GMX RESOURCES INC. 2008 LONG-TERM INCENTIVE PLAN

EXHIBIT 10.1

GMX RESOURCES INC.
2008 LONG-TERM INCENTIVE PLAN
(Effective as of May 28, 2008)

ARTICLE I
PURPOSE

Section 1.1 Purpose . This GMX Resources Inc. 2008 Long-Term Incentive Plan (the “Plan”) is intended as an incentive to managerial and other employees of GMX Resources Inc. (the “Company”) and any Subsidiary of the Company. The Plan’s purposes are to retain employees, to attract new employees, to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company. The Plan is also intended to provide incentive to consultants to, and certain directors of, the Company and any Subsidiary of the Company. Toward these objectives, the Plan provides for the grant of Options, Restricted Stock Awards, Bonus Stock Awards, SARs, Performance Units and Performance Bonuses to Eligible Employees and the grant of Nonqualified Stock Options, Restricted Stock Awards, Bonus Stock Awards, SARs and Performance Units to Consultants and Eligible Directors, subject to the conditions set forth in the Plan. Certain capitalized terms used in this Plan have the meanings ascribed to them in Article II hereof.

Section 1.2 Effectiveness and Expiration of the Plan . The Plan was adopted by the Board to be effective as of May 28, 2008 (the “Effective Date”). The Plan is subject to approval by holders of the Company’s outstanding Common Stock, which must be obtained within the twelve month period subsequent to Effective Date. The Plan is effective until May 28, 2018, unless earlier terminated pursuant Section 11.1. Notwithstanding any termination of the Plan, the Plan shall continue in effect until all matters relating to the payment and administration of outstanding Awards have been settled.

Section 1.3 Shares Subject to the Plan . Subject to the limitations set forth in the Plan, there shall be subject to the Plan 750,000 shares of Common Stock of the Company, par value $0.001 per share (the “Common Stock”). Any shares subject to the Plan that are not subject to Awards at the termination of the Plan shall cease to be subject to the Plan; provided, however, that until termination of the Plan, the Company shall at all times make available a sufficient number of shares to meet the requirements of the Plan. The shares subject to the Plan shall consist of authorized but unissued shares of Common Stock or shares of Common Stock held in the treasury of the Company. Shares of Common Stock shall be deemed to have been issued under the Plan only to the extent actually issued and delivered pursuant to an Award. Any shares of Common Stock related to Awards that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of shares of Common Stock or are exchanged in the Board’s discretion for Awards not involving shares of Common Stock, shall be available again for grant under the Plan and shall not be counted against the shares of Common Stock authorized under this Section 1.3. In addition, shares of Common Stock issued under the Plan and forfeited back to the Plan, shares of Common Stock surrendered in payment of the exercise price or purchase price of an Award, and shares of Common Stock withheld for payment of applicable employment taxes and/or withholding obligations associated with an Award shall again be available for the grant of an Award under the Plan. A maximum of 750,000 shares of Common Stock of the total authorized under this Section 1.3 may be granted as Incentive Stock Options. The limitations of this Section 1.3 shall be subject to the adjustment provisions of Article X.

1

ARTICLE II
DEFINITIONS

Section 2.1 “Award” means, individually or collectively, any Option, Restricted Stock Award, SAR, Performance Unit or Performance Bonus granted under the Plan to an Eligible Employee by the Committee or any Nonqualified Stock Option, Performance Unit, SAR or Restricted Stock Award granted under the Plan to a Consultant by the Committee or an Eligible Director by the Board pursuant to such terms, conditions, restrictions, and/or limitations, if any, as the Committee may establish by the Award Agreement or otherwise.

Section 2.2 “Award Agreement” means any written instrument that establishes the terms, conditions, restrictions, and/or limitations applicable to an Award in addition to those established by this Plan and by the Committee’s exercise of its administrative powers.

Section 2.3 “Board” means the Board of Directors of the Company.

Section 2.4 “Bonus Stock Award” means an Award granted under Section 6.3.

Section 2.5 “Change of Control Event” means each of the following:

(a) An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Exchange Act) immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding Voting Securities;

(b) The individuals who, as of the Effective Date, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least two-thirds of the members of the Board; provided, however, that if the election, or nomination for election by the Company’s common shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “election contest” (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

2

(c) The consummation of:

(i) A merger, consolidation or reorganization involving the Company, unless: (A) the shareholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization; (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation; and (C) no Person, other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation, or any Subsidiary or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifty percent (50%) or more of the then outstanding Voting Securities, has Beneficial Ownership of fifty percent (50%) or more of the combined voting power of the Surviving Corporation’s then outstanding voting securities;

(ii) A complete liquidation or dissolution of the Company; or

(iii) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary).

Notwithstanding the foregoing, a Change in Control Event shall not be deemed to have occurred solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company that, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control Event would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control Event shall be deemed to have occurred.

Section 2.6 “Code” means the Internal Revenue Code of 1986, as amended. References in the Plan to any Section of the Code shall be deemed to include any amendments or successor provisions to such Section and any regulations under such Section.

Section 2.7 “Committee” means the Compensation Committee of the Board, provided, however, that with respect to powers to grant and establish the terms of Awards to Eligible Directors and all other powers that are reserved to the Board under Section 2.3, references to “Committee” shall be deemed to be references to Board.

3

Section 2.8 “Common Stock” means the common stock, par value $.001 per share, of the Company, and after substitution, such other stock as shall be substituted therefore as provided in Article X.

Section 2.9 “Consultant” means any person who is engaged by the Company or a Subsidiary to render consulting or advisory services.

Section 2.10 “Date of Grant” means the date on which the grant of an Award is authorized by the Committee or such later date as may be specified by the Committee in such authorization.

Section 2.11 “Eligible Employee” means any employee of the Company or a Subsidiary as approved by the Committee.

Section 2.12 “Eligible Director” means any member of the Board who is not an employee of the Company or a Subsidiary.

Section 2.13 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

Section 2.14 “Fair Market Value” means the average of the high and low sales prices of the shares of Common Stock on any national securities exchange on which the shares are listed on the day on which such value is to be determined or, if no shares were traded on such day, on the next preceding day on which shares were traded, as reported by such exchange, by National Quotation Bureau, Inc. or other national quotation service. If the Common Stock is not listed on a national securities exchange, Fair Market Value means the average of the closing “bid” and “asked” prices of the shares of Common Stock in the over-the-counter market on the date on which such value is to be determined or, if such prices are not available, the last sales price on such day or, if no shares were traded on such day, on the next preceding day on which the shares were traded, as reported by the National Association of Securities Dealers Automatic Quotation System (NASDAQ) or other national quotation service. If at any time shares of Common Stock are not traded on an exchange or in the over-the-counter market, Fair Market Value shall be the value determined by the Committee, taking into consideration those factors affecting or reflecting value that they deem appropriate. For purposes of determining the purchase price of an Incentive Stock Option, Fair Market Value shall in any event be determined in accordance with Sections 422 and 409A of the Code.

Section 2.15 “Incentive Stock Option” means an Option within the meaning of Section 422 of the Code.

Section 2.16 “Nonqualified Stock Option” means an Option which is not an Incentive Stock Option.

4

Section 2.17 “Option” means an Award granted under Article V of the Plan and includes both Nonqualified Stock Options and Incentive Stock Options to purchase shares of Common Stock.

Section 2.18 “Participant” means an Eligible Employee, a Consultant or an Eligible Director to whom an Award has been granted under the Plan.

Section 2.19 “Performance Bonus” means the cash bonus which may be granted to Eligible Employees under Article IX of the Plan.

Section 2.20 “Performance Measures” means any of the operational, financial or stock performance criteria set forth on Exhibit A annexed hereto, or any combination thereof, or as may from time to time otherwise be specified by the Committee. The Performance Measures may be absolute, relative to one or more other companies, or relative to one or more indexes.

Section 2.21 “Performance Unit” means the monetary unit, having a value equal to the Fair Market Value of one share of Common Stock, as provided by the terms of an Award Agreement evidencing such Award, that may be granted to Eligible Employees, Consultants or Eligible Directors pursuant to Article VIII hereof.

Section 2.22 “Plan” means this GMX Resources Inc. 2008 Long-Term Incentive Plan.

Section 2.23 “Restricted Stock Award” means an Award granted to an Eligible Employee, Consultant or Eligible Director under Article VI of the Plan.

Section 2.24 “SAR” means a stock appreciation right granted to an Eligible Employee, Consultant or Eligible Director under Article VII of the Plan.

Section 2.25 “Subsidiary” shall have the same meaning set forth in Section 424 of the Code. The term “Subsidiary” as used in this Plan shall include the plural of the term, if applicable.

ARTICLE III
ADMINISTRATION

Section 3.1 Administration of the Plan . The Committee shall have the power and authority to administer the Plan. Pursuant to Section 3.2, the Committee shall also be authorized to administer Awards granted by the Board to Eligible Directors. The Committee may designate persons, other than members of the Committee (including certain officers of the Company), to carry out its responsibilities under such conditions and limitations as it may prescribe, except that the Committee may not delegate its authority with regard to selection for participation of, and the granting of Awards to, persons subject to Sections 16(a) and 16(b) of the Exchange Act or Section 162(m) of the Code.

Subject to the provisions of the Plan and except as provided otherwise in Section 3.2, the Committee shall have exclusive power to:

(a) Select Eligible Employees and Consultants to participate in the Plan;

5

(b) Determine the time or times when Awards will be made to Eligible Employees and Consultants;

(c) Determine the form of an Award, whether an Incentive Stock Option, Nonqualified Stock Option, Restricted Stock Award, SAR, Performance Unit, or Performance Bonus, the number of shares of Common Stock or Performance Units subject to the Award, the amount and all the terms, conditions (including performance requirements, if any), restrictions and/or limitations, if any, of an Award, including the time and conditions of exercise or vesting, and the terms of any Award Agreement, which may include the waiver or amendment of prior terms and conditions or acceleration or early vesting or payment of an Award under certain circumstances determined by the Committee;

(d) Determine whether Awards will be granted singly or in combination;

(e) Accelerate the vesting, exercise or payment of an Award or the performance period of an Award;

(f) Take any and all other action it deems necessary or advisable for the proper operation or administration of the Plan.

Section 3.2 Grants to Eligible Directors . The Board shall have the exclusive power to select Eligible Directors to participate in the Plan and to determine the number of Nonqualified Stock Options, Performance Units, SARs, shares of Restricted Stock or shares of Bonus Stock awarded to Eligible Directors selected for participation and the terms of such Awards. The Committee shall administer all other aspects of the Awards made to Eligible Directors. For purposes of the Plan, references to the “Committee” shall be deemed to be references to the Board with respect to the powers reserved exclusively to the Board pursuant to this Section.

Section 3.3 Committee to Make Rules and Interpret Plan . The Committee in its sole discretion shall have the authority, subject to the provisions of the Plan, to establish, adopt, or revise such rules and regulations and to make all such determinations relating to the Plan, as it may deem necessary or advisable for the administration of the Plan. The Committee’s interpretation of the Plan or any Awards and all decisions and determinations by the Board with respect to the Plan shall be final, binding, and conclusive on all parties.

Section 3.4 Section  162(m) Provisions . It is the intent of the Company for the Plan and the Awards made hereunder to qualify for the exception from Section 162(m) of the Code for “qualified performance based compensation” if it is determined by the Committee that such qualification is necessary for an Award. Accordingly, if the Committee intends for an Award to be granted and administered in a manner designed to preserve the deductibility of the resulting compensation in accordance with Section 162(m) of the Code, then the Performance Measures to be achieved by the Company, or any Subsidiary, division, or department, applicable to such Award shall be (i) measured for a prescribed period, as determined by the Committee, consisting of not less than one year; and (ii) established in writing by the Committee no later than the earlier of (a) 90 days after the commencement of the relevant performance period and (b) the date as of which 25% of the performance period has elapsed. The Committee’s discretion to modify an

6

Award to change or otherwise waive a Performance Measure to allow the vesting of the Award may be restricted in order to comply with Section 162(m). Further, the granting of any Award intended to be “qualified performance based compensation” shall be administered by a committee of, and appointed by, the Board that shall be comprised solely of two or more outside directors (within the meaning of the term “outside directors” as used in Section 162(m) of the Code and applicable interpretive authority thereunder and within the meaning of the term “Non-Employee Director” as defined in Rule 16b-3 promulgated under the Exchange Act).

Section 3.5 Section 409A Provisions . It is the intent of the Company that no Award under the Plan be considered “deferred compensation” subject to Section 409A of the Code, including awards paid pursuant to a Change in Control Event. The Committee shall design and administer the Awards under the Plan so that they are not subject to Section 409A of the Code.

ARTICLE IV
GRANT OF AWARDS

Section 4.1 Grant of Awards . Awards granted under this Plan shall be subject to the following conditions:

(a) Subject to the adjustment provisions of Article X, the aggregate number of shares of Common Stock made subject to the grant of Options and/or SARs to any Eligible Employee in any calendar year may not exceed 200,000 shares, such limitations to be applied in a manner consistent with the requirements of, and only to the extent required for compliance with, the exclusion from the limitation or deductibility of compensation under Section 162(m) of the Code.

(b) Subject to the adjustment provisions of Article X, the aggregate number of shares of Common Stock made subject to the grant of Restricted Stock Awards and Performance Unit Awards (presuming such Performance Unit Awards will be paid in shares of Common Stock) to any Eligible Employee in any calendar year may not exceed 200,000, subject to the adjustment provisions of Article X, such limitations to be applied in a manner consistent with the requirements of, and only to the extent required for compliance with, the exclusion from the limitation or deductibility of compensation under Section 162(m) of the Code.

(c) The maximum amount made subject to the grant of Performance Bonuses to any Eligible Employee in any calendar year may not exceed $1,000,000.

(d) The Committee shall, in its sole discretion, determine the manner in which fractional shares arising under this Plan shall be treated.

(e) Separate certificates or a book-entry registration representing shares of Common Stock shall be delivered to a Participant pursuant to an Award contemplating delivery of shares of Common Stock; provided, however, any shares of Common Stock subject to a Restricted Stock Award may be held in the custody of the Company until the vesting conditions of such Award are satisfied.

7

(f) The maximum term of any Award shall be ten years.

ARTICLE V
STOCK OPTIONS

Section 5.1 Grant of Options . The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Options to Eligible Employees. These Options may be Incentive Stock Options or Nonqualified Stock Options, or a combination of both. The Committee may, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Nonqualified Stock Options to Eligible Directors and Consultants. Each grant of an Option shall be evidenced by an Award Agreement executed by the Company and the Participant, and shall contain such terms and conditions and be in such form as the Committee may from time to time approve, subject to the requirements of Section 5.2. Unless otherwise determined by the Committee at the time of grant, all Options shall become exercisable at the rate of 25% of the total shares subject to the Option on each of the first four (4) anniversary dates of the Date of Grant. The Committee shall also be entitled to accelerate the date any outstanding Option becomes exercisable at any time.

Section 5.2 Conditions of Options . Each Option so granted shall be subject to the following conditions:

(a)  Price . The purchase price for each share placed under Option pursuant to the Plan shall be determined by the Committee, but shall in no event be less than 100% of the Fair Market Value of such share on the Date of Grant.

(b)  Term . In the event of the death of a Participant while in the employ of the Company, any unvested portion of the Option as of the date of death shall be vested as of the date of death and the Option shall be exercisable in full by the heirs or other legal representatives of the Participant within twelve (12) months following the date of death. In the event of termination of employment for any reason other than death or termination for cause (and except as otherwise provided in Section&