(b) *Dividends, etc.*If the Company (i) declares a dividend or makes a distribution on CommonStock in shares of Common Stock, (ii) subdivides or reclassifies outstanding shares of Common Stockinto a greater number of shares of Common Stock or (iii) combines or reclassifies outstandingshares of Common Stock into a smaller number of shares of Common Stock, then the number of sharesof Grantee’s Common Stock subject to the transfer restrictionsof this Section 2 may beproportionately increased or reduced so as to prevent the enlargement or dilution of Grantee’srights and duties hereunder as determined by the Committee in its sole discretion. Thedetermination 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), thetransfer restrictions of this Section 2 shall automatically cease as of the date immediatelypreceding the Change in Control, and all the Restricted Shares shall be 100% vested. For thepurposes of this Agreement, a “Change in Control” of the Company shall include any event as definedin the Plan, and the Board has determined that pursuant to Section 6.7(f) of the Plan, a “Change inControl” 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 Granteefor any reason other than as described in Section 4 below, then Grantee shall immediatelyforfeit all Restricted Shares which are not Vested Shares. Any Restricted Shares forfeited underthis Agreement shall automatically revert to the Company and become canceled and such shares shallbe again subject to the Plan. Any certificate(s) representing Restricted Shares which includeforfeited shares shall only represent that number of Restricted Shares which have not beenforfeited hereunder. Upon the Company’s request, Grantee agrees for himself and any otherholder(s) to tender to the Company any certificate(s) representing Restricted Shares which includeforfeited 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 onaccount of Retirement, Disability (as defined in the Plan) or death, the Restricted Shares shall be100% 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 otherwisedisposed of in any manner which would constitute a violation of any applicable federal orstate securities laws, any rules of the national securities exchange or the NASDAQ on whichthe Company’s securities are traded, listed or quoted, or violation of Company policy. The Companyshall cause to be issued a stock certificate, registered in the name of the Grantee, evidencing theRestricted 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 STOCKREPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS ANDCONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER)CONTAINED IN THE PETROQUEST ENERGY, INC. 1998 STOCK INCENTIVE PLAN (ASAMENDED AND RESTATED EFFECTIVE MARCH 16, 2006) AND A RESTRICTED STOCKAGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES ANDPETROQUEST ENERGY, INC. A COPY OF THE PLAN AND A RESTRICTED STOCKAGREEMENT ARE ON FILE IN THE CORPORATE OFFICES OF PETROQUEST ENERGY,INC.**
 
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Such legend shall not be removed from the certificate evidencing Restricted Shares until such timeas the restrictions imposed by Section 2 hereof have lapsed.(b) Thecertificate issued pursuant to this Section 5, together with the stock powersrelating to the Restricted Shares evidenced by such certificate, shall be held by the Company. TheCompany shall issue to the Grantee a receipt evidencing the certificates held by it which areregistered in the name of the Grantee.**6. Tax Requirements.**(a) *Tax Withholding*. This grant of Restricted Shares is subject to and the Company shallhave 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 bylaw or regulation to be withheld with respect to any taxable event arising as a result of the Planand this Agreement.(b) *Share Withholding*. With respect to tax withholding required upon any taxable eventarising as a result of this Agreement, Grantee may elect, subject to the approval of the Committeein its discretion, to satisfy the withholding requirement, in whole or in part, by having theCompany withhold shares of Common Stock having a Fair Market Value on the date the tax is to bedetermined equal to the minimum statutory total tax which could be imposed on the transaction. Allsuch elections shall be made in writing, signed by the Grantee, and shall be subject to anyrestrictions or limitations that the Committee, in its discretion, deems appropriate. Any fractionof a Share required to satisfy such obligation shall be disregarded and the amount due shallinstead be paid in cash by the Grantee.(c) *Supplemental Cash Payment.*The Company at its sole discretion may pay a supplemental cashpayment to Grantee in an amount equal to the minimum statutory total federal state or local taxesas 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 RestrictedShares in breach of any provision of this Agreement shall be void and ineffectual, and shall notoperate to Transfer any interest or title in the purported transferee.
 
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(b) *No Fractional Shares*. All provisions of this Agreement concern whole shares of CommonStock. If the application of any provision hereunder would yield a fractional share, suchfractional share shall be rounded down to the next whole share if it is less than 0.5 and roundedup 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 orinterpreted to create (i) any right of Grantee to continue employment with or provide services tothe Company or any of its Affiliates.(d) *Notices*. Any notice, instruction, authorization, request or demand required hereundershall 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, orby courier or delivery service, addressed to the Company at the address indicated beneath itssignature on the execution page of this Agreement, and to Grantee at his address indicated on theCompany’s stock records, or at such other address and number as a party shall have previouslydesignated by written notice given to the other party in the manner hereinabove set forth. Noticesshall be deemed given when received, if sent by facsimile means (confirmation of such receipt byconfirmed 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 isrefused), if hand-delivered, sent by express courier or delivery service, or sent by certified orregistered mail, return receipt requested.(e) *Amendment and Waiver*. This Agreement may be amended, modified or superseded only bywritten instrument executed by the Company and Grantee. Any waiver of the terms or conditionshereof shall be made only by a written instrument executed and delivered by the party waivingcompliance. Any waiver granted by the Company shall be effective only if executed and delivered bya duly authorized executive officer of the Company other than Grantee. The failure of any party atany time or times to require performance of any provisions hereof, shall in no manner effect theright to enforce the same. No waiver by any party of any term or condition, or the breach of anyterm or condition contained in this Agreement in one or more instances shall be deemed to be, orconstrued as, a further or continuing waiver of any such condition or breach or a waiver of anyother 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 thisAgreement shall not affect any other provision of this Agreement, which shall remain in fullforce and effect.(g) *Successors and Assigns*. Subject to the limitations which this Agreement imposes upontransferability of shares of Common Stock, this Agreement shall bind, be enforceable by and inureto the benefit of the Company and its successors and assigns, and Grantee, and Grantee’s permittedassigns and upon death, estate and beneficiaries thereof (whether by will or the laws of descentand distribution), executors, administrators, agents, legal and personal representatives.
 
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(h) *Community Property*. Each spouse individually is bound by, and such spouse’s interest, ifany, in any Shares is subject to, the terms of this Agreement. Nothing in this Agreement shallcreate a community property interest where none otherwise exists.(i) *Entire Agreement*. This Agreement together with the Plan supersede any and all other priorunderstandings and agreements, either oral or in writing, between the parties with respect to thesubject matter hereof and constitute the sole and only agreements between the parties with respectto the said subject matter. All prior negotiations and agreements between the parties with respectto the subject matter hereof are merged into this Agreement. Each party to this Agreementacknowledges 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 inthis Agreement or the Plan and that any agreement, statement or promise that is not contained inthis 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 RestrictedShares 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 securitiesare traded or listed, and Company rules or policies. Any determination in which connection by theCommittee 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 herebyacknowledges that he has been advised to obtain independent legal and tax advice regarding thisAgreement, grant of the Restricted Shares and the disposition of such shares, including, withoutlimitation, the election available under Section 83(b) of the Internal Revenue Code.**8. Counterparts and Electronic Execution.**This Agreement may be executed in multiple originalcounterparts, each of which shall be deemed an original, but all of which together shall constitutebut one and the same instrument. Grantee’s electronic acceptance of the Award Notice shall bedeemed to be Grantee’s execution and acceptance of this Agreement subject to the terms of the AwardNotice and the Plan.**9. Grantee’s Acknowledgments.**The Grantee acknowledges receipt of a copy of the Plan andrepresents that he or she is familiar with the terms and provisions thereof, and hereby acceptsthis Agreement subject to all the terms and provisions of the Plan and this Agreement. The Granteehereby agrees to accept asbinding, 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.***[COMPANY SIGNATURE PAGE FOLLOWS]***
 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on                     .      **COMPANY**: