Document:

ex10-1.htm

UNITED STATES OF AMERICA

BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

WASHINGTON, D.C.

	
 

Written Agreement by and between

 

COMMUNITY CENTRAL BANK

   CORPORATION

Mount Clemens, Michigan

 

and

 

FEDERAL RESERVE BANK OF

   CHICAGO

Chicago, Illinois

 

	
 

 

Docket No. 10-250-WA/RB-HC

WHEREAS, Community Central Bank Corporation, Mount Clemens, Michigan ("CCBC"), a registered bank holding company, owns and controls Community Central Bank, Mount Clemens, Michigan (the -Bank-), a state-chartered nonmember bank, and various nonbank subsidiaries;

WHEREAS, it is the common goal of CCBC and the Federal Reserve Bank of Chicago (the "Reserve Bank") to maintain the financial soundness of CCBC so that CCBC may serve as a source of strength to the Bank;

WHEREAS, CCBC and the Reserve Bank have mutually agreed to enter into this Written Agreement (the "Agreement"); and

WHEREAS, on January 18                , 2011, the board of directors of CCBC, at a duly constituted meeting, adopted a resolution authorizing and directing Ray T. Colonius to enter into this Agreement on behalf of CCBC, and consenting to compliance with each and every provision of this Agreement by CCBC and its institution-affiliated parties, as defined in sections

 

  

  

  

  

3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the "FDI Act") (12 U.S.C. §§ 1813(u) and 1818(b)(3)).

NOW, TIIERFFORE, CCBC and the Reserve Bank agree as follows:

Source of Strength

1.    The board of directors of CCBC shall take appropriate steps to fully utilize CCBC's financial and managerial resources, pursuant to section 225.4 (a) of Regulation Y of the Board of Governors of the Federal Reserve System (the "Board of Governors") (12 C.F.R. § 225.4(a)), to serve as a source of strength to the Bank, including, but not limited to, taking steps to ensure that the Bank complies with the Consent Order issued jointly by the Federal Deposit Insurance Corporation ("FDIC") and the State of Michigan Office of Financial and Insurance Regulation on November 1, 2010, and any other supervisory action taken by the Bank's federal or state regulator.

Dividends and Distributions

2.    (a)           CCBC shall not declare or pay any dividends without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation (the "Director") of the Board of Governors.

          (b)   CCBC shall not directly or indirectly take dividends or any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Reserve Bank.

          (c)   CCBC and its nonbank subsidiaries shall not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director.

 

  

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(d)   All requests for prior approval shall be received by the Reserve Bank at least 30 days prior to the proposed dividend declaration date, proposed distribution on subordinated debentures, and required notice of deferral on trust preferred securities. All requests shall contain, at a minimum, current and projected information on CCBC's capital, earnings, and cash flow; the Bank's capital, asset quality, earnings, and allowance for loan and lease losses (the "ALLL"); and identification of the sources of funds for the proposed payment or distribution. For requests to declare or pay dividends, CCBC must also demonstrate that the requested declaration or payment of dividends is consistent with the Board of Governors' Policy Statement on the Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at page 4-323).

Debt and Stock Redemption

3.   (a)           CCBC and its nonbank subsidiaries shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the Reserve Bank. All requests for prior written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.

(b)   CCBC shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.

Capital Plan

4.   Within 60 days of this Agreement, CCBC shall submit to the Reserve Bank an acceptable written plan to maintain sufficient capital at CCBC on a consolidated basis. The plan shall, at a minimum, address, consider, and include:

 

  

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(a)   The consolidated organization's and the Bank's current and future capital requirements, including compliance with the Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and D) and the applicable capital adequacy guidelines for the Bank issued by the Bank's federal regulator;

(b)   the adequacy of the Bank's capital, taking into account the volume of classified credits, concentrations of credit, allowance for loan and lease losses, current and projected asset growth, and projected retained earnings;

(c)   the source and timing of additional funds necessary to fulfill the consolidated organization's and the Bank's future capital requirements;

(d)   supervisory requests for additional capital at the Bank or the requirements of any supervisory action imposed on the Bank by its federal regulator; and

(e)   the requirements of section 225.4(a) of Regulation Y of the Board of Governors that CCBC serve as a source of strength to the Bank.

5.   CCBC shall notify the Reserve Bank, in writing, no more than 45 days after the end of any quarter in which any of CCBC's capital ratios fall below the approved plan's minimum ratios. Together with the notification, CCBC shall submit an acceptable written plan that details the steps that CCBC will take to increase CCBC's capital ratios to or above the approved plan's minimums.

Cash Flow Projections

6.   Within 30 days of this Agreement, CCBC shall submit to the Reserve Bank a written statement of its planned sources and uses of cash for debt service, operating expenses, and other purposes ("Cash Flow Projection") for the first full calendar quarter following the date

 

  

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of this Agreement. For each subsequent calendar quarter CCBC shall submit to the Reserve Bank a Cash Flow Projection for that calendar quarter at least thirty days prior to the beginning of that quarter.

Regulatory Reports

7.   (a)           Within 60 days of this Agreement, CCBC shall submit to the Reserve Bank acceptable written procedures to strengthen and maintain internal controls to ensure that all required regulatory reports and notices filed with the Reserve Bank accurately reflect CCBC's financial condition and are filed in accordance with the applicable instructions for preparation.

(b)   Within 60 days of this Agreement, CCBC shall file amended regulatory reports to correct any report previously filed during 2010 that does not comply with regulatory reporting requirements.

Compliance with Laws and Regulations

8.   (a)           In appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position, CCBC shall comply with the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.).

(b)   CCBC shall comply with the restrictions on indemnification and severance payments of section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the FDIC's regulations (12 C.F.R. Part 359).

Progress Reports

9.   Within 45 days after the end of each calendar quarter following the date of this Agreement, the board of directors shall submit to the Reserve Bank written progress reports

 

  

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detailing the form and manner of all actions taken to secure compliance with the provisions of this Agreement and the results thereof, and a parent company only balance sheet, income statement, and, as applicable, report of changes in stockholders' equity.

Approval and Implementation of Plans

10.   (a)           CCBC shall submit written plans and a program that are acceptable to the Reserve Bank within the applicable time period set forth in paragraphs 4, and 7(a) of this Agreement.

(b)   Within 10 days of approval by the Reserve Bank, CCBC shall adopt the approved plans. Upon adoption, CCBC shall promptly implement the approved plans, and thereafter fully comply with them.

(c)   During the term of this Agreement, the approved plans shall not be amended or rescinded without the prior written approval of the Reserve Bank.

Communications

11.   All communications regarding this Agreement shall be sent to:

 

 

(a)  Mr. Joseph J. Turk

    Assistant Vice President

    Federal Reserve Bank of Chicago

    230 South LaSalle Street

    Chicago, Illinois 60604-1413

 

(b)  Mr. Ray Colonius

    Interim Chief Executive Officer

    Community Central Bank Corporation

    120 North Main Street

    P.O. Box 7

    Mount Clemens, Michigan 48046-0007

  

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Miscellaneous

12.   Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole discretion, grant written extensions of time to CCBC to comply with any provision of this Agreement.

13.   The provisions of this Agreement shall be binding upon CCBC and its institution-affiliated parties, in their capacities as such, and their successors and assigns.

14.   Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Reserve Bank.

15.   The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, or any other federal or state agency from taking any other action affecting CCBC, the Bank, any nonbank subsidiary of CCBC, or any of their current or former institution-affiliated parties and their successors and assigns.

16.   Pursuant to section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the Board of Governors under section 8 of the FD1 Act (12 U.S.C. § 1818).

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the 19th day of January, 2011.

 

	
COMMUNITY CENTRAL BANK CORPORATION

	
FEDERAL RESERVE BANK OF CHICAGO

	
By:

	
/s/ Ray T. Colonius

	  	
By:

	
/s/ Julie H. Williams

	  	
Ray T. Colonius

Interim CEO & CFO

	  	
For

	
Mark H. Kawa

Vice President

  

7Exhibit 10.1

Exhibit 10.1

XETA TECHNOLOGIES, INC.

EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

XETA Technologies, Inc. (hereinafter the “Company”) hereby adopts the XETA Technologies,
Inc. Executive Change in Control Severance Plan (the “Plan”), effective upon the date the Board
adopts the Plan.

ARTICLE 1

DEFINITIONS

1.1 “Annual Cash Compensation” means the Participant’s Base Salary plus the annual cash
incentive as established by the Board. If annual cash incentive has not been established, the
Annual Cash Compensation will mean the Participant’s Base Salary plus the greater of (i) the annual
cash incentive earned by the Participant, excluding commissions, in the preceding fiscal year or
(ii) the average of the annual cash incentive earned by the Participant, excluding commissions,
over the three consecutive fiscal years of the Company immediately preceding the Employment
Termination Date (or, if the Participant has been employed for fewer than three fiscal years by the
Company, the average of all annual cash incentive earned by the Participant, excluding commissions,
for the fiscal years immediately preceding the Employment Termination Date).

1.2 “Base Salary” means the Participant’s annual gross salary before any deductions,
exclusions or any deferrals or contributions under any Company plan or program, but excluding
bonuses, commissions, incentive compensation, deferred compensation, employee benefits, expense
reimbursements or any other non-salary form of compensation being received by a Participant.

1.3 “Board” means the Board of Directors of the Company.

1.4 “Cause” means (a) the conviction of the Participant for any felony involving dishonesty,
fraud or breach of trust, (b) intentional disclosure of company’s confidential information contrary
to companies policies, (c) intentional engagement in any competitive activity which would
constitute a breach of your duty of loyalty, (d) the willful and continued failure to substantially
perform your duties for company (other than as a result of incapacity due to physical or mental
illness); or (d) the willful engagement by the Participant in gross misconduct in the performance
of his or her duties that materially injures the Company. For purposes of this paragraph, and act,
or a failure to act, shall not be deemed willful or intentional, as those terms are defined herein,
unless it is done, or omitted to be done, by you in bad faith or without a reasonable belief that
your action or omission was in the best interest of company. “Cause” also includes any of the above
grounds for dismissal regardless of whether company learns of it before or after terminating your
employment.

1.5 “Change in Control” means the occurrence of any of the following after the Effective Date:

(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (“Exchange Act”)) is or becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting
power of the then-outstanding Voting Stock of the Company.

(b) A majority of the Board ceases to be comprised of “Incumbent Directors.” The term
“Incumbent Directors” means the individuals who, as of the date hereof, are Directors of the
Company and any individual becoming a Director subsequent to the date hereof whose election,
nomination for election by the Company’s shareholders, or appointment, was approved by a vote of a
majority of the then Incumbent Directors (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for director, without objection
to such nomination).

(c) The consummation of a reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the consolidated assets of the Company (each, a “Business
Combination Transaction”) immediately after which the Voting Stock of the Company outstanding
immediately prior to such Business Combination Transaction does not continue to represent (either
by remaining outstanding or by being converted into Voting Stock of the entity surviving, resulting
from, or succeeding to all or substantially all of the Company’s consolidated assets as a result
of, such Business Combination Transaction or any parent of such entity), at least 50% of the
combined voting power of the then outstanding shares of Voting Stock of (i) the entity surviving,
resulting from, or succeeding to all or substantially all of the Company’s consolidated assets as a
result of, such Business Combination Transaction or (ii) any parent of any such entity (including,
without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries). The term “Voting Stock” means securities entitled to
vote generally in the election of Directors.

 

 

 

1.6 “Code” means the Internal Revenue Code of 1986, as amended.

1.7 “Company” means XETA Technologies, Inc., an Oklahoma corporation and any Successor,
whether the liability of such Successor under the Plan is established by contract or occurs by
operation of law.

1.8 “Effective Date” means the date on which the Plan is adopted by the Board.

1.9 “Employment Termination Date” means the date on which the employment relationship between
the Participant and the Company and its Subsidiaries is terminated due to an Involuntary
Termination.

1.10 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.11 “Good Reason Event” means the occurrence of one or more of the following events or
conditions after the occurrence of a Change in Control:

(a) the Company removes the Participant from, or fails to re-elect or appoint the Participant
to, any duties or position with the Company that were assigned or held by the Participant
immediately before the occurrence of the Change in Control, except that a nominal change in the
Participant’s title that is merely descriptive and does not affect rank or status shall not
constitute such an event;

(b) the Company or a Subsidiary assigns to the Participant any duties inconsistent with the
Participant’s position (including offices, titles and reporting requirements), authority, duties or
responsibilities with the Company or a Subsidiary in effect immediately before the occurrence of
the Change in Control;

(c) the Company takes any action that results in a material diminution of the Participant’s
position, authority, duties or responsibilities with the Company or a Subsidiary in effect
immediately before the occurrence of the Change in Control, or otherwise takes any action that
materially interferes therewith;

(d) the Company materially reduces the Participant’s Base Salary or the Participant’s Annual
Cash Compensation as in effect immediately prior to such reduction;

(e) the Company or a Subsidiary relocates the Participant’s principal workplace to an area
that is located outside of a radius of 50 miles from the location of the Participant’s principal
workplace immediately prior to the Change in Control; or

(f) the Company fails to honor any provision of this Plan which failure has a material adverse
effect on the Participant.

1.12 “Involuntary Termination” means the termination of a Participant’s employment
relationship with the Company and each Subsidiary (a) by the Company or a Subsidiary for any reason
other than Cause, or (b) by the Participant on account of a Good Reason Event. For purposes of the
Plan, a Participant’s termination will not be considered to be on account of a Good Reason Event
unless the Participant terminates employment no more than 30 days following such Good Reason Event.
A Participant shall not be deemed to have incurred an Involuntary Termination by reason of the
transfer of the Participant’s employment between the Company and any of its Subsidiaries, or among
Subsidiaries. The Plan Administrator shall determine, in its sole discretion, whether a
Participant’s termination of employment from the Company or any Subsidiary constitutes an
Involuntary Termination. For purposes of the Plan, a Participant will not be considered to have
terminated his or her employment relationship unless the termination of employment qualifies as a
Separation from Service.

1.13 “Participant” means an employee of the Company or a Subsidiary who is identified by the
Board as a participant in the Plan pursuant to Section 2.2 of the Plan.

1.14 “Plan” means the XETA Technologies, Inc. Executive Change in Control Severance Plan, as
set forth herein and as amended from time to time.

1.15 “Plan Administrator” means the Company; however, the Company may designate any individual
or a committee to administer the Plan in accordance with the provisions of Article 7.

 

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1.16 “Release” means the Release Agreement in substantially the form attached hereto as
Exhibit A and made a part hereof for all purposes.

1.17 “Subsidiary” means a corporation, partnership, limited liability company or other entity
in which the Company owns directly or indirectly more than 50% of the outstanding shares of voting
stock or other voting interest.

ARTICLE 2

ELIGIBILITY

2.1 Individuals eligible to participate in the Plan shall be limited solely to employees of
the Company or any Subsidiary.

2.2 The Board, in its sole discretion and from time to time, shall determine which employees
of the Company or any Subsidiary are participants in the Plan. The Board shall have the sole
discretion to add or remove individuals as Participants in the Plan.

ARTICLE 3

SEVERANCE BENEFITS

3.1 Subject to Article 4 and Section 10.8 of the Plan, upon an Involuntary Termination within
one year following the date of a Change in Control, a Participant shall be entitled to the
following benefits:

(a) A single sum cash payment equal to a multiple of the Participant’s Annual Cash
Compensation, but in any case, not exceeding four times the Participant’s Base Salary. The
multiples are determined by the Participant’s position at the Company as follows:

	 	a.	 	One and one-half times for the Chief Executive
Officer of the Company

	 	b.	 	One times for other Participants as defined in
Section 1.13

(b) For a period of twelve (12) months following the Participant’s Employment Termination Date
(“Continuation Period”), the Company shall reimburse the Participant for the cost to continue on
behalf of the Participant and his or her dependents and beneficiaries basic life insurance,
medical, dental, vision and hospitalization benefits (including any benefit under any individual
benefit arrangement that covers medical, dental or hospitalization expenses not otherwise covered
under any general Company plan) provided (x) to the Employee at any time during the 120-day period
prior to the Participant’s Employment Termination Date or at any time thereafter or (y) to other
similarly situated executives who continue in the employ of the Company during the Continuation
Period. The coverage and benefits (including deductibles and costs) provided in this Section
3.1(b) during the Continuation Period shall be no less favorable to the Participant and his or her
dependents and beneficiaries, than the most favorable of such coverages and benefits during any of
the periods referred to in clauses (x) or (y) above. Notwithstanding anything else to the contrary
in this Section 3.1(b), if any benefits provided to the Participant by the Company under this
Section 3.1(b) are taxable to the Participant, then, with the exception of medical insurance
benefits, the value of the aggregate amount of such taxable benefits provided to the Participant
pursuant to this Section 3.1(b) during the six month period following the date of termination of
employment shall be limited to the amount specified by Internal Revenue Code §402(g)(1)(B) for the
year of the date of termination of employment (e.g. $16,500 in 2010). The Participant shall pay
the cost of any benefits that exceed the amount specified in the prior sentence during the
six-month period following the date of termination. The Company shall reimburse the Participant
for all expenses paid by the Participant for such coverage on the first business day that is more
than six months following termination of employment. The reimbursement of the cost of disability
insurance, life insurance, the reimbursement of the cost of taxable medical, dental, vision and
hospitalization benefits after the end of the period during which the Participant would be entitled
to continuation coverage under the Company’s group health plan under Section 4980B of the Code
(COBRA), and the reimbursement of any other taxable benefits provided under this Section 3.1(b),
shall comply with the requirement that non-qualified deferred compensation be paid on a specified
date or pursuant to a fixed schedule, which requires that (1) the amount of benefits or
reimbursements provided during one calendar year shall not affect the amount of benefits or
reimbursements to be provided in any other calendar year, (2) the reimbursement of any eligible
expense shall be made no later than the last day of the calendar year following the year in which
the expense was incurred, and (3) the right to
reimbursement or benefits hereunder is not subject to liquidation or exchange for another
benefit. If the basic life insurance coverage cannot be continued through the end of the
Continuation Period due to restrictions in the general Company plan, in lieu of coverage, the
Company will make a payment to the Participant equal to 125% of the effective annual premium upon
the Participant’s Employment Termination Date.

 

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3.2 No benefits shall be payable under this Plan due to termination of employment on account
of (i) death, (ii) disability, (iii) voluntary termination not for Good Reason Event, (iv)
involuntary termination for Cause, and (v) any other termination of employment not considered to be
an Involuntary Termination of Employment, within one year following the date of the Change in
Control.

3.3 Benefits under the Plan shall not be taken into account as compensation for purposes of
determining contributions or benefits under any other employee benefit plan of the Company or a
Subsidiary. In addition, Benefits under the Plan shall be reduced by any severance, termination or
similar payments payable to a Participant pursuant to any employment, change in control, severance
or similar agreement with the Company or a Subsidiary.

ARTICLE 4

TIME OF SEVERANCE PAYMENT

4.1. Subject to Sections 4.2 and 10.8 of the Plan, the Company shall provide to the
Participant the benefits described in Section 3.1(a) commencing on the 60th day after the date of
the Participant’s Involuntary Termination.

4.2 If the Participant fails to furnish an executed Release, or if the Release furnished by
the Participant has not become effective and irrevocable by the date payment of benefits is to
otherwise commence under Section 4.1, the Participant shall not be entitled to any benefits
described in Section 3.1(a) of the Plan and any benefits which commenced on the Participant’s
Employment Termination Date under Section 3.1(b) shall cease and the Participant shall no longer be
eligible to receive such benefits.

ARTICLE 5

LIMITATION ON PAYMENT OF BENEFITS

Notwithstanding any provision of this Plan to the contrary, if any amount or benefit to be
paid or provided under this Plan would be an “Excess Parachute Payment,” within the meaning of
Section 280G of the Code but for the application of this sentence, then the payments and benefits
to be paid or provided under this Plan will be reduced to the minimum extent necessary (but in no
event to less than zero) so that no portion of any such payment or benefit, as so reduced,
constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction will be
made only if and to the extent that such reduction would result in an increase in the aggregate
payment and benefits to be provided, determined on an after-tax basis (taking into account the
excise tax imposed pursuant to Section 4999 of the Code, any tax imposed by any comparable
provision of state law, and any applicable federal, state and local income and employment taxes).
The determination of whether any reduction in such payments or benefits to be provided under this
Plan or otherwise is required pursuant to the preceding sentence will be made at the expense of the
Company by the Company’s independent accountants in effect prior to the Change in Control. The fact
that the Participant’s right to payments or benefits may be reduced by reason of the limitations
contained in this Article will not of itself limit or otherwise affect any other rights of the
Participant under Plan. In the event that any payment or benefit intended to be provided under this
Plan or otherwise is required to be reduced pursuant to this Article, the Company will effect such
reduction by first reducing the benefits described in Section 3.1(a), then, to the extent
necessary, by reducing the benefits described in Section 3.1(b).

ARTICLE 6

UNFUNDED ARRANGEMENT

The plan is unfunded, and all benefits payable hereunder will be paid, as needed, from the
general assets of the Company. The Plan is only a general corporate commitment and each Participant
must rely upon the general credit of the Company for the fulfillment of its obligations hereunder.
Under all circumstances the rights of Participants to any asset held by the Company will be no
greater than the rights expressed in this Plan. Nothing contained in this Plan shall constitute a
guarantee by the Company that the assets of the Company will be sufficient to pay any benefits
under this Plan or would place the Participant in a secured position ahead of general creditors of
the Company; the Participants are unsecured creditors of the Company with respect to their Plan
benefits, and the Plan constitutes a promise by the Company to make benefit payments in the future
to eligible Participants. No specific assets of the Company have been
or shall be set aside, or shall in any way be transferred to a trust or shall be pledged in
any way for the performance of the Company’s obligations under the Plan which would remove such
assets from being subject to the general creditors of the Company.

 

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ARTICLE 7

ADMINISTRATION OF THE PLAN

7.1 The Plan Administrator shall have the full power and authority to administer the Plan,
carry out its terms and conditions and effectuate its purposes. The Plan Administrator shall be the
“named fiduciary,” as such term is defined in ERISA, of the Plan, with responsibility for
administration of the Plan.

7.2 The Plan Administrator shall serve without compensation for its services as such. However,
all reasonable expenses of the Plan Administrator shall be paid or reimbursed by the Company upon
proper documentation. The Plan Administrator shall be indemnified by the Company against personal
liability for actions taken in good faith in the discharge of duties as the Plan Administrator.

7.3 The Plan Administrator shall keep all individual and group records relating to
participants and former participants and all other records necessary for the proper operation of
the Plan. Such records shall be made available to the Company and to each Participant for
examination during business hours except that a Participant shall examine only such records as
pertain exclusively to the examining Participant and to the Plan. The Plan Administrator shall
prepare and shall file as required by law or regulation all reports, forms, documents and other
items required by ERISA, and every other relevant statute, each as amended, and all regulations
thereunder (except that the Company, as payor of the Benefits, shall prepare and distribute to the
proper recipients all forms relating to withholding of income or wage taxes, Social Security taxes,
and other amounts which may be similarly reportable).

ARTICLE 8

AMENDMENT OR TERMINATION

The Board reserves the right to amend or terminate the Plan at any time and in any manner
without the consent of any affected individual, which right includes, without limitation, the right
to change the individuals who are eligible to participate in the Plan from time to time.
Notwithstanding the foregoing, (i) for a period of one year following a Change in Control, the Plan
may not be terminated or amended in any manner adverse to any eligible Participant without the
written consent of each affected Participant and (ii) any amendment to or termination of the Plan
will not adversely affect the benefits otherwise payable to a Participant whose Employment
Termination Date occurred prior to the date of such amendment or termination.

ARTICLE 9

CLAIMS PROCEDURES

9.1 Claim for Benefits. When a Benefit is due, a Claimant may submit a claim for Benefits to
the office designated by the Plan Administrator to receive claims. For purposes of this Article,
“Claimant” means a Participant or an authorized representative of a Participant who makes a claim
for Benefits under the Plan.

9.2 Deadline for Notifications of Claim Determinations. If a Claimant’s claim for Benefits
under the Plan is denied in whole or in part, the Plan Administrator will provide to the Claimant a
written notice of the claim decision within 90 days of receipt of the claim. This 90-day period may
be extended one time by the Plan Administrator for up to 90 days, provided that the Plan
Administrator notifies the Claimant, prior to the expiration of such 90-day period, of the
circumstances requiring the extension of time and the date by which the Plan Administrator expects
to render a decision. Claims not acted upon within the time prescribed herein shall be deemed
denied for purposes of proceeding to the review stage.

9.3 Contents of Notices of Claims Denials. When a claim is denied (an adverse determination)
in full or in part, the Plan Administrator will provide the Claimant a written or electronic
notification of the denial within the time frame specified in Section 9.2. This notice will:

(a) explain the specific reasons for the adverse determination;

(b) reference the specific Plan provisions on which the adverse determination is based;

 

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(c) provide a description of any additional material or information necessary for the Claimant
to complete the claim and an explanation of why such material or information is necessary; and

(d) provide a description of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA following an adverse claims determination on review.

9.4 Appeals of Denied Claims. The Claimant will have 60 days after receiving the notice that
the Claimant’s claim is denied to appeal the adverse determination in writing to the Plan
Administrator. The Claimant may submit written comments, documents, records, and other information
relevant to the claim, and such information will be taken into account during the review, without
regard to whether it was submitted or considered in the initial claim determination. In addition,
the Claimant will be provided, upon request and free of charge, reasonable access to and copies of
all documents, records, and other information relevant to the claim. If no appeal of the adverse
determination is made in writing to the Plan Administrator within 60 days after the Claimant’s
receipt of the notice of denial, the denial of the claim is final.

9.5 Deadlines for Notifications of Appeals Determinations. The Administrator will notify the
Claimant of its determination on review of an adverse claim determination within a reasonable
period of time, but not later than 60 days from receipt of a request for review of the adverse
determination. This 60-day period may be extended one time by the Plan Administrator for up to 60
days, provided that the Plan Administrator notifies the Claimant, prior to the expiration of such
60-day period, of the circumstances requiring the extension of time and the date by which the Plan
Administrator expects to render a decision.

9.6 Contents of Notices of Final Claims Determinations. Notice of the Plan’s claims decision
will be given in writing or electronically. If the Claimant’s claim is denied in whole or in part
the notification will include:

(a) the specific reasons for the denial;

(b reference to the specific Plan provisions on which the decision was based;

(c) a statement of the Claimant’s right to receive, upon request and free of charge,
reasonable access to and copies of all documents, records, and other information relevant to the
claim; and

(d) a statement of the Claimant’s right to bring a civil action in court under section 502(a)
of ERISA.

ARTICLE 10

MISCELLANEOUS

10.1 Tax Withholding. The Company will calculate the deductions from the amount of the benefit
otherwise payable under the Plan for any taxes required to be withheld by federal, state or local
government and shall cause them to be withheld.

10.2 Plan Not an Employment Contract. The adoption and maintenance of the Plan is not a
contract between the Company and its employees, which gives any employee the right to be retained
in its employment. Likewise, it is not intended to interfere with the rights of the Company to
discharge any employee at any time or to interfere with the employee’s right to terminate his or
her employment at any time.

10.3 Alienation Prohibited. No benefits hereunder shall be subject to anticipation or
assignment by a Participant, to attachment by, interference with, or control of any creditor of a
Participant, or to being taken or reached by any legal or equitable process in satisfaction of any
debt or liability of a Participant prior to its actual receipt by the Participant. Any attempted
conveyance, transfer, assignment, mortgage, pledge, or encumbrance of the benefits hereunder prior
to payment thereof shall be void.

10.4 Gender and Number. If the context requires it, words of one gender when used in the Plan
shall include the other genders, and words used in the singular or plural shall include the other.

10.5 Severability. If any provision of the Plan is determined to be invalid or unenforceable,
that determination shall not affect the validity or enforceability of any other provision.

 

6

 

10.6 Successors. This Plan shall be binding upon and inure to the benefit of the Company and
any of its successors or assigns. The Company shall require any successor to or assignee of
(whether direct or indirect, by purchase, merger, consolidation or otherwise) all or substantially
all of the assets or businesses of the Company (i) to assume unconditionally and expressly this
Plan and (ii) to agree to perform or to cause to be performed all of the obligations under this
Plan in the same manner and to the same extent as would have been required of the Company had no
assignment or succession occurred.

10.7 Assignment; Binding Effect. This Plan shall be binding upon any Successor. The Company
shall not assign any of its obligations under the Plan unless (a) such assignment is to a
Successor, and (b) the requirements of Section 10.6 are fulfilled.

10.8 Compliance with Section 409A of the Code. Deferred Compensation. It is intended that
benefits payable hereunder, whether in form or operation, do not constitute “deferred compensation”
within the meaning of Code Section 409A and therefore, the benefits are intended to be exempt from
the requirements applicable to deferred compensation under section 409A of the Code and the
regulations thereunder.

(a) Benefits that are not intended to constitute deferred compensation. With respect to
benefits payable hereunder that are not intended to constitute deferred compensation within the
meaning of Code Section 409A, (i) to the extent necessary and permitted under Code Section 409A,
the Company is authorized to amend this Plan so that the Plan as modified and the benefits payable
under the modified Plan, remain exempt from the requirements applicable to deferred compensation
under Code Section 409A of the Code (ii) the Committee shall take no action otherwise permitted
under the Plan to the extent such action shall cause such benefits to be treated as deferred
compensation within the meaning of Code Section 409A. The Plan Administrator, in its sole
discretion, shall determine to what extent if any, this Plan shall be required to be so modified.
Notwithstanding any provision to the contrary, such modification shall be made without prior notice
to or consent of Participants.

(b) Benefits that constitute deferred compensation. With respect to benefits payable hereunder
that constitute deferred compensation within the meaning of Code Section 409A by form or operation
(including, but not limited to, benefits referenced under paragraph (a) above that the Plan
Administrator determines is a form of deferred compensation), (i) to the extent necessary the
Company is authorized to amend this Plan so that the Plan as modified and the benefits payable
under the modified Plan, complies with the requirements applicable to deferred compensation under
Code Section 409A and (ii) the Plan Administrator shall take no action otherwise permitted under
the Plan to the extent such action shall cause benefits payable herunder to no longer comply with
the requirements applicable to deferred compensation under Code Section 409A. The Plan
Administrator, in its sole discretion, shall determine to what extent if any, this Plan shall be
required to be so modified. Notwithstanding any provision to the contrary, such modification or
substitution shall be made without prior notice to or consent of Participants.

(c) Treatment of specified employees. If a Participant is a “specified employee” as defined
under Code Section 409A and the Participant’s benefits are to be paid or provided on account of the
Participant’s Separation from Service (for reasons other than death) and such benefits constitute
“deferred compensation” as defined under Code Section 409A, then any portion of the Participant’s
benefits that would otherwise be paid or provided during the six-month period commencing on the
Participant’s Separation from Service shall be paid or provided as soon as practicable following
the conclusion of the six-month period (or following the Participant’s death if it occurs during
such six-month period).

10.9 Governing Law. The provisions of the Plan shall be governed by the laws of the State of
Oklahoma and, excluding any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan to the substantive law of another jurisdiction.
Participants under this Plan are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts of Oklahoma to resolve any and all issues that may arise out of or relate
to the Plan.

	 	 	 	 	 
	 	XETA TECHNOLOGIES INC.

 	 
	 	By:  	/s/ Greg Forrest
 	 
	 	 	Title:           President and CEO 	 
	 	 	 	 
	 

 

7

 

Exhibit A

XETA TECHNOLOGIES, INC.

EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

RELEASE AGREEMENT

This RELEASE is executed by
 _____ 
(the “Employee”) in consideration of the severance benefits
provided under the XETA Technologies, Inc. Executive Change in Control Severance Plan (the “Plan”),
and as a condition to the receipt of such benefits. For purposes of this Release, the term
“Company” means XETA Technologies, Inc. and any Successor (as defined in the Plan).

NOW THEREFORE, the Employee provides the following release:

1. Release by Employee. I,
 _____, on behalf of myself and my heirs and assigns, in
consideration of the Company’s payment of the severance benefits in the amount of $                    
(less any amounts that the Company is required to withhold under applicable laws) and the welfare
benefits described in Section 3.1(b) of the Plan to be furnished to me pursuant to the Plan, the
sufficiency of which is hereby acknowledged, and as a material inducement to the Company to enter
into this Release hereby release and forever discharge the Company, and its directors, officers,
shareholders, partners, representatives, agents, employees, predecessors, successors, affiliates,
divisions, subsidiaries and related entities and their respective directors, officers,
shareholders, agents, representatives and employees, from all claims of any nature whatsoever
waivable by applicable law, from the beginning of time to the date of the execution of this
Release, known or unknown, suspected or unsuspected, including but not limited to all claims
arising out of, based upon, or relating to my employment with the Company, or compensation for that
employment. I understand that the consideration provided for in the Plan exceeds anything of value
to which I am already entitled without the Plan.

Without limiting the generality of the foregoing, I understand and agree that this Release
includes, but is not limited to, claims based on or relating to: (a) any express or implied
employment contract; (b) wrongful discharge; (c) termination in breach of public policy; (d) age
discrimination under the Age Discrimination in Employment Act of 1967, as amended; (e) claims of
discrimination, harassment or retaliation under Title VII of the Civil Rights Act of 1964, as
amended, the Americans with Disabilities Act, or any other law which prohibits discrimination based
on race, color, age, ancestry, national origin, sex, sexual orientation, religion, mental or
physical disabilities, or marital status; (f) any other federal, state or local laws or regulations
prohibiting employment discrimination; (g) personal injury, defamation, assault, battery, invasion
of privacy, fraud, intentional or negligent misrepresentation of fact, intentional or negligent
infliction of emotional distress, or false imprisonment; (h) claims for additional wages,
compensation, severance pay or bonuses; and (i) claims for attorneys’ fees or costs.

I UNDERSTAND THAT THIS RELEASE COVERS BOTH CLAIMS THAT I KNOW ABOUT AND THOSE THAT
I MAY NOT KNOW ABOUT.

2. Additional Issues Associated with Scope of Release. I understand that I am only waiving
those claims that I have as of the date I sign this Release, and not any claims that might arise in
the future. I also understand that this Release does not release or discharge claims that are not
waivable by applicable law. Also excluded from the scope of this Release are any rights I have to
any vested benefits under the Company’s benefit plans, including but not limited to the Company’s
401(k) Plan. Further, nothing in this Release prohibits me from filing a charge with the EEOC or
participating in an investigation or proceeding of the EEOC. However, I am waiving the right to
any personal monetary recovery or other personal relief should the EEOC or any other agency pursue
alleged charges in part or entirely on my behalf.

3. No Knowledge of Legal Violations. I further assert that during my employment with the
Company and activities regarding any company or organization affiliated with the Company, that I
have no information or knowledge of any legal irregularity, violation, or alleged violation of any
law, regulation, statute, or ordinance of any kind resulting from the operations of the Company, or
any other company or organization affiliated with the Company. I have never reported any such
irregularity or violation to any superior with respect to the Company or any company or
organization affiliated with the Company.

4. Advisement to Consult with an Attorney and Forty-five (45) Day Review Period. I
acknowledge that I am hereby advised in writing to consult with an attorney prior to executing this
Release to discuss the contents of this document and its meaning. I understand that I have
forty-five (45) days after receiving this Release to consider this waiver and release of my rights.
I understand the terms and conditions of this Release in full, agree to abide by this, and
knowingly and voluntarily execute it without hidden reservations.

 

i

 

5. Seven (7) Day Revocation Period. I understand that I will have seven (7) days after I sign
this Release during which I can revoke my signature and cancel my acceptance of the benefits under
the Plan for any reason, and that this Release shall not become effective or enforceable until
after this revocation period has expired. I understand that I may revoke or rescind this Release
by providing written notice of revocation to the Company’s General Counsel, [name, address, fax
number], within the 7-day revocation period. I understand that I will not be entitled to any
severance benefits under the Plan until the end of the 7-day revocation period.

6. Governing Law. The provisions of the Plan and this Release shall be governed by the laws of
the State of Oklahoma and, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Plan to the substantive law of another
jurisdiction. Participants under this Plan are deemed to submit to the exclusive jurisdiction and
venue of the federal or state courts of Oklahoma to resolve any and all issues that may arise out
of or relate to the Plan or this Release.

7. Continuing Obligations After Separation from Employment. I agree that before and after my
separation from employment, I will continue to abide by any Company policies and procedures
relating to confidentiality, inventions, non-disclosure and/or other employment obligations that
survive the termination of my employment. I agree that I will continue to be bound by all
post-employment obligations as required by the Company’s policies and procedures or as required in
any other written agreement between myself and the Company. I agree that the Plan and this Release
do not affect or diminish in any manner any of my post-employment obligations to the Company,
including, but not limited to, those specifically described within this Release.

8. Entire Agreement. I understand that the Plan and this Release contain the entire agreement
and understanding between me and the Company regarding my employment and separation from that
employment and that no other covenants or promises have been made except those contained in the
Plan and this Release. The Plan and this document supersede all other agreements and arrangements
between the Company and me, whether written or oral.

9. Attorneys’ Fees. I further agree I am fully responsible for any attorneys’ fees incurred
by me in consulting with an attorney of my choice in connection with my review or execution of this
document.

10. Severability. I agree that should any court or arbitrator determine that any clause,
sentence, provision, paragraph, or part of this Release is illegal, invalid, or unenforceable, that
court’s or arbitrator’s determination shall not affect, impair, or invalidate the remainder of the
Release, and the remainder of the Release will remain in full force and effect.

11. Headings. I understand that all headings used in this Release are intended for
convenience and reference only and do not in any manner amplify, limit, modify or amend the
Release. A court or arbitrator shall not use any headings in the construction or interpretation of
any section of the Release.

EXECUTED in multiple originals this
 _____ 
day of                     ,                     .

	 	 	 	 	 
	 

	 	Signature of Employee	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

WITNESS
	 	 

NON-REVOCATION STATEMENT

I,                                         , acknowledge that at least seven (7) days have expired since the execution of
the Release Agreement by me on the
 _____ 
day of                     ,                     , and I knowingly and
voluntarily elect not to revoke this waiver and release of my rights under the Age Discrimination
in Employment Act, as amended, 29 U.S.C. § 621 et seq.

EXECUTED in multiple originals this
 _____ 
day of                     ,                     .

	 	 	 	 	 
	 

	 	 
	 	 
	 

	 	 

Signature of Employee
	 	 

 

ii

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