EXHIBIT 10.3
RESTRICTED STOCK AGREEMENT
     THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made and entered into
by and between PetroQuest Energy, Inc., a corporation organized under the laws
of the State of Delaware (the “Company”) and
                                        , an individual (“Grantee”) on the ___
day of                     , 200___ (the “Grant Date”), pursuant to the
Petroquest Energy, Inc. 1998 Incentive Plan (as amended and restated effective
March 16, 2006) (the “Plan”). The Plan is incorporated by reference herein in
its entirety. Capitalized terms not otherwise defined in this agreement shall
have the meaning given to such terms in the Plan.
     WHEREAS, Grantee is an employee of the Company, and in connection
therewith, the Company desires to grant to Grantee                      shares
of the Company’s common stock, par value $.001 per share (the “Common Stock”),
subject to the terms and conditions of this Agreement and the Plan, with a view
to increasing Grantee’s interest in the Company’s welfare and growth; and
     WHEREAS, Grantee desires to have the opportunity to be a holder of shares
of the Common Stock subject to the terms and conditions of this Agreement and
the Plan.
     NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
     1. Grant of Common Stock and Administration. Subject to the restrictions,
forfeiture provisions and other terms and conditions set forth herein (i) the
Company grants to Grantee                      (___) shares of Common Stock
(“Restricted Shares”), and (ii) Grantee shall have and may exercise all rights
and privileges of ownership of such shares, including, without limitation, the
voting rights of such shares and the right to receive any dividends declared in
respect thereof. This Agreement and its grant of Restricted Shares is subject to
the terms and conditions of the Plan, and the terms and conditions of the Plan
shall control except to the extent otherwise permitted or authorized in the Plan
and specifically addressed in this Agreement. The Plan and this Agreement shall
be administered by the Committee pursuant to the Plan.
     2. Transfer Restrictions.
     (a) Generally. Grantee shall not sell, assign, transfer, exchange, pledge,
encumber, gift, devise, hypothecate or otherwise dispose of (collectively,
“Transfer”) any Restricted Shares. The transfer restrictions imposed by this
Section 2 shall lapse as to 25% of the Restricted Shares on the first
anniversary of the Grant Date, an additional 25% of the Restricted Shares on the
second anniversary of the Grant Date, an additional 25% of the Restricted Shares
on the third anniversary of the Grant Date, an additional 0% of the Restricted
Shares on the fourth anniversary of the Grant Date and an additional 25% of the
Restricted Shares on the fifth anniversary of the Grant Date; provided, however,
that, subject to Sections 3 and 4, Grantee then is, and continuously since the
Grant Date has been, an employee of the Company. The Restricted Shares as to
which such restrictions so lapse are referred to as “Vested Shares.”
     (b) Dividends, etc. If the Company (i) declares a dividend or makes a
distribution on Common Stock in shares of Common Stock, (ii) subdivides or
reclassifies outstanding shares of

 

--------------------------------------------------------------------------------

 

Common Stock into a greater number of shares of Common Stock or (iii) combines
or reclassifies outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then the number of shares of Grantee’s Common Stock
subject to the transfer restrictions of this Section 2 may be proportionately
increased or reduced so as to prevent the enlargement or dilution of Grantee’s
rights and duties hereunder as determined by the Committee in its sole
discretion. The determination of the Committee regarding such adjustments shall
be final and binding.
     (c) Change in Control. If there is a Change in Control of the Company (as
defined below), the transfer restrictions of this Section 2 shall automatically
cease as of the date immediately preceding the Change in Control, and all the
Restricted Shares shall be 100% vested. For the purposes of this Agreement, a
“Change in Control” of the Company shall include any event as defined in the
Plan, and the Board has determined that pursuant to Section 6.7(f) of the Plan,
a “Change in Control” of the Company shall also include any other event that
constitutes a “Change in Control” of the Company as defined in the Optionee’s
Termination Agreement with the Company.
     3. Forfeiture. If Grantee’s employment with the Company is terminated by
the Company or Grantee for any reason other than as described in Section 4
below, then Grantee shall immediately forfeit all Restricted Shares which are
not Vested Shares. Any Restricted Shares forfeited under this Agreement shall
automatically revert to the Company and become canceled and such shares shall be
again subject to the Plan. Any certificate(s) representing Restricted Shares
which include forfeited shares shall only represent that number of Restricted
Shares which have not been forfeited hereunder. Upon the Company’s request,
Grantee agrees for himself and any other holder(s) to tender to the Company any
certificate(s) representing Restricted Shares which include forfeited shares for
a new certificate representing the unforfeited number of Restricted Shares.
     4. Retirement, Disability or Death. If Grantee’s employment is terminated
with the Company on account of Retirement, Disability (as defined in the Plan)
or death, the Restricted Shares shall be 100% vested on the date of Grantee’s
Retirement, Disability or death.
     5. Issuance of Certificate.
     (a) The Restricted Shares may not be Transferred until they become Vested
Shares. Further, the Restricted Shares may not be transferred and the Vested
Shares may not be sold or otherwise disposed of in any manner which would
constitute a violation of any applicable federal or state securities laws, any
rules of the national securities exchange or the NASDAQ on which the Company’s
securities are traded, listed or quoted, or violation of Company policy. The
Company shall cause to be issued a stock certificate, registered in the name of
the Grantee, evidencing the Restricted Shares upon receipt of a stock power duly
endorsed in blank with respect to such shares. Each such stock certificate shall
bear the following legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED
HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING
FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE PETROQUEST
ENERGY, INC. 1998 STOCK

2

--------------------------------------------------------------------------------

 

INCENTIVE PLAN (AS AMENDED AND RESTATED EFFECTIVE MARCH 16, 2006) AND A
RESTRICTED STOCK AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH
SHARES AND PETROQUEST ENERGY, INC. A COPY OF THE PLAN AND A RESTRICTED STOCK
AGREEMENT ARE ON FILE IN THE CORPORATE OFFICES OF PETROQUEST ENERGY, INC.
Such legend shall not be removed from the certificate evidencing Restricted
Shares until such time as the restrictions imposed by Section 2 hereof have
lapsed.
     (b) The certificate issued pursuant to this Section 5, together with the
stock powers relating to the Restricted Shares evidenced by such certificate,
shall be held by the Company. The Company shall issue to the Grantee a receipt
evidencing the certificates held by it which are registered in the name of the
Grantee.
     6. Tax Requirements.
     (a) Tax Withholding. This grant of Restricted Shares is subject to and the
Company shall have the power and the right to deduct or withhold, or require the
Grantee to remit to the Company, an amount sufficient to satisfy federal, state,
and local taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of the Plan and
this Agreement.
     (b) Share Withholding. With respect to tax withholding required upon any
taxable event arising as a result of this Agreement, Grantee may elect, subject
to the approval of the Committee in its discretion, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold shares of
Common Stock having a Fair Market Value on the date the tax is to be determined
equal to the minimum statutory total tax which could be imposed on the
transaction. All such elections shall be made in writing, signed by the Grantee,
and shall be subject to any restrictions or limitations that the Committee, in
its discretion, deems appropriate. Any fraction of a Share required to satisfy
such obligation shall be disregarded and the amount due shall instead be paid in
cash by the Grantee.
     (c) Supplemental Cash Payment. The Company at its sole discretion may pay a
supplemental cash payment to Grantee in an amount equal to the minimum statutory
total federal state or local taxes as a result of a taxable event arising as a
result of the Plan and this Agreement.
     7. Miscellaneous.
     (a) Certain Transfers Void. Any purported Transfer of shares of Common
Stock or Restricted Shares in breach of any provision of this Agreement shall be
void and ineffectual, and shall not operate to Transfer any interest or title in
the purported transferee.
     (b) No Fractional Shares. All provisions of this Agreement concern whole
shares of Common Stock. If the application of any provision hereunder would
yield a fractional share, such

3

--------------------------------------------------------------------------------

 

fractional share shall be rounded down to the next whole share if it is less
than 0.5 and rounded up to the next whole share if it is 0.5 or more.
     (c) Not an Employment or Service Agreement. This Agreement is not an
employment agreement, and this Agreement shall not be, and no provision of this
Agreement shall be construed or interpreted to create (i) any right of Grantee
to continue employment with or provide services to the Company or any of its
Affiliates.
     (d) Notices. Any notice, instruction, authorization, request or demand
required hereunder shall be in writing, and shall be delivered either by
personal delivery, by telegram, telex, telecopy or similar facsimile means, by
certified or registered mail, return receipt requested, or by courier or
delivery service, addressed to the Company at the address indicated beneath its
signature on the execution page of this Agreement, and to Grantee at his address
indicated on the Company’s stock records, or at such other address and number as
a party shall have previously designated by written notice given to the other
party in the manner hereinabove set forth. Notices shall be deemed given when
received, if sent by facsimile means (confirmation of such receipt by confirmed
facsimile transmission being deemed receipt of communications sent by facsimile
means); and when delivered and receipted for (or upon the date of attempted
delivery where delivery is refused), if hand-delivered, sent by express courier
or delivery service, or sent by certified or registered mail, return receipt
requested.
     (e) Amendment and Waiver. This Agreement may be amended, modified or
superseded only by written instrument executed by the Company and Grantee. Any
waiver of the terms or conditions hereof shall be made only by a written
instrument executed and delivered by the party waiving compliance. Any waiver
granted by the Company shall be effective only if executed and delivered by a
duly authorized executive officer of the Company other than Grantee. The failure
of any party at any time or times to require performance of any provisions
hereof, shall in no manner effect the right to enforce the same. No waiver by
any party of any term or condition, or the breach of any term or condition
contained in this Agreement in one or more instances shall be deemed to be, or
construed as, a further or continuing waiver of any such condition or breach or
a waiver of any other condition or the breach of any other term or condition.
     (f) Governing Law and Severability. This Agreement shall be governed by the
internal laws, and not the laws of conflict, of the State of Delaware. The
invalidity of any provision of this Agreement shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
     (g) Successors and Assigns. Subject to the limitations which this Agreement
imposes upon transferability of shares of Common Stock, this Agreement shall
bind, be enforceable by and inure to the benefit of the Company and its
successors and assigns, and Grantee, and Grantee’s permitted assigns and upon
death, estate and beneficiaries thereof (whether by will or the laws of descent
and distribution), executors, administrators, agents, legal and personal
representatives.
     (h) Community Property. Each spouse individually is bound by, and such
spouse’s interest, if any, in any Shares is subject to, the terms of this
Agreement. Nothing in this Agreement shall create a community property interest
where none otherwise exists.

4

--------------------------------------------------------------------------------

 

     (i) Entire Agreement. This Agreement together with the Plan supersede any
and all other prior understandings and agreements, either oral or in writing,
between the parties with respect to the subject matter hereof and constitute the
sole and only agreements between the parties with respect to the said subject
matter. All prior negotiations and agreements between the parties with respect
to the subject matter hereof are merged into this Agreement. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any party or by anyone acting
on behalf of any party, which are not embodied in this Agreement or the Plan and
that any agreement, statement or promise that is not contained in this Agreement
or the Plan shall not be valid or binding or of any force or effect.
     (j) Compliance with Other Laws and Regulations. This Agreement, the grant
of Restricted Shares and issuance of Common Stock shall be subject to all
applicable federal and state laws, rules, regulations and applicable rules and
regulations of any exchanges on which such securities are traded or listed, and
Company rules or policies. Any determination in which connection by the
Committee shall be final, binding and conclusive on the parties hereto and on
any third parties, including any individual or entity.
     (k) Independent Legal and Tax Advice. The Grantee has been advised and
Grantee hereby acknowledges that he has been advised to obtain independent legal
and tax advice regarding this Agreement, grant of the Restricted Shares and the
disposition of such shares, including, without limitation, the election
available under Section 83(b) of the Internal Revenue Code.
     8. Counterparts. This Agreement may be executed in multiple original
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and. the same instrument.
     9. Grantee’s Acknowledgments. The Grantee acknowledges receipt of a copy of
the Plan and represents that he or she is familiar with the terms and provisions
thereof, and hereby accepts this Agreement subject to all the terms and
provisions of the Plan and this Agreement. The Grantee hereby agrees to accept
as binding, conclusive, and final all decisions or interpretations of the
Committee or the Board, as appropriate, upon any questions arising under the
Plan or this Agreement.
[SIGNATURE PAGE FOLLOWS]

5

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first above written.

                  COMPANY:    
 
                PETROQUEST ENERGY, INC.    
 
           
 
  By:                      
 
  Name:                      
 
  Title:                      
 
  Address:   400 E. Kaliste Saloom Road, Suite 6000    
 
      Lafayette, Louisiana 70508    
 
                Telecopy No.: (337) 232-0044    
 
                Attention: General Counsel    
 
                GRANTEE:    

                       
 
  Signature        
 
                     
 
  Printed Name        
 
  Address:                      
 
                         
 
                         

6