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Exhibit 10.01

SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS

This Settlement Agreement and Mutual Release (hereinafter “AGREEMENT”) is
entered into on this, the 25th day of January, 2013, by, between, and among
Worthington Energy, Inc. (“Worthington”), on the one hand, and BLACK CAT
Exploration & Production, LLC (“Black Cat”) and Anthony Mason (“Tony”) on the
other hand. Black Cat and Tony are collectively referred to as the “Claimants”.
Worthington and the Claimants are hereinafter referred to collectively as
“SETTLING PARTIES”.  The SETTLING PARTIES enter this AGREEMENT individually, and
on behalf of themselves and their respective principals, agents, attorneys,
officers, directors, shareholders, servants, representatives, employees,
members, partners, subsidiaries, affiliated companies, insurers, predecessors,
successors-in-interest and assigns.

The SETTLING PARTIES intend that the terms of this agreement and underlying
transactions remain confidential.

1.0           PARTIES’ REPRESENTATIONS

Each SETTLING PARTY represent as follows:

(a) That this AGREEMENT will be binding upon it when executed; and

(b) That the representations set forth herein shall endure forever and shall
survive the execution of this AGREEMENT and the settlement, as more fully
described below.

2.0           RECITALS

2.1           WHEREAS, it is the intent of the SETTLING PARTIES to fully and
finally resolve any and all of the claims at issue between them in order to
preclude any potential future litigation between and among the SETTLING PARTIES,
all terms of this AGREEMENT are to be construed so that their meaning will
effectuate this intent.

2.2           WHEREAS, the SETTLING PARTIES each recognize that any future
litigation among them would require substantial time, effort, and expense unless
their claims are settled and terminated between and among them at this time.

2.3           WHEREAS, the SETTLING PARTIES wish to reduce to writing the full
terms of their AGREEMENT.

3.0           NO ADMISSION

In making this AGREEMENT, the SETTLING PARTIES do not admit the sufficiency of
any claims, allegations, assertions, contentions, or positions of any other
party, or the sufficiency of any defenses to any such claims, allegations,
assertions, contentions or positions.  Further, in making this AGREEMENT, the
SETTLING PARTIES agree that the covenants and releases comprising this AGREEMENT
are not intended to be admissions of liability, negligence, willful conduct,
breach of contract, bad faith conduct or fault of any kind whatsoever.  The
SETTLING PARTIES hereto desire to resolve the instant action in an amicable
fashion.  The SETTLING PARTIES have entered into this AGREEMENT in good faith
and with the desire to forever settle as between them all claims and to execute
a Release as set forth in Paragraph 4.0 below.
 
 
 

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AGREEMENT AND RELEASE

WHEREFORE, in consideration of the covenants and agreements expressed herein,
and the recitals set forth above, which form a part of, and are incorporated
into this AGREEMENT, the parties hereto agree as follows:

4.0           SETTLEMENT TERMS

(a) In consideration of this Release, the Worthington hereby grants to the
Claimants the following:
(i)  
A Payment of $125,000 to the Claimants representing all amounts owed to Tony and
all amounts owed to Black Cat.  The $125,000 will be comprised of 10 monthly
payments in the amount of $12,500 each. The first payment will be issued in 45
days following the execution date of this Agreement.  Each additional payment
will be made in 30 days thereafter.

(ii)  
On the closing of a funding of the VM179 credit facility of at least $3,500,000
(1st Tranche), all unpaid portions of the $125,000 will become fully due and
payable.

(iii)  
All current production of the I-1 well (from the date it went on-line) belongs
goes to Black Cat

(b) In consideration of this Release, the Claimants here grant to Worthington
the following:
(i)  
The return of all Worthington or Paxton Energy stock certificates which were
issued to any Claimant or any affiliate of any Claimant or a designee of any
Claimant.

(ii)  
All studies, contact information, documentation and other forms of related
information regarding the VM179 Seismic acquisition.

(iii)  
Tony will resign from the Board of Directors of Worthington and as President and
CEO of Worthington.

(i) Each of the Settling Parties hereby release and forever discharges each
other, and all of their representatives, agents, employees, heirs, successors,
administrators, executors, attorneys, and any parents, affiliates, subsidiaries,
officers, directors, shareholders, predecessors and assigns, from any and all
claims, actions and causes of action, known or unknown which may have arisen or
may in the future arise in connection with or in any manner related to or
arising out of the any event or occurrence related to the transaction
contemplated in the recital (“Released Claims”).

 
 

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(j) The Settling Parties further expressly agree that this Agreement shall be
binding upon their successors and assigns and shall inure to the benefit of the
Settling Parties and each of them.  The Settling Parties further represent that
any approvals of this Agreement required to be obtained by each of the Settling
Parties have been obtained and that the Settling Parties are expressly or
otherwise fully authorized to release and discharge each other as described
herein.

The parties confirm that this is a written Settlement Agreement as contemplated
by Section 154.071 of the Texas Civil Practice and Remedies Code.

5.0           ENTIRE AGREEMENT

This AGREEMENT constitutes the full and entire AGREEMENT between the SETTLING
PARTIES hereto and such Parties acknowledge that there is no other Agreement,
oral or written, between the SETTLING PARTIES hereto.

6.0           FINAL AGREEMENT

The parties to this AGREEMENT and each of them, acknowledge that (1) this
AGREEMENT and its reduction to final form is the result of extensive good faith
negotiations between the parties; (2) the parties have carefully reviewed and
examined this AGREEMENT; (3) the parties have had ample opportunity to consult
with independent legal counsel; and (4) any statute or rule of construction that
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this AGREEMENT.

7.0           FEES AND COSTS

All parties will bear their own fees and costs concerning preparation and
execution of this AGREEMENT and all required definitive agreements.

8.0           NO INDUCEMENT

Each SETTLING PARTY expressly warrants and represents that, in executing this
AGREEMENT, it is not relying upon any representation, promise, inducement or
statement made by or on behalf of any of the other persons or entities which/who
are parties to this AGREEMENT.  Nor is any party relying on any omission or the
absence of any statement, representation, promise or inducement not made
herein.  Each party hereto expressly waives any right it might ever have to
claim that this AGREEMENT was in any way induced by fraud.

 
 

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9.0           MODIFICATIONS

This AGREEMENT may not be amended or modified, except by a written instrument
executed by the parties affected by such amendment to this AGREEMENT.

10.0           COUNTERPARTS

This AGREEMENT may be executed in counterparts with the same effect as if all
original signatures were placed on one document, and which, when taken together,
shall constitute one original agreement.

11.0           PARAGRAPH HEADINGS

Paragraph headings are for reference only and shall not affect the
interpretation of any paragraph hereto.

12.0           PARTIAL INVALIDITY

Each provision of this AGREEMENT is valid and enforceable to the fullest extent
permitted by law.  If any provision of this AGREEMENT, or the application of
such provision to any person or circumstance, is deemed to be invalid or
unenforceable, the remainder of this AGREEMENT, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, is not affected by such invalidity or
unenforceability, unless such provision or application of such provision is
essential to this AGREEMENT.

13.0           APPLICABLE LAW

This AGREEMENT is made and entered into in the State of Nevada and shall be
deemed to have been executed and delivered within the State of Nevada, and the
rights and obligations of the parties hereunder shall be governed by, and
construed, and enforced in accordance with the laws of the State of Nevada
without regard to its conflict of laws principles.

 
 

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14.0           NON-ASSIGNMENT

The SETTLING PARTIES hereby warrant that they are the legal owners of the
RELEASED CLAIMS described and being released herein and have not assigned all or
any portion of the claims to any person or entity.  The SETTLING PARTIES further
expressly agree to defend, protect, indemnify and hold each other harmless if
any person, firm or corporation shall assert or attempt to assert any claims
against either one of the SETTLING PARTIES by reason of the foregoing matters.

15.0           PRESS RELEASE
 
The SETTLING PARTIES will mutually agree on the language and tone of any press
release or other disclosure by either party regarding the Agreement, except as
required by the Securities Act of 1933, as amended.

16.0           EFFECTIVE DATE

The Parties hereto deem this AGREEMENT to be effective as of the date that the
AGREEMENT is fully executed by all Parties.

IN WITNESS WHEREOF, the undersigned have executed this AGREEMENT and mutual
release on the date affixed by their signature.
 

 
WORTHINGTON ENERGY, INC.
     
/s/ CHARLES VOLK
 
By: Charles Volk, Chairman
             
/s/ ANTHONY MASON
 
Anthony Mason
     
Black Cat Exploration & Production, LLC
         
BY /s/ ANTHONY MASON
 
Title: Chief Executive Officer

 
 
 
 
 
 

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