EX-10.5


    Exhibit
      10.5

    
 

    Effective
      Date: February 22, 2006

    


    


    Mr.
      Joseph T. Leary

    


    Re:
       Amendment No. 2 to Change in Control Agreement 

    


    Dear
      Joseph:

    


    When
      countersigned by you, this letter will serve as an amendment (referred to here
      as “Amendment
      No. 2”)
      to
      your existing change in control agreement with KCS Energy, Inc. (the
“Company”)
      dated
      May 27, 2003, as amended by Amendment No.1 (the “Original
      Agreement”).
      

    


    1.
       Cash
      Payment.
      Section
      2.1.1 of the Original Agreement is amended by deleting that provision in its
      entirety and substituting the following terms: 

     

    Cash
      Payment.
      The
      Company shall pay to Executive: (i) 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 the last 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 3 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 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.

     

    2.
       Bonus
      Payment.
      New
      Section 3 is added to the Original Agreement to provide as follows:

     

    Bonus
      Payment.
       (a) In
      the
      event of a Change in Control, if prior to the Change in Control a bonus for
      the
      Executive has been determined by the compensation committee or the board of
      directors of the Company for the year immediately preceding the year in which
      a
      Change in Control occurs, then the Executive shall receive a bonus payment
      for
      such year in the amount so determined.

    


    (b)
       In the event of a Change in Control, if prior to the Change in Control the
      Executive has not been awarded a bonus for the year immediately preceding the
      year in which the Change in Control falls by the compensation committee or
      the
      board of directors of the Company, then the Executive shall receive a bonus
      payment for such preceding year in an amount equal to the


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        -2-

      

    


    greater
      of (i) 100% of Executive’s targeted bonus payment for such year or (ii) the
      bonus for such preceding year determined after the Change in Control by the
      compensation committee or the board of directors of the Company under the bonus
      plan in effect immediately prior to the Change in Control. 

    


    (c)
       Subject to the provisions of Section 4(b), any bonus payable to Executive
      pursuant to Section 3(a) shall be paid by the later of (i) the date that is
      2-1/2 months after the end of the calendar year immediately preceding the
      calendar year in which the Change in Control occurred and (ii) the date that
      is
      2-1/2 months after the end of the Company’s taxable year immediately preceding
      the Company’s taxable year in which the Change in Control occurred, 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 Change in Control
      occurred.

    


    (d)
       Subject to the provisions of Section 4(b), any bonus payable to the
      Executive pursuant to Section 3(b) shall be paid by the later of (i) the date
      that is 2-1/2 months after the end of the calendar year in which the Change
      in
      Control occurred and (ii) the date that is 2-1/2 months after the end of the
      Company’s taxable year in which the Change in Control occurred, or as soon after
      the later of such dates as administratively feasible, but in any event before
      the end of the calendar year immediately following the calendar year in which
      the Change in Control occurred.

    


    3.
       Payment
      Terms.
      Section
      3 of the Original Agreement is renumbered as Section 4 and is amended by
      deleting that Section in its entirety and substituting the following new Section
      4:

    


    Payment
      Terms.
       (a)
      Except as provided by the remaining provisions of this Section 4, all payments
      to the Executive required to be made pursuant to Section 2.1.1 shall be made
      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 made within five (5) days of the 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 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 taxes as may be required by
      law.

    


    (b) 
      In the event that any payment made pursuant to this Agreement is 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”), and
      Executive is a specified employee as defined in Section
      409A(a)(2)(B)(i) of the Code, then the portion (which may be all) of such
      payment 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 such payment constitutes NQDC and
      whether Executive is a specified employee within the meaning of Section
      409A(a)(2)(B)(i) of the Code 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,
      employees, agents, or professional advisers shall have any
      liability


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        -3-

      

    


    to
      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 4(b) 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.

    


    4. 
Original
      Agreement Ratified.
      In all
      other respects, the Original Agreement remains in effect, and is ratified by
      you
      and by the Company.

    


    *
      * *

    


    Please
      sign below and return a signed copy to the Company to confirm your agreement
      with this Amendment No. 2.

    


    


    


    Very
      truly yours, 

    


    
      	
              KCS
                Energy, Inc.

            	 
	 	 	 
	 	 	 
	
              By:

            	/s/
              James Christmas 	 
	
               

            	
              James
                Christmas

            	 
	 	
              Chairman
                and Chief Executive Officer

            	 
	 	 	 
	 	 	 
	
              Accepted
                and agreed to:

            	 
	 	 	 
	 	 	 
	/s/
              Joseph T. Leary 	 
	
              Joseph
                T. Leary