XETA TECHNOLOGIES, INC. 2004 OMNIBUS STOCK INCENTIVE PLAN 1. Establishment and Purpose

Equity Incentive Plan Agreement

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XETA TECHNOLOGIES, INC

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Title: XETA TECHNOLOGIES, INC. 2004 OMNIBUS STOCK INCENTIVE PLAN 1. Establishment and Purpose
Governing Law: Oklahoma Date: 1/19/2005
Industry: COMEQP Sector: TECHNO

Search Equity Incentive Plan Agreement by:

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).

	(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.

	(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.

	(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

		preceding October 31^st. 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.

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.

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

			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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