Exhibit 10.6
FINAL
EMPLOYMENT AGREEMENT
     This Employment Agreement (this “Agreement”) is made by and between Oasis
Petroleum Inc., a Delaware corporation (the “Company”), and Thomas B. Nusz
(“Employee”) effective as of June 18, 2010 (the “Effective Date”).
     WHEREAS, the Company currently employs Employee as its Chairman and Chief
Executive Officer;
     WHEREAS, the Company desires to continue to employ Employee and Employee
desires to continue to be employed by the Company and to commit himself to serve
the Company on the terms herein provided.
     NOW, THERFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
     1. Employment. The Company shall continue to employ Employee, and Employee
accepts continued employment with the Company, upon the terms and conditions set
forth in this Agreement. Unless earlier terminated pursuant to Section 4 below,
the initial term of this Agreement shall begin on the Effective Date and end on
the third anniversary of the Effective Date (the “Initial Term”), provided,
however, that the term shall be automatically renewed for successive one-year
periods (each such period an “Extension Term”) unless the Company provides a
written notice of non-renewal to the Employee more than 60 days before the end
of the Initial Term or, if applicable, the current Extension Term. The Initial
Term together with each Extension Term, if any, shall be the “Term.” If the
Company gives timely notice of non-renewal, then Employee’s employment shall end
on the last day of the Term. A termination of Employee’s employment and the Term
by reason of notice of non-renewal given by the Company shall be considered a
termination without Cause for purposes of Section 4.
     2. Position and Duties; Exclusive Compensation and Services.
          (a) During the Term, Employee shall hold the title of Chairman and
Chief Executive Officer. The Company and Employee agree that the Employee shall
have duties and responsibilities consistent with the position set forth above in
a company the size and of the nature of the Company, and such other duties and
authority that are assigned to Employee from time to time by the Company’s Board
of Directors (the “Board”), or such other officer of the Company as shall be
designated by the Board. Employee shall report to the Board, or to such other
officer of the Company as shall be designated by the Board. All services that
Employee may render to the Company or any of its Affiliates in any capacity
during the Term shall be deemed to be services required by this Agreement and
the consideration for such services is that provided for in this Agreement.
          (b) During the Term, Employee agrees to devote his full business time
and attention to the business and affairs of the Company, unless Employee
notifies the Board in advance of Employee’s intent to engage in other paid work
and receives the Board’s express written consent to do so. Notwithstanding the
foregoing, so long as such activities do not conflict with the Company’s
interests, interfere with Employee’s duties and responsibilities or

 

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violate Employee’s obligations hereunder, Employee will not be prohibited from
(i) managing his personal, financial, and legal affairs; (ii) engaging in
professional, charitable or community activities or organizations or
(iii) serving on the boards of directors, or advisory boards of directors, of
not-for-profit charitable organizations, not-for-profit professional
organizations, or for-profit corporations, so long as Employee secures the
Board’s express written consent for Employee to serve on such boards prior to
undertaking such service.
          (c) During the Term, Employee agrees to comply with and, where
applicable, enforce the policies of the Company, including without limitation
such policies with respect to legal compliance, conflicts of interest,
confidentiality, professional conduct and business ethics as are from time to
time in effect. Employee shall cooperate with any investigation or inquiry
authorized by the Board or conducted by a governmental authority related to the
Company’s or an Affiliate’s business or the Employee’s conduct related to the
Company or an Affiliate.
     3. Compensation.
          (a) Base Salary. During the Term, Employee’s base salary shall be
$325,000 per annum, which salary may be increased (but not decreased without the
Employee’s written consent) by the Board (or a designated committee thereof) in
its discretion (the “Base Salary”), which Base Salary shall be payable in
regular installments in accordance with the Company’s general payroll practices.
          (b) Annual Bonus. During the Term, Employee shall be eligible to
receive an annual performance bonus payment (a “Performance Bonus”) for each
calendar year pursuant to an annual cash performance bonus program (the “Bonus
Plan”). Pursuant to the terms of the Bonus Plan, each annual Performance Bonus
shall be payable based on the achievement of reasonable performance targets
established in accordance herewith, and for each calendar year Employee’s target
Performance Bonus shall be equal to 80% of Employee’s annual Base Salary in
effect on the last day of the applicable calendar year (the “Target Performance
Bonus”). For each calendar year, the Board and the Employee will mutually
determine and will establish in writing (i) the applicable performance targets,
(ii) the percentage of annual Base Salary payable to Employee if some lesser or
greater percentage of the target annual performance is achieved, and (iii) such
other applicable terms and conditions of the Bonus Plan necessary to satisfy the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”). Except as otherwise provided in Section 5, any Performance Bonus
that Employee becomes entitled to receive (as a result of the applicable
performance targets ultimately being achieved) will be deemed earned on the last
day of the calendar year to which such bonus relates and will be paid to
Employee as soon as administratively feasible following preparation of the
Company’s unaudited financial statements for the applicable calendar year, but
in no event later than March 15 of the calendar year following the calendar year
to which such Performance Bonus relates.
          (c) Employee Benefits. Employee will be entitled during the Term to
receive such welfare benefits and other fringe benefits (including, but not
limited to vacation, financial and tax planning assistance, medical, dental,
life insurance, 401(k) and other employee benefits and perquisites, such as club
membership dues) as the Company may offer from time to time to similarly
situated executive level employees, subject to applicable eligibility
requirements. The

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Company shall not, however, by reason of this Section 3(c), be obligated to
refrain from changing, amending, or discontinuing any such benefit plan or
program, on a prospective basis, so long as any such changes are similarly
applicable to similarly situated employees of the Company.
          (d) Business Expenses. The Company shall reimburse Employee for all
reasonable expenses incurred by him in the course of performing his duties
during the Term to the extent consistent with the Company’s written policies in
effect from time to time with respect to travel, entertainment and other
business expenses, subject to the Company’s requirements with respect to
reporting and documentation of such expenses (“Business Expenses”).
Notwithstanding any provision in this Agreement to the contrary, the amount of
Business Expenses for which Employee is eligible to receive reimbursement during
any calendar year shall not affect the amount of Business Expenses for which
Employee is eligible to receive reimbursement during any other calendar year
within the Term. Reimbursement of Business Expenses under this Section 3(d)
shall generally be made within two weeks of Employee’s submission of expense
reports pursuant to Company policy, but in no event later than March 15 of the
calendar year following the calendar year in which the expense was incurred.
Employee is not permitted to receive a payment or other benefit in lieu of
reimbursement under this Section 3(d).
          (e) Long Term Incentive Compensation. Employee may, as determined by
the Board (or a designated committee thereof) in its sole discretion,
periodically receive grants of stock options or other equity or non-equity
related awards pursuant to the Company’s long-term incentive plan(s), subject to
the terms and conditions thereof. Any grants previously awarded to Employee
pursuant to the Company’s long-term incentive plan(s) that are outstanding on
the Effective Date hereof shall continue to be governed by the terms and
conditions of such plan(s).
     4. Termination of Employment. Unless otherwise agreed to in writing by the
Company and Employee, Employee’s employment hereunder may be terminated under
the following circumstances:
          (a) Death. Employee’s employment hereunder shall terminate upon his
death.
          (b) Inability to Perform. Employee’s employment may be terminated by
the Company if Employee has incurred a Disability. For purposes of this
Agreement, “Disability” means Employee’s inability to perform the essential
functions of Employee’s position with or without reasonable accommodation, if
required by law, due to physical or mental impairment. The existence of any such
Disability shall be certified by a physician acceptable to both the Company and
Employee. If the parties are not able to agree on the choice of a physician,
each party shall select a physician who, in turn, shall select a third physician
to render such certification. In no event will Employee’s employment be
terminated as a result of Disability pursuant to this Section 4(b) until at
least 180 consecutive days of paid leave have elapsed and the Company has
provided Employee with at least thirty days’ advance written notice of
termination. During the 180 days of paid leave, the Company may offset the
payment of Employee’s Base Salary then in effect by the amount of any short-term
or long-term disability benefits Employee receives pursuant to Section 3(c)
above.

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          (c) Termination by the Company. The Company may terminate Employee’s
employment with or without Cause. For purposes of this Agreement, the term
“Cause” means Employee (i) has been convicted of a misdemeanor involving moral
turpitude or a felony, (ii) has engaged in grossly negligent or willful
misconduct in the performance of his duties for the Company, which actions have
had a material detrimental effect on the Company, (iii) has breached any
material provision of this Agreement, (iv) has engaged in conduct which is
materially injurious to the Company (including, without limitation, misuse or
misappropriation of the Company’s funds or other property), or (v) has committed
an act of fraud, provided, however, that the Company must give Employee written
notice of the acts or omissions constituting Cause within 60 days after an
officer of the Company (other than Employee) first learns of the occurrence of
such event, and no termination shall be for Cause under clauses (ii), (iii),
(iv), or (v) contained in this Section 4(c) unless and until Employee fails to
cure such acts or omissions within 30 days following receipt of such written
notice.
          (d) Termination by Employee. Employee may, upon giving the Company no
less than 30 days’ advance written notice, terminate Employee’s employment
without Good Reason or for Good Reason. For purposes of this Agreement, the term
“Good Reason” shall mean, without the express written consent of Employee, the
occurrence of one of the following arising on or after the Effective Date, as
determined in a manner consistent with Treasury Regulation § 1.409A-1(n)(2)(ii):
(i) a material reduction in Employee’s base compensation, (ii) a material
diminution in Employee’s authority, duties or responsibilities, (iii) a
permanent relocation in the geographic location at which Employee must perform
services to a location more than 50 miles from the location at which Employee
normally performed services immediately before the relocation; (iv) a
requirement that Employee report to an officer or employee instead of the Board;
or (v) any other action or inaction that constitutes a material breach by the
Company of this Agreement. Neither a transfer of employment among the Company
and any of its Affiliates nor the Company or an Affiliate entering into a
co-employer relationship with a personnel services organization constitutes Good
Reason. In the case of Employee’s allegation of Good Reason, (A) Employee shall
provide notice to the Company of the event alleged to constitute Good Reason
within 60 days after the occurrence of such event, and (B) the Company shall
have the opportunity to remedy the alleged Good Reason event within 30 days from
receipt of notice of such allegation. If not remedied within that 30-day period,
Employee may submit a Notice of Termination pursuant to Section 5(e), provided
that the Notice of Termination must be given no later than 100 days after the
expiration of such 30 day period; otherwise, Employee is deemed to have accepted
such event, or the Company’s remedy of such event, that may have given rise to
the existence of Good Reason; provided, however, such acceptance shall be
limited to the occurrence of such event and shall not waive Employee’s right to
claim Good Reason with respect to future similar events.
          (e) Investigation; Suspension. The Company may suspend Employee with
pay pending an investigation authorized by the Company or a governmental
authority or a determination by the Company whether Employee has engaged in acts
or omissions constituting Cause, and such paid suspension shall not constitute
Good Reason or a termination of this Agreement or Employee’s employment.

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     5. Compensation Upon Termination.
          (a) For Cause or Without Good Reason. In the event Employee’s
employment is terminated by the Company for Cause or by the Employee without
Good Reason, the Company shall pay to Employee (i) any unpaid portion of the
Base Salary through the Date of Termination at the rate then in effect, (ii) any
unpaid Performance Bonus earned in the calendar year prior to the Date of
Termination, (iii) unreimbursed Business Expenses through the Date of
Termination, and (iv) such employee benefits, if any, as to which Employee may
be entitled pursuant to the terms governing such benefits. The amounts, if any,
set forth in (i), (ii), (iii), and (iv) shall be collectively referred to herein
as the “Accrued Payments”. The Accrued Payments shall be paid at the time and in
the manner required by applicable law but in no event later than 30 business
days after the Date of Termination, with the exception of (ii), which shall be
paid at the time provided in and in accordance with Section 3(b).
          (b) Without Cause or For Good Reason. In addition to the Accrued
Payments, in the event Employee’s employment is terminated by the Company
without Cause or by Employee for Good Reason and such termination constitutes a
“separation from service” (as defined in Section 5(i)), the Company shall pay to
Employee a pro-rata portion of the Performance Bonus that Employee would have
been entitled to receive pursuant to Section 3(b) hereof for the calendar year
of termination, multiplied by a fraction, the numerator of which is the number
of days during which Employee was employed by the Company in the calendar year
of Employee’s termination, and the denominator of which is 365 (the “Pro-Rata
Bonus”), payable as soon as administratively feasible following preparation of
the Company’s unaudited financial statements for the applicable calendar year,
but in no event later than March 15 of the calendar year following the calendar
year to which such Performance Bonus relates. In addition, the Company shall
provide Employee with the following (the “Severance Package”), contingent upon
Employee satisfying the Severance Conditions, as defined below:
          (i) Payment of an amount (the “Separation Payment”) equal to the
greater of either (1) the aggregate amount of Base Salary as of the Date of
Termination or, if greater, before any reduction not consented to by Employee,
that would have been paid to Employee if he had continued performing services
pursuant to this Agreement for the remainder of the then-current Term or (2) the
equivalent of twelve months of Employee’s Base Salary as of the Date of
Termination or, if greater, before any reduction not consented to by Employee,
payable at the time and in the manner provided in this Section 5(b) below; plus
          (ii) Pay or reimburse on a monthly basis the premiums required to
continue Employee’s group health care coverage for a period of 18 months
following Employee’s Date of Termination, under the applicable provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), provided that
Employee elects to continue and remains eligible for these benefits under COBRA;
plus
          (iii) (A) if the Date of Termination occurs during the Initial Term,
an amount equal to the aggregate of each Target Performance Bonus that Employee
would have been eligible to receive if he had continued performing services
pursuant to this Agreement for the remainder of the then-current Term,
calculated based on Employee’s

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Base Salary in effect on the Date of Termination or, if greater, before any
reduction not consented to by Employee or (B) if the Date of Termination occurs
during any Extension Term, an amount equal to 80% of the aggregate amount of
Base Salary as of the Date of Termination or, if greater, before any reduction
not consented to by Employee, that would have been paid to Employee if he had
continued performing services pursuant to this Agreement for the remainder of
the then-current Term, minus any Pro-Rata Bonus received by the Employee
pursuant to section 5(b) above, payable as soon as administratively feasible
following preparation of the Company’s unaudited financial statements for the
applicable calendar year, but in no event later than March 15 of the calendar
year following the calendar year to which such Target Performance Bonus relates;
plus
          (iv) immediate vesting of all unvested equity awards under the
Company’s 2010 Long Term Incentive Plan or other plans of the Company as of the
Date of Termination, regardless of any other established vesting schedule, such
that all remaining unvested equity awards shall be fully vested on the Date of
Termination.
To receive the Severance Package, Employee must execute and return to the
Company on or prior to the 60th day following the Date of Termination a waiver
and release of claims agreement in the Company’s customary form, which shall
exclude claims for indemnification, claims for coverage under officer and
director policies, and claims as a stockholder of the Company and which may be
amended by the Company to reflect changes in applicable laws and regulations
(the “Release”), and where applicable, not timely revoke such Release (the
“Severance Conditions”).
     The Separation Payment shall be paid as follows:
          (A) If the Separation Payment is greater than the Section 409A Exempt
Amount (defined below), then —
               (1) the Section 409A Exempt Amount shall be paid in substantially
equal monthly installments over a period of twelve (12) months beginning on the
first payroll date which occurs on or after the 60th day following the Date of
Termination, and
               (2) the excess of the Separation Payment over the Section 409A
Exempt Amount shall be paid in a single lump sum no later than 60 days after the
Date of Termination.
For purposes of this Agreement, the “Section 409A Exempt Amount” is two times
the lesser of (x) Employee’s annualized compensation based upon the annual rate
of pay for services provided to the Company for the calendar year preceding the
calendar year in which Employee has a “separation from service” (as defined in
Section 5(i)) with the Company (adjusted for any increase during that year that
was expected to continue indefinitely if Employee had not separated from
service) or (y) the maximum amount that may be taken into account under a
qualified plan pursuant to Section 401(a)(17) of the Code for the year in which
Employee has a separation from service.

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          (B) If the Separation Payment is equal to or less than the
Section 409A Exempt Amount, then the Separation Payment shall be paid in equal
monthly installments over a period of months (limited to 24 such months)
determined by dividing (x) the Separation Payment by (y) the Employee’s Monthly
Base Salary as of the Date of Termination, commencing in payment on the first
day of the third month following the Date of Termination, provided that the Date
of Termination constitutes a “separation from service” (as defined in
Section 5(i)).
          (c) Death or Disability. In the event Employee’s employment terminates
by reason of his death or Disability, Employee (or his estate) shall be entitled
to receive:
          (i) the Accrued Payments;
          (ii) a Pro-Rata Bonus for the calendar year of termination, payable as
soon as administratively feasible following preparation of the Company’s
unaudited financial statements for the applicable calendar year, but in no event
later than March 15 of the calendar year following the calendar year to which
such Performance Bonus relates; and
          (iii) provided Employee satisfies the Severance Conditions, (1) an
amount equivalent to twelve (12) months of Employee’s Base Salary as of the Date
of Termination, or, if greater, before any reduction not consented to by
Employee, payable in a lump sum within 60 days of the Date of Termination; and
(2) pay or reimburse on a monthly basis the premiums required to continue
Employee’s group health care coverage for a period of 18 months following
Employee’s Date of Termination, under the applicable provisions of COBRA,
provided that Employee or his dependents, as applicable, elect to continue and
remain eligible for these benefits under COBRA.
          (d) Exclusive Compensation and Benefits. The compensation and benefits
described in this Section 5 or in Section 6 as applicable, along with the
associated terms for payment, constitute all of the Company’s obligations to
Employee with respect to the termination of Employee’s employment. Nothing in
this Agreement, however, is intended to limit any earned, vested benefits (other
than any entitlement to severance or separation pay, if any) that Employee may
have under the applicable provisions of any benefit plan of the Company in which
Employee is participating on the Date of Termination, any rights Employee may
have to continue or convert coverage under certain employee benefit plans in
accordance with the terms of those plans and applicable law, or any rights
Employee may have under long-term incentive or equity compensation plan.
          (e) Notice of Termination. Any termination of Employee’s employment
occurring in accordance with the terms of this Section 5 (other than by reason
of Employee’s death) shall be communicated to the other party by written notice
that (i) indicates the specific termination provisions of this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for the termination, and (iii) specifies the Date of
Termination (a “Notice of Termination”), and that is delivered to the other
party in accordance with Section 9(i) of this Agreement.

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          (f) Date of Termination. For purposes of this Agreement, “Date of
Termination” means the date of receipt of the Notice of Termination or any later
date specified therein, as the case may be; provided, however that if Employee’s
employment is terminated by reason of his death, the Date of Termination shall
be the date of death of Employee.
          (g) Deemed Resignations. Unless otherwise agreed to in writing by the
Company and Employee prior to termination of Employee’s employment, any
termination of Employee’s employment shall constitute an automatic resignation
of Employee from all positions he then holds as an employee, officer, director,
manager or other service provider of the Company and each Affiliate of the
Company.
          (h) Offset. Employee agrees that the Company may set off against, and
Employee authorizes the Company to deduct from, any payments due to Employee, or
to his estate, heirs, legal representatives, or successors, any amounts which
may be due and owing to the Company or an Affiliate by Employee, whether arising
under this Agreement or otherwise; provided that no such offset may be made with
respect to amounts payable that are subject to the requirements of Section 409A
of the Code unless the offset would not result in a violation of the
requirements of Section 409A of the Code.
          (i) Application of Section 409A. The amounts payable pursuant to
Sections 5 and 6 of this Agreement are intended to comply with the short-term
deferral exception and/or separation pay exception to Section 409A of the Code.
Notwithstanding the foregoing, no amount payable pursuant to this Agreement
which constitutes a “deferral of compensation” within the meaning of the
Treasury Regulations issued pursuant to Section 409A of the Code (the
“Section 409A Regulations”) shall be paid unless and until Employee has incurred
a “separation from service” within the meaning of the Section 409A Regulations.
Furthermore, to the extent that Employee is a “specified employee” within the
meaning of the Section 409A Regulations as of the date of Employee’s separation
from service, no amount that constitutes a deferral of compensation which is
payable on account of Employee’s separation from service shall be paid to
Employee before the date (the “Delayed Payment Date”) which is first day of the
seventh month after the date of Employee’s separation from service or, if
earlier, the date of Employee’s death following such separation from service.
All such amounts that would, but for this Section 5(i), become payable prior to
the Delayed Payment Date will be accumulated and paid on the Delayed Payment
Date. No interest will be paid by the Company with respect to any such delayed
payments. For purposes of Section 409A of the Code, each payment or amount due
under this Agreement shall be considered a separate payment, and Employee’s
entitlement to a series of payments under this Agreement is to be treated as an
entitlement to a series of separate payments.
     6. Change in Control.
          (a) Upon the occurrence of a Change in Control (as defined in the
Company’s 2010 Long Term Incentive Plan) during the Term, all unvested equity
awards under the Company’s 2010 Long Term Incentive Plan or other plans of the
Company as of such date shall become immediately vested, regardless of any other
established vesting schedule, such that all remaining unvested equity awards
shall be fully vested on the date of such Change in Control. In addition, if a
Change in Control occurs during the Term and (x) Employee is terminated by the

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Company for any reason other than for Cause within one year following such
Change in Control or (y) Employee terminates employment for Good Reason within
one year following such Change in Control, and any such termination constitutes
a separation from service (as defined in Section 5(i)), then, the Company shall:
     (i) Pay Employee within 60 days following the Date of Termination, a lump
sum payment equal to two (2) times the sum of (i) Employee’s annual rate of Base
Salary as of the Date of Termination or, if greater, before any reduction not
consented to by Employee, plus (ii) (A) if the Date of Termination occurs during
the Initial Term, the maximum Performance Bonus Employee is eligible to receive
for the calendar year in which the Change in Control occurs or (B) if the Date
of Termination occurs during any Extension Term, Employee’s Target Performance
Bonus, calculated based on Employee’s Base Salary as of the Date of Termination
or, if greater, before any reduction not consented to by Employee; plus
     (ii) pay or reimburse on a monthly basis the premiums required to continue
Employee’s group health care coverage for a period of 18 months following
Employee’s separation date, under COBRA, provided that Employee elects to
continue and remains eligible for these benefits under COBRA.
provided, that, nothing in this Section 6 shall relieve the Company or any
successor-in-interest thereof of its obligation to continue, following any
Change in Control, to provide Employee with the compensation due pursuant to
Section 3 of this Agreement or to otherwise comply with its obligations
hereunder in the event Employee’s service continues pursuant to this Agreement
following the occurrence of such Change in Control; provided, further, that, in
the event Employee is terminated simultaneously with the occurrence of a Change
in Control or within one year thereof, Employee shall be entitled to receive the
greater of the payments or benefits provided under Section 5(b) of this
Agreement and this Section 6(a), which receipt shall be conditioned upon
Employee’s satisfaction of the Severance Conditions.
          (b) In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Company or any of its wholly-owned
subsidiaries or any other affiliate (as that term is used in Treas. Reg. §
1.280G-1, Q/A-46) to or for the benefit of Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise) (a “Payment”) is subject to the excise tax imposed by Section 4999 of
the Code, or any interest and penalties are incurred by Employee with respect to
such excise tax (such excise tax, together with any such interest and penalties,
hereinafter collectively referred to as the “Excise Tax”), Employee shall be
entitled to receive, in accordance with Exhibit A hereof, an additional payment
(a “Gross-Up Payment”) in an amount such that after payment by Employee of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any federal, state and local income taxes and
employment taxes (and any interest and penalties imposed with respect thereto)
and the Excise Tax imposed upon the Gross-Up Payment, Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
          Notwithstanding the foregoing provisions of this Section 6(b), if it
is determined that Employee is entitled to a Gross-Up Payment, but that the
value of the Parachute Payments

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(as defined below) does not exceed 110% of the Safe Harbor Amount (as defined
below), then no Gross-Up Payment shall be made to Employee and the Payments, in
the aggregate, will be reduced to the Safe Harbor Amount. The reduction of the
Payments to the Safe Harbor Amount will be made in the following order:
     (i) First, by reducing the cash amounts of Parachute Payments that would
not constitute deferred compensation (within the meaning of Section 409A of the
Code) subject to Section 409A of the Code (with the Payments subject to such
reduction to be determined by Employee), to the extent necessary to decrease the
Payments that would otherwise constitute Parachute Payments to the Safe Harbor
Amount.
     (ii) Next, if after the reduction to zero of the amounts described in
paragraph (i) above, the remaining scheduled Parachute Payments are greater than
the Safe Harbor Amount, then by reducing the cash amounts of Payments that
constitute deferred compensation (within the meaning of Section 409A of the
Code) subject to Section 409A of the Code, with the reductions to be applied
first to the Payments scheduled for the latest distribution date, and then
applied to distributions scheduled for progressively earlier distribution dates,
to the extent necessary to decrease the Payments that would otherwise constitute
Parachute Payments to the Safe Harbor Amount.
     (iii) Next, if after the reduction to zero of the amounts described in
paragraphs (i) and (ii) above, the remaining scheduled Parachute Payments are
greater than the Safe Harbor Amount, then, by reducing any of the remaining
scheduled Payments, in an order to be determined by the Company, to the extent
necessary to decrease the Payments that would otherwise constitute Parachute
Payments to the Safe Harbor Amount.
The term “Parachute Payment” is the portion of the Payments that would be
treated as parachute payments under Section 280G of the Code. The “Safe Harbor
Amount” is the maximum amount of Payments that could be made to Employee without
giving rise to any Excise Tax.
     7. Protection of Information.
          (a) Disclosure to and Property of the Company. All information, trade
secrets, designs, ideas, concepts, improvements, product developments,
discoveries and inventions, whether patentable or not, that are conceived, made,
developed or acquired by Employee, individually or in conjunction with others,
during the term of his employment (whether during business hours or otherwise
and whether on the Company’s premises or otherwise) that relate to the Company’s
or any of its wholly-owned subsidiaries’ business, products or services and all
writings or materials of any type embodying any such matters (collectively,
“Confidential Information”) shall be disclosed to the Company, and are and shall
be the sole and exclusive property of the Company. Confidential Information does
not, however, include any information that is available to the public other than
as a result of any unauthorized act of Employee.
          (b) No Unauthorized Use or Disclosure. Employee agrees that Employee
will preserve and protect the confidentiality of all Confidential Information
and work product of the Company and its wholly-owned subsidiaries, and will not,
at any time during or after the

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termination of Employee’s employment with the Company, make any unauthorized
disclosure of, and shall not remove from the Company premises, and will use
reasonable efforts to prevent the removal from the Company premises of,
Confidential Information or work product of the Company or its wholly-owned
subsidiaries, or make any use thereof, in each case, except in the carrying out
of Employee’s responsibilities hereunder. Employee shall have no obligation
hereunder to keep confidential any Confidential Information if and to the extent
disclosure thereof is specifically required by law; provided, however, that in
the event disclosure is required by applicable law and Employee is making such
disclosure, Employee shall provide the Company with prompt notice of such
requirement, and shall use commercially reasonable efforts to give such notice
prior to making any disclosure so that the Company may seek an appropriate
protective order.
          (c) Remedies. Employee acknowledges that money damages would not be a
sufficient remedy for any breach of this Section 7 by Employee, and the Company
or its wholly-owned subsidiaries shall be entitled to enforce the provisions of
this Section 7 by obtaining an order for specific performance and/or injunctive
relief as remedies for any such breach or threatened breach, including but not
limited to an order terminating payments owing to Employee under this Agreement.
Such remedies shall not be deemed the exclusive remedies for a breach of this
Section 7, but shall be in addition to all remedies available at law or in
equity to the Company, including the recovery of damages from Employee and
remedies available to the Company pursuant to other agreements with Employee.
          (d) No Prohibition. Nothing in this Section 7 shall be construed as
prohibiting Employee, following the termination of the Prohibited Period (as
defined below), from being employed by any Competing Business (as defined below)
or engaging in any Prohibited Activity (as defined below); provided, that during
such employment or engagement Employee complies with his obligations under this
Section 7.
     8. Non-Competition and Non-Solicitation.
          (a) Definitions. As used in this Agreement, the following terms shall
have the following meanings:
          (i) “Affiliate” shall mean an individual or entity that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a specified individual or entity.
          (ii) “Competing Business” means any business, individual, partnership,
firm, corporation or other entity engaged in oil and gas exploration and
production.
          (iii) “Prohibited Activity” means any service or activity on behalf of
a Competing Business that involves the planning, management, supervision, or
providing of services that are substantially similar to those services Employee
provided to the Company within the last 12 months of Employee’s employment with
the Company.
          (iv) “Prohibited Period” means the Term and the 12 month period
following the termination of Employee’s employment with the Company.

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          (v) “Restricted Area” means any area within a six (6) mile radius of
the boundary of any existing leasehold or other property of the Company or its
Affiliates, either during the Term or as of the Employee’s Date of Termination.
The parties stipulate that the forgoing is a reasonable area restriction because
the area identified is the market area with respect to which Employee will help
the Company provide its products and services, help analyze, and/or receive
access to Confidential Information.
          (b) Protective Covenants and Restrictions. Acknowledging delivery of
Confidential Information and that such Confidential Information is vital to
Employee’s continued performance of services to the Company and acknowledging
that the Company is delivering and will deliver the Confidential Information
partly in reliance on the protective covenants and restrictions set forth
herein, Employee agrees that the following protective covenants are reasonable
and necessary for the protection of the Company’s legitimate business interests,
do not create any undue hardship on Employee, and are not contrary to the public
interest:
          (i) Non-compete. Employee expressly covenants and agrees that, during
the Prohibited Period, he will not engage in any Prohibited Activity in the
Restricted Area. Notwithstanding the foregoing, in the event Employee resigns
his employment or is terminated, for any reason, on or after a Change in
Control, Employee shall have no obligations to comply with this Section 8(b)(i).
          (ii) Non-solicitation. Employee further expressly covenants and agrees
that during the Prohibited Period, he will not (A) solicit any individual who,
on the Date of Termination, is an employee of the Company, to leave such
employment, provided that Employee will not be deemed to have violated this
provision if employees of the Company directly contact Employee regarding
employment or respond to general advertisements for employment, or (B) solicit
any client or customer of the Company, with whom Employee has had direct contact
with, to terminate or modify its relationship with Company that exists on the
Date of Termination. Notwithstanding the foregoing, in the event Employee
resigns his employment or is terminated, for any reason, on or after a Change in
Control, Employee shall have no obligations to comply with this
Section 8(b)(ii).
          (c) Permitted Ownership. Notwithstanding any of the foregoing,
Employee shall not be prohibited from owning 2.5% or less of the outstanding
equity securities of any entity whose equity securities are listed on a national
securities exchange or publicly traded in any over-the-counter market, provided
that neither Employee nor any of his Affiliates, together or alone, has the
power, directly or indirectly, to control or direct or is involved in the
management or affairs of any such corporation that is a Competing Business.
          (d) Reasonableness. Employee and the Company agree and acknowledge
that the limitations as to time, geographical area and scope of activity to be
restrained as set forth in this Section 8 are the result of arm’s-length
bargaining, are fair and reasonable, and do not impose any greater restraint
than is necessary to protect the legitimate business interests of the Company in
light of (i) the nature and geographic scope of the Company’s operations; (ii)
Employee’s level of control over and contact with the Company’s business in the
Restricted

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Area; (iii) the fact that the Company’s business is conducted throughout the
Restricted Area; and (iv) the amount of compensation that Employee is receiving
in connection with the performance of his duties hereunder.
          (e) Relief and Enforcement. Employee hereby represents to the Company
that he has read and understands, and agrees to be bound by, the terms of this
Section 8. It is the desire and intent of the parties hereto that the provisions
of this Section 8 be enforced to the fullest extent permitted under applicable
law, whether now or hereafter in effect. However, to the extent that any part of
this Section 8 may be found invalid, illegal or unenforceable for any reason, it
is intended that such part shall be enforceable to the extent that a court of
competent jurisdiction shall determine that such part, if more limited in scope,
would have been enforceable, and such part shall be deemed to have been so
written and the remaining parts shall as written be effective and enforceable in
all events. Employee and the Company further agree and acknowledge that, in the
event of a breach or threatened breach of any of the provisions of this
Section 8, the Company shall be entitled to immediate injunctive relief, as any
such breach would cause the Company irreparable injury for which it would have
no adequate remedy at law. Nothing herein shall be construed so as to prohibit
the Company from pursuing any other remedies available to it hereunder, at law
or in equity, for any such breach or threatened breach.
     9. General Provisions.
          (a) Amendments and Waiver. Other than pursuant to Section 4(d),
(i) the terms and provisions of this Agreement may not be modified or amended,
nor may any of the provisions hereof be waived, temporarily or permanently,
unless such modification or amendment is agreed to in writing and signed by
Employee and by a duly authorized officer of the Company, and such waiver is set
out in writing and signed by the party to be bound by waiver, and (ii) the
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms, and a waiver on one occasion shall not
be deemed to be a waiver of the same or any other type of breach on a future
occasion.
          (b) Withholding and Deductions. With respect to any payment to be made
to Employee, the Company shall deduct, where applicable, any amounts authorized
by Employee, and shall withhold and report all amounts required to be withheld
and reported by applicable law.
          (c) Mitigation. Employee shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Agreement be
reduced by any compensation earned by Employee as the result of employment by
another employer after the Date of Termination, or otherwise.
          (d) Survival. The termination of Employee’s employment shall not
impair the rights or obligations of any party that have accrued prior to such
termination or which by their nature or terms survive termination of the Term,
including without limitation the Company’s obligations under Sections 5 and 6
and Employee’s obligations under Sections 7 and 8.

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          (e) No Obligation to Pay. With regard to any payment due to Employee
under this Agreement, it shall not be a breach of any provision of this
Agreement for the Company to fail to make such payment to Employee if by doing
so, the Company violates applicable law.
          (f) Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
          (g) Entire Agreement. This Agreement constitutes the entire agreement
of the parties with regard to the subject matter hereof, and contains all the
covenants, promises, representations, warranties and agreements between the
parties with respect to employment of Employee by the Company. Without limiting
the scope of the preceding sentence, all understandings and agreements preceding
the date of execution of this Agreement and relating to the subject matter
hereof are hereby null and void and of no further force and effect.
          (h) Successors and Assigns; Binding Agreement. This Agreement shall
bind and inure to the benefit of and be enforceable by the parties hereto and
their respective successors, permitted assigns, heirs and personal
representatives and estates, as the case may be. Neither this Agreement nor any
right or obligation hereunder of any party may be assigned or delegated without
the prior written consent of the other party hereto; provided, however, that the
Company may assign this Agreement to any of its Affiliates and Employee may
direct payment of any benefits that will accrue upon death. Employee shall not
have any right to pledge, hypothecate, anticipate, or in any way create a lien
upon any payments or other benefits provided under this Agreement; and no
benefits payable under this Agreement shall be assignable in anticipation of
payment either by voluntary or involuntary acts, or by operation of law, except
by will or pursuant to the laws of descent and distribution. This Agreement
shall not confer any rights or remedies upon any person or legal entity other
than the parties hereto and their respective successors and permitted assigns.
          (i) Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) when received, if delivered personally or by courier,
(ii) on the date receipt is acknowledged, if delivered by certified mail,
postage prepaid, return receipt requested, or (iii) one day after transmission,
if sent by facsimile transmission with confirmation of transmission, as follows:

             
 
  If to Employee, at:        
 
     
 
   
 
     
 
   
 
     
 
   
 
     
 
   
 
           
 
  If to the Company, at:   Oasis Petroleum Inc.    
 
      Attn:                                             
 
      1001 Fannin Street, Suite 202    
 
      Houston, Texas 77002    

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or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
          (j) Construction. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.
The section headings in this Agreement are for convenience of reference only,
and they form no part of this Agreement and shall not affect its construction.
          (k) Assistance in Litigation. During the Term and for a period of four
years following the Date of Termination, Employee shall, if given at least two
(2) weeks notice, furnish such information and proper assistance to the Company
or any of its Affiliates as may reasonably be required by the Company in
connection with any litigation, investigations, arbitrations, and/or any other
fact-finding or adjudicative proceedings involving the Company or any of its
Affiliates, provided that if such assistance is requested after the Date of
Termination: (i) such assistance not unreasonably interfere with Employee’s
employment or other activities or endeavors; and (ii) such assistance not exceed
forty hours in any twelve month period, unless otherwise agreed in writing by
the parties. This obligation shall include, without limitation, to meet with
counsel for the Company or any of its Affiliates and provide truthful testimony
at the request of the Company or as otherwise required by law or valid legal
process. The Company shall reimburse Employee for all reasonable out-of-pocket
expenses incurred by Employee and approved in advance by the Company in
rendering such assistance (such as travel, parking, and meals but not attorney’s
fees). In addition, following the Date of Termination, the Company shall pay the
Employee $300/hr for his time in providing information and assistance in
accordance with this Section 9(k).
          (l) Governing Law; Construction; Venue; Jury-Trial Waiver. The parties
(i) agree that this Agreement is governed by and shall be construed and enforced
in accordance with Texas law, excluding its choice-of-law principles, except
where federal law may preempt the application of state law; (ii) agree that this
Agreement is to be construed as a whole, according to its fair meaning, and not
strictly for or against any of the parties; (iii) submit and consent to the
exclusive jurisdiction, including removal jurisdiction, of the state and federal
courts located in Harris County, Texas (or the county where the Company’s
principal executive offices are located if different) for any action or
proceeding relating to this Agreement or Employee’s employment; (iv) waive any
objection to such venue; (v) agree that any judgment in any such action or
proceeding may be enforced in other jurisdictions; and (vi) irrevocably waive
the right to trial by jury and agree not to ask for a jury in any such
proceeding.
          (m) Mutual Contribution. The parties to this Agreement have mutually
contributed to its drafting. Consequently, no provision of this Agreement shall
be construed against any party on the grounds that such party drafted the
provision or caused it to be drafted.

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     IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the Effective Date.

            OASIS PETROLEUM INC.
      By:   /s/ Michael H. Lou         Name:   Michael H. Lou        Title:  
SVP - Finance        EMPLOYEE:
      /s/ Thomas B. Nusz       Thomas B. Nusz         

 

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EXHIBIT A
GROSS-UP PAYMENT
This Exhibit A shall govern the Gross-Up Payment described in Section 6 of the
Agreement. Capitalized terms used but not otherwise defined herein shall have
the meanings assigned to such terms in the Agreement.
Section 1. All determinations required to be made under this Exhibit A,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment, whether a reduction to the Safe Harbor Amount is required and,
if so, the amount of the reduction, and the assumptions to be utilized in
arriving at such determination, shall be made by a nationally recognized
accounting firm designated by the Company (the “Accounting Firm”), which shall
provide detailed supporting calculations both to the Company and Employee within
ten (10) business days of the receipt of notice from Employee that there has
been a Payment, or such earlier time as is requested by the Company. All fees
and expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Exhibit A, shall be paid by the
Company to Employee (or to the appropriate taxing authority on Employee’s
behalf) when the tax is due. If the Accounting Firm determines that no Excise
Tax is payable by Employee, it shall so indicate to Employee in writing. Any
determination by the Accounting Firm shall be binding upon the Company and
Employee (subject to Section 2 hereof). As a result of the uncertainty in the
application of Section 4999 of the Code, it is possible that Gross-Up Payments
determined by the Accounting Firm to be due to (or on behalf of) Employee was
lower than the amount actually due (“Underpayment”). In the event that the
Company exhausts its remedies pursuant to Section 2 of this Exhibit A and
Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred, and any such Underpayment shall be promptly paid by the Company to or
for the benefit of Employee (but in any case no later than the calendar year
following the calendar year in which such tax was payable).
Section 2. Employee shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of any Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Employee shall
not pay such claim prior to the expiration of the thirty (30) day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies Employee in writing prior to the expiration of
such period that it desires to contest such claim, Employee shall (i) give the
Company any information reasonably requested by the Company relating to such
claim, (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company, (iii) cooperate with the Company
in good faith in order to effectively contest such claim, and (iv) permit the
Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Employee
Exhibit A

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harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 2, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Employee to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and Employee agrees to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one (1) or more appellate courts, as the Company
shall determine; provided that if the Company directs Employee to pay such claim
and sue for a refund, the Company shall advance the amount of such payment to
Employee, on an interest-free basis, and shall indemnify and hold Employee
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; provided,
further, that if Employee is required to extend the statute of limitations to
enable the Company to contest such claim, Employee may limit this extension
solely to such contested amount. The Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
Section 3. If, after the receipt by Employee of an amount paid or advanced by
the Company pursuant to this Exhibit A, Employee becomes entitled to receive any
refund with respect to a Gross-Up Payment, Employee shall (subject to the
Company’s complying with the requirements of Section 2 of this Exhibit A)
promptly pay to the Company the amount of such refund received (together with
any interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by Employee of an amount advanced by the Company pursuant to
Section 2 of this Exhibit A, a determination is made that Employee shall not be
entitled to any refund with respect to such claim, and the Company does not
notify Employee in writing of its intent to contest such denial of refund prior
to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid, and the amount
of such advance shall offset, to the extent thereof, the amount of the Gross-Up
Payment required to be paid.
Section 4. For the avoidance of doubt, all payments to or for the benefit of
Employee provided for in this Exhibit A shall be made no later than the end of
the calendar year in which the applicable Excise Tax has become due, or if as a
result a tax audit or litigation, it is determined that no additional Excise Tax
has become due, the end of the calendar year in which the audit is completed or
there is a final and non-appealable settlement or other resolution.
Exhibit A

2