Document:

exv10w5

Exhibit 10.5

AMENDED EXECUTIVE EMPLOYMENT AGREEMENT

     An executive employment agreement was made and entered into effective as of July 28, 2003,
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 Stephen H. Green (hereinafter referred to as the “Employee”) (the “Agreement”).
The Agreement is hereby amended effective December 31, 2008 (hereinafter the “Amended Agreement”)
as follows:

WITNESSETH:

     WHEREAS, the Company and the Employee desire to amend the Agreement to comply with Code
Section 409A.

     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 Amended Agreement, the following terms have the
meanings prescribed below:

     Affiliate is used in this Amended 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.

     Code shall mean the Internal Revenue Code of 1986, as amended, and the applicable
rules, notices and regulations thereunder, as amended from time to time.

     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 Amended Agreement and his employment 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; provided, however,
notwithstanding anything herein to the contrary, for the purposes of Code Section 409A, with
respect to any amounts payable hereunder that are deferred compensation subject to Code Section
409A or that are intended to be exempt from Code Section 409A that require Employee’s termination,
the Employee’s termination shall mean a “Separation from Service” within the meaning of Code
Section 409A.

     Disability means an illness or other disability which prevents the Employee from
discharging his responsibilities under this Amended 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).

     Employee means Stephen H. Green, 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.

     Original Effective Date means July 28, 2003.

     Termination Agreement means the Termination Agreement dated the Original Effective
Date between the Company and the Employee, as amended effective December 31, 2008 by the Amended
Termination Agreement and as amended from time to time.

     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.

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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 Senior Vice President — Exploration. 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 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 Amended Agreement shall be a period of two years beginning on the
Original Effective Date (the “Initial Term”). After the expiration of the Initial Term, the
Employee’s period of employment under this Amended Agreement shall be automatically renewed for
successive one-year terms on each anniversary of the Original 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 $248,000, including any
increases thereon from time to time (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.

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     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.

     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 by providing reasonable written documentation thereof
to the Company and all such expenses shall be paid promptly, but in no event, later than 21/2 months
after the end of Employee’s tax year in which such expenses were incurred.

     4.6 Life Insurance. The Company shall provide to the Employee life insurance under
programs currently maintained or hereafter established by the Company for the benefit of its
executive officer or employees.

     4.7 Relocation. The Company and the Employee agree that if the Employee is asked to
relocate from Lafayette, Louisiana to Houston, Texas, the Company will provide to Employee
reimbursement for out of pocket moving expenses incurred in connection with such move, and it will
also reimburse the Employee for any loss incurred by the Employee on the sale of his personal
residence in Lafayette, Louisiana, with such loss being calculated on the basis of the difference
between the Employee’s actual costs less the net sales price.

     4.8 Vacation. Until the Date of Termination, subject to the Company’s policies
regarding vacation as in effect from time to time during the Employment Period, Employee shall be
entitled to five (5) weeks paid vacation during each one year period commencing on the anniversary
date of Employee’s employment with the Company.

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     4.9 Additional Agreements. In addition to the rights and obligations of the Company
and Employee under this Agreement, the Company, Employee or their Affiliates may, from time
to time, execute agreements during the Employment Period which provide Employee certain rights
with respect to particular oil and gas prospects. Such agreements are not part of this Agreement
relating to employment and nothing in such agreements shall confer upon Employee any right to
continue in the employ of the Company or interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to terminate Employee for any reason, with our
without cause

5. Termination.

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

     5.2 Disability. The Company may terminate this Amended Agreement and Employee’s
employment, 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 Amended Agreement and Employee’s
employment, upon written notice to the Employee delivered in accordance with Sections 5.5 and 12.1
hereof, for Cause. For purposes of this Amended 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 Amended Agreement or (iii) the Employee’s willful engaging
in activities which would (A) constitute a breach of any term of this Amended 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 Amended Agreement Without Cause and
Employee’s employment, upon written notice to the Employee delivered in accordance with Sections
5.5 and 12.1 hereof. For purposes of this Amended 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.

     5.5 Notice of Termination. Any termination of this Amended Agreement and Employee’s
employment 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
Amended Agreement. For purposes of this Amended Agreement, a “Notice of Termination” means a
written notice which (i) indicates the specific termination provision in this Amended 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.

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     6.1 Cause or by Employee. If this Amended 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 shall be paid in accordance with the plan documents
governing such deferrals. 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 Amended Agreement is
terminated as a result of the Employee’s death or Employee’s termination in connection with
a 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 (which shall be
owned by the Company) 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 but prior to Employee’s Disability that is a bona fide disability
plan under Treasury Regulation 1.409A-1(a)(5), 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 that is a bona fide
disability plan under Treasury Regulation 1.409A-1(a)(5), 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 Amended Agreement shall be terminated by the Company
Without Cause:

     (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 shall be paid in accordance with the plan documents governing such
deferrals;

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     (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 Amended Agreement if the Employee’s employment had not terminated, to be
paid no later than 21/2 months after the end of the calendar year in which such expenses were
incurred; and

     (c) for the 12-month period commencing on the Date of Termination, the Company shall
pay the Company portion of any premiums and shall otherwise continue benefits to the
Employee and/or the Employee’s family in accordance with the Company’s normal payroll
practices 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. With respect to benefits set forth in
this subsection (c), to the extent possible, all insurance premium and/or benefit payments
by the Company shall be made so as to be exempt from Code Section 409A, and for the purposes
thereof, each payment shall be treated as a separate payment under Code Section 409A.
Notwithstanding the foregoing, with respect to any benefits that are for medical, dental or
vision expenses under a self-insured plan, the Employee shall pay the premiums for such
coverage and the Company shall reimburse the Employee for the Company portion of the cost of
such premiums by the 15th day of the month following the month such premiums are
paid by the Employee. After the group health benefits hereunder have expired, the Employee
and his dependents shall be eligible to elect continuation of health insurance coverage
under COBRA and shall be responsible for the applicable premiums under COBRA. With respect
to any other premiums or amounts payable under this Section 6.3(c), to the extent that such
amounts are taxable and not otherwise exempt from deferred compensation under Code Section
409A, the Employee shall pay the premiums for such coverage and the Company shall promptly
reimburse the Employee upon Employee’s submission of reasonable documentation of such
premiums, and the Company’s payment of such reimbursements or any other benefits under this
Section 6.3(c) shall be subject to the following: (i) all amounts to be paid under this
paragraph and that are includable in Employee’s income shall only be paid if such expenses
are incurred during the 2 year period after the Termination Date; (ii) any amount
reimbursable or paid in one tax year shall not affect the amount to be reimbursed or paid in
another tax year; (iii) if Employee is reimbursed for any expenses hereunder, he must
provide the Company with reasonable documentation of such expenses; (iv) payments for such
expenses will be made in cash promptly after the expenses are incurred but in no event later
than the end of Employee’s taxable year following the tax year in which the expenses are
incurred; and (v) the payments under this paragraph cannot be substituted for another
benefit.

     (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.

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     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 shall be
paid in accordance with the plan documents governing such deferral. 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.

     6.5 Specified Employee Status. In the event that, as of the date of Employee’s
Separation from Service, as defined in Treasury Regulation Section 1.409A-1(h), Employee is a
“specified employee,” as defined in Treasury Regulation Section 1.409A-1(i), to the extent that any
of the payments under this Amended Agreement payable on account of a Separation from Service,
including without limitation, Sections 6.2, 6.3 or 6.4 are subject to, and not exempt from, Code
Section 409A, such amounts shall be paid not earlier than (1) six months after the date of the
Employee Separation from Service, or (2) the date of Employee’s death, as required in accordance
with Section 409A(a)(2)(B)(i) of the Code and Treasury Regulation Section 1.409A-3(i)(2) (“Waiting
Period”); any payments withheld during the Waiting Period will be paid in a lump sum amount on the
first business day of the seventh month following the Employee’s Separation from Service and
payments thereafter shall be otherwise paid as provided herein.

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 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.

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

     8.2 For purposes of this Amended 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):

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     (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 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.

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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 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 regarding the matters identified in Section 10.1, 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.

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     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.

     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 Amended
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.

12

 

     11.2 (a) If this Amended 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 Amended
Agreement, the Employee agrees that if this Amended 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 Amended Agreement is terminated by the Company Without Cause, then the Employee
shall not be subject to any non-competition obligation.

12. Miscellaneous.

     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:

138 Demas Street

Lafayette, Louisiana 70506

13

 

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 Amended Agreement shall neither operate nor be construed as a waiver of any subsequent breach
by any party.

     12.3 Assignment. This Amended 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 Amended Agreement; No Oral Amendments. This Amended 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 the Company and constitutes the entire agreement between the
Employee and the Company with respect to the subject matter of this Amended Agreement. This
Amended 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 Amended 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
Amended Agreement which can be given effect without the invalid or unenforceable provision or
application.

     12.6 Jurisdiction; Arbitration. The laws of the State of Louisiana shall govern the
interpretation, validity and effect of this Amended 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 Amended 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 Amended 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 Amended Agreement shall be interpreted in accordance with the
applicable requirements of, and exemptions from, Section 409A of the Code and the Treasury
Regulations thereunder.

14

 

14. No Guarantee of Tax Consequences. None of the Company, its Affiliates or any of their
officers, directors, employees or agents are responsible for or guarantee the tax consequences to
Employee with respect to any payments or benefits provided under this Amended Agreement including,
without limitation, any excise tax, interest or penalties that may be imposed under Code Section
409A.

[Signature page follows]

15

 

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

	 	 	 	 	 
	 	PETROQUEST ENERGY, INC.

 	 
	 	By:  	/s/ Charles T. Goodson
 	 
	 	 	Charles T. Goodson 	 
	 	 	President and Chief Executive Officer 	 
	 
	 	EMPLOYEE:

 	 
	 	/s/ Stephen H. Green
 	 
	 	Stephen H. Green 	 
	 	 	 
	 

16exv10w6

Exhibit 10.6

AMENDED TERMINATION AGREEMENT

     The termination agreement, dated as of [                              ] (the “Termination Agreement”), was
made and entered into by and between PetroQuest Energy, Inc., a Delaware corporation with its
principal office at 400 E. Kaliste Saloom Road, Suite 6000, Lafayette, Louisiana 70508 (the
“Company”), and [                              ] (“Executive”). The Company and Executive hereby agree to amend
the Termination Agreement effective December 31, 2008 (the “Amended Termination Agreement”), as
follows.

RECITALS

     A. The Termination Agreement sets forth the severance benefits which the Company agrees that
it will pay to the Executive if Executive’s employment with the Company terminates under one of the
circumstances described therein following a Change in Control of the Company.

     B. The Company and Executive desire to amend the Termination Agreement to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the rules,
notices and regulations thereunder effective December 31, 2008 (the “Code”).

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained
herein, the parties hereto agree to amend the Termination Agreement as follows:

     1. Term of Agreement. This Amended Termination Agreement shall be effective
immediately on December 31, 2008 and shall continue in effect through December 31, 2010; provided,
however, that commencing on January 1, 2011 and each January 1 thereafter, the term of this Amended
Termination Agreement shall automatically be extended for one additional year unless not later than
September 30 of the preceding year, the Company shall have given notice that it does not wish to
extend this Amended Termination Agreement; provided, further, that notwithstanding any such notice
by the Company not to extend, this Amended Termination Agreement shall automatically be extended
for 24 months beyond the term provided herein if a Change in Control, as defined in Section 3 of
this Amended Termination Agreement, has occurred during the term of this Amended Termination
Agreement.

     2. Effect on Employment Rights. This Amended Termination Agreement is not part of any
employment agreement that the Company and Executive may have entered. Nothing in this Amended
Termination Agreement shall confer upon Executive any right to continue in the employ of the
Company or interfere with or restrict in any way the rights of the Company, which are hereby
expressly reserved, to terminate for any reason, with or without Cause (as defined below).

     Executive agrees that, subject to the terms and conditions of this Amended Termination
Agreement, in the event of a Potential Change in Control of the Company (as defined below),
Executive will remain in the employ of the Company during the pendency of any such potential change
in control and for a period of one year after the occurrence of an actual Change in Control. For
this purpose, a “Potential Change in Control of the Company” shall be deemed to
have occurred if (a) the Company enters into an agreement the consummation of which would
result in the occurrence of a Change in Control, (b) any person (including the Company) publicly
announces an intention to take or consider taking action which if consummated would constitute a
Change in Control or (c) the Board of Directors of the Company (the “Board”) adopts a resolution to
the effect that a potential change in control of the Company has occurred.

 

 

     3. Change in Control. For purposes of this Amended Termination Agreement, a “Change
in Control” of the Company shall be deemed to have occurred if any of the events set forth in any
one of the following paragraphs shall occur:

     (a) any “person” (as defined in section 3(a)(9) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and as such term is modified in sections 13(d) and 14(d) of
the Exchange Act), excluding the Company or any of its subsidiaries, a trustee or any
fiduciary holding securities under an employee benefit plan of the Company of any of its
subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such
securities or a corporation owned, directly or indirectly, by stockholders of the Company in
substantially the same proportions as their ownership of the Company, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of the combined voting
power of the Company’s then outstanding securities; or

     (b) during any period of not more than two consecutive years, individuals who at the
beginning of much period constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with the Company to effect a
transaction described in clause (a), (c) or (d) of this paragraph) whose election by the
Board or nomination for election by the Company’s stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or

     (c) the shareholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (i) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee or other fiduciary
holder of securities under an employee benefit plan of the Company, at least 50% of the
combined voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than 50% of the combined voting power of the
Company’s then outstanding securities; or

     (d) the shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or substantially
all of the Company’s assets.

2

 

Notwithstanding the foregoing, if any transaction described under paragraphs (a), (c) and
(d) of this Section 3 results in consideration to the Company or the shareholders of the
Company, as the case may be, from such transaction with a value (as determined in good faith
by the Compensation Committee of the Board) of less than $1.00 per share (subject to
adjustment for stock splits and combination and stock dividends after the date hereof), no
Change in Control will be deemed to occur unless such transaction is approved by persons
holding not less than two-thirds of the combined voting power of the Company’s voting
securities entitled to vote on such transaction. In addition, no Change in Control shall be
deemed to occur if there is consummated any transaction or series of integrated transactions
immediately following which, in the judgment of the Compensation Committee of the Board, the
holders of the Company’s Common Stock immediately prior to such transaction or series of
transactions continue to have the same proportionate ownership in an entity which owns all
or substantially all of the assets of the Company immediately prior to such transaction or
series of transactions.

     4. Termination of Employment Following a Change in Control. Executive shall be
entitled to the benefits provided in Section 5 hereof upon the subsequent termination of
Executive’s employment by the Company within two (2) years after a Change in Control which occurs
during the term of this Amended Termination Agreement, provided such termination is (a) by the
Company other than for Cause, or (b) by Executive for Good Reason, as defined below. Executive
shall not be entitled to the benefits of Section 5, any other provision hereof to the contrary
notwithstanding, if Executive’s employment terminates: (i) pursuant to Executive retiring at age
65, (ii) by reason of Executive’s total and permanent disability, or (iii) by reason of Executive’s
death. As used herein, “total and permanent disability” means a condition which prevents Executive
from performing to a significant degree the essential duties of his or her position and is expected
to be of long-term duration or result in death. A determination of total and permanent disability
must be based on competent medical evidence.

     (a) Cause.

     (i) Definition. Termination by the Company of Executive’s employment for
“Cause” shall mean termination upon Executive’s willful engaging in misconduct which
is demonstrably and materially injurious to the Company and its subsidiaries taken
as a whole. No act, or failure to act, on Executive’s part shall be considered
“willful” unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief that Executive’s action or omission was in the best
interest of the Company or its subsidiaries. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three quarters of the entire membership of the
Board at a meeting of the Board called and held for the purpose of making a
determination of whether Cause for termination exists (after reasonable notice to
Executive and an opportunity for Executive to be heard before the Board), finding
that in the good faith opinion of the Board Executive was guilty of misconduct as
set forth above in this subsection 4(a)(i) and specifying the particulars thereof in
detail.

3

 

     (ii) Remedy by Executive. If the Company gives Executive a Notice of
Termination which states that the basis for terminating Executive’s employment is
Cause, Executive shall have ten days after receipt of such Notice to remedy the
facts and circumstances which provided Cause. The Board (or any duly authorized
Committee thereof) shall make a good faith reasonable determination immediately
after such ten-day period whether such facts and circumstances have been remedied
and shall communicate such determination in writing to Executive. If the Board
determines that an adequate remedy has not occurred, then the initial Notice of
Termination shall remain in effect.

     (b) Good Reason. After a Change in Control, Executive may terminate employment
with the Company at any time during the term of this Amended Termination Agreement if
Executive has made a good faith reasonable determination that Good Reason exists for this
termination.

     (i) Definition. For purposes of this Amended Termination Agreement, “Good
Reason” shall mean any of the following actions, if taken without the express
written consent of Executive:

     A. any material change by the Company in Executive’s functions, duties,
or responsibilities which change would cause Executive’s position with the
Company to become of less dignity, responsibility, importance, or scope from
the position and attributes that applied to Executive immediately prior to
the Change in Control;

     B. any significant reduction in Executive’s base salary, other than a
reduction effected as part of an across-the-board reduction affecting all
executive employees of the Company;

     C. any material failure by the Company to comply with any of the
provisions of this Amended Termination Agreement (or of any employment
agreement between the parties);

     D. the Company’s requiring Executive to be based at any office or
location more than 45 miles from the home at which the Executive resides on
the date immediately preceding the Change in Control, except for travel
reasonably required in the performance of Executive’s responsibilities and
commensurate with the amount of travel required of Executive prior to the
Change in Control; or

     E. any failure by the Company to obtain the express assumption of this
Amended Termination Agreement by any successor or assign of the Company.

     Executive’s right to terminate employment for Good Reason pursuant to
this subsection 4(b)(i) shall not be affected by Executive’s incapacity due
to physical or mental illness.

4

 

     (ii) Remedy by Company. If Executive gives the Company a Notice of Termination
which states that the basis for Executive’s termination of employment is Good
Reason, the Company shall have ten days after receipt of such Notice to remedy the
facts and circumstances which provided Good Reason. Executive shall make a good
faith reasonable determination immediately after such ten-day period whether such
facts and circumstances have been remedied and shall communicate such determination
in writing to the Company. If Executive determines that adequate remedy has not
occurred, then the initial Notice of Termination shall remain in effect.

     (iii) Determination by Executive Presumed Correct. Any determination by
Executive pursuant to this Section 4(b) that Good Reason exists for Executive’s
termination of employment and that adequate remedy has not occurred shall be
presumed correct and shall govern unless the party contesting the determination
shows by a clear preponderance of the evidence that it was not a good faith
reasonable determination.

     (iv) Severance Payment Made Notwithstanding Dispute. Notwithstanding any
dispute concerning whether Good Reason exists for termination of employment or
whether adequate remedy has occurred, the Company shall immediately pay to
Executive, as specified in Section 5, any amounts otherwise due under this Amended
Termination Agreement.

     (c) Notice of Termination. Any termination of Executive’s employment by the
Company or by Executive hereunder shall be communicated by a Notice of Termination to the
other party hereto. For purposes of this Amended Termination Agreement, a “Notice of
Termination” shall mean a written notice which shall indicate the specific termination
provisions in this Amended Termination Agreement relied upon any which sets forth (i) in
reasonable detail the facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated and (ii) the date of Executive’s
termination of employment, which shall be no earlier than 10 days after such Notice is
received by the other party. Any purported termination of the Executive’s employment by the
Company which is not effected pursuant to a Notice of Termination satisfying the
requirements of this Amended Termination Agreement shall not be effective. In the case of a
termination for Cause, the Notice of Termination shall also satisfy the requirements set
forth in Section 4(a)(i).

     5. Severance Payment Upon Termination of Employment. If Executive’s employment with
the Company is terminated during the term of this Amended Termination Agreement and after a Change
in Control (a) by the Company other than for Cause, or (b) by Executive for Good Reason, then
Executive shall be entitled to the following:

     (a) Lump-Sum Severance Payment. In lieu of any further salary payments to the
Executive for periods subsequent to the date of termination, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to two (2) (or, if less, the
number of years, including fractions, from the date of termination until the Executive would
have reached age sixty-five (65)) times the sum of (a) the Executive’s annual base
salary in effect on date of termination and (b) the Executive’s most recent annual
bonus. If the most recent Annual Bonus was a stock option or a stock grant, the value of
the bonus will be deemed to be the number of option shares times the closing price of the
Company’s Common Stock for the 20 trading days prior to termination.

5

 

     (b) Continued Benefits. For a twenty-four (24) month period (or, if less, the
number of months from the date of termination until the Executive would have reached age
sixty-five (65)) after the date of termination, the Company shall continue to pay the
Company portion of any premiums and otherwise provide the Executive with life insurance,
health, disability and other welfare benefits (“Welfare Benefits”) substantially similar in
all respects to those which the Executive is receiving immediately prior to the Notice of
Termination in accordance with the Company’s normal payroll practices (without giving effect
to any reduction in such benefits subsequent to the Potential Change in Control of the
Company preceding the Change in Control or the Change in Control which reduction constitutes
or may constitute Good Reason). With respect to benefits set forth in this subsection (b),
all insurance premium and/or benefit payments by the Company, to the extent possible, shall
be made so as to be exempt from Code Section 409A, and for the purposes thereof, each
payment shall be treated as a separate payment under Code Section 409A. Benefits otherwise
receivable by an Executive pursuant to this Section shall be reduced to the extent
substantially similar benefits are actually received by or made available to the Executive
by any other employer during the same time period for which such benefits would be provided
pursuant to this Section at a cost to the Executive that is commensurate with the cost
incurred by the Executive immediately prior to the Executive’s date of termination (without
giving effect to any increase in costs paid by the Executive after the Potential Change in
Control of the Company preceding the Change in Control or the Change in Control which
constitutes or may constitute Good Reason); provided, however, that if the Executive becomes
employed by a new employer which maintains a medical plan that either (i) does not cover the
Executive or a family member or dependent with respect to a preexisting condition which was
covered under the applicable Company medical plan, or (ii) does not cover the Executive or a
family member or dependent for a designated waiting period, the Executive’s coverage under
the applicable Company medical plan shall continue (but shall be limited in the event of
noncoverage due to a preexisting condition, to such preexisting condition) until the earlier
of the end of the applicable period of noncoverage under the new employer’s plan or the
second anniversary of the Executive’s date of termination. The Executive agrees to report
to the Company any coverage and benefits actually received by the Executive or made
available to the Executive from such other employer(s). The Executive shall be entitled to
elect to change his level of coverage and/or his choice of coverage options (such as
Executive only or family medical coverage) with respect to the Welfare Benefits to be
provided by the Company to the Executive to the same extent that actively employed senior
executives of the Company are permitted to make such changes; provided, however, that in the
event of any such changes the Executive shall pay the amount of any cost increase that would
actually be paid by an actively employed executive of the Company by reason of making the
same change in his level of coverage or coverage options. With respect to any benefits that
are for medical, dental or vision expenses under a self-insured plan, the Executive shall
pay the premiums for such coverage and the Company shall reimburse the Executive for the
Company portion of the cost of such premiums by the 15th day of the month
following the month such premiums are paid by the Executive. After the group health
benefits provided hereunder have expired, the Executive and his dependents shall be eligible
to elect continuation of health insurance coverage under COBRA and shall be responsible for
the applicable premiums under COBRA. With respect to any premiums or amounts payable under
this Section, to the extent that such amounts are taxable and not otherwise exempt from
deferred compensation under Code Section 409A, the Executive shall pay the premiums or
expenses, the Company shall promptly reimburse Executive for such amounts and the Company’s
reimbursement payments shall be subject to the following: (i) all amounts to be paid under
this paragraph and that are includable in Executive’s income shall only be paid if such
premiums or expenses are incurred during the 2 year period after the Termination Date; (ii)
any amount reimbursable or paid in one tax year shall not affect the amount to be reimbursed
or paid in another tax year; (iii) if Executive is reimbursed for any premiums or expenses
hereunder, he must provide the Company with reasonable documentation of such premiums or
expenses; (iv) payments for such premiums or expenses will be made in cash promptly after
the expenses are incurred but in no event later than the end of Executive’s taxable year
following the tax year in which the expenses are incurred; and (v) the payments under this
paragraph cannot be substituted for another benefit.

6

 

     (c) Gross-Up Payment. In the event that the Executive becomes entitled to the
severance benefits described in Sections 5(a) and 5(b) or any other benefits or payments
under this Amended Termination Agreement or any other agreement, plan, instrument or
obligation in whatever form of the Company or its subsidiaries or affiliates (other than
pursuant to this Section) including by reason of the accelerated vesting of stock options or
restricted stock hereunder or thereunder (together, the “Total Benefits”), and in the event
that any of the Total Benefits will be subject to the excise tax under Code Section 4999,
including interest, penalties or other excise tax thereon (the “Excise Tax”), the Company
shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net
amount retained by the Executive, after deduction of any Excise Tax on the Total Benefits
and any federal, state and local income tax, Excise Tax and FICA and Medicare withholding
taxes upon the payment provided for by this Section, shall be equal to the Total Benefits.

     For purposes of determining whether any of the Total Benefits will be subject to the
Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits received or
to be received by the Executive in connection with a Change in Control or the Executive’s
termination of employment (whether pursuant to the terms of this Amended Termination
Agreement or any other agreement, plan or arrangement with the Company, any Person whose
actions result in a Change in Control or any Person affiliated with the Company or such
Person) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of
the Code, and all “excess parachute payments” within the meaning the Section 280G(b)(1)
shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel (“Tax
Counsel”) selected by the Company’s independent auditors and acceptable to the Executive,
such other payments or benefits (in whole or in part) do not constitute parachute payments,
or such excess parachute payments (in whole or in part) represent reasonable compensation
for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the Base Amount (as defined in the Code),
or are otherwise not subject to the Excise Tax, (ii) the amount of the Total Benefits which
shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Total Benefits reduced by the amount of such Total Benefits that in the
opinion of Tax Counsel are not parachute payments, or (B) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) (after applying clause (i), above), and
(iii) the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company’s independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment
is to be made and state and local income taxes at the highest marginal rate of taxation in
the state and locality of the Executive’s residence on the date of termination, net of the
reduction in federal income taxes which could be obtained from deduction of such state and
local taxes (calculated by assuming that any reduction under Section 68 of the Code in the
amount of itemized deductions allowable to the Executive applies first to reduce the amount
of such state and local income taxes that would otherwise be deductible by the Executive).

7

 

     (d) Timing of Payments. The payments provided for in Sections 5(a) and 5(c)
shall be made not later than the fifth (5th) day following the date of termination;
provided, however, that if the amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such payments and shall
pay the remainder of such payments (the “Underpayment”) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after the date of
termination, and if it is determined there is an Underpayment in any tax audit or proceeding
under Code Section 4999, such Underpayment amount shall be paid within 5 days after the
conclusion of such tax audit or proceeding under Code Section 4999. Notwithstanding
anything to the contrary in the foregoing provisions of this Section 5(d), in no event shall
payment of any Gross-Up Payment and any Underpayment be made later than December 31 of the
year next following the year in which the Excise Tax is remitted to the taxing authority.
Reimbursement of any costs or expenses incurred by the Executive due to a tax audit or
litigation related to “parachute payments,” “excess parachute payments,” Excise Tax or the
Gross-Up Payments or other payments in Section 5(c) and Section 6 below shall be made by
December 31 of the year following the year in which the taxes that are the subject of the
audit or litigation are remitted to the taxing authority, or where as a result of such audit
or litigation no taxes are remitted, by December 31 of the year following the year in which
the audit is completed or there is a final and nonappealable settlement or other resolution
of the litigation. The Executive’s right to payment or reimbursement pursuant to Section
5(c) or (d) shall not be subject to liquidation or exchange for any other benefit.

     (e) Specified Employee Status. In the event that, as of the date of
Executive’s “Separation from Service,” as defined in Treasury Regulation Section
1.409A-1(h), Executive is a “specified employee,” as defined in Treasury Regulation Section
1.409A-1(i), to the extent that any of the payments under this Amended Termination Agreement
payable on account of a Separation from Service, including without limitation, any
payments in Sections 5 and 6 are subject to, and not exempt from, Code Section 409A, such
amounts shall be paid not earlier than (1) six months after the date of the Executive’s
Separation from Service within the meaning of Code Section 409A, or (2) the date of
Executive’s death, as required in accordance with Section 409A(a)(2)(B)(i) of the Code and
Treasury Regulation Section 1.409A-3(i)(2) (“Waiting Period”); any payments withheld during
the Waiting Period will be paid in a lump sum amount on the first business day of the
seventh month following the Executive’s Separation from Service and payments thereafter
shall be otherwise paid as provided herein.

8

 

     (f) Termination of Employment. For the purposes of Code Section 409A, to the
extent any payment under this Amended Termination Agreement is deferred compensation subject
to and not exempt from Code Section 409A, Executive’s termination and termination date from
the Company shall mean a Separation from Service within the meaning of Code Section 409A.

     6. Reimbursement of Legal Costs. The Company shall pay to the Executive all legal
fees and expenses incurred by the Executive as a result of a termination which entitles the
Executive to any payments under this Amended Termination Agreement including all such fees and
expenses, if any, incurred in contesting or disputing any Notice of Termination under Section 4(a)
hereof or in seeking to obtain or enforce any right or benefit provided by this Amended Termination
Agreement or in connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit provide hereunder. Such payments
shall be made within five (5) business days after delivery of the Executive’s respective written
requests for payment accompanied by such evidence of fees and expenses incurred as the Company
reasonably may require.

     Notwithstanding the foregoing, to the extent that Code Section 409A is applicable to the
expenses under this Section 6 as deferred compensation, to the extent that no exception under Code
Section 409A is applicable the following shall apply (and to the extent such expenses are not
reimbursements for tax audit or litigation expenses which are subject to the reimbursement
provisions of Section 5(d)): (a) all expenses to be paid under this Section 6 and that are taxable
and includable in Executive’s income shall only be paid for a period not to exceed 25 years from
the Executive’s Separation from Service; (b) any amount reimbursable or paid in one tax year shall
not affect the amount to be reimbursed or paid in another tax year; (c) the Executive must provide
the Company with reasonable documentation of such expenses; (d) payments for such expenses will be
made in cash within 30 days after the reasonable documentation of the expenses incurred is provided
but in no event later than the end of Executive’s taxable year following the Executive’s tax year
in which the expenses are incurred; and (e) the payments under this Section 6 cannot be substituted
for another benefit.

     7. Damages. Executive shall not be required to mitigate damages with respect to the
amount of any payment provided under this Amended Termination Agreement by seeking other employment
or otherwise, nor shall the amount of any payment provided under this Amended Termination Agreement
be reduced by retirement benefits, deferred compensation or any compensation earned by Executive as
a result of employment by another employer.

9

 

     8. Successor to Company. The Company shall require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance satisfactory to
Executive, expressly, absolutely and unconditionally to assume and agree to perform this Amended
Termination Agreement in the same manner and to the same extent that the Company would be required
to perform it if no such succession or assignment had taken place. As used in this Amended
Termination Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
or assign to its business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section or which otherwise becomes bound by all the terms and provisions of
this Amended Termination Agreement by operation of law.

     9. Heirs of Executive. This Amended Termination Agreement shall inure to the benefit
of and be enforceable by Executive’s personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die while any amounts
are still payable to Executive hereunder, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Amended Termination Agreement to Executive’s devisee,
legatee, or other designee or, if there be so much designee, to Executive’s estate.

     10. Arbitration. Any dispute, controversy or claim arising under or in connection
with this Amended Termination Agreement, or the breach thereof, shall be settled exclusively by
arbitration in accordance with the Rules of the American Arbitration Association then in effect.
Judgment upon the award rendered by the arbitrator(s) may be entered in any court of competent
jurisdiction. Any arbitration held pursuant to this Section in connection with Executive’s
termination of employment shall take place in Houston, Texas at the earliest possible date. If any
proceeding is necessary to enforce or interpret the terms of this Amended Termination Agreement, or
to recover damages for breach thereof, the prevailing party shall be entitled to reasonable
attorneys’ fees and necessary costs and disbursements, not to exceed in the aggregate one percent
(1%) of the net worth of the other party, in addition to any other relief to which he or it may be
entitled. All such expenses shall be paid only if incurred prior to the last day of the second
calendar year following the calendar year in which the Executive’s Separation from Service occurs.

     11. Notice. For purposes of this Amended Termination Agreement, notices and all other
communications provided for in this Amended Termination Agreement shall be in writing and shall be
deemed to have been duly given when delivered by messenger or in person, or when mailed by United
States registered mail, return receipt requested, postage prepaid, as follows:

	 	 	 	 	 
	 

	 	If to the Company:
	 	400 E. Kaliste Saloom Road

Suite 6000

Lafayette, Louisiana 70508

Attention: President

10

 

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	If to the Executive:
	 	400 E. Kaliste Saloom Road

Suite 6000

Lafayette, Louisiana 70508

or such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

     12. General Provisions.

     (a) Executive’s rights and obligations under this Amended Termination Agreement shall
not be transferable by assignment or otherwise, nor shall Executive’s rights be subject to
encumbrance or subject to the claims of the Company’s creditors. Nothing in this Amended
Termination Agreement shall prevent the consolidation of the Company with, or its merger
into, any other corporation, or the sale by the Company of all or substantially all of its
properties or assets; and this Amended Termination Agreement shall inure to the benefit of,
be binding upon and be enforceable by, any successor surviving or resulting corporation, or
other entity to which such assets shall be transferred. This Amended Termination Agreement
shall not be terminated by the voluntary or involuntary dissolution of the Company.

     (b) This Amended Termination Agreement and any employment agreement with Executive plus
terms of any stock option plans or grants constitutes the entire agreement between the
parties hereto in respect to the rights and obligations of the parties following a Change in
Control. This Amended Termination Agreement supersedes and replaces all prior oral and
written agreements, understandings, commitments, and practices between the parties (whether
or not fully performed by Executive prior to the date hereof), which shall be of no further
force or effect.

     (c) The provisions of this Amended Termination Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are declared invalid or
unenforceable by a court of competent jurisdiction, the validity and enforceability of the
remainder of such provisions or parts thereof and the applicability thereof shall not be
affected thereby.

     (d) This Amended Termination Agreement may not be amended or modified except by a
written instrument executed by the Company and Executive.

     (e) This Amended Termination Agreement and the rights and obligations hereunder shall
be governed by and construed in accordance with the laws of the State of Texas.

     13. Code Section 409A. This Amended Termination Agreement shall be interpreted in
accordance with the applicable requirements of, and exemptions from, Section 409A of the Code and
the Treasury Regulations thereunder.

11

 

     14. No Guarantee of Tax Consequences. None of the Company, its Affiliates or any of
their officers, directors, employees or agents are responsible for or guarantee the tax
consequences to Executive with respect to any payments or benefits provided under this
Amended Termination Agreement including, without limitation, any excise tax, interest or
penalties that may be imposed under Code Section 409A.

[Signature page follows]

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     IN WITNESS WHEREOF, the parties have executed this Amended Termination Agreement as of the
date first above written.

	 	 	 	 	 
	 	PetroQuest Energy, Inc.,

a Delaware Corporation

 	 
	 	 	 
	 	Charles T. Goodson 	 
	 	President and Chief Executive Officer 	 
	 
	 	Executive

 	 
	 	 	 
	 	[                              ] 	 
	 	 	 

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