exv10w2



 





Exhibit 10.2




EXECUTIVE EMPLOYMENT AGREEMENT




          THIS AGREEMENT is made and entered into effective as of this 5th day of March,
2008, between PetroQuest Energy, Inc., a Delaware corporation having its principal executive office
at 400 E. Kaliste Saloom Road, Suite 6000, Lafayette, Louisiana 70508 (hereinafter referred to as
the “Company”), and W. Todd Zehnder (hereinafter referred to as the “Employee”).




W I T N E S S E T H:




          WHEREAS, the Company and the Employee entered into that certain Severance Agreement dated as
of December 6, 2006 (the “Prior Agreement”); and




          WHEREAS, the Company and the Employee desire to terminate the Prior Agreement, and the Company
desires to employ the Employee in an executive capacity and the Employee desires to continue in the
employ of the Company and/or its Affiliates.




          NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and the Employee hereby agree as follows:




     1. Certain Definitions. As used in this Agreement, the following terms have the
meanings prescribed below:



          Affiliate is used in this Agreement to define a relationship to a person or entity and
means a person or entity who, directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such person or entity.




          Annual Bonus shall have the meaning assigned thereto in Section 4.2 hereof.




          Base Salary shall have the meaning assigned thereto in Section 4.1 hereof.




          Beneficial Owner shall have the meaning assigned thereto in Rule 13(d)-3 under the
Exchange Act; provided, however, and without limitation, that any individual, corporation,
partnership, group, association or other person or entity that has the right to acquire any Voting
Stock at any time in the future, whether such right is (a) contingent or absolute or (b)
exercisable presently or at any time in the future, pursuant to any agreement or understanding or
upon the exercise or conversion of rights, options or warrants, or otherwise, shall be the
Beneficial Owner of such Voting Stock.




          Cause shall have the meaning assigned thereto in Section 5.3 hereof.




          Common Stock means the Company’s common stock, par value $.001 per share.




          Company means PetroQuest Energy, Inc., a Delaware corporation, the principal executive
office of which is located at 400 E. Kaliste Saloom Road, Suite 6000, Lafayette, Louisiana 70508.




 









 








          Confidential Information shall have the meaning assigned thereto in Section 8.2
hereof.




          Date of Termination means the earliest to occur of (i) the date of the Employee’s
death, (ii) the date on which the Employee terminates this Agreement for any reason or (iii) the
date of receipt of the Notice of Termination, or such later date as may be prescribed in the Notice
of Termination in accordance with Section 5.5 hereof.




          Disability means an illness or other disability which prevents the Employee from
discharging his responsibilities under this Agreement for a period of 180 consecutive calendar
days, or an aggregate of 180 calendar days in any calendar year, during the Employment Period, all
as determined in good faith by the Board of Directors of the Company (or a committee thereof).




          Effective Date means the date of execution hereof.




          Employee means W. Todd Zehnder, whose business address is 400 E. Kaliste Saloom Road,
Suite 6000, Lafayette, Louisiana 70508.




          Employment Period shall have the meaning assigned thereto in Section 3 hereof.




          Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the Securities and Exchange Commission thereunder, all as in effect from
time to time during the Employment Period.




          Initial Term shall have the meaning assigned thereto in Section 3 hereof.




          Notice of Termination shall have the meaning assigned thereto in Section 5.5 hereof.




          Termination Agreement means the Termination Agreement of even date herewith between
the Company and the Employee.




          Voting Stock means all outstanding shares of capital stock of the Company entitled to
vote generally in an election of directors; provided, however, that if the Company has shares of
Voting Stock entitled to more or less than one vote per share, each reference to a proportion of
the issued and outstanding shares of Voting Stock shall be deemed to refer to the proportion of the
aggregate votes entitled to be cast by the issued and outstanding shares of Voting Stock.




          Without Cause shall have the meaning assigned thereto in Section 5.4 hereof.




     2. General Duties of Company and Employee.




     2.1. The Company agrees to employ the Employee, and the Employee agrees to accept
employment by the Company and to serve the Company as Executive Vice President, Chief Financial
Officer and Treasurer. The authority, duties and responsibilities of the Employee shall be
consistent with those of executive officers in a public company with a similar title, and such
other or additional duties as may from time to time be assigned to the Employee by the Board of
Directors (or a committee thereof) and agreed to by the Employee. While employed hereunder, the
Employee shall devote full time and attention during normal



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business hours to the affairs of the Company and use his best efforts to perform faithfully
and efficiently his duties and responsibilities. The Employee may (i) serve on corporate, civic
or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach
at educational institutions and (iii) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Employee’s duties and responsibilities.




     2.2. The Employee agrees and acknowledges that he owes a fiduciary duty of loyalty,
fidelity and allegiance to act at all times in the best interests of the Company and to do no
act and to make no statement, oral or written, which would injure Company’s business, its
interests or its reputation.




     2.3. The Employee agrees to comply at all times during the Employment Period with all
applicable policies, rules and regulations of the Company, including, without limitation, the
Company’s code of ethics and the Company’s policy regarding trading in the Common Stock, as each
is in effect from time to time during the Employment Period.



     3. Term. Unless sooner terminated pursuant to other provisions hereof, the Employee’s
period of employment under this Agreement shall be a period of three years beginning on the
Effective Date (the “Initial Term”). After the expiration of the Initial Term, the Employee’s
period of employment under this Agreement shall be automatically renewed for successive one-year
terms on each anniversary of the Effective Date (the Initial Term and any and all renewals thereof
are referred to herein collectively as the “Employment Period”).



     4. Compensation and Benefits.




     4.1. Base Salary. As compensation for services to the Company, the Company shall
pay to the Employee until the Date of Termination an annual base salary of $265,000 (the “Base
Salary”). The Board of Directors (or a committee thereof), in its discretion, may increase the
Base Salary based upon relevant circumstances. The Base Salary shall be payable in equal
semi-monthly installments or in accordance with the Company’s established policy, subject only
to such payroll and withholding deductions as may be required by law and other deductions
applied generally to employees of the Company for insurance and other employee benefit plans.




     4.2. Bonus. In addition to the Base Salary, the Employee may be awarded, for each
fiscal year until the Date of Termination, an annual bonus (either pursuant to a bonus or
incentive plan or program of the Company or otherwise) in an amount to be determined by the
Board of Directors (or a committee thereof), in its sole discretion (the “Annual Bonus”). Each
such Annual Bonus shall be payable at a time to be determined by the Board of Directors (or a
committee thereof) in its sole discretion.




     4.3. Incentive, Savings and Retirement Plans. Until the Date of Termination, the
Employee shall be eligible to participate in and shall receive all benefits under all executive
incentive, savings and retirement plans (including 401(k) plans) and programs currently
maintained or hereinafter established by the Company for the benefit of its executive officers
and/or employees.



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     4.4. Welfare Benefit Plan. Until the Date of Termination, the Employee and/or the
Employee’s family, as the case may be, shall be eligible to participate in and shall receive all
benefits under each welfare benefit plan of the Company currently maintained or hereinafter
established by the Company for the benefit of its employees. Such welfare benefit plans may
include, without limitation, medical, dental, disability, group life, accidental death and
travel accident insurance plans and programs.




     4.5. Reimbursement of Expenses. The Employee may from time to time until the Date
of Termination incur various business expenses customarily incurred by persons holding positions
of like responsibility, including, without limitation, travel, entertainment and similar
expenses incurred for the benefit of the Company. Subject to the Company’s policy regarding the
reimbursement of such expenses as in effect from time to time during the Employment Period,
which does not necessarily allow reimbursement of all such expenses, the Company shall reimburse
the Employee for such expenses from time to time, at the Employee’s request, and the Employee
shall account to the Company for all such expenses.




     4.6. Life Insurance. The Company shall provide to the Employee life insurance on
terms that are mutually agreeable to the Company and the Employee.



     5. Termination.




     5.1. Death. This Agreement shall terminate automatically upon the death of the
Employee.




     5.2. Disability. The Company may terminate this Agreement, upon written notice to
the Employee delivered in accordance with Sections 5.5 and 12.1 hereof, upon the Disability of
the Employee.




     5.3. Cause. The Company may terminate this Agreement, upon written notice to the
Employee delivered in accordance with Sections 5.5 and 12.1 hereof, for Cause. For purposes of
this Agreement, “Cause” means (i) the conviction of the Employee of a felony (which, through
lapse of time or otherwise, is not subject to appeal), (ii) the Employee’s willful refusal,
without proper legal cause, to perform his duties and responsibilities as contemplated in this
Agreement or (iii) the Employee’s willful engaging in activities which would (A) constitute a
breach of any term of this Agreement, the Company’s code of ethics, the Company’s policies
regarding trading in the Common Stock or reimbursement of business expenses or any other
applicable policies, rules or regulations of the Company, or (B) result in a material injury to
the business, condition (financial or otherwise), results of operations or prospects of the
Company or its Affiliates (as determined in good faith by the Board of Directors of the Company
or a committee thereof).




     5.4. Without Cause. The Company may terminate this Agreement Without Cause, upon
written notice to the Employee delivered in accordance with Sections 5.5 and 12.1 hereof. For
purposes of this Agreement, the Employee will be deemed to have been terminated “Without Cause”
if the Employee is terminated by the Company for any reason other than Cause, Disability or
death.



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     5.5. Notice of Termination. Any termination of this Agreement by the Company for
Cause, Without Cause or as a result of the Employee’s Disability shall be communicated by Notice
of Termination to the Employee given in accordance with this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the Employee’s employment
under the provision so indicated and (iii) specifies the termination date, if such date is other
than the date of receipt of such notice (which termination date shall not be more than 15 days
after the giving of such notice).



     6. Obligations of Company upon Termination.




     6.1. Cause or by Employee. If this Agreement shall be terminated either by the
Company for Cause or by the Employee for any reason, the Company shall pay to the Employee, in a
lump sum in cash within 30 days after the Date of Termination, the aggregate of the Employee’s
Base Salary (as in effect on the Date of Termination) through the Date of Termination, if not
theretofore paid, and, in the case of compensation previously deferred by the Employee, all
amounts of such compensation previously deferred and not yet paid by the Company. All other
obligations of the Company and rights of the Employee hereunder shall terminate effective as of
the Date of Termination.




     6.2. Death or Disability.




     (a) Subject to the provisions of this Section 6.2, if this Agreement is terminated as a
result of the Employee’s death or Disability, the Company shall pay to the Employee or his
estate, in equal semi-monthly installments, the Employee’s Base Salary (as in effect on the
Date of Termination) for 12 months after such Date of Termination. The Company may purchase
insurance to cover all or any part of the obligation contemplated in the foregoing sentence,
and the Employee agrees to submit to a physical examination to facilitate the procurement of
such insurance.




     (b) Whenever compensation is payable to the Employee hereunder during a period in which
he is partially or totally disabled, and such Disability would (except for the provisions
hereof) entitle the Employee to Disability income or salary continuation payments from the
Company according to the terms of any plan or program presently maintained or hereafter
established by the Company, the Disability income or salary continuation paid to the
Employee pursuant to any such plan or program shall be considered a portion of the payment
to be made to the Employee pursuant to this Section 6.2 and shall not be in addition hereto.
If Disability income is payable directly to the Employee by an insurance company under the
terms of an insurance policy paid for by the Company, the amounts paid to the Employee by
such insurance company shall be considered a portion of the payment to be made to the
Employee pursuant to this Section 6.2 and shall not be in addition hereto.




     6.3. Without Cause. If this Agreement shall be terminated by the Company Without
Cause:



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     (a) the Company shall pay to the Employee, in a lump sum in cash within 30 days after
the Date of Termination, the aggregate of the following amounts:




     (1) if not theretofore paid, the Employee’s Base Salary (as in effect on the
Date of Termination) through the Date of Termination; and




     (2) in the case of compensation previously deferred by the Employee, all
amounts of such compensation previously deferred and not yet paid by the Company;




     (b) the Company shall, promptly upon submission by the Employee of supporting
documentation, pay or reimburse to the Employee any costs and expenses (including moving and
relocation expenses) paid or incurred by the Employee which would have been payable under
Section 4.5 of this Agreement if the Employee’s employment had not terminated; and




     (c) for the 12-month period commencing on the Date of Termination, the Company shall
continue benefits to the Employee and/or the Employee’s family at least equal to those which
would have been provided to them under Section 4.4 if the Employee’s employment had not been
terminated; and




     (d) the Company shall pay to the Employee, in equal semi-monthly installments, the
Employee’s Base Salary (as in effect on the Date of Termination) for 12 months after the
Date of Termination.




     6.4. Termination of Employment Following a Change in Control. Notwithstanding the
provisions of Section 6.3 hereof to the contrary, if the Employee’s employment by the Company is
terminated by the Company in accordance with the terms of Section 4 of the Termination Agreement
and the Employee is entitled to benefits provided in Section 5 of the Termination Agreement, the
Company shall pay to the Employee, in a lump sum in cash within 30 days after the Date of
Termination, the aggregate of the Employee’s Base Salary (as in effect on the Date of
Termination) through the Date of Termination, if not theretofore paid, and, in the case of
compensation previously deferred by the Employee, all amounts of such compensation previously
deferred and not yet paid by the Company. Except with respect to the obligations set for forth
in the Termination Agreement, notwithstanding any provisions herein to the contrary, all other
obligations of the Company and rights of the Employee hereunder shall terminate effective as of
the Date of Termination.



     7. Employee’s Obligation to Avoid Conflicts of Interest.




     7.1. In keeping with the Employee’s fiduciary duties to the Company, the Employee agrees
that he shall not knowingly become involved in a conflict of interest with the Company, or upon
discovery thereof, allow such a conflict to continue. The Employee further agrees to disclose
to the Company, promptly after discovery, any facts or circumstances which might involve a
conflict of interest with the Company.




     7.2. The Company and the Employee recognize that it is impossible to provide an exhaustive
list of actions or interests which constitute a “conflict of interest.” Moreover, the



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Company and the Employee recognize that there are many borderline situations. In some
instances, full disclosure of facts by the Employee to the Company is all that is necessary to
enable the Company to protect its interests. In others, if no improper motivation appears to
exist and the Company’s interests have not suffered, prompt elimination of the outside interest
will suffice. In still others, it may be necessary for the Company to terminate the employment
relationship. The Company and the Employee agree that the Company’s determination as to whether
or not a conflict of interest exists shall be conclusive. The Company reserves the right to
take such action as, in its judgment, will end the conflict of interest.




     7.3. In this connection, it is agreed that any direct or indirect interest in, connection
with or benefit from any outside activities, particularly commercial activities, which interest
might in any way adversely affect the Company or its Affiliates, involves a possible conflict of
interest. Circumstances in which a conflict of interest on the part of the Employee would or
might arise, and which should be reported immediately to the Company, include, but are not
limited to, the following:




     (a) Ownership of a material interest in any lender, supplier, contractor,
subcontractor, customer or other entity with which the Company does business.




     (b) Acting in any capacity, including director, officer, partner, consultant, employee,
distributor, agent or the like, for any lender, supplier, contractor, subcontractor,
customer or other entity with which the Company does business.




     (c) Acceptance, directly or indirectly, of payments, services or loans from a lender,
supplier, contractor, subcontractor, customer or other entity with which the Company does
business, including, without limitation, gifts, trips, entertainment or other favors of more
than a nominal value, but excluding loans from publicly held insurance companies and
commercial or savings banks at market rates of interest.




     (d) Use of information or facilities to which the Employee has access in a manner which
will be detrimental to the Company’s interests, such as use for the Employee’s own benefit
of know-how or information developed through the Company’s business activities.




     (e) Disclosure or other misuse of information of any kind obtained through the
Employee’s connection with the Company.




     (f) Acquiring or trading in, directly or indirectly, oil and gas properties or
interests for his own account or the account of his Affiliates without the prior written
consent of the Board of Directors.



     8. Employee’s Confidentiality Obligation.




     8.1. The Employee hereby acknowledges, understands and agrees that all Confidential
Information is the exclusive and confidential property of the Company and its Affiliates which
shall at all times be regarded, treated and protected as such in accordance with this




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Section 8. The Employee acknowledges that all such Confidential Information is in
the nature of a trade secret.




     8.2. For purposes of this Agreement, “Confidential Information” means information, which is
used in the business of the Company or its Affiliates and (i) is proprietary to, about or
created by the Company or its Affiliates, (ii) gives the Company or its Affiliates some
competitive business advantage or the opportunity of obtaining such advantage or the disclosure
of which could be detrimental to the interests of the Company or its Affiliates, (iii) is
designated as Confidential Information by the Company or its Affiliates, is known by the
Employee to be considered confidential by the Company or its Affiliates, or from all the
relevant circumstances should reasonably be assumed by the Employee to be confidential and
proprietary to the Company or its Affiliates, or (iv) is not generally known by non-Company
personnel. Such Confidential Information includes, without limitation, the following types of
information and other information of a similar nature (whether or not reduced to writing or
designated as confidential):




     (a) Internal personnel and financial information of the Company or its Affiliates,
information regarding oil and gas properties including reserve information, vendor
information (including vendor characteristics, services, prices, lists and agreements),
purchasing and internal cost information, internal service and operational manuals, and the
manner and methods of conducting the business of the Company or its Affiliates;




     (b) Marketing and development plans, price and cost data, price and fee amounts,
pricing and billing policies, bidding, quoting procedures, marketing techniques, forecasts
and forecast assumptions and volumes, and future plans and potential strategies (including,
without limitation, all information relating to any oil and gas prospect and the identity of
any key contact within the organization of any acquisition prospect) of the Company or its
Affiliates which have been or are being discussed;




     (c) Names of customers and their representatives, contracts (including their contents
and parties), customer services, and the type, quantity, specifications and content of
products and services purchased, leased, licensed or received by customers of the Company or
its Affiliates; and




     (d) Confidential and proprietary information provided to the Company or its Affiliates
by any actual or potential customer, government agency or other third party (including
businesses, consultants and other entities and individuals).



     8.3. As a consequence of the Employee’s acquisition or anticipated acquisition of
Confidential Information, the Employee shall occupy a position of trust and confidence with
respect to the affairs and business of the Company and its Affiliates. In view of the foregoing
and of the consideration to be provided to the Employee, the Employee agrees that it is
reasonable and necessary that the Employee make each of the following covenants:




     (a) At any time during the Employment Period and thereafter, the Employee shall not
disclose Confidential Information to any person or entity, either inside or



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outside of the Company, other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first obtaining the Company’s
prior written consent (unless such disclosure is compelled pursuant to court orders or
subpoena, and at which time the Employee shall give notice of such proceedings to the
Company).




     (b) At any time during the Employment Period and thereafter, the Employee shall not
use, copy or transfer Confidential Information other than as necessary in carrying out his
duties and responsibilities as set forth in Section 2 hereof, without first obtaining the
Company’s prior written consent.




     (c) On the Date of Termination, the Employee shall promptly deliver to the Company (or
its designee) all written materials, records and documents made by the Employee or which
came into his possession prior to or during the Employment Period concerning the business or
affairs of the Company or its Affiliates, including, without limitation, all materials
containing Confidential Information.



     9. Disclosure of Information, Ideas, Concepts, Improvements, Discoveries and
Inventions.



     As part of the Employee’s fiduciary duties to the Company, the Employee agrees that during his
employment by the Company and for a period of three years following the Date of Termination, the
Employee shall promptly disclose in writing to the Company all information, ideas, concepts,
improvements, discoveries and inventions, whether patentable or not, and whether or not reduced to
practice, which are conceived, developed, made or acquired by the Employee, either individually or
jointly with others, and which relate to the business, products or services of the Company or its
Affiliates, irrespective of whether the Employee used the Company’s time or facilities and
irrespective of whether such information, idea, concept, improvement, discovery or invention was
conceived, developed, discovered or acquired by the Employee on the job, at home, or elsewhere.
This obligation extends to all types of information, ideas and concepts, including information,
ideas and concepts relating to new types of services, corporate opportunities, acquisition
prospects, the identity of key representatives within acquisition prospect organizations,
prospective names or service marks for the Company’s business activities, and the like.



     10. Ownership of Information, Ideas, Concepts, Improvements, Discoveries and Inventions,
and all Original Works of Authorship.




     10.1. All information, ideas, concepts, improvements, discoveries and inventions, whether
patentable or not, which are conceived, made, developed or acquired by the Employee or which are
disclosed or made known to the Employee, individually or in conjunction with others, during the
Employee’s employment by the Company and which relate to the business, products or services of
the Company or its Affiliates (including, without limitation, all such information relating to
corporate opportunities, research, financial and sales data, pricing and trading terms,
evaluations, opinions, interpretations, acquisition prospects, the identity of customers or
their requirements, the identity of key contacts within the customers’ organizations or within
the organization of acquisition prospects, marketing and merchandising techniques, and
prospective names and service marks) are and shall be the



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sole and exclusive property of the Company. Furthermore, all drawings, memoranda, notes,
records, files, correspondence, manuals, models, specifications, computer programs, maps and all
other writings or materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries and inventions are and shall be the sole and exclusive property of the
Company.




     10.2. In particular, the Employee hereby specifically sells, assigns, transfers and conveys
to the Company all of his worldwide right, title and interest in and to all such information,
ideas, concepts, improvements, discoveries or inventions, and any United States or foreign
applications for patents, inventor’s certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part, reissues and/or
extensions thereof, and applications for registration of such names and service marks. The
Employee shall assist the Company and its nominee at all times, during the Employment Period and
thereafter, in the protection of such information, ideas, concepts, improvements, discoveries or
inventions, both in the United States and all foreign countries, which assistance shall include,
but shall not be limited to, the execution of all lawful oaths and all assignment documents
requested by the Company or its nominee in connection with the preparation, prosecution,
issuance or enforcement of any applications for United States or foreign letters patent,
including divisions, continuations, continuations-in-part, reissues and/or extensions thereof,
and any application for the registration of such names and service marks.




     10.3. In the event the Employee creates, during the Employment Period, any original work of
authorship fixed in any tangible medium of expression which is the subject matter of copyright
(such as, videotapes, written presentations on acquisitions, computer programs, drawings, maps,
architectural renditions, models, manuals, brochures or the like) relating to the Company’s
business, products or services, whether such work is created solely by the Employee or jointly
with others, the Company shall be deemed the author of such work if the work is prepared by the
Employee in the scope of his employment; or, if the work is not prepared by the Employee within
the scope of his employment but is specially ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation or as an instructional text, then the work shall be
considered to be work made for hire, and the Company shall be the author of such work. If such
work is neither prepared by the Employee within the scope of his employment nor a work specially
ordered and deemed to be a work made for hire, then the Employee hereby agrees to sell,
transfer, assign and convey, and by these presents, does sell, transfer, assign and convey, to
the Company all of the Employee’s worldwide right, title and interest in and to such work and
all rights of copyright therein. The Employee agrees to assist the Company and its Affiliates,
at all times, during the Employment Period and thereafter, in the protection of the Company’s
worldwide right, title and interest in and to such work and all rights of copyright therein,
which assistance shall include, but shall not be limited to, the execution of all documents
requested by the Company or its nominee and the execution of all lawful oaths and applications
for registration of copyright in the United States and foreign countries.



     11. Employee’s Non-Competition Obligation.



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     11.1. (a) Until the Date of Termination, the Employee shall not, acting alone or in
conjunction with others, directly or indirectly, in any of the business territories in which the
Company or any of its Affiliates is presently or from time to time during the Employment Period
conducting business, invest or engage, directly or indirectly, in any business which is
competitive with that of the Company or accept employment with or render services to such a
competitor as a director, officer, agent, employee or consultant, or take any action
inconsistent with the fiduciary relationship of an employee to his employer; provided, however,
that the beneficial ownership by the Employee of up to three percent of the Voting Stock of any
corporation subject to the periodic reporting requirements of the Exchange Act shall not violate
this Section 11.1(a).




     (b) In addition to the other obligations agreed to by the Employee in this Agreement,
the Employee agrees that until the Date of Termination, he shall not at any time, directly
or indirectly, (i) induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or acquisition prospect of the
Company derived from any customer list, customer lead, mail, printed matter or other
information secured from the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone numbers, printed material
or other information of the Company relating thereto.



     11.2. (a) If this Agreement is terminated either by the Company for Cause or by the
Employee for any reason, then for a period of one year following the Date of Termination, the
Employee shall not, acting alone or in conjunction with others, directly or indirectly, in any
of the business territories in which the Company or any of its Affiliates is presently or at the
Date of Termination conducting business, invest or engage, directly or indirectly, in any
business which is competitive with that of the Company as of the Date of Termination or accept
employment with or render services to such a competitor as a director, officer, agent, employee
or consultant, or take any action inconsistent with the fiduciary relationship of an employee to
his employer; provided, however, that the beneficial ownership by the Employee of up to three
percent of the Voting Stock of any corporation subject to the periodic reporting requirements of
the Exchange Act shall not violate this Section 11.2(a).




     (b) In addition to the other obligations agreed to by the Employee in this Agreement,
the Employee agrees that if this Agreement is terminated either by the Company for Cause or
by the Employee for any reason, then for a period of one year following the Date of
Termination, he shall not at any time, directly or indirectly, (i) induce, entice or solicit
any employee of the Company to leave his employment, (ii) contact, communicate or solicit
any customer or acquisition prospect of the Company derived from any customer list, customer
lead, mail, printed matter or other information secured from the Company or its present or
past employees or (iii) in any other manner use any customer lists or customer leads, mail,
telephone numbers, printed material or other information of the Company relating thereto.



     11.3. If this Agreement is terminated either by the Company Without Cause, then the
Employee shall not be subject to any non-competition obligation.



12. Miscellaneous.



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     12.1. Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing and shall be
deemed to have been given when delivered by hand or mailed by registered or certified mail,
return receipt requested, as follows (provided that notice of change of address shall be deemed
given only when received):


If to the Company to:



400 E. Kaliste Saloom Road

Suite 6000

Lafayette, Louisiana 70508



If to the Employee to:



400 E. Kaliste Saloom Road

Suite 6000

Lafayette, Louisiana 70508



or to such other names or addresses as the Company or the Employee, as the case may be, shall
designate by notice to the other party hereto in the manner specified in this Section 12.1.





     12.2. Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall neither operate nor be construed as a waiver of any subsequent
breach by any party.




     12.3. Assignment. This Agreement shall be binding upon and inure to the benefit of
the Company and its successors, legal representatives and assigns, and upon the Employee, his
heirs, executors, administrators, representatives and assigns; provided, however, the Employee
agrees that his rights and obligations hereunder are personal to him and may not be assigned
without the express written consent of the Company.




     12.4. Entire Agreement; No Oral Amendments. This Agreement, together with any
exhibit attached hereto and any document, policy, rule or regulation referred to herein,
replaces and merges all previous agreements and discussions relating to the same or similar
subject matter between the Employee and each of the Company and constitutes the entire agreement
among the Employee and the Company with respect to the subject matter of this Agreement,
including the Prior Agreement, and the Prior Agreement is hereby terminated by mutual consent of
the Employee and the Company. This Agreement may not be modified in any respect by any verbal
statement, representation or agreement made by any employee, officer, or representative of the
Company or by any written agreement unless signed by an officer of the Company who is expressly
authorized by the Company to execute such document.




     12.5. Enforceability. If any provision of this Agreement or application thereof to
anyone or under any circumstances shall be determined to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions or applications of this
Agreement which can be given effect without the invalid or unenforceable provision or
application.



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     12.6. Jurisdiction; Arbitration. The laws of the State of Louisiana shall govern
the interpretation, validity and effect of this Agreement without regard to the place of
execution or the place for performance thereof. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by arbitration located in
Houston, Texas administered by the American Arbitration Association in accordance with its
applicable arbitration rules, and the judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof, which judgment shall be binding upon the
parties hereto.




     12.7. Injunctive Relief. The Company and the Employee agree that a breach of any
term of this Agreement by the Employee would cause irreparable damage to the Company and that,
in the event of such breach, the Company shall have, in addition to any and all remedies of law,
the right to any injunction, specific performance and other equitable relief to prevent or to
redress the violation of the Employee’s duties or responsibilities hereunder.



     13. Code Section 409A. This Agreement is not intended to be deferred compensation
under Code Section 409A under the Internal Revenue Code of 1986, as amended, and the regulations,
notices and rulings thereunder. The parties agree to amend this Agreement to the extent necessary
to insure that this Agreement is not deferred compensation under Code Section 409A or to comply
with Code Section 409A in order to maintain the terms of the Agreement so that there is no
reduction in the total amounts payable to Employee hereunder.



[Signature page follows]




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     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this
Agreement as of the date first written above.



	 	 	 	 	 
	 	 	PETROQUEST ENERGY, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Charles T. Goodson
	 

	 	 	 	 
	 

	 	 	 	Charles T. Goodson
	 

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 
	 	 	/s/ W. Todd Zehnder
	 	 	 
	 	 	W. Todd Zehnder







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