SUPPLEMENTAL EMPLOYMENT AGREEMENT
Exhibit
10.2
WHEREAS,
Xxxxx X. Christmas (the “Executive”) and KCS Energy, Inc., (the “Company”) are
parties to an Employment Agreement dated December 1, 2001, as amended by
Amendment No. 1 (the “2001 Agreement”), setting forth certain terms and
conditions of employment.
WHEREAS,
the Executive and the Company desire to modify the terms of the 2001 Agreement
in a manner that benefits both the Executive and the Company.
ACCORDINGLY,
The Executive and the Company agree to enter into a Supplemental Employment
Agreement (the “Amendment”) containing the following terms and
conditions:
1. Because
the Amendment affects the obligations of the parties under Section 3 of the
2001
Agreement, this Amendment constitutes a modification of Section 3 of the 2001
Agreement made in compliance with Section 14.3 of the 2001 Agreement.
Accordingly, the Executive and the Company agree that this Amendment serves
to
modify the provisions set forth in Section 3 of the 2001 Agreement.
2. Because
the Amendment affects the obligations of the parties under Section 4 of the
2001
Agreement, this Amendment constitutes a modification of Section 4 of the 2001
Agreement made in compliance with Section 14.3 of the 2001 Agreement.
Accordingly, the Executive and the Company agree that this Amendment serves
to
modify the provisions set forth in Section 4 of the 2001 Agreement.
3. Because
the Amendment affects the obligations of the parties under Section 8 of the
2001
Agreement, this Amendment constitutes a modification of Section 8 of the 2001
Agreement made in compliance with Section 14.3 of the 2001 Agreement.
Accordingly, the Executive and the Company agree that this Amendment serves
to
modify the provisions set forth in Section 8 of the 2001 Agreement.
4. Because
the Supplemental Employment Agreement affects the obligations of the parties
under Section 9 of the 2001 Agreement, this Supplemental Employment Agreement
constitutes an amendment and modification of Section 9 of the 2001 Agreement
made in compliance with Section 14.3 of the 2001 Agreement. Accordingly, the
Executive and the Company agree that this Supplemental Employment Agreement
serves to modify the provisions set forth in Section 9 (but not Sections 9.1,
9.2, 9.3, or 9.4 of the 2001 Agreement).
5. Section
3
of the 2001 Agreement is hereby amended by deleting the words “President and
Chief Executive Officer of the Company” and replacing them with the words
“Chairman of the Board and Chief Executive Officer of the Company.”
7. Section
4
of the 2001 Agreement is amended by adding a new provision designated as Section
4.2, and by renumbering the provision in the 2001 Agreement previously
designated as 4.2, so that it is now Section 4.3. The Executive and the Company
agree that the new provision constituting Section 4.2 provides as
follows:
4.2
Any
bonus
payable to the Executive pursuant to Section 4.1 shall be paid by the later
of
(i) the date that is 2-1/2 months after the end of the calendar year for which
such bonus is determined and (ii) the date that is 2-1/2 months after the end
of
the Company’s taxable year for which such bonus is determined, or as soon after
the later of such dates as administratively feasible, but in any event before
the end of the calendar year in which the later of such dates occurs. The
Company and the Executive agree that a Change in Control should not result
in
the forfeiture of any bonus payable in accordance with Section 4.1. Accordingly,
the Company agrees that any bonus payable to Executive in accordance with
Section 4.1 shall
be
paid as provided in this Section 4.2 if a Change in Control occurs after the
end
of the applicable year,
but
before the bonus is actually paid.
8. The
Executive and the Company hereby agree that Section 8.4 of the 2001 Agreement
is
amended by replacing the provisions found in Section 8.4 of the 2001 Agreement
and substituting the following terms:
8.4
If
the
Company terminates Executive’s employment other than for Cause, death or
permanent disability or Executive terminates his employment for Good Reason,
at
any time within 3 years after a Change in Control, then the Company shall pay
to
Executive: (i) an amount equal to three (3) times the greater of (a) Executive’s
annual base salary in effect as of the Termination Date or (b) Executive’s
annual base salary in effect immediately preceding the Change in Control; plus
(ii) an amount equal to three (3) times the greater of (a) the amount of any
cash bonus payable to the Executive for the year in which the Termination Date
occurs (provided that if the Executive’s bonus for such year has not been
determined as of the Termination Date, then the amount of the bonus shall be
determined as if the Executive earned 100% of the targeted bonus for such year)
or (b) the amount of the last annual cash bonus paid to the Executive prior
to
the Change in Control; plus (iii) the amount of any earned but unpaid salary
as
of the Termination Date; plus (iv) the amount of any cash bonus payable to
the
Executive pursuant to Section 4.1
to the
extent not paid prior to the Termination Date; plus (v) an amount equal to
the
greater of (a) a pro rata amount of the Executive’s
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targeted
bonus for the year in which the Termination Date falls or (b) such bonus for
such year as may be determined by the compensation committee or the board of
directors of the Company in their sole discretion; plus (vi) the amount of
any
accrued but unpaid vacation pay through the Termination Date.
9. The
Executive and the Company hereby agree that Section 8.7 of the 2001 Agreement
is
amended by replacing the provisions found in Section 8.7 of the 2001 Agreement
and substituting the following terms:
8.7
(a)
Any
payments due to the Executive pursuant to Section 8.1 shall be made in
accordance with the timing arrangements under which the Company normally
compensates its employees.
(b)
Any salary and vacation pay amounts due to the Executive pursuant to Section
8.2
shall be paid in accordance with the timing arrangements under which the Company
normally compensates its employees. Any bonus payments due to the Executive
pursuant to Section 8.2 shall be made by the later of (i) the date that is
2-1/2
months after the end of the calendar year in which the Termination Date falls
and (ii) the date that is 2-1/2 months after the end of the Company’s taxable
year in which the Termination Date falls, or as soon after the later of such
dates as administratively feasible, but in any event before the end of the
calendar year in which the later of such dates occurs.
(c)
In the event any payments
to Executive required to be made pursuant to Sections 8.3, 8.4., 8.6, or any
other provision of this Agreement are
determined, in
whole
or in part,
to
constitute “nonqualified deferred compensation” (“NQDC”) within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), then
the portion (which may be all) of such
payments that constitutes NQDC will not be paid before the date which is six
(6)
months after the Executive’s “separation from service” (as such term is defined
in Section 409A of the Code).
The
determination of whether and what amount of any
payments
to Executive required to be made pursuant to Sections 8.3, 8.4, 8.6, or any
other provision of this Agreement constitute
NQDC shall
be
made by the board of directors of the Company in consultation with legal
counsel, and any such determination shall
be
final and binding on the Company and the Executive. The Company makes no
representation as to whether any such payment or any part thereof constitutes
or
may constitute NQDC. Neither the Company nor any of its directors,
officers,
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employees,
agents, or professional advisers shall have any liability to the Executive
or
any other person for any amounts incurred by the Executive or such other person
by reason of the determination made by the board of directors of the Company
pursuant to this Section 8.7(c) or any action taken or omitted by the board
of
directors of the Company, the Company or any of the Company’s directors,
officers, employees, agents, or professional advisers in the course of or as
a
result of making such determination.
(d)
Subject to the provisions of Section 8.7(c), any and
all
payments to Executive required to be made under clause (b) of the last sentence
of Section 8.6 shall be made within five (5) days of Executive’s furnishing the
Company with evidence of the cost of such insurance, provided that the Executive
furnishes such evidence within six (6) months after the Termination Date, in
each case by wire transfer or Company check at Executive’s option.
(e)
All payments required to be made to Executive pursuant to this Agreement
shall be subject to the withholding of such taxes as may be required by law.
11. In
accordance with the provisions of Sections 8.3, 8.4, 8.5, and 8.6 of the 2001
Agreement, Executive may become entitled to certain benefits that may be
considered a “payment in the nature of compensation” that is contingent on a
Change in Control. That compensation may be subject to income tax and customary
payroll taxes, and a portion of those benefits may be subject to excise taxes
pursuant to the Section 4999 of the Code or any successor statute. If it is
determined that any compensation owed under Sections 8.3, 8.4, 8.5, and 8.6
of
the 2001 Agreement or any other provision of that Agreement would lead to a
liability to pay excise taxes, the Executive and the Company agree that an
Accounting Firm designated in accordance with Section 9.1 of the 2001 Agreement
shall (i)
determine
the
effect of income taxes, excise taxes, if any, and any payroll tax that
would be incurred
by the Executive if such
payments
were made in accordance with the provisions of Sections 8.3,
8.4,
8.5, 8.6, and 9 of the 2001 Agreement or any other provision of that Agreement
without modification or reduction, and (ii) state whether a reduction in
such
payments
or benefits would serve to benefit the Executive on an after-tax basis, and
(iii) state the amount of reduction in such
payments
that would provide the greatest benefit to the Executive on an after-tax basis.
The Executive and the Company agree that, if the Accounting Firm states that
a
reduction in such
payments
would serve to benefit the Executive on an after-tax basis, the sum of the
payments
required
to be made
by the
Company under Sections 8.3, 8.4, 8.5, and 8.6 of the 2001 Agreement or any
other
provision of that Agreement shall be reduced by the amount that the Accounting
Firm states would provide the greatest benefit to the Executive on an after-tax
basis, and in such
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case
no
Excise Tax Payment will be owed to the Executive under Section 9 of the 2001
Agreement unless it is later determined that,
due
to a change in circumstances (including
a claim by the Internal Revenue Service) or
a
reevaluation, the Executive
is entitled to receive
an
Excise Tax Payment in
accordance with Section 9 of the 2001 Agreement, in which case such payment
shall be made to the Executive (or to the Internal Revenue Service on the
Executive’s behalf) within thirty (30) days after the receipt by the Company of
such determination. Executive agrees that, if such
payments
are
reduced in accordance with this Amendment, the Company will
not owe
him any benefits
under Sections 8.3, 8.4, 8.5, or 8.6 of the 2001 Agreement in addition
to,
or
greater than,
the
amounts determined in accordance with this provision.
12. If
the
compensation calculated in accordance with Sections 8.3, 8.4, 8.5, 8.6
or any
other provision of
the
2001 Agreement is reduced in accordance with Section 11 of this Amendment,
the
Executive may elect to allocate the reduced amount as a reduction in the
benefits accruing to him under those
Sections
of the
2001 Agreement
which
are determined by the Accounting Firm to lead to a liability to pay excise
taxes
pursuant to Section 4999 of the Code or any successor statute. Such election
shall be made by giving
written notice to the Company prior to the payment of such benefits. If the
Executive does not elect to allocate the reduction as provided in this Section
12,
then
the reduction will be allocated among such benefits as may be determined by
the
Company.
13. This
Amendment does not modify or otherwise affect any provision of the 2001
Agreement other
than as
expressly set forth in this Amendment, and, except as modified by this
Amendment, the 2001 Agreement remains in full force and effect.
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KCS
Energy, Inc.
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By:
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/s/ Xxxxxxx X. Xxxxx | |
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Xxxxx
X. Christmas
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| /s/ Xxxxx X. Christmas | ||
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