Exhibit 10.2
CHANGE IN CONTROL AGREEMENT
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This CHANGE IN CONTROL AGREEMENT (this "Agreement") is made as of May
27, 2003, between KCS ENERGY, INC., a Delaware corporation whose principal place
of business is located at 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (the
"Company") and XXXXXX X. XXXXX (the "Executive").
The Company and the Executive agree as follows:
1. RECITALS.
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1.1 The Executive is employed by the Company.
1.2 The Company recognizes that a Change in Control of Company may
occur.
1.3 The Company desires to induce the Executive to remain in the employ
of the Company and to assure the Executive of a fair severance payment should
his employment terminate under certain circumstances following a Change of
Control
2. SEVERANCE ARRANGEMENT.
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2.1. Termination By Company or Executive. If within two (2) years
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following a Change in Control the Executive's employment with the Company is
terminated (i) by the Company for any reason other than for Cause, death or
permanent disability or (ii) by the Executive for Good Reason, then:
2.1.1. Cash Payment. The Company shall Pay to Executive: (i)
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an amount equal to one (1) times the greater of (a) the Executive's
annual base salary in effect as of the Termination Date or (b) the
Executive's annual base salary in effect immediately preceding the
Change in Control; plus (ii) an amount equal to one (1) times the
greater of (a) the amount of any cash bonus payable to the Executive
for the year in which the Termination Date falls (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 any cash bonus paid to the Executive for the year
immediately preceding the year in which the Change in Control occurs;
plus (iii) the amount of any earned but unpaid salary as of the
Termination Date; plus (iv) a pro rata amount of the Executive's
targeted bonus for the year in which the Termination Date falls; plus
(v) the amount of any accrued but unpaid vacation pay through the
Termination Date.
2.1.2. Stock Options and Restricted Stock. Any stock options
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or restricted stock granted to the Executive by the Company as of the
Termination Date shall immediately vest and any stock options remain
exercisable until the later of (i) one (1) year from the Termination
Date or (ii) the date on which such options may be exercised pursuant
to the employee stock option plan under which they were granted.
2.1.3. Insurance Benefits. The Company shall continue to
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maintain and pay the premiums for the Executive's medical and life
insurance with coverage which is substantially similar to the coverage
in effect as of the Termination Date until the earlier of (i) the first
anniversary of the Termination Date or (ii) the date the Executive
becomes employed by another employer and is entitled to substantially
similar benefits under such employer's benefit plan. If continued
coverage is not permitted under the Company's insurance plans, then the
Company will (a) provide the Executive with substantially similar
insurance through another insurance carrier or (b) reimburse the
Executive for the full cost of obtaining such insurance.
2.2. Termination Due to Death or Disability or Cause. The
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Executive shall not be entitled to any of the payments or benefits
provided under Section 2.1 in the event that the Termination Date
occurs by reason of the Executive's death or permanent disability or if
the Executive's employment with the Company is terminated for Cause.
3. PAYMENT TERMS.
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All payments to the Executive required to be made pursuant to Section
2.1.1 shall be paid by the Company within five (5) days after the
Termination Date and all payments to the Executive required to be made
under clause (b) of the last sentence of Section 2.1.3 shall be paid
within five (5) days of Executive's furnishing the Company with
evidence of the cost of such insurance, in each case, by wire transfer
or Company check at the Executive's option. All payments required to be
made to the Executive pursuant to this Agreement shall be subject to
the withholding of such payroll taxes as may be required by law.
4. Definitions.
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As used in the Agreement, the following terms shall have the indicated
meanings:
4.1. "Change in Control": The first to occur of any of the following
events: (i) Any "person" (as the term is used in section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")), other than a trustee or
other fiduciary holding securities under an executive benefit plan of the
Company or any of its subsidiaries, becomes the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 25% of the combined voting power of the Company's
then outstanding securities; (ii) Individuals who are members of the Board on
the date of this Agreement (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date of this Agreement in replacement for a director
who has died or become disabled and whose election was approved by a vote of at
least a majority of the directors comprising the Incumbent Board, or whose
nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board shall be considered a
member of the Incumbent Board; (iii) A merger or consolidation of the Company
with any other corporation or other business entity, other than a merger or
consolidation which would result in the combined voting power of the Company's
securities outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 51% of the combined voting power of the securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or (iv) A sale or disposition by the Company of all or
substantially all of the Company's assets.
4.2. "Cause": The occurrence of any of the following events:
(i) The commission by the Executive of an act of willful misconduct
in any material respect including, but not limited to, the willful violation of
any material law, rule, regulation or cease and desist order applicable to the
Executive or the Company (other than a law, rule or regulation relating to a
minor traffic violation or similar offense), or an act which constitutes a
breach of a fiduciary duty to or related to the Company.
(ii) The commission by the Executive of an act of dishonesty related
to the performance of the Executive's duties, habitual unexcused absence from
work, willful failure to perform duties in any material respect (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or disability), or gross negligence in the performance of duties
resulting in damage or injury to the Company, its reputation or goodwill; or
(iii) Any felony conviction of the Executive or any conviction
involving dishonesty, fraud or breach of trust (other than for a minor traffic
violation or similar offense), whether or not in the line of duty.
4.3. "Good Reason": The occurrence of any of the following events
without the consent of the Executive which remain in effect ten (10) days after
the Company receives written notice of any such event from the Executive:
(i) Any material diminution of the Executive's position with the
Company including the Executive's title and responsibilities;
(ii) Any reduction in the Executive's annual base salary or targeted
bonus compensation; or
(iii) The Company's requiring the Executive to be based at any
office location further than fifty (50) miles from the Executive's office
location as of the date of the Agreement.
4.4. "Termination Date": (i) The date on which the Company receives
written notice (or any later date specified in such notice) that the Executive's
employment with the Company is terminated for Good Reason; or (ii) the date on
which the Executive receives written notice (or any later date specified in such
notice) that the Executive's employment is terminated by the Company other than
for Cause.
5. EFFECTIVENESS OF AGREEMENT. The Executive shall be entitled to the
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benefits afforded to him under this Agreement only if a Change in Control occurs
on or before August 1, 2004. If a Change in Control occurs after that date, this
Agreement shall have no force or effect.
6. RELEASE OF CLAIMS. No payments shall be made to the Executive in
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paragraphs 2.1.1 (i), 2.1.1 (ii), 2.1.1 (iv), 2.1.2 and 2.1.3 unless and until
the Executive shall sign and deliver to the Company an agreement in a form
reasonably satisfactory to the Company pursuant to which the Executive agrees to
release all claims he may have against the Company other than claims arising
under this Agreement and claims with respect to the reimbursement of business
expenses or with respect to benefits which are to continue in effect in
accordance with the terms of this Agreement.
7. MISCELLANEOUS PROVISIONS.
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7.1. No Mitigation. The Executive shall not be required to seek other
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employment or otherwise mitigate damages in order to be entitled to the full
amount of any payments and benefits to which the Executive is entitled under
this Agreement. The amount of such payments and benefits shall not be reduced by
any compensation or benefits received by the Executive from other employment
other than with respect to the insurance benefits as provided in the Section
2.1.3.
7.2. No Employment Agreement. Nothing contained in this Agreement shall
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be construed as a contract of employment between the Company and the Executive,
or as a right of the Executive to continue in the employ of Company, or as a
limitation of the right of Company to discharge the Executive with or without
Cause. The Executive is employed at will and his employment may be terminated by
the Company at any time with or without Cause.
7.3 Eligibility for Standard Severance. If the Executive receives
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severance pursuant to Section 2 of this Agreement, the Executive will not be
eligible to receive a severance payment under KCS' standard severance pay policy
(as then existing as set forth in the KCS Energy, Inc. Employee Handbook).
7.4 Amendments. This Agreement shall not be amended or modified in any
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way unless such amendment or modification is in writing and signed by the
Company and the Executive.
7.5 Entire Agreement. This Agreement contains the entire understanding
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of the Company and the Executive concerning the subject matter hereof and
supersedes any prior or contemporaneous agreement, written or oral, with respect
to the same subject matter.
7.6 Binding Effect. This Agreement is binding on the Company and the
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Executive and their respective successors in interest and, as applicable,
personal representatives and beneficiaries.
7.7 Governing Law. This Agreement is made and delivered in the State of
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Texas, and shall be governed by and construed according to Texas law.
KCS ENERGY INC.
By: /s/ Xxxxx X. Christmas
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Xxxxx X. Christmas
Chairman, Chief Executive Officer
/s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX
