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Exhibit 10.01

EMPLOYMENT AGREEMENT
Robert Fulton (Tony) Smith, Jr.
 
THIS EMPLOYMENT AGREEMENT ("Agreement") is made to be effective as of the 15th
day of June, 2011 (“Starting Date”) between PAXTON ENERGY, INC., a Nevada
corporation (“Paxton”), and ROBERT FULTON (TONY) SMITH, JR. (“Employee”).
 
For good and valuable consideration, the parties agree as follows:
 
1.      Hiring.   Paxton hereby hires and employs Employee, and Employee accepts
such hiring, as a regular employee of Paxton and agrees to perform the duties
specified below on the terms and conditions hereafter described.
 
2.      Duties.   Employee agrees, to the extent of the time commitment set
forth below, to devote Employee’s attention to the performance of the following
services to Paxton:
 
A.      Employee shall be a employee and shall devote at least sixty percent
(60%) of each work week of 40 hours per week on behalf of Paxton. Paxton
acknowledges that Employee serves as a officer, director, employee, and
consultant to other companies, including Virgin Oil Company, Inc., a Louisiana
corporation, and Virgin Offshore U.S.A., Inc., a Delaware corporation (“Outside
Activities”).  Employee may spend time involved with such “Outside Activities”
provided he does so in a way to fit into the time requirements of tasks to be
performed for Paxton and does so without interference with Employee’s
responsibilities and duties to Paxton.  Employee agrees to disclose to the board
of directors upon request and from time to time the nature and complete details
of all of his Outside Activities.
 
B.      Employee shall act initially as and shall have the title of President of
Paxton.  Employee shall perform the variety of tasks within the scope of
Employee’s title, including those described in the Bylaws of Paxton, and shall
have the responsibility, subject to the direction of the chief executive
officer, to oversee implementation of Paxton’s business plan and budget, and
shall carry out duties and responsibilities customarily associated with the
position of President.  Employee shall interface with other officers, employees,
accountants, and consultants of Paxton regarding the implementation of the
various initiatives undertaken by Paxton.
 
C.      Employee shall comply with Paxton’s written policies set out in Paxton’s
Employee Handbook and Paxton’s Code of Ethics.  Employee acknowledges that such
policies, from time to time, may be changed subject to giving notice to
Employee.
 
D.      Although the principal office of Paxton is located in Carson City,
Nevada, Paxton’s main business activities are located in Louisiana, and other
states; thus Employee may work remotely from the principal office.
 
E.      Employee shall account for any and all property of Paxton that may come
into Employee's possession in the course of the employment, and at the
termination, Employee agrees to turn in and settle for all such property.
 
F.      Employee hereby grants to Paxton the right to use Employee’s name,
picture, and curriculum vitae in connection with any brochures, web sites, slide
presentations, offering memoranda, and other materials describing Paxton and
Employee as part of the management team.
 
G.           Paxton, by action of the board of directors, reserves the right to
change, either by increasing or decreasing, the duties of Employee and to
designate other duties and responsibilities of Employee within the general scope
of the foregoing.

 
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3.    Term and Termination.
 
A.      The term of this employment agreement (the “Term”) shall commence on
June 15, 2011 and shall continue on a calendar month to month basis thereafter
for a period of six full calendar months, subject to termination under the
provisions set forth below. The parties acknowledge that this relationship is
“at will,” which means that either party can terminate the relationship with or
without cause at any time upon notice to the other party.  No oral or written
modifications, express or implied, may alter or vary the terms of this “at will”
employment unless specifically documented by a written agreement signed by
Employee and by the CEO or other authorized officer of Paxton.  Any
representations to the contrary, express or implied, written or oral, are hereby
disclaimed.
 
B.      Either Employee or Paxton may terminate this agreement and the “at will”
employment relationship for any or no reason by giving the other party written
notice of termination.
 
4.      Compensation.  A. Paxton shall pay Employee for the services rendered
hereunder during the Term a Base Salary of Ten Thousand Dollars and 00/100
($10,000.00) per month for Employee’s commitment to Paxton (“Base Salary”).  The
Base Salary shall be subject to review and adjustment from time to time by
action of the Compensation Committee of the board of directors of Paxton.  The
Base Salary shall be payable in two semimonthly installments for work performed
from the 1st to the 15th day and from the 16th day to the last day of each
calendar month.  If the Term begins on a day other than the 1st or ends on a day
other than the last day of a month, Base Salary for such month shall be prorated
based on the number of days of the Term in such month.
 
B.      Paxton’s payroll, fringe benefits other than the Option Plan, and human
resource management services may be provided through a professional employer
organization (“POE”). In such case ,  Employee’s employer of record for purposes
of payroll, fringe benefits, and human resource matters may be the POE; however,
the board of directors of Paxton or the Compensation Committee of the board of
directors shall be responsible for overseeing Employee’s work and reviewing
Employee’s performance.  Employee will execute forms and agreements provided by
the POE to accomplish these purposes.
 
C.      Employee shall be entitled to the fringe benefits provided by Paxton to
its regular employees allocated and reduced to the percentage commitment of time
set forth in Section 2 A above.  Benefits may include  paid vacation time, sick
leave, and medical and dental insurance on the terms and as described in the
Employee Handbook.  No representation is made whether any of these fringe
benefits will be offered or will continue to be offered on the same basis..
Benefits may be changed from time to time by Paxton or by the Compensation
Committee  provided changes apply uniformly to all regular employees.
 
E.      Paxton’s Compensation Committee appointed by the board of directors
shall review Employee’s Base Salary, his Incentive Compensation, and other
benefits at the end of the term of six months and not less frequently than every
twelve months thereafter.  Following such review, the board or the Compensation
Committee may in its discretion increase (but shall not be required to increase)
Employee’s Base Salary, Incentive Compensation, and other benefits, but may not
decrease Employee’s Base Salary and Incentive Compensation during the time he
serves as President.  The amount of such adjustment shall be effective upon the
execution of either a written amendment to this Agreement or a Paxton, Inc.
Payroll Data Change form.  As a salaried exempt employee, Employee will not be
entitled to additional compensation for any over-time additional hours worked to
complete assignments or work when reasonably required by business needs.
 
F.      Employee acknowledges and agrees that: (i) payments made to Employee
pursuant to Employee’s employment by the Paxton shall be subject to withholding
of applicable taxes; (ii) Employee shall be obligated to report as income all
compensation received by Employee pursuant to this Agreement; and (iii) Employee
shall pay all applicable taxes due on such compensation in the case of
under-withholding by the Paxton.

 
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G.      Paxton shall reimburse Employee for all reasonable, authorized expenses
incurred in furtherance of, or in connection with, Employee’s performance of the
Services, in accordance with the Paxton's expense reimbursement policies as in
effect from time to time.
 
5.  Indemnification.  A. To the maximum extent permitted by law and its Bylaws,
Paxton agrees to indemnify and hold Employee harmless for any acts or decisions
made in good faith while performing services for Paxton. To the same extent,
Paxton will pay, and subject to any legal limitations, advance all expenses,
including reasonable attorney fees and costs of settlements, actually and
necessarily incurred by Employee in connection with the defense of any action,
suit, or proceeding and in connection with any appeal, which has been brought
against Employee by reason of his service as an officer or agent of Paxton.
 
B. Paxton shall obtain and maintain directors’ and officers’ liability insurance
in a limit of at least $5.0 million and employment practices liability covering
Employee.  Employee shall be entitled to the protection of any such insurance
policies against all costs, charges, and expenses in connection with any action,
suit, or proceeding to which Employee may be made a party by reason of his
affiliation with Company
 
6.      Notices.  Any and all notices or other communications required or
permitted by this Agreement or by law to be served on or given to a party hereto
by the other party shall be deemed given: (i) when personally delivered; (ii)
one (1) business day after timely delivery to Federal Express, United Parcel
Service or other courier for overnight delivery, charges prepaid; (iii) at the
earlier of its receipt or five days after deposit in a regularly-maintained
receptacle for the deposit of the United States mail, first-class postage
prepaid, addressed as described below; or (iv) using the electronic mail
addresses set forth on the signature page or assigned by Paxton to employee,
upon confirmation that the notice has been transmitted successfully to the
receiving party’s electronic mail address, subject to the limitations set forth
in any other applicable statute. In the event of any conflict between the
mailing address and the electronic mail addresses set forth below and those in
the books and records of Paxton, copies of the notices and communications shall
be sent all such addresses and numbers. Either party may change any such address
or electronic mail address for notice purposes by a notice given in this manner.
 
 7.      Assignment.   This Agreement shall not be terminated as a result of
Paxton’s voluntary or involuntary dissolution or any merger in which Paxton is
not the surviving or resulting corporation, or any transfer of all or
substantially all of Paxton’s assets.  In the event of any such merger or
transfer of assets, the provisions of this agreement shall be binding on and
shall inure to the benefit of the parties and their respective legal
representatives, successors, and assigns.  Employee acknowledges that this is an
agreement for Employee’s personal services and agrees that Employee shall
perform them individually and may not assign his rights nor transfer his
obligations under this Agreement to any other party.
 
8      Dispute Resolution - Mandatory Mediation and Arbitration as EXCLUSIVE
Remedies.
 
A. The parties agree that all claims, disputes, or controversies arising out of
or relating to this Agreement, negotiations related thereto, performance during
the Term, and/or matters relating to the cessation of the relationship with
Paxton shall be resolved and determined exclusively under the mandatory
mediation and arbitration procedures described below.  By way of example only,
such claims include claims under U.S. federal, state, and local statutory or
common law, such as the Age Discrimination in Employment Act, Title VII of the
Civil Rights Act of 1964, as amended, including the amendments of the Civil
Rights Act of 1991, the Americans with Disabilities Act, the law and regulations
regarding employment, the law of contract and the law of torts.
 
B.  Before filing for mandatory and binding arbitration with respect to any
dispute, controversy, or claim arising out of or relating to this Agreement, the
parties shall be obligated first to seek by good faith efforts to resolve such
matter by mediation. As a condition precedent to filing for mandatory
arbitration, a Notice of Claim shall be sent to the other party. The Notice of
Claim shall specify the nature of the dispute, controversy, and claims and shall
include the name of a proposed independent third party mediator or organization
of mediators who shall be located in Reno, Nevada or other place designated in
the notice or agreed to by the parties.  The party receiving the Notice of Claim
shall within fifteen days thereafter either consent to mediate the matter in
front of the mediator or organization of mediators so proposed or suggest an
alternative mediator or organization of mediators likewise so located.  The
parties shall undertake good faith efforts for a period of thirty days
thereafter to appoint a mediator and submit the dispute, controversy, and claims
to mediation.
 
 
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C.  If the mediation attempt is not successful, either party thereafter shall be
entitled to seek binding arbitration.  The parties by mutual consent may elect
to have the mediator act as the neutral arbitrator to render mandatory and
binding decision.  If either party objects to having the mediator act as the
binding arbitrator, the dispute shall be referred to the American Arbitration
Association (“AAA”) for appointment of a neutral arbitrator for a mandatory
final and binding determination pursuant to the Commercial Rules (the “Rules”)
of the AAA.  Such arbitration shall be administered by the AAA and shall be held
in the place agreed upon by the parties or designated by AAA.  Binding
arbitration shall be initiated by a written request for arbitration delivered by
one party to the other party and to the AAA.  A neutral arbitrator will be
selected in accordance with the Rules.  Pending the hearing, the parties shall
be entitled to undertake discovery proceedings, including the taking of
depositions.  Promptly following the closing of the hearing, a final decision
will be made concerning the disputed matter, which decision and the basis
therefor will be in writing and delivered to the parties.  The final decision of
the arbitrator will be binding on the parties and enforceable in any court of
law having jurisdiction thereof.  Pending final decision of the disputed matter,
the parties will continue diligently to observe and perform the terms of this
Agreement.  In such arbitration, (i) Paxton will bear the costs of arbitration,
including the costs of the arbitrator and AAA fees; (ii) the prevailing party
will be entitled to any statutory, contractual, or other recovery to which the
party would be entitled in a court of law; and (iii) all matters regarding
enforcement and interpretation hereof shall be governed by the laws of the State
of Nevada without regard to its choice of law principles.
 
D. The parties acknowledge that a breach of certain provisions of this
Agreement may result in irreparable harm to a party, the nature and extent of
which may be difficult to measure in damages, and for which damages will not be
an adequate remedy.  The parties therefore agree that, in addition to any other
right or remedy which a party may have for a breach thereof, an arbitrator may
order an injunction or other equitable relief and such order may be enforced by
an appropriate court.
 
E.  On any action for the breach of this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys’ fees and costs.
 
THE PARTIES HAVE READ AND UNDERSTAND THAT THIS SECTION SETS OUT MANDATORY
MEDIATION AND ARBITRATION PROCEDURES TO RESOLVE ALL DISPUTES HEREUNDER.  BY
SIGNING THIS AGREEMENT, EACH PARTY AGREES, TO THE EXTENT PERMITTED BY LAW, TO
SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR CONNECTED WITH THIS
AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH,
OR TERMINATION THEREOF, TO BINDING ARBITRATION AND THAT THIS ARBITRATION CLAUSE
CONSTITUTES A WAIVER OF EACH PARTY’S RIGHT TO A JURY TRIAL.
 
 
 SO ACKNOWLEDGED AND AGREED:
____________________
____________________
 
Employee’s Initials
Initials of Paxton’s Agent

 
9.      Amendments.   This Agreement may be amended at any time, but any
amendment must be in writing and signed by both parties.

 
 
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10.       Counsel Input.  The parties acknowledge that each of them and their
counsel have reviewed or have had an opportunity to review and revise this
Agreement. Employee acknowledges that Employee had sufficient time to review,
and has carefully reviewed and fully understands, all the provisions of this
Agreement and is knowingly and voluntarily entering into this Agreement. The
parties agree that the rule to the effect that any ambiguities shall be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement.
 
11.      No Waiver.  The failure of either party to insist on strict compliance
with any of the terms, covenants, or conditions of this Agreement by the other
party shall not be deemed a waiver of that term, covenant, or condition, nor
shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or any
other times.
 
12.      Severability.  If any term, provision, covenant, or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.  If any such
court shall decline to enforce any provision of this Agreement, such provisions
shall nevertheless be enforced to the greatest extent such court shall deem
lawful.
 
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as
of the date set forth herein.

EMPLOYEE:
PAXTON:
 
Paxton, Inc.
 
a Nevada corporation
   
/s/ ROBERT FULTON SMITH
By:  /s/ CHARLES F. VOLK, JR.
Robert Fulton Smith
Its:  Chief Executive Officer
   
ADDRESS AND EMAIL ADDRESS:
       
Employee:
Robert Fulton (Tony) Smith
Paxton:
Paxton, Inc.  Attention:  President
 
909 Poydras Street Ste 2200
 
P.O. Box 1148
 
New Orleans LA 70112
 
Zephyr Cove, NV 89448-1148
   
Delivery:
295 Highway 50, Suite 2
Email:
tsmith@virginoil.net
 
Stateline, NV 89449
     
jimb@paxenergyinc.com
       

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