Exhibit 10.5

 

XETA TECHNOLOGIES

2000 STOCK OPTION PLAN

As amended and Restated December 30, 2008

 

 

1.                                      Purpose.  The purpose of the XETA
Technologies 2000 Stock Option Plan (the “Plan”), is to promote the interests of
XETA Corporation, doing business as XETA Technologies (the “Company”) by aiding
the Company in attracting and retaining competent key employees and directors by
means of providing such persons with an opportunity to acquire or increase their
proprietary interest in the Company, and by affording an incentive to selected
key employees and directors to use their best efforts to assist the Company in
achieving long-term corporate objectives.  It is intended that certain options
granted hereunder will qualify as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended and that other
options granted hereunder will not be incentive stock options but instead will
be nonqualified stock options.

 

2.                                      Definitions.  Whenever used herein, the
following terms shall have the meanings set forth below:

 

(a)                                  “Board” means the Board of Directors of the
Company.

 

(b)                                 “Code” means the Internal Revenue Code of
1986, as amended.

 

(c)                                  “Committee” means a committee designated by
the Board, which shall consist of two or more “non-employee directors” as
defined in Rule 16b-3 under the Securities Exchange Act of 1934 as amended (the
“1934 Act”) or any successor Rule. The Compensation Committee of the Board may
serve as the Committee, provided that it meets these requirements.  In the event
the Committee shall no longer meet the qualification requirements set forth
above, the Board of Directors of the Company shall appoint a new committee to
administer the Plan, whose members shall cause the committee to qualify under
the transaction approval requirements of Rule 16b-3. The Committee shall have
the authority to appoint a subcommittee whose members qualify as “outside”
directors under Section 162(m) of the Code and the regulations thereunder, to
administer awards under the Plan to the extent required to meet the requirements
of Section 162(m) of the Code and the regulations thereunder.

 

(d)                                 “Company” means XETA Corporation, d/b/a XETA
Technologies.

 

(e)                                  “Disability” means a “permanent and total
disability” which enables the Participant to be eligible for and receive a
disability benefit under the Federal Social Security Act.

 

(f)                                    “Fair Market Value” means the closing
price of the Stock as reported on the NASDAQ stock market for the applicable
date, or if there were no sales on such date, on the last day preceding the
applicable date on which there were sales.

 

(g)                                 “Incentive Stock Option” means an Option
granted under the Plan which constitutes and shall be treated as an “incentive
stock option” as defined in Section 422 of the Code.

 

(h)                                 “Option” means a right or rights to purchase
shares of Stock described in Section 6.

 

(i)                                     “Option Agreement” means the agreement
between the Company and a Participant evidencing the grant of an Option and
containing the terms and conditions, not inconsistent with the Plan, that are
applicable to such Option.

 

(j)                                     “Participant” means an individual to
whom an Option is granted.

 

(k)                                  “Plan” means the XETA Technologies 2000
Stock Option Plan, as amended from time to time.

 

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(l)                                     “Retirement” means the voluntary
termination of a Participant’s employment with the Company or a Subsidiary after
twenty (20) years of continuous service or after age 59 ½.

 

(m)                               “Stock” means the Common Stock of the Company.

 

(n)                                 “Subsidiary” means a subsidiary of the
Company or an unincorporated organization controlled, directly or indirectly, by
the Company.

 

3.                                      Administration.  The Plan shall be
administered by the Committee, which shall act by vote or written consent of a
majority of its members.  The Committee shall have full power and authority to
construe, interpret, and administer the Plan and may from time to time
prescribe, amend and rescind rules and regulations for carrying out this Plan as
it may deem proper and in the best interests of the Company.  Subject to the
terms, provisions, and conditions of the Plan, the Committee shall have
exclusive jurisdiction to (i) select the individuals to whom Options will be
granted, (ii) determine the number of shares subject to each Option and the time
or times when Options will be granted, (iii) determine the price of the shares
subject to each Option, (iv) to determine the time when each Option may be
exercised, (v) fix such other provisions of the Option Agreement as the
Committee may deem necessary or desirable consistent with the terms of the Plan,
and (vi) determine all other questions relating to the administration of the
Plan.  The interpretation of any provisions of the Plan by the Committee shall
be final, conclusive, and binding upon all persons. Subject to compliance with
applicable legal requirements, the full Board may exercise any of the authority
conferred upon the Committee hereunder.  In the event of any such exercise of
authority by the Board, references in the Plan to the Committee shall be deemed
to refer to the Board.

 

4.                                      Shares Subject to the Plan.

 

(a)                                  The total number of shares of Stock
authorized to be issued under the Plan shall be 300,000, subject to adjustment
in accordance with the provisions of Section 8.

 

(b)                                 The shares to be delivered upon exercise of
an Option shall be made available, at the discretion of the Board, from the
authorized, unissued shares of the Company’s Stock or from shares of Stock
reacquired by the Company, including shares purchased in the open market.

 

(c)                                  In the event that any Option granted under
the Plan expires, terminates, ceases to be exercisable or is surrendered without
having been exercised in full, the shares subject to, but not delivered under,
such Option shall again become available for issuance under the Plan unless the
Plan has been terminated. If any Option is exercised by tendering shares of
Stock, either actually or by attestation, to the Company as full or partial
payment in connection with the exercise of an Option under this Plan, the shares
of Stock so tendered may be used by the Company to satisfy any other Option
under the Plan, provided that in no event may the number of shares of Stock
issued under the Plan, net of the shares so tendered, exceed the total number of
shares authorized to be issued under the Plan.

 

(d)                                 Shares of Stock issued under the Plan
through the settlement, assumption or substitution of outstanding awards or
through obligations to grant future awards as a condition of the Company
acquiring another entity shall not reduce the maximum number of shares available
for delivery under the Plan.

 

(e)                                  More than one Option may be granted to a
Participant pursuant to the Plan.

 

5.                                      Eligibility.  Key employees of the
Company and any of its Subsidiaries, including officers and directors who are
salaried employees, and outside directors of the Company and any of its
Subsidiaries, shall be eligible to receive Options.  Key employees and directors
to whom Options may be granted will be those selected by the Committee from time
to time who, in the sole discretion of the Committee, have contributed in the
past or who may be expected to contribute materially in the future to the
successful performance of the Company or its Subsidiaries.

 

6.                                      Option Terms and Conditions.  Each
Option granted under the Plan shall be evidenced by an Option Agreement which
shall contain such terms and conditions (which need not be uniform for all
Participants)

 

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consistent with the Plan as the Committee shall determine; provided, however,
that each Option shall satisfy the following requirements:

 

(a)          Exercise Price.  The price at which shares of Stock may be
purchased under an Option (the “Exercise Price”) and the number of shares
subject to the Option, which shall be fixed on the date of grant of the Option,
shall be specified in the Option Agreement.  The Exercise Price shall not be
less than Fair Market Value of such shares on the date the Option is granted,
subject, however, to the provisions of Section 8 hereof and further provided
that in no event shall the Exercise Price be less than the par value of the
Stock.

 

(b)         Exercise of Options.

 

(i)             The period during which an Option may be exercised shall not
exceed ten (10) years from the date the Option is granted; provided, however,
that the Option may be sooner terminated in accordance with the provisions of
Subsection (d) below.

 

(ii)          An Option may be exercised only after one year of continued
employment by or service as an outside director with the Company or one of its
Subsidiaries immediately following the date the Option is granted and, except as
provided in Subsection (d) below, only during the continuance of the
Participant’s employment with the Company or one of its Subsidiaries.  Subject
to the foregoing limitations and the terms and conditions of the Option
Agreement, each Option shall be exercisable in whole or in part in installments,
at such time or times as the Committee may prescribe in the Option Agreement.

 

(c)          Payment.  Full payment of the Exercise Price shall be made at the
time of exercising the Option in whole or in part.  The Exercise Price shall be
payable (i) in cash or by an equivalent means acceptable to the Committee,
(ii) by delivery (actually or by attestation) to the Company of shares of Stock
owned by the Participant having a Fair Market Value on the date of exercise of
the Option equal to the Exercise Price for the shares being purchased; except
that any portion of the Exercise Price representing a fraction of a share shall
in any event be paid in cash and no shares of the Stock which have been held by
the Participant for less than six (6) months may be delivered in payment of the
Exercise Price, or (iii) in the discretion of the Committee, by any combination
of the above.  For Options granted prior to January 1, 2005, the Committee may
grant an Option that provides for the grant of a replacement Option if all or
any portion of the Exercise Price of the original Option is paid by delivery of
shares of Stock.  The replacement Option shall (i) cover the number of shares of
Stock surrendered to pay the Exercise Price of the original Option; (ii) have an
Exercise Price equal to 100% of the Fair Market Value of such Stock on the date
the replacement Option is granted; (iii) become exercisable no sooner than six
(6) months after the date of grant of the replacement Option; and (iv) have an
expiration date identical to the expiration date of the original Option.  No
certificates for shares purchased upon exercise of an Option shall be issued
until full payment therefore has been made, and a Participant shall have none of
the rights of a shareholder until such certificates are issued to him or her.

 

(d)         Termination of Employment.

 

(i)             Death.  If a Participant’s employment is terminated by death,
the Option may be exercised by the Participant’s estate or by the person or
persons to whom the Participant’s rights pass by will or by the laws of descent
and distribution, subject to the same conditions upon exercise to which the
Participant was subject prior to death.  All Options which were not exercisable
as of the date of death shall expire as of such date.

 

(ii)          Disability.  If a Participant’s employment with the Company or a
Subsidiary is terminated by Disability, any Options held by the Participant may
be exercised in accordance with and subject to the same conditions upon exercise
to which the Participant was subject prior to such Disability; provided,
however, that the Option must be exercised prior to the expiration date of the
Option or within one year after the date of Disability, whichever is earlier. 
All Options which were not exercisable as of the date of Disability shall expire
as of such date.

 

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(iii)       Retirement.  If a Participant’s employment with the Company or a
Subsidiary is terminated by reason of Retirement, any Options held by the
Participant may be exercised in accordance with and subject to the same
conditions upon exercise to which the Options were subject prior to the
Participant’s Retirement; provided, however, that the Options must be exercised
prior to the expiration date of the Options or within three (3) months after the
date of Participant’s Retirement, whichever is earlier.  All Options which were
not exercisable as of the date of Retirement shall expire as of such date.

 

(iv)      Other Termination.  If a Participant’s employment with the Company or
a Subsidiary is terminated for any reason other than for death or Disability and
other than “for cause” as defined in subparagraph (v) below, any Options held by
the Participant may be exercised in accordance with and subject to the same
conditions upon exercise to which the Options were subject prior to the
Participant’s termination of employment; provided, however, that the Options
must be exercised prior to the expiration date of the Options or within three
(3) months after the date of such termination of employment, whichever is
earlier.  All Options which were not exercisable as of the date of such
termination shall expire as of such date.  In the case of a director who is not
an employee of the Company or a Subsidiary, termination of employment shall mean
the voluntary or involuntary cessation of Board service for any reason.

 

(v)         Termination For Cause.  Notwithstanding any other provision in the
Plan to the contrary, if the Participant’s employment with the Company or a
Subsidiary is terminated “for cause” (as defined below), any unexercised Options
held by the Participant shall immediately be forfeited.  Termination “for cause”
shall mean termination by the Company because of: (x) the Participant’s willful
and continued failure to substantially perform his duties (other than any such
failure resulting from the Participant’s incapacity due to physical or mental
impairment); (y) the willful conduct of the Participant which is demonstrably
and materially injurious to the Company or a Subsidiary, monetarily or
otherwise, or (z) the conviction of the Participant for a felony by a court of
competent jurisdiction.

 

(e)          Special Incentive Stock Option Conditions.  Notwithstanding
anything in the Plan to the contrary, the following special conditions shall
apply to Incentive Stock Options granted under the Plan:

 

(i)             if an Incentive Stock Option is granted to a Participant who, at
the time such Option is granted, owns stock that has more than 10 percent of the
voting power of all classes of stock of the Company or of any Subsidiary, then
(x) the Exercise Price of the Incentive Stock Option granted shall be not less
than 110% of the Fair Market Value on the date of grant; and (y) the Incentive
Stock Option shall not be exercisable after the expiration of five (5) years
from the date such Option is granted; and

 

(ii)          Incentive Stock Options shall not be granted to any Participant,
the effect of which would be to permit such Participant to first exercise
options, in any calendar year, for the purchase of shares having a Fair Market
Value, determined at the time the Option is granted, in excess of $100,000.  Any
Option purporting to constitute an Incentive Stock Option in excess of such
limitation shall, to the extent of such excess, constitute a nonqualified stock
option.

 

(f)       Other Terms and Conditions.  Any Option granted hereunder shall
contain such other and additional terms, not inconsistent with the terms of the
Plan, which are deemed necessary or desirable by the Committee.  Options may be
granted that are subject to different terms, conditions and restrictions than
other Options granted.  Except as otherwise expressly provided in the Plan, the
Committee may designate an Option, at the time of its grant, as an Incentive
Stock Option or as a nonqualified stock option; provided, however, that an
Option may be designated as an Incentive Stock Option only if the applicable
Participant is an employee of the Company or a Subsidiary on the date of grant.

 

7.                                      Transferability of Options.  An Option
shall not be transferable except by will or the laws of descent and distribution
upon the death of the Participant.  Options shall be exercisable during the
Participant’s lifetime only by the Participant, or, in the event of the
Participant’s Disability, by his legal representative. 

 

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Notwithstanding the foregoing, the Committee may, in its sole discretion, permit
a Participant to transfer a non-qualified Option, to a “family member” as
defined in the General Instructions to Form S-8 adopted by the Securities
Exchange Commission under the Securities Act of 1933, as amended, provided that
such transfer is not made for value as set forth in the General Instructions to
Form S-8.  Any such Option so transferred to the aforementioned persons shall be
subject to the provisions of Section 6 concerning the exercisability during the
Participant’s employment or service as an outside director of the Company or any
of its Subsidiaries.

 

8.                                      Changes in Capital Adjustments Affecting
Stock.  In the event that there is any change in the capital structure of the
Company through merger, consolidation, reorganization, recapitalization,
spin-off or otherwise, or if there shall be any dividend on the Company’s Stock,
payable in such Stock, of if there shall be a Stock split or a combination of
shares, then the number of shares reserved for Options (both in the aggregate
and with respect to each Participant), and the number of shares subject to
outstanding Options and the price per share of each such Option, shall be
proportionately adjusted by the Committee as it deems equitable, in its absolute
discretion, to prevent dilution or enlargement of the rights of a Participant. 
The issuance of Stock for consideration and the issuance of Stock rights shall
not be considered a change in the Company’s capital structure.  No adjustment
provided for in this Section 8 shall require the issuance of any fractional
share.  To the extent deemed advisable by the Committee, the adjustments made to
the Options will not (i) result in a modification to the incentive stock options
as defined in Section 424 or other subsequent relevant Internal Revenue Code
Sections and Treasury Regulations; (ii) result in an earnings charge to the
Company under generally accepted accounting principles; or (iii) be made in a
manner that would cause Section 409A of the Code to apply to such adjusted
Options.

 

9.                                      Change In Control.  Unless the Committee
shall otherwise expressly provide in the Option Agreement, upon the occurrence
of a Change in Control of the Company (as defined herein), all Options then
outstanding under the Plan shall become immediately fully exercisable by the
Participant.  A “Change in Control” shall be deemed to have occurred if:

 

(a)                                  Any person becomes the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
securities of the Company representing 25 percent or more of the combined voting
power of the Company’s then outstanding common stock, unless through a
transaction arranged by, or consummated with the prior approval of the Board;

 

(b)                                 During any period of two consecutive years,
there shall cease to be a majority of the Board comprised as follows: 
individuals who at the beginning of such period constituted the Board and any
new director(s) whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved;

 

(c)                                  The shareholders of the Company approve a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) less than fifty percent of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation;

 

(d)                                 The shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of its assets; or

 

(e)                                  Two-thirds (2/3rd) of the Board deems any
other event to constitute a change in control of the Company for purposes of
this provision, or if, notwithstanding the occurrence of an event as described
in subsections (a) through (d) of this Section 9, two-thirds (2/3rd) of the
Board deems such event not to constitute a change in control for purposes of
this provision.

 

10.                               Amendment or Termination.  The Board of
Directors of the Company shall have the right, at any time, to amend or
terminate the Plan in any respect which it may deem to be in the best interests
of the Company; provided, however, no amendment to the Plan shall be made
without the approval of the Company’s shareholders if such amendment would:
(i) materially increase the benefits accruing to Participants under the Plan;
(ii) materially increase the number of securities that may be issued under the
Plan; (iii) materially modify the requirements as to

 

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eligibility for participation in the Plan; or (iv) otherwise require shareholder
approval under the Oklahoma General Corporation Act, Rule 16b-3 of the
Securities Exchange Act of 1934, as amended from time to time, or
Section 162(m) of the Code.

 

11.                               Effective Date and Approval.   This Plan, as
Amended and Restated, was approved by the Board of Directors on December 30,
2008.  Options issued under the Plan prior to January 1, 2005 will continue in
effect and will be subject to the terms of the Plan as in effect prior to this
restatement.  The Plan as originally adopted took effect upon its adoption by
the Company’s Board of Directors on January 5, 2000.  The Plan was submitted to
the Company’s shareholders and approved by them at the Company’s annual meeting
on April 11, 2000.

 

12.                               Duration of Plan.  The Plan shall remain in
effect for a period of ten (10) years from the date of its adoption by the
Board, unless sooner terminated in accordance with Section 10.

 

13.                               Miscellaneous.

 

(a)                                  The Plan and all Options granted pursuant
to it are subject to all applicable laws, rules and regulations, including
without limitation Federal Securities laws and tax laws.  Notwithstanding any
provisions of the Plan or any Option Agreement, the Participant shall not be
entitled to exercise an Option nor shall the Company be obligated to issue any
shares to a Participant if such exercise or issuance would constitute a
violation of any provision of any such laws, rules or regulation.

 

(b)                                 The Committee may require each Participant
acquiring Stock pursuant to the exercise of an Option to represent to and agree
with the Company in writing that such Participant is acquiring the shares
without a view to distribution thereof.  No shares of Stock shall be issued
pursuant to an Option until all applicable securities laws and other legal or
regulatory requirements have been satisfied.  The Committee may require the
placing of stop-orders and restrictive legends on certificates for Stock, as it
deems appropriate.

 

(c)                                  The proceeds received by the Company from
the sale of Shares pursuant to Options may be used for general corporate
purposes.

 

(d)                                 The Company may, as a condition to issuing
Stock upon exercise of an Option, require the payment (through withholding from
the Participant’s salary or payment of cash by the Participant) of any federal,
state or local taxes required by law to be withheld with respect to such.

 

(e)                                  The adoption of the Plan does not preclude
the adoption by appropriate means of any other incentive plan for employees and
nothing herein shall be construed to limit the Company’s right to grant options
outside of the Plan for any proper and lawful purpose.

 

(f)                                    The fact that an employee has been
granted an Option under the Plan shall not in any way affect or qualify the
right of the employer to terminate the employee’s employment at any time.

 

(g)                                 Members of the Committee shall be entitled
to indemnification as directors of the Company, and to any limitation of
liability and reimbursement as directors with respect to their services as
members of the Committee.

 

(h)                                 The Participant is required to notify the
Company of a disqualifying disposition of Company stock acquired through the
exercise of incentive stock options as defined in Section 422 or other
subsequent relevant Internal Revenue Code Sections and Treasury Regulations.

 

14.                               Section 409A of the Code.

 

(a)                                  The Plan is designed with the intent that
no Options granted under the Plan shall be subject to Section 409A of the Code,
and all provisions hereof shall be construed in a manner consistent with that
intent.

 

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(b)                                 To the extent that the Committee determines
that any Option granted under the Plan is subject to Section 409A of the Code,
the Option Agreement evidencing such Option shall incorporate the terms and
conditions necessary to avoid the consequences specified in
Section 409A(a)(1) of the Code.  To the extent applicable, the Plan and Option
Agreements shall be interpreted in accordance with Section 409A of the Code and
Department of Treasury regulations and other interpretive guidance issued
thereunder (“409A Guidance”).  Notwithstanding any provision of the Plan to the
contrary, in the event that the Committee determines that any Option may be
subject to Section 409A of the Code, the Board of Directors may adopt such
amendments to the Plan and the applicable Option Agreement or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Board determines are
necessary or appropriate to: (i) exempt the Option from Section 409A of the Code
and/or preserve the intended tax treatment of the benefits provided with respect
to the Option; or (ii) comply with the requirements of Section 409A of the Code
and 409A Guidance.  Neither the Company nor the Committee shall be responsible
for any additional tax imposed pursuant to Section 409A of the Code, nor will
the Company or the Committee be required to indemnify or otherwise reimburse a
Participant for any liability incurred as a result of Section 409A of the Code.

 

(c)                                  Notwithstanding anything to the contrary in
this Plan (and unless the Option Agreement provides otherwise, with specific
reference to this sentence), to the extent that a Participant holding an Option
that constitutes “deferred compensation” for purposes of Section 409A of the
Code is a “specified employee” (as defined in Section 409A of the Code and 409A
Guidance), no distribution or payment of any amount shall be made before a date
that is six (6) months following the date of such Participant’s “separation from
service” (as defined in Section 409A of the Code and 409A Guidance) or, if
earlier, the date of the Participant’s death.

 

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