS. PLEDGOR 

     

     

    
      
        
        

      

      
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IRREVOCABLY
        CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS
        IN
        ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
        OR
        CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS AS SET FORTH ABOVE.
        PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
        HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS
        ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS
        REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
        PLEAD
        OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
        ANY
        SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING CONTAINED HEREIN
        SHALL AFFECT THE RIGHT OF PLEDGEE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
        BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST PLEDGOR
        IN
        ANY OTHER JURISDICTION.

    

     

    Section
      15.    Jury
      Trial Waiver.
      EACH OF
      PLEDGOR AND PLEDGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
      ANY
      AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
      BASED
      ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY
      COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN),
      OR
      ACTIONS OF PLEDGOR OR PLEDGEE RELATING TO THE NOTE, AND THE LENDING RELATIONSHIP
      WHICH IS THE SUBJECT OF THIS PLEDGE AGREEMENT. THIS PROVISION IS A MATERIAL
      INDUCEMENT FOR PLEDGEE ENTERING INTO THIS AGREEMENT.

     

    Section
      16.     Indemnity.
      The
      Pledgor agrees to indemnify and hold harmless the Pledgee from and against
      any
      and all claims, demands, losses, judgments and liabilities (including
      liabilities for penalties) of whatsoever kind or nature, and to reimburse the
      Pledgee for all costs and expenses, including reasonable attorneys' fees,
      growing out of or resulting from this Agreement or the exercise by the Pledgee
      of any right or remedy granted to it hereunder; provided,
      that
      the Pledgor shall not be required to indemnify the Pledgee in respect of any
      claims, demands, losses, judgments, liabilities, costs or expenses arising
      from
      the gross negligence or willful misconduct of the Pledgee. In no event shall
      the
      Pledgee be liable, in the absence of gross negligence or willful misconduct
      on
      its part, for any matter or thing in connection with this Agreement other than
      to account for moneys actually received by it in accordance with the terms
      hereof. If and to the extent that the obligations of the Pledgor under this
      Section
      16
      are
      unenforceable for any reason, the Pledgor hereby agrees to make the maximum
      contribution to the payment and satisfaction of such obligations which is
      permissible under applicable law. Notwith-standing any other provision of this
      Agreement, the Pledgee shall not be liable hereunder for any action or failure
      to act hereunder, except to the extent of its gross negligence or willful
      misconduct.

     

    Section
      17.    Expenses.
      Upon
      demand, Pledgor will pay to Pledgee the amount of any and all expenses,
      including the reasonable fees and expenses of Pledgee’s counsel and of any
      experts and agents, which Pledgee may incur in connection with (i) the sale
      of,
      collection from, or other realization upon, any of the Pledged Collateral,
      (ii)
      the exercise or enforcement of any of Pledgee’s rights hereunder, or (iii) the
      failure by Pledgor to perform or observe any of the provisions
      hereof.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Section
      18. Amendments,
      Waivers, Etc.
      No
      amendment or waiver of any provision of this Agreement, nor consent to any
      departure by Pledgor herefrom, shall in any event be effective unless the same
      shall be in writing and signed by Pledgee, and then such waiver or consent
      shall
      be effective only in the specific instance and for the specific purpose for
      which given.

     

    Section
      19. Notices.
      All
      notices, demands, instructions and other communications required or permitted
      to
      be given to or made upon any party hereto shall be given in the manner specified
      in the Note, and at the address of each party hereto set forth below its
      signature on the signature page hereto. The parties hereto may change the
      address at which they are to receive notices hereunder by notice in writing
      in
      the foregoing manner to all parties.

     

    Section
      20. Continuing
      Security Interest; Transfer.
      This
      Agreement shall create a continuing security interest in the Pledged Collateral
      and shall (i) remain in full force and effect until the indefeasible payment
      or
      satisfaction in full of the Obligations, (ii) be binding upon Pledgor, its
      permitted transferees, representatives, successors and assigns, and (iii) inure,
      together with the rights and remedies of Pledgee hereunder, to the benefit
      of
      Pledgee and its permitted transferees, representatives, successors and assigns.
      Without limiting the generality of the foregoing clause (iii), Pledgee, but
      not
      Pledgor, may assign or otherwise transfer this Agreement together with the
      Pledged Collateral, the Note and any other Obligations to any other Persons
      to
      the extent permitted by the Note, and such other Persons shall thereupon become
      vested with all the benefits in respect thereof granted to Pledgee herein or
      otherwise. Upon the indefeasible payment or satisfaction in full of the
      Obligations, (x) Pledgor shall be entitled to the return, upon its request
      and
      at its expense, of such portion of the Pledged Collateral as shall not have
      been
      sold or otherwise applied or forfeited pursuant to the terms hereof, and (y)
      this Agreement shall be of no further force or effect except for the provisions
      of Sections 5, 12 and 16, which shall survive.

     

    Section
      21. Severability.
      If for
      any reason any provision or provisions hereof are determined to be invalid
      and
      contrary to any existing or future law, such invalidity shall not impair the
      operation of or affect those portions of this Agreement which are
      valid.

     

    Section
      22. Governing
      Law; Terms.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of Delaware (without giving effect to principles of conflicts
      of law). Unless otherwise defined herein, terms defined in the Code are used
      herein as therein defined.

     

    Section
      23. Recitals.
      The
      Recitals at the beginning of this Agreement are hereby incorporated into the
      substantive provisions of this Agreement.

     

    Section
      24. Counterparts.
      This
      Agreement may be executed in one or more counterparts (including by means of
      facsimile or other non-alterable electronic transmission), and it shall not
      be
      necessary that the signature of, or on behalf of, each party, or that the
      signatures of all persons required to bind any party, appear on each
      counterpart, but it shall be sufficient that the signature of, or on behalf
      of,
      each party, or that the signatures of the persons required to bind any party,
      appear on one or more such counterparts. All counterparts shall constitute
      one
      and the same instrument. It shall not be necessary in making proof of this
      Agreement or any counterpart hereof to produce or account for any of the other
      counterparts.

     


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be executed and
      delivered by its duly authorized representatives as of the date first set forth
      above.

     

    
      

        


        
          	
                  IHL
                    INVESTMENTS, LLC

                	
                  HARRIS
                    CORPORATION 

                
	 	 
	
                  By:
                    /s/
                    L. Balikowsky,
                    Mgr.                     

                  Name:
                    L. Bailkowsky

                  Title:
                    Manager

                	
                  By:
                    /s/
                    Charles J.
                    Greene                     

                  Name:
                    Charles J. Greene

                  Title:
                    V.P.-Tax & Treasurer

                


        

        


        
          	
                  Address:

                	
                  3402
                    Oak Grove, Suite 200

                  Dallas,
                    TX 75204

                  Attention:
                    Manager

                	
                  Address:

                	
                  1025
                    West NASA Blvd

                  Melbourne,
                    FL 32919

                  Attention:
                    Scott t. Mikuen

                


        

        


      

      
 

      PLEDGOR:

      *
        * * *
        *

      State
        of
        TEXAS

      County
        of
        DALLAS

      


      On
         March
        29, 2007 before
        me
        appeared L.
        Balikowsky          
        who is
personally
        known to me (or proved to me on the basis of satisfactory evidence) to be
        the
        person whose name is subscribed to within the instrument and acknowledged
        to me
        that he executed the same in his authorized capacity, and that by his signature
        on the instrument the person, or the entity upon behalf of which the person
        acted, executed the instrument.

      


      
        	
                Notary
                  Public, 

                Commission
                  No.   

                Expires
                   July
                  25. 2009   

              	
                 

                 

                 

                /s/
                  Patricia Stevens

              
	 	
                Notary

              


      

      


      


      PLEDGEE:

      *
        * * *
        *

      State
        of
        FLORIDA

      County
        of
        BREVARD

      


      On
         March
        29, 2007 
        before
        me appeared Charles
        J. Greene   
        who is
personally
        known to me (or proved to me on the basis of satisfactory evidence) to be
        the
        person whose name is subscribed to within the instrument and acknowledged
        to me
        that he executed the same in his authorized capacity, and that by his signature
        on the instrument the person, or the entity upon behalf of which the person
        acted, executed the instrument.

      


      


      


      
        	
                Notary
                  Public, 

                Commission
                  No. DD263331         

                Expires
                   
                  2/24/08   

              	
                 

                 

                 

                /s/
                  Vicki L. Calicchia

              
	 	
                Notary

              


      



    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    Exhibit
      A

     

    AGREEMENT
      AND ACKNOWLEDGEMENT OF PLEDGE

     

    OF
      TELTRONICS, INC.

     

    Teltronics,
      Inc. (the “undersigned”
or
      “Teltronics”)
      hereby
      agrees, acknowledges and consents to the execution and delivery to HARRIS
      CORPORATION (“Pledgee”),
      of
      that certain Pledge Agreement by IHL INVESTMENTS, LLC (“Pledgor”)
      dated
      of even date herewith (the “Pledge”),
      as
      collateral security for the payment and performance by the Pledgor under the
      Note delivered to Pledgee and the assignment and pledge under the Pledge to
      Pledgee by Pledgor of all of Pledgor’s right, title and interest to the Pledged
      Collateral (as defined in the Pledge). All capitalized terms used herein not
      otherwise defined herein shall have the meanings ascribed to such terms in
      the
      Pledge.

     

    The
      undersigned shall cause all of its books and records to reflect the pledge
      of
      the Pledged Collateral to Pledgee and agrees not to consent to or to permit
      any
      transfer of the Pledged Collateral or any other action that may be taken by
      Pledgor that might constitute a breach of any term or condition of the Pledge
      or
      any Event of Default so long as any Obligations remain outstanding, except
      in
      accordance with and subject to the terms and conditions of the Pledge. The
      undersigned represents and warrants that (i) the execution and delivery of
      the
      Pledge does not violate any of the undersigned’s Organizational Documents
      (including without limitation Teltronics’ Certificate of Incorporation and
      Bylaws, as they may be amended) or any other agreement to which the undersigned
      is a party or by which any of the property of the undersigned is bound, (ii)
      Pledgor’s shares in the undersigned are as set forth in the Pledge and such
      shares in the undersigned are not subject to any claim, lien or encumbrance
      whatsoever of any kind or nature; and (iii) the undersigned does not have any
      claim, right of offset, or counterclaim against Pledgor under or with respect
      to
      the Pledged Collateral or otherwise under any of the undersigned’s
      Organizational Documents, and Pledgor is not in default to the undersigned
      or
      otherwise under or in respect of any of its obligations under any of the
      undersigned’s Organizational Documents. The undersigned agrees that Pledgee
      and/or its representatives may at any time during reasonable business hours
      inspect the books, records and properties of the undersigned, and the
      undersigned shall, so long as any Obligations remain outstanding, at least
      five
      (5) business days prior to the time any Distributions are proposed to be made,
      give written notice thereof to Pledgee at its address provided in the Pledge.
      The undersigned has issued a certificate representing Pledgor’s shares in the
      undersigned. The undersigned maintains books or records for or relating to
      the
      transfer of shares in the undersigned.

     

    Notwithstanding
      the security interests of Pledgee in the Pledged Collateral, Pledgee shall
      have
      no obligation or liability whatsoever to the undersigned, or any stockholder
      or
      director thereof, or any creditor or other person having any relationship,
      contractual or otherwise, with the undersigned, nor shall Pledgee be obligated
      to perform any of the obligations or duties of Pledgor under any of the
      undersigned’s Organizational Documents, or to take any action to collect or
      enforce any claim for payment due Pledgor arising thereunder. The undersigned
      acknowledges that the security interest of Pledgee in the Pledged Collateral
      and
      all of Pledgee’s rights and remedies under the Pledge may be freely transferred
      or assigned by Pledgee, as

     

     

    
      
        
        

      

      
        1

      

      
        
          

        

      

       

      permitted
        by the Note. In the event of any such transfer or assignment, all of the
        provisions of this Agreement and Acknowledgment of Pledge shall inure to
        the
        benefit of the transferees, successors and/or assigns of Pledgee. The provisions
        of this Agreement and Acknowledgment of Pledge shall likewise be binding
        upon
        any and all permitted transferees, successors and assigns of the
        undersigned.

    

     

    The
      undersigned hereby agrees that it will comply with all reasonable instructions
      concerning the Pledged Collateral originated by Pledgee without further consent
      of Pledgor and that: (i) all Distributions will be made directly to Pledgee
      until the Obligations have been paid in full, (ii) upon the occurrence of any
      Event of Default, Pledgee shall have the sole and exclusive right to exercise
      all voting, consensual and other powers of ownership pertaining to the Pledged
      Collateral, and (iii) Pledgee may take any reasonable action which Pledgee
      may
      deem necessary for the maintenance, preservation and protection of any of the
      Pledged Collateral or Pledgee’s security interests therein, including, without
      limitation, the right to declare any or all Obligations to be immediately due
      and payable without demand or notice and the right to transfer any of the
      Pledged Interests or other Pledged Collateral into Pledgee’s name or the name of
      any designee or nominee of Pledgee.

     

    The
      undersigned hereby acknowledges that on the date hereof, Pledgee sold to Pledgor
      40,000 shares of Series C Preferred stock of the undersigned but that only
      10,000 of such shares are part of the Pledged Collateral and that 30,000 of
      such
      shares are not pledged (such unpledged shares and any underlying common stock
      is
      referred to as the “Unpledged
      Shares”).
      The
      undersigned hereby acknowledges that it will not register or effect any transfer
      or sale of the Unpledged Shares on its books or otherwise, unless the
      Obligations have previously been paid in full or unless the proceeds of such
      sale or transfer shall have been applied to pay the Obligations under the Note.
      The undersigned also acknowledges that unless the Obligations have previously
      been paid in full, any dividends or other Distributions on the Unpledged Shares
      will be paid directly to Pledgee to be applied to the Obligations under the
      Note.

    


    The
      undersigned shall, from time to time, promptly execute and deliver such further
      instruments, documents and agreements, and perform such further acts as may
      be
      necessary or proper to carry out and effect the terms of the Pledge and this
      Agreement and Acknowledgment of Pledge.

    


    This
      Agreement and Acknowledgment of Pledge is being given to induce Pledgee to
      accept the Pledge and with the understanding that Pledgee will rely
      hereon.

     


    
      
        
        

      

      
        
        

        2
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the undersigned has caused this Agreement and Acknowledgment
      of
      Pledge to be duly executed and delivered.

     

    Dated
      this 29th day of March, 2007.

     

    


    
      	 	
              TELTRONICS,
                INC. 

               

               

               

               

              By:
                /s/ Ewen R.
                Cameron                                             
                

              Name:
                Ewen R. Cameron

              Title:
                President & CEO

            


    

    


     

     

     

     

     

     

     

     

    
      3