Exhibit 10.1


XETA TECHNOLOGIES, INC. 


2004 OMNIBUS STOCK INCENTIVE PLAN


1.       Establishment and Purpose. 


          There is hereby adopted the XETA Technologies, Inc. 2004 Omnibus Stock Incentive Plan (the “Plan”). The Plan shall be in addition to the XETA Technologies 2000 Stock Option Plan. The Plan is intended to promote the interests of the Company and the stockholders of the Company by providing officers, other employees of the Company, directors who are not employees of the Company, and other persons who are expected to make a long-term contribution to the success of the Company with appropriate incentives and rewards to encourage them to enter into and continue in the employ of the Company and/or to acquire a proprietary interest in the long-term success of the Company, thereby aligning their interest more closely to the interest of stockholders. 


2.       Definitions.


          As used in the Plan, the following definitions apply to the terms indicated below: 

	
 
 
  	
 
(a)
  	
  
“Award   Agreement” shall mean the written agreement between the Company and a   Participant evidencing an Incentive Award.
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
(b)
  	
  
“Board of   Directors” shall mean the Board of Directors of the Company.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
  
(c)      “Cause,”   when used in connection with the termination of a Participant’s employment by   the Company, shall mean (i)  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); (ii) the willful conduct of the Participant which is   demonstrably and materially injurious to the Company or a Subsidiary,   monetarily or otherwise, or (iii) the conviction of the Participant for a   felony by a court of competent jurisdiction. The Committee shall determine   whether a termination of employment is for Cause.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
(d)
  	
  
“Change in   Control” shall mean any of the following occurrences:
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(i)
  	
  
any   “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange   Act (other than the Company, any trustee or other fiduciary holding   securities under an employee benefit plan of the Company or any corporation   owned, directly or indirectly, by the stockholders of the Company in   substantially the same proportions as their ownership of stock of the Company),   is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the   Exchange Act), directly or indirectly, of securities of the Company   representing 50% or more of the combined voting power of the Company’s then   outstanding securities;
  









	
 
 
  	
 
 
  	
  
(ii)
  	
  
during any   period of not more than two consecutive years (not including any period prior   to the adoption of the Plan), individuals who at the beginning of such period   constitute the Board of Directors and any new director (other than a director   designated by a person who has entered into an agreement with the Company to   effect a transaction described in clause (i), (iii) or (iv) of   this Section) whose election by the Board of Directors or nomination for   election 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, cease for any reason to constitute at least a majority thereof;
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(iii)
  	
  
the   stockholders of the Company approve a merger or consolidation of the Company   with any other corporation, other than (A) a merger or consolidation   that 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) more than 50% of the combined voting power of the voting securities   of the Company or such surviving entity outstanding immediately after such   merger or consolidation or (B) a merger or consolidation effected to   implement a recapitalization of the Company (or similar transaction) in which   no “person” (as herein above defined) acquires more than 50% of the combined   voting power of the Company’s then outstanding securities; or
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(iv)
  	
  
the   stockholders 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 the Company’s assets.
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
(e)
  	
  
“Code” shall   mean the Internal Revenue Code of 1986, as amended from time to time.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
(f)
  	
  
“Committee”   shall mean the Compensation Committee of the Board of Directors. The   Committee shall consist of two or more persons each of whom is an “outside   director” within the meaning of Section 162(m) of the Code and a   “Non-Employee Director” within the meaning of Rule 16b-3 under the   Exchange Act (or who satisfies any other criteria for administering employee   benefit plans as may be specified by the Securities and Exchange Commission   in order for transactions under such plan to be exempt from the provisions of   Section 16(b) of the Exchange Act).
  




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(g)
  	
  
“Company”   shall mean XETA Technologies, Inc., an Oklahoma corporation.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(h)
  	
  
“Common   Stock” shall mean the common stock of the Company, $0.001 par value per   share.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(i)
  	
  
“Disability”   shall mean: (1) any physical or mental condition that would qualify a   Participant for a disability benefit under the long-term disability plan maintained   by the Company or a Subsidiary of the Company and applicable to such   Participant or, if such long-term disability plan is not applicable to the   Participant, then a “permanent and total disability” which enables the   Participant to be eligible for and receive a disability benefit under the   Federal Social Security Act ; or (2) when used in connection with the   exercise of an Incentive Stock Option following termination of employment,   disability within the meaning of Section 22(e)(3) of the Code.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(j)
  	
  
“Effective   Date” shall mean the date upon which this Plan is adopted by the Board of   Directors.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(k)
  	
  
“Exchange   Act” shall mean the Securities Exchange Act of 1934, as amended from time to   time.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(l)
  	
  
“Executive   Officer” shall have the meaning set forth in Rule 3b-7 promulgated under   the Exchange Act.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(m)
  	
  
“Exercise   Date” shall mean the date on which a Participant may exercise an Incentive   Award.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(n)
  	
  
“Fair Market   Value” of a share of Common Stock, as of a date of determination, shall mean   (i) the closing sales price per share of Common Stock on the national   securities exchange on which such stock is principally traded for the last   preceding date on which there was a sale of such stock on such exchange, or   (ii) if the shares of Common Stock are not listed or admitted to trading   on any such exchange, the closing price as reported by the Nasdaq Stock   Market for the last preceding date on which there was a sale of such stock on   such exchange, or (iii) if the shares of Common Stock are not then   listed on the Nasdaq Stock Market, the average of the highest reported bid   and lowest reported asked prices for the shares of Common Stock as reported   by the National Association of Securities Dealers, Inc. Automated   Quotations System for the last preceding date on which there was a sale of   such stock in such market, or
(iv) if the shares of Common Stock are not   then listed on a national securities exchange or traded in an   over-the-counter market, such value as determined by the Committee in good   faith.
  




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(o)
  	
  
“Incentive   Award” shall mean an Option, Tandem SAR, Stand-Alone SAR, Restricted Stock   grant, Phantom Stock grant or Stock Bonus granted pursuant to the terms of   the Plan.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(p)
  	
  
“Incentive   Stock Option” shall mean an Option that is an “incentive stock option” within   the meaning of Section 422 of the Code.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(q)
  	
  
“Issue Date”   shall mean the date established by the Company on which shares of Restricted   Stock shall be registered in the name of the Participant pursuant to the terms   of Section 10(e) of the Plan.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(r)
  	
  
“Non-Qualified   Stock Option” shall mean an Option that is not an Incentive Stock Option.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(s)
  	
  
“Option”   shall mean an option to purchase shares of Common Stock granted pursuant to   Section 7 of the Plan.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(t)
  	
  
“Participant”   means any person who is both eligible to receive an Incentive Award pursuant   to the Plan (as set forth in Section 5) and to whom an Incentive Award   is granted pursuant to the Plan, and, upon his or her death, his or her   successors, heirs, executors and administrators, as the case may be.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(u)
  	
  
“Phantom   Stock” shall mean the right, granted pursuant to Section 11 of the Plan,   to receive in cash the Fair Market Value of a share of Common Stock.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)
  	
  
“Plan” shall   mean this 2004 Omnibus Stock Incentive Plan, as amended from time to time.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(w)
  	
  
“Reference   Value” shall mean, with respect to Stand-Alone SARs, the greater of the Fair   Market Value or the value given by the Compensation Committee.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(x)
  	
  
“Restricted   Stock” shall mean a share of Common Stock that is granted pursuant to the   terms of Section 10 hereof and that is subject to the restrictions set   forth in Section 10 of the Plan.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(y)
  	
  
“Rule 16b-3”   shall mean Rule 16b-3 promulgated under the Exchange Act.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(z)
  	
  
“Section 162(m)”   shall mean Section 162(m) of the Code and the regulations promulgated   thereunder.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(aa)
  	
  
“Securities   Act” shall mean the Securities Act of 1933, as amended from time to time.
  
	
  
 
  	
  
 
  	
  
 
  



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(ab)
  	
  
“Stand-Alone   SAR” shall mean a stock appreciation right granted pursuant to Section 9   of the Plan that is not related to any Option.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ac)
  	
  
“Stock   Bonus” shall mean a bonus payable in shares of Common Stock granted pursuant   to Section 12 of the Plan.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ad)
  	
  
“Subsidiary”   shall mean a “subsidiary corporation” within the meaning of   Section 424(f) of the Code.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ae)
  	
  
“Tandem SAR”   shall mean a stock appreciation right granted pursuant to Section 8 of   the Plan that is related to an Option.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(af)
  	
  
“Termination   of employment,” or words of similar import, in the Plan shall be deemed,   (i) when applied to non-employee Directors, to mean “termination of   service as a director,” and (ii) when applied to employee-Directors, to   mean “termination of service as an employee and a director.”    Reference   to “termination of employment,” or words of similar import, in the Plan shall   not be deemed to apply to persons who were not employees or a director of the   Company or a Subsidiary of the Company.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ag)
  	
  
“Vesting   Date” shall mean the date established by the Committee on which an Incentive   Award may vest.
  
	
   
  	
  
 
  	
  
 
  
	
  
3.
  	
  
Stock Subject to the Plan.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(a)
  	
  
Shares   Available for Awards.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
The maximum   number of shares of Common Stock reserved for issuance under the Plan shall   be 600,000 shares (subject to adjustment as provided herein). The total   number of shares reserved for issuance hereunder may be authorized but   unissued Common Stock or authorized and issued Common Stock held in the   Company’s treasury or acquired by the Company for the purposes of the Plan.   The Committee may direct that any stock certificate evidencing shares issued   pursuant to the Plan shall bear a legend setting forth such restrictions on   transferability as may apply to such shares pursuant to the Plan. The grant   of a Tandem SAR shall not reduce the number of shares of Common Stock with   respect to which Incentive Awards may be granted pursuant to the Plan. Upon   the exercise of any Tandem SAR, the related Option shall be canceled to the   extent of the number of shares of Common Stock as to which the Tandem SAR is   exercised and, notwithstanding the
foregoing, such number of shares shall no   longer be available for Incentive Awards under the Plan. Subject to   adjustment under Section 3(c) below, the maximum number of shares of Common   Stock that may be issued under the Plan shall be increased as of   November 1 each year, beginning November 1, 2004, by three percent   (3%) of the total number of shares of Common Stock that are issued and   outstanding on the immediately 
  



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preceding   October 31st. Any provision herein to the contrary   notwithstanding, the maximum number of shares of Common Stock that may be   issued pursuant to Incentive Stock Options granted hereunder shall not exceed   600,000, subject to adjustment under Section 3(c) below.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
Individual   Limitation.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
The total   number of shares of Common Stock subject to Incentive Awards (including   Incentive Awards payable in cash but denominated as shares of Common Stock,   i.e., Stand-Alone SARs and Phantom Stock), awarded to any employee during any   tax year of the Company, shall not exceed 250,000 shares. Determinations   under the preceding sentence shall be made in a manner that is consistent   with Section 162(m) of the Code.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)
  	
  
Adjustment   for Change in Capitalization.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
In the event   that the Committee shall determine that any dividend or other distribution   (whether in the form of cash, Common Stock, or other property),   recapitalization, stock split, reverse stock split, reorganization, merger,   consolidation, spin-off, combination, repurchase, or share exchange, or other   similar corporate transaction or event, affects the Common Stock such that an   adjustment is appropriate in order to prevent dilution or enlargement of the   rights of Participants under the Plan, then the Committee shall make such   equitable changes or adjustments as it deems necessary or appropriate to any   or all of (i) the number and kind of shares of stock that may thereafter   be issued in connection with Incentive Awards, (ii) the number and kind   of shares of stock issued or issuable in respect of outstanding Incentive   Awards, and (iii) the exercise price, grant price, or purchase price   relating to any Incentive Award;
provided that, with respect to Incentive   Stock Options, such adjustment shall be made in accordance with   Section 424 of the Code.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(d)
  	
  
Re-Use of   Shares.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
The   following shares of Common Stock shall again become available for Incentive   Awards: any shares subject to an Incentive Award that remain unissued upon   the cancellation, surrender, exchange or termination of such award for any   reason whatsoever; any shares of Restricted Stock forfeited; and any shares   in respect of which a stock appreciation right is settled for cash.
  




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4.
  	
  
Administration of the Plan.
  
	
  
 
  
	
  
          The   Plan shall be administered by the Committee. The Committee shall have the   authority in its sole discretion, subject to and not inconsistent with the   express provisions of the Plan, to administer the Plan and to exercise all   the powers and authorities either specifically granted to it under the Plan   or necessary or advisable in the administration of the Plan, including,   without limitation, the authority to grant Incentive Awards; to determine the   persons to whom and the time or times at which Incentive Awards shall be   granted; to determine the type and number of Incentive Awards to be granted,   the number of shares of Stock to which an Award may relate and the terms,   conditions, restrictions and performance criteria relating to any Incentive   Award; to determine whether, to what extent, and under what circumstances an   Incentive Award may be settled, canceled, forfeited, exchanged,
or   surrendered; to grant Incentive Awards in replacement of Incentive Awards   previously granted under the Plan or under any other plan of the Company,   including without limitation a grant of Stock Options or Restricted Stock in   exchange for a Participant’s agreement to cancel a higher-priced stock option   or options  previously granted to such   Participant; to subject shares of Stock to which an Award may relate to   rights of repurchase or rights of refusal in favor of the Company under the   circumstances and upon the terms set forth in an Award Agreement; to make   adjustments in the performance goals in recognition of unusual or   non-recurring events affecting the Company or the financial statements of the   Company (to the extent in accordance with Section 162(m)of the Code, if   applicable), or in response to changes in applicable laws, regulations, or   accounting principles; to construe and interpret the Plan and any Incentive   Award; to prescribe, amend and rescind
rules and regulations relating to the   Plan; to determine the terms and provisions of Award Agreements; and to make   all other determinations deemed necessary or advisable for the administration   of the Plan.
  
	
   
  
	
  
          The   Committee may, in its absolute discretion and without amendment to the Plan,   (i) accelerate the date on which any Option or Stand-Alone SAR granted under   the Plan becomes exercisable, waive or amend the operation of Plan provisions   respecting exercise after termination of employment, or otherwise adjust any   of the terms of such Option or Stand-Alone SAR (provided, however, that with   respect to Incentive Stock Options, no such change shall be made that would   cause the Incentive Stock Options to become Non-Qualified Stock Options   unless both the Participant and the Company expressly agree to such change),   and (ii) accelerate the Vesting Date or Issue Date, or waive any condition   imposed hereunder, with respect to any share of Restricted Stock or Phantom   Stock or otherwise adjust any of the terms applicable to such share.
  
	
  
 
  
	
  
          No   member of the Committee shall be liable for any action, omission or   determination relating to the Plan, and the Company shall indemnify and hold   harmless each member of the Committee and each other director or employee of   the Company to whom any duty or power relating to the administration or   interpretation of the Plan has been delegated against any cost or expense (including   counsel fees) or liability (including any sum paid in settlement of a claim   with the approval of the Committee) arising out of any action, omission or   determination relating to the Plan, if, in either case, such action, omission   or determination was taken or made by such member, director or employee in   good faith and in a manner such member, director or employee reasonably   believed to be in or not opposed to the best interests of the Company.
  




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 5.
  	
 
Eligibility.
  
	
 
 
  	
 
 
  
	
  
          The   persons who shall be eligible to receive Incentive Awards pursuant to the   Plan shall be all employees and directors of the Company and its Subsidiaries   and such other persons whom the Committee determines are expected to make a   contribution to the Company.  The   Committee may grant Incentive Awards to any, all or none of such eligible   persons at any time, from time to time, during the term of the Plan.
  
	
 
 
  	
 
 
  
	
 
6.
  	
 
Awards Under the Plan; Award Agreement.
  
	
 
 
  	
 
 
  
	
  
          The   Committee may grant Options, Tandem SARs, Stand-Alone SARs, shares of   Restricted Stock, shares of Phantom Stock and Stock Bonuses, in such amounts   and with such terms and conditions as the Committee shall determine, subject   to the provisions of the Plan.
  
	
  
  	
 
 
  
	
  
          Each   Incentive Award granted under the Plan (except an unconditional Stock Bonus)   shall be evidenced by an Award Agreement that shall contain such provisions   as the Committee may in its sole discretion deem necessary or desirable. By   accepting an Incentive Award, a Participant thereby agrees that the award   shall be subject to all of the terms and provisions of the Plan and the   applicable Award Agreement.
  
	
 
 
  	
 
 
  
	
 
7.
  	
 
Options.
  
	
 
 
  	
 
 
  
	
 
 
  	
 
(a)
  	
  
Identification   of Options.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Each Option   shall be clearly identified in the applicable Award Agreement as either an   Incentive Stock Option or a Non-Qualified Stock Option.
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
(b)
  	
  
Exercise   Price.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Each Award   Agreement with respect to an Option shall set forth the amount (the “option   exercise price”) payable by the grantee to the Company upon exercise of the   Option. The Option exercise price per share shall be set by the Committee in   its discretion on a case by case basis, but in the case of an Incentive Stock   Option shall not be less than the Fair Market Value of a share of Common   Stock on the date of grant.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
  
  	
 
(c)
  	
  
Term and   Exercise of Options.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(i)
  	
  
Unless the   applicable Award Agreement provides otherwise, an Option shall become   cumulatively exercisable as to 25 percent of the shares covered thereby   on each of the first, second, third and fourth anniversaries of the date of   grant. The Committee shall determine the 
  




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expiration   date of each Option; provided, however, that no Incentive Stock Option shall   be exercisable more than 10 years after the date of grant. Unless the   applicable Award Agreement provides otherwise, no Option shall be exercisable   prior to the first anniversary of the date of grant.
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(ii)
  	
  
An Option   shall be exercised by delivering notice to the Company’s principal office, to   the attention of its Secretary, no less than one business day in advance of   the effective date of the proposed exercise. An Option may also be exercised   electronically by notifying the Company’s agent, pursuant to the methods then   in use by that agent. Such notice shall specify the number of shares of   Common Stock with respect to which the Option is being exercised and the   effective date of the proposed exercise and shall be signed by the   Participant or other person then having the right to exercise the Option.   Such notice may be withdrawn at any time prior to the close of business on   the business day immediately preceding the effective date of the proposed   exercise. Payment for shares of Common Stock purchased upon the exercise of   an Option shall be made on the effective date of such exercise by one or a   combination of the following means:
(i) in cash, by certified check,   bank cashier’s check or wire transfer; (ii) by delivering a properly   executed exercise notice to the Company together with a copy of irrevocable   instructions to a broker to deliver promptly to the Company the amount of   sale or loan proceeds to pay the full amount of the exercise price,   (iii) by delivering shares of Common Stock owned by the Participant for   at least six months with appropriate stock powers, (iv) by any other means   which the Committee, in its sole discretion, determines to provide legal   consideration for the Common Stock and to be consistent with the purposes of   the Plan, or (v) any combination of the foregoing forms. In determining   the number of shares of Common Stock necessary to be delivered to or retained   by the Company, such shares shall be valued at their Fair Market Value as of   the Exercise Date.
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(iii)
  	
  
Certificates   for shares of Common Stock purchased upon the exercise of an Option shall be   issued in the name of the Participant or other person entitled to receive   such shares, and delivered to the Participant or such other person as soon as   practicable following the Effective Date on which the Option is exercised. In   the event of an exercise by way of electronic means, no actual Certificates   need be issued.
  




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(d)
  	
  
Limitations   on Incentive Stock Options.
  
	
 
 
  	
 
 
  	
  
 
  
	
  
  	
 
 
  	
  
(i)
  	
  
To the   extent that the aggregate Fair Market Value of shares of Common Stock with   respect to which Incentive Stock Options are exercisable for the first time   by a Participant during any calendar year under the Plan and any other stock   option plan of the Company (or any Subsidiary of the Company) shall exceed   $100,000, or such higher value as may be permitted under Section 422 of   the Code, such Options shall be treated as Non-Qualified Stock Options. Such   Fair Market Value shall be determined as of the date on which each such   Incentive Stock Option is granted.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(ii)
  	
  
No Incentive   Stock Option may be granted to an individual if, at the time of the grant,   such individual owns stock possessing more than ten percent of the total   combined voting power of all classes of stock of the Company unless   (i) the exercise price per share of such Incentive Stock Option is at   least 110 percent of the Fair Market Value of a share of Common Stock of   the Company, or of its parent or subsidiary corporation, at the time such   Incentive Stock Option is granted and (ii) such Incentive Stock Option   is not exercisable after the expiration of five years from the date such   Incentive Stock Option is granted.
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
(e)
  	
  
Effect of   Termination of Employment.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(i)
  	
  
Unless the   applicable Award Agreement provides otherwise, in the event that the   employment of a Participant with the Company or a Subsidiary of the Company   shall terminate for any reason other than death, Disability or Cause,   (i) Options granted to such Participant, to the extent that they are   exercisable at the time of such termination, shall remain exercisable until the   date that is three months  (or   120 days in the case of a “Non-Qualified Stock Option”) after such   termination, on which date they shall expire, and (ii) Options granted   to such Participant, to the extent that they were not exercisable at the time   of such termination, shall expire at the close of business on the date of   such termination. Notwithstanding the foregoing, no Option shall be   exercisable after the expiration of its term.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
  
  	
 
 
  	
  
(ii)
  	
  
Unless the   applicable Award Agreement provides otherwise, in the event that the   employment of a Participant with the Company or a Subsidiary of the Company   shall terminate on account of the Disability or death of the Participant   (i) Options granted to such Participant, to the extent that they were   exercisable at the time of such termination, shall remain exercisable until   the first anniversary of such termination, on which date they shall expire,   and (ii) Options granted to such Participant, to the extent that they   were not exercisable at the time of such termination, shall expire at the   close of business on the date of such termination. Notwithstanding the   foregoing, no Option shall be exercisable after the expiration of its term.
  




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(iii)
  	
  
Unless an   applicable Award Agreement issued after the date hereof provides otherwise,   if a Participant’s employment with the Company or a Subsidiary of the Company   is terminated for Cause, all unexercised Options held by the Participant   shall immediately be forfeited.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
  
  	
 
(f)
  	
  
Effect of   Change in Control.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Upon the   occurrence of a Change in Control, (i) Options granted to a Participant,   to the extent that they were exercisable at the time of a Change in Control,   shall remain exercisable until their expiration notwithstanding the   provisions of Section 7(e)(1) and (2) of the Plan, and   (ii) Options granted to such Participant, to the extent they were not   exercisable at the time of a Change in Control, shall expire at the close of   business on the date of such Change in Control. Notwithstanding the   foregoing, no Option shall be exercisable after the expiration of its term.   Any vested, exercisable Options outstanding at the time of a Change in   Control shall be cashed out, converted to options of the acquiring entity,   assumed by the acquiring entity or otherwise disposed of in the manner   provided in any shareholder-approved agreement or plan governing or providing   for such Change in Control (“Change in Control
Agreement”); provided that any   such cash-out, conversion, assumption or disposition of the Options shall not   deprive the Option holder of the inherent value of his Options, measured   solely by the excess of the Fair Market Value of the underlying Option shares   immediately prior to the Change in Control over the Option exercise price,   without the holder’s consent. In the absence of such governing provisions in   a Change in Control Agreement, the Committee in its sole discretion may on a   case by case basis require any vested, exercisable Options that remain   outstanding upon a Change in Control to be cashed out and terminated in   exchange for a lump sum cash payment, shares of the acquiring entity or a   combination thereof equal in value to the fair market value of the Option,   measured in the manner described above, immediately prior to the Change in   Control. Any non-vested Options shall terminate upon a Change in Control   unless: (i) otherwise provided in the Change
in Control Agreement or in   a written agreement, such as a severance agreement, between the Company and   the Participant; or (ii) the Committee in its sole discretion on a case   by case basis elects in writing to waive termination and/or accelerate   vesting.
  



11







	
 
8.
  	
 
Tandem SARs.
  
	
 
 
  	
 
 
  
	
  
          The   Committee may grant in connection with any Option granted hereunder one or   more Tandem SARs relating to a number of shares of Common Stock less than or   equal to the number of shares of Common Stock subject to the related Option.   A Tandem SAR may be granted at the same time as, or, in the case of a   Non-Qualified Stock Option, subsequent to the time that, its related Option   is granted.
  
	
 
 
  
	
 
 
  	
 
(a)
  	
  
Benefit Upon   Exercise.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
The exercise   of a Tandem SAR with respect to any number of shares of Common Stock shall   entitle the Participant to a cash payment, for each such share, equal to the   excess of (i) the Fair Market Value of a share of Common Stock on the   Exercise Date over (ii) the option exercise price per share of the   related Option. Such payment shall be made as soon as practicable after the   effective date of such exercise.
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
(b)
  	
  
Term and   Exercise of Tandem SAR.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(i)
  	
  
A Tandem SAR   shall be exercisable only if and to the extent that its related Option is   exercisable.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(ii)
  	
  
The exercise   of a Tandem SAR with respect to a number of shares of Common Stock shall   cause the immediate and automatic cancellation of its related Option with   respect to an equal number of shares. The exercise of an Option, or the   cancellation, termination or expiration of an Option (other than pursuant to   this Section 8(b)(2)), with respect to a number of shares of Common   Stock shall cause the automatic and immediate cancellation of any related   Tandem SARs to the extent that the number of shares of Common Stock remaining   subject to such Option is less than the number of shares then subject to such   Tandem SAR. Such Tandem SARs shall be canceled in the order in which they   become exercisable.
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(iii)
  	
  
No Tandem   SAR shall be assignable or transferable otherwise than together with its   related Option, and any such transfer or assignment will be subject to the   provisions of Section 20 of the Plan.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(iv)
  	
  
A Tandem SAR   shall be exercisable by delivering notice to the Company’s principal office,   to the attention of its Secretary, no less than one business day in advance   of the effective date of the proposed exercise. A Tandem SAR may also be   exercised electronically by notifying the Company’s agent, pursuant to the   methods then in use by that agent. Such notice shall specify the number of   shares of Common Stock with respect to which the Tandem SAR is being   exercised and the effective date of the proposed exercise and shall be signed   by the Participant or other person then having the right to exercise the   Option to which the Tandem SAR is related. Such notice may be withdrawn at   any time prior to the close of business on the business day immediately   preceding the effective date of the proposed exercise.
  



12







	
 
9.
  	
 
Stand-Alone SARs.
  
	
 
 
  	
 
 
  
	
 
 
  	
 
(a)
  	
  
Benefit Upon   Exercise.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
The exercise   of a Stand-Alone SAR with respect to any number of shares of Common Stock   shall entitle the Participant to a cash payment, for each such share, equal   to the excess of (i) the Fair Market Value of a share of Common Stock on   the Exercise Date over (ii) the Reference Value of the Stand-Alone SAR.   Such payments shall be made as soon as practicable after the effective date   of such exercise.
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
(b)
  	
  
Term and   Exercise of Stand-Alone SARs.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(i)
  	
  
Unless the   applicable Award Agreement provides otherwise, a Stand-Alone SAR shall become   cumulatively exercisable as to 25 percent of the shares covered thereby   on each of the first, second, third and fourth anniversaries of the date of   grant. The Committee shall determine the expiration date of each Stand-Alone   SAR. Unless the applicable Award Agreement provides otherwise, no Stand-Alone   SAR shall be exercisable prior to the first anniversary of the date of grant.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(ii)
  	
  
A   Stand-Alone SAR shall be exercised by delivering notice to the Company’s   principal office, to the attention of its Secretary, no less than one   business day in advance of the effective date of the proposed exercise. A   Stand-Alone SAR may also be exercised electronically by notifying the   Company’s agent, pursuant to the methods then in use by that agent. Such   notice shall specify the number of shares of Common Stock with respect to   which the Stand-Alone SAR is being exercised, and the effective date of the   proposed exercise, and shall be signed by the Participant. The Participant   may withdraw such notice at any time prior to the close of business on the   business day immediately preceding the effective date of the proposed   exercise.
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
(c)
  	
  
Effect of   Termination of Employment.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
The   provisions set forth in Section 7(e) with respect to the exercise of   Options following termination of employment shall apply as well to the   exercise of Stand-Alone SARs.
  




13







	
  
 
  	
  
(d)
  	
  
Effect of   Change in Control.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
Upon the   occurrence of a Change in Control, (i) Stand-Alone SARs granted under   the Plan, to the extent exercisable at the time of a Change in Control, shall   remain exercisable until their expiration notwithstanding the provisions of   Section 7(e) of the Plan that are incorporated into this Section 9,   and (ii) Stand-Alone SARs not exercisable at the time of a Change in   Control shall expire at the close of business on the date of such Change in   Control. Any vested, exercisable Stand-Alone SARs shall, upon a Change in   Control, be cashed out, converted, assumed or otherwise disposed of in the   same manner as applies to Options under Section 7(f).
  
	
  
 
  	
  
 
  	
  
 
  
	
  
10.
  	
  
Restricted Stock.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
(a)
  	
  
Issue Date   and Vesting Date.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
At the time   of the grant of shares of Restricted Stock, the Committee shall establish an   Issue Date or Issue Dates and a Vesting Date or Vesting Dates with respect to   such shares. The Committee may divide such shares into classes and assign a   different Issue Date and/or Vesting Date for each class. If the grantee is   employed by the Company or a Subsidiary of the Company on an Issue Date   (which may be the date of grant), the specified number of shares of Restricted   Stock shall be registered in the grantee’s name and evidenced in accordance   with the provisions of Section 10(e) of the Plan. Provided that all   conditions to the vesting of a share of Restricted Stock imposed pursuant to   Section 10(b) of the Plan are satisfied, and except as provided in   Section 10(g) of the Plan, upon the occurrence of the Vesting Date with   respect to a share of Restricted Stock, such share shall vest and the   restrictions of
Section 10(c) of the Plan shall lapse.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
Conditions   to Vesting.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
At the time   of the grant of shares of Restricted Stock, the Committee may impose such   restrictions or conditions to the vesting of such shares as it, in its   absolute discretion, deems appropriate.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)
  	
  
Restrictions   on Transfer Prior to Vesting.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
Prior to the   vesting of a share of Restricted Stock, no transfer of a Participant’s rights   with respect to such share, whether voluntary or involuntary, by operation of   law or otherwise, shall be permitted. Immediately upon any attempt to   transfer such rights, such share, and all of the rights related thereto,   shall be forfeited by the Participant.
  




14







	
 
 
  	
 
(d)
  	
  
Dividends on   Restricted Stock.
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
The   Committee in its discretion may require that any dividends paid on shares of   Restricted Stock shall be held in escrow until all restrictions on such   shares have lapsed.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
(e)
  	
  
Restricted   Stock Certificates.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Each   Restricted Stock Award may be evidenced in such a manner as the Committee   deems appropriate, including, without limitation, book entry registration or   issuance of a stock certificate or certificates and by a Restricted Stock   Award Agreement setting forth the terms of such Restricted Stock award. To   the extent a stock certificate is issued, the Secretary of the Company shall   hold such certificates for the Participant’s benefit until the Vesting Date   or until the Restricted Stock is forfeited to the Company. The Company shall   not cause a stock certificate to be issued in the name of a Participant prior   to the Vesting Date unless it has received a stock power duly endorsed by the   Participant in blank with respect to such shares. Each such stock certificate   shall bear the following legend:
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
 
  	
  
The   transferability of this certificate and the shares of stock represented   hereby are subject to the restrictions, terms and conditions (including   forfeiture provisions and restrictions against transfer) contained in the   2004 Omnibus Stock Incentive Plan of XETA Technologies, Inc. and an   Award Agreement entered into between the registered owner of such shares and   XETA Technologies, Inc. A copy of such Plan and Award Agreement is on   file in the office of the Secretary of XETA Technologies, Inc., 1814   West Tacoma, Broken Arrow, Oklahoma 74012.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Such legend   shall not be removed until such shares vest pursuant to the terms of the   applicable Award Agreement.
  
	
 
 
  	
 
 
  	
  
 
  
	
  
  	
 
(f)
  	
  
Consequences   of Vesting.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Upon the   vesting of a share of Restricted Stock pursuant to the terms of the   applicable Award Agreement, the restrictions of Section 10(c) of the   Plan shall lapse, except as otherwise provided in the Award Agreement.   Reasonably promptly after a share of Restricted Stock vests, the Company   shall cause to be delivered to the Participant to whom such shares were   granted, a certificate evidencing such share, free of the legend set forth in   Section 10(e) of the Plan.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
(g)
  	
  
Effect of   Termination of Employment.
  
	
 
 
  	
 
 
  	
  
 
  
	
  
  	
 
 
  	
  
(i)
  	
  
Subject to   such other provision as the Committee may set forth in the applicable Award   Agreement, and to the Committee’s amendment authority pursuant to   Section 4 of the Plan, upon the termination of a 
  




15







	
 
 
  	
 
 
  	
  
 
  	
  
Participant’s   employment by the Company or any Subsidiary of the Company for any reason   other than Cause, any and all shares that have not vested as of the date of   such termination shall be immediately forfeited by the Participant and   transferred to the Company, provided that if the Committee, in its sole   discretion and within thirty (30) days after such termination of   employment notifies the Participant in writing of its decision not to   terminate the Participant’s rights in such shares, then the Participant shall   continue to be the owner of such shares subject to such continuing   restrictions as the Committee may prescribe in such notice. If shares of   Restricted Stock are forfeited in accordance with the provision of this   Section 10, the Company shall also have the right to require the return   of all dividends paid on such shares, whether by termination of any escrow   arrangement under which such dividends are held or
otherwise.
  
	
  
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
(ii)
  	
  
In the event   of the termination of a Participant’s employment for Cause, all shares of   Restricted Stock granted to such Participant that have not vested as of the   date of such termination shall be immediately forfeited by the Participant   and transferred to the Company, together with any dividends paid on such   shares.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
(h)
  	
  
Effect of   Change in Control.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Upon the   occurrence of a Change in Control, (i) all restrictions on outstanding vested   shares shall immediately lapse, and (ii) all outstanding shares of Restricted   Stock that have not theretofore vested shall immediately expire and be   cancelled unless the Committee in its sole discretion on a case by case   basis, in writing, elects to waive such expiration and cancellation
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
(i)
  	
  
Special   Provisions Regarding Restricted Stock Awards.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
The   Committee may designate on a case-by-case basis whether Restricted Stock   Awards are intended to be “performance based compensation” within the meaning   of Code Section 162(m). The vesting of Restricted Stock so designated   shall be based on the attainment by the Company (or a Subsidiary or division   of the Company if applicable) of performance goals pre-established by the   Committee, limited to and based on one or more of the following criteria:   specified levels of or increases in the Company’s (i) return on equity, (ii)   earnings per share, (iii) total earnings, (iv) earnings growth, (v) return on   capital, (vi) return on assets, (vii) economic value added, (viii) earnings   before interest and taxes, (ix) sales growth, (x) gross margin return on   investment, (xi) increase in the FMV of the shares, (xii) share price   (including, but not limited to, growth measures and total shareholder   return), (xiii) net operating profit,
(xiv) net income, (xv) cash flow   (including, but not limited to, operating cash flow and free cash flow),
  




16








	
  
  	
 
 
  	
  
(xvi) cash   flow return on investments (which equals net cash flow divided by total   capital), (xvii) internal rate of return, or (xviii) increase in net present   value or expense targets.  Attainment   of any such performance criteria shall be determined in accordance with   generally accepted accounting principles as in effect from time to time. Such   shares shall be released from restrictions only after the attainment of such   performance measures have been certified by the Committee.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
11.
  	
 
Phantom Stock.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
(a)
  	
  
Vesting   Date.
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
At the time   of the grant of shares of Phantom Stock, the Committee shall establish a   Vesting Date or Vesting Dates with respect to such shares. The Committee may   divide such shares into classes and assign a different Vesting Date for each   class. Provided that all conditions to the vesting of a share of Phantom   Stock imposed pursuant to Section 11(c) of the Plan are satisfied, and   except as provided in Section 11(d) of the Plan, upon the occurrence of   the Vesting Date with respect to a share of Phantom Stock, such share shall   vest.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
(b)
  	
  
Benefit Upon   Vesting.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Upon the   vesting of a share of Phantom Stock, the Participant shall be entitled to   receive in cash, within 30 days of the date on which such share vests,   an amount equal to the sum of (i) the Fair Market Value of a share of   Common Stock on the date on which such share of Phantom Stock vests and   (ii) the aggregate amount of cash dividends paid with respect to a share   of Common Stock during the period commencing on the date on which the share   of Phantom Stock was granted and terminating on the date on which such share   vests.
  
	
  
  	
 
 
  	
  
 
  
	
 
 
  	
 
(c)
  	
  
Conditions   to Vesting.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
At the time   of the grant of shares of Phantom Stock, the Committee may impose such   restrictions or conditions to the vesting of such shares as it, in its   absolute discretion, deems appropriate.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
(d)
  	
  
Effect of   Termination of Employment.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
  
  	
 
 
  	
  
(i)
  	
  
Subject to   such other provisions as the Committee may set forth in the applicable Award   Agreement, and to the Committee’s amendment authority pursuant to   Section 4 of the Plan, shares of Phantom Stock that have not vested,   together with any dividends credited on such shares, shall be forfeited upon   the Participant’s termination of employment for any reason other than Cause.
  




17







	
 
 
  	
 
 
  	
  
(ii)
  	
  
In the event   of the termination of a Participant’s employment for Cause, all shares of   Phantom Stock granted to such Participant that have not vested as of the date   of such termination shall immediately be forfeited, together with any   dividends credited on such shares.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
  
  	
 
(e)
  	
  
Effect of   Change in Control.
  
	
 
 
  	
 
 
  	
  
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
Upon the   occurrence of a Change in Control, all outstanding shares of Phantom Stock   that have not theretofore vested shall immediately expire and be cancelled   unless the Committee in its sole discretion on a case by case basis, in   writing, elects to waive such expiration and cancellation.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
(f)
  	
  
Special   Provisions Regarding Phantom Stock Awards.
  
	
 
 
  	
 
 
  	
  
 
  
	
 
 
  	
 
 
  	
  
The   Committee may designate on a case by case basis whether Phantom Stock Awards   are intended to be “performance based compensation” within the meaning of   Code Section162 (m). The grant of Phantom Stock so designated shall be based   on the attainment by the Company (or a Subsidiary or division of the Company   if applicable) of performance goals pre-established by the Committee, limited   to and based on one or more of the following criteria: specified levels of or   increases in the Company’s (i) return on equity, (ii) earnings per share,   (iii) total earnings, (iv) earnings growth, (v) return on capital, (vi)   return on assets, (vii) economic value added, (viii) earnings before interest   and taxes, (ix) sales growth, (x) gross margin return on investment, (xi)   increase in the FMV of the shares, (xii) share price (including, but not   limited to, growth measures and total shareholder return), (xiii) net   operating profit, (xiv) net
income, (xv) cash flow (including, but not   limited to, operating cash flow and free cash flow), (xvi) cash flow return   on investments (which equals net cash flow divided by total capital), (xvii)   internal rate of return, or (xviii) increase in net present value or expense   targets.  Attainment of any such   performance criteria shall be determined in accordance with generally   accepted accounting principles as in effect from time to time. Such shares   shall be released from restrictions only after the attainment of such   performance measures have been certified by the Committee.
  
	
  
  	
 
 
  	
  
 
  
	
 
12.
  	
 
Stock Bonuses.
  
	
 
 
  	
 
 
  
	
 
 
  	
  
In the event   that the Committee grants a Stock Bonus, a certificate for the shares of   Common Stock comprising such Stock Bonus shall be issued in the name of the   Participant to whom such grant was made and delivered to such Participant as   soon as practicable after the date on which such Stock Bonus is payable.
  




18







	
  
13.
  	
  
Rights as a Stockholder.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
No person   shall have any rights as a stockholder with respect to any shares of Common   Stock covered by or relating to any Incentive Award until the date of   issuance of a stock certificate with respect to such shares. Except as   otherwise expressly provided in Section 3(c) of the Plan, no adjustment   to any Incentive Award shall be made for dividends or other rights for which   the record date occurs prior to the date such stock certificate is issued.
  
	
   
  	
  
 
  
	
  
14.
  	
  
No Special Employment Rights; No Right to Incentive Award.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
Nothing   contained in the Plan or any Award Agreement shall confer upon any   Participant any right with respect to the continuation of employment by the   Company or any Subsidiary of the Company or interfere in any way with the   right of the Company or any Subsidiary of the Company, subject to the terms   of any separate employment agreement to the contrary, at any time to   terminate such employment or to increase or decrease the compensation of the   Participant. No person shall have any claim or right to receive an Incentive   Award hereunder. The Committee’s granting of an Incentive Award to a   Participant at any time shall neither require the Committee to grant any   other Incentive Award to such Participant or other person at any time or   preclude the Committee from making subsequent grants to such Participant or   any other person.
  
	
  
 
  	
  
 
  
	
  
15.
  	
  
Securities Matters.
  
	
  
 
  	
  
 
  
	
   
  	
  
(a)
  	
  
The Company   shall be under no obligation to effect the registration pursuant to the   Securities Act of any interests in the Plan or any shares of Common Stock to   be issued hereunder or to effect similar compliance under any state laws.   Notwithstanding anything herein to the contrary, the Company shall not be   obligated to cause to be issued or delivered any certificates evidencing   shares of Common Stock pursuant to the Plan unless and until the Company is   advised by its counsel that the issuance and delivery of such certificates is   in compliance with all applicable laws, regulations of governmental authority   and the requirements of any securities exchange on which shares of Common   Stock are traded. The Committee may require, as a condition of the issuance   and delivery of certificates evidencing shares of Common Stock pursuant to   the terms hereof and of the applicable Award Agreement, that the recipient of   such shares make such covenants,
agreements and representations, and that   such certificates bear such legends, as the Committee, in its sole   discretion, deems necessary or desirable.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
The transfer   of any shares of Common Stock hereunder shall be effective only at such time   as counsel to the Company shall have determined that the issuance and   delivery of such shares is in compliance with all applicable laws,   regulations of governmental authority and the requirements of any securities   exchange on which shares of Common Stock are traded.
  




19








	
   
  	
  
 
  	
  
The   Committee may, in its sole discretion, defer the effectiveness of any   transfer of shares of Common Stock hereunder in order to allow the issuance   of such shares to be made pursuant to registration or an exemption from   registration or other methods for compliance available under federal or state   securities laws. The Committee shall inform the Participant in writing of its   decision to defer the effectiveness of a transfer. During the period of such   deferral in connection with the exercise of an Option, the Participant may,   by written notice, withdraw such exercise and obtain the refund of any amount   paid with respect thereto.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
16.
  	
  
Withholding Taxes.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
Whenever   cash is to be paid pursuant to an Incentive Award, the Company (or its agent)   shall have the right to deduct there from an amount sufficient to satisfy any   federal, state and local withholding tax requirements related thereto.   Whenever shares of Common Stock are to be delivered pursuant to an Incentive   Award, the Company (or its agent) shall have the right to require the   Participant to remit to the Company in cash an amount sufficient to satisfy   any federal, state and local withholding tax requirements related thereto.   With the approval of the Committee, a Participant may satisfy the foregoing   requirement, with respect to all or any portion of the shares to be delivered   pursuant to an Incentive Award, by electing to have the Company (or its   agent) withhold from delivery shares of Common Stock having a fair market   value equal to the minimum amount of tax to be withheld. Such shares shall be   valued at their Fair Market Value on the
date on which the amount of tax to   be withheld is determined (the “Tax Date”). Fractional share amounts shall be   settled in cash.
  
	
   
  	
  
 
  
	
  
17.
  	
  
Notification of Election Under Section 83(b) of the Code.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
If any   Participant shall, in connection with the acquisition of shares of Common   Stock under the Plan, make the election permitted under Section 83(b) of   the Code (i.e., an election to include in gross income in the year of   transfer the amounts specified in Section 83(b)), such Participant shall   notify the Company of such election within 10 days of filing notice of   the election with the Internal Revenue Service, in addition to any filing and   a notification required pursuant to regulation issued under the authority of   Code Section 83(b).
  
	
  
 
  	
  
 
  
	
  
18.
  	
  
Notification Upon Disqualifying Disposition Under Section 421(b)   of the Code.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
Each Award   Agreement with respect to an Incentive Stock Option shall require the Participant   to notify the Company of any disposition of shares of Common Stock issued   pursuant to the exercise of such Option under the circumstances described in   Section 421(b) of the Code (relating to certain disqualifying   dispositions), within 10 days of such disposition.
  



20







	
  
19.
  	
  
Amendment or Termination of the Plan.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
The Board of   Directors may, at any time, suspend or terminate the Plan or revise or amend   it in any respect whatsoever; provided, however, that stockholder approval   shall be required if and to the extent the Board of Directors determines that   such approval is appropriate for purposes of satisfying Section 162(m)   or 422 of the Code or to the extent such approval is required by the rules of   Nasdaq or any stock exchange on which the Common Stock is listed. Nothing   herein shall restrict the Committee’s ability to exercise its discretionary   authority pursuant to Section 4 of the Plan, which discretion may be   exercised without amendment to the Plan. No action hereunder may, without the   consent of a Participant, reduce the Participant’s rights under any   outstanding Incentive Award.
  
	
  
 
  	
  
 
  
	
  
20.
  	
  
Transfers Upon Death; Non-Assignability.
  
	
  
 
  	
  
 
  
	
   
  	
  
Upon the   death of a Participant, outstanding Incentive Awards granted to such   Participant may be exercised only by the executor or administrator of the   Participant’s estate or by a person who shall have acquired the right to such   exercise by will or by the laws of descent and distribution. No transfer of   an Incentive Award by will or the laws of descent and distribution shall be   effective to bind the Company unless the Committee shall have been furnished   with (a) written notice thereof and with a copy of the will and/or such   evidence as the Committee may deem necessary to establish the validity of the   transfer and (b) an agreement by the transferee to comply with all the   terms and conditions of the Incentive Award that are or would have been   applicable to the Participant and to be bound by the acknowledgments made by   the Participant in connection with the grant of the Incentive Award.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
During a   Participant’s lifetime, an outstanding Incentive Award granted to such   Participant may only be exercised by the Participant or, in the case of the   Participant’s Disability, by the Participant’s legal guardian or   attorney-in-fact, and shall not otherwise be transferable.  Notwithstanding the foregoing, and subject   to the Committee’s sole discretion and any conditions as the Committee may   prescribe, a Participant may, with respect to an outstanding Option (unless   such Option is an Incentive Stock Option and the Committee and the   Participant intend that it shall retain such status), upon providing written   notice to the Secretary of the Company, elect to transfer  such Option to members of his or her   immediate family (including, but not limited to, children, grandchildren,   spouse and any other persons included in the definition of “family member” in   the General Instructions to Form S-8) or to
trusts for the benefit of such   immediate family members or to partnerships in which such family members are   the only partners; provided, however, that no such transfer by any   Participant may be made in exchange for consideration.
  



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21.
  	
  
Expenses and Receipts.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
The expenses   of the Plan shall be paid by the Company. Any proceeds received by the   Company in connection with any Incentive Award will be used for general   corporate purposes.
  
	
  
 
  	
  
 
  
	
  
22.
  	
  
Failure to Comply.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
In addition   to the remedies of the Company elsewhere provided for herein, failure by a   Participant (or beneficiary or transferee) to comply with any of the terms   and conditions of the Plan or the applicable Award Agreement, unless such   failure is remedied by such Participant (or beneficiary or transferee) within   ten days after notice of such failure by the Committee, shall be grounds for   the cancellation and forfeiture of such Incentive Award, in whole or in part,   as the Committee, in its absolute discretion, may determine.
  
	
   
  	
  
 
  
	
  
23.
  	
  
Effective Date and Term of Plan.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
The Plan   became effective on the Effective Date, but the Plan (and any grants of   Incentive Awards made prior to stockholder approval of the Plan) shall be   subject to the requisite approval of the stockholders of the Company. In the   absence of such approval, any such Incentive Awards shall be null and void.   Unless earlier terminated by the Board of Directors, the right to grant   Incentive Awards under the Plan will terminate on the tenth anniversary of   the Effective Date. Incentive Awards outstanding at Plan termination will   remain in effect according to their terms and the provisions of the Plan.
  
	
  
 
  	
  
 
  
	
  
24.
  	
  
Applicable Law.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
Except to   the extent preempted by any applicable federal law, the Plan will be   construed and administered in accordance with the laws of the State of   Oklahoma, without reference to the principles of conflicts of law.
  
	
   
  	
  
 
  
	
  
25.
  	
  
Participant Rights.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
No   Participant shall have any claim to be granted any Incentive Award under the   Plan, and there is no obligation for uniformity of treatment for   Participants. Except as provided specifically herein, a Participant or a   transferee of an Incentive Award shall have no rights as a stockholder with   respect to any shares covered by any award until the date of the issuance of   a Common Stock certificate to him for such shares.
  
	
  
 
  	
  
 
  
	
  
26.
  	
  
Unfunded Status of Awards.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
The Plan is   intended to constitute an “unfunded” plan for incentive and deferred   compensation. With respect to any payments not yet made to a Participant   pursuant to an Incentive Award, nothing contained in the Plan or any Award   Agreement shall give any such Participant any rights that are greater than   those of a general creditor of the Company.
  



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27.
  	
  
No Fractional Shares.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
No   fractional shares of Common Stock shall be issued or delivered pursuant to   the Plan. The Committee shall determine whether cash, other Incentive Awards,   or other property shall be issued or paid in lieu of such fractional shares   or whether such fractional shares or any rights thereto shall be forfeited or   otherwise eliminated.
  
	
  
 
  	
  
 
  
	
  
28.
  	
  
Beneficiary.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
A   Participant may file with the Committee a written designation of a   beneficiary on such form as may be prescribed by the Committee and may, from   time to time, amend or revoke such designation. If no designated beneficiary   survives the Participant, the executor or administrator of the Participant’s   estate shall be deemed to be the Participant’s beneficiary.
  
	
   
  	
   
  
	
  29.
  	
  Interpretation.
  
	
   
  	
   
  
	
   
  	
  The Plan is   designed and intended to comply with Rule 16b-3 promulgated under the   Exchange Act and, with Section 162(m) of the Code, and all provisions   hereof shall be construed in a manner to so comply.
  



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