KCS Energy, Inc.











	 	EXHIBIT 10.7

 

Grant Date: ‹DATE›

Option Price: ‹PRICE›  






KCS ENERGY, INC.  



DIRECTORS SUPPLEMENTAL
STOCK OPTION AGREEMENT  




	Option granted to:

 

Address: 	«First_Name» «Last_Name»

 

«Address_1» «Address_2»

«City», «State» «Zip» 






          This
Stock Option  Agreement  (“Agreement”) is made by and between KCS Energy,  Inc., a
Delaware  Corporation (the “Company”),  having its office at 5555 San Felipe, Suite 1200
Houston,  Texas 77056, and the Grantee, a non-employee director of the Company  residing
at the address set forth above,  pursuant to Section 2.1.2 of the KCS Energy,  Inc.  2001
 Employees and Directors Stock Plan (the “Plan”).  



          WHEREAS
the Plan, a copy of which is attached  hereto as Exhibit A, became  effective  upon the
effective  date of the  Company’s  Plan of  Reorganization  under  Chapter  11 of the
 United  States  Bankruptcy  Code by order of the  United  States Bankruptcy Court dated
January 30, 2001; and  



          WHEREAS
the Plan provides,  among other things, for the annual automatic grant to eligible
participants thereunder of an option to purchase (the  “Option”)  «NewStock_Options»  shares
of common stock,  $.01 par value (the “Common  Stock”),  of the Company,  at a price
equal to 100 percent  (100%) of the Fair Market Value (as defined in the Plan) of the
Common Stock (the “Option Price”) determined on the date the Option is granted (the
“Grant Date”); and  



          WHEREAS
the Grantee is eligible to receive a grant of an Option under the Plan, and the Grantee
 desires to accept the grant of such Option and to enter into this Agreement with the
Company;  



          NOW,
 THEREFORE,  in consideration of the premises and mutual covenants herein  contained,
 and for other good and valuable consideration, the parties hereto agree as follows:  



          FIRST:
  On the Grant Date, the Company hereby grants to the Grantee,  and the Grantee hereby
 accepts,  an Option to purchase at the Option Price up to 1,000 shares of Common Stock,
 on the terms and subject to the  provisions  and conditions set forth in the Plan and in
this Agreement.  


















          SECOND:
 The Option will expire at the earlier of (i) ten years after the Grant Date,  or (ii)
one month after the Grantee ceases to serve as a director of the Company for any reason,
or (iii) six months after the date of the Grantee’s death.  



          THIRD:
  The Option is made subject to the following  provisions,  conditions and  limitations,
 as well as to all the provisions, conditions and limitations stated in the Plan:  



                    (a)
     The Option  will not be  transferable  by the  Grantee  except by Will or the laws
of  descent  and  distribution  (or to a designated  beneficiary in the event of the
Grantee’s death) and, if then required under Rule 16b-3, will be exercisable  during the
lifetime of the  Grantee  only by such  Grantee or his or her  guardian  or legal
 representative.  In the event of the death of the Grantee,  the Option may be  exercised
 by the estate of the Grantee or by any person to whom the Grantee  may have  bequeathed
 the Option or whom the Grantee may have  designated  to exercise the Option under the
 Grantee’s  Will or in a  beneficiary  designation filed with the Secretary of the
Company,  or by the Grantee’s  personal  representatives  if the Grantee has died
intestate,  within the six month time period set forth in Section SECOND (ii).  



                    (b)
     The Option shall be subject in all  respects to any rules and  regulations  adopted
 from time to time by the  President of the Company as the President  deems proper for
carrying out the purposes of the Plan. The  interpretation  and  construction  by the
President of any provision of the Plan or this Agreement shall be final and binding on
all parties.  



                    (c)
     The Option is subject in all respects to the Plan, the terms of which are
 incorporated  herein by reference.  In the event of any conflict between this Agreement
and the Plan, the terms of the Plan shall control.  



                    (d)
     In the event any recapitalization,  reorganization,  merger, consolidation,
 spin-off, combination, repurchase, exchange of shares or other securities of the
Corporation,  stock split or reverse split, extraordinary dividend,  liquidation,
 dissolution, or other  similar  corporate  transaction  or event  affects  Common Stock
such that an  adjustment  is  determined  by the Board to be appropriate in order to
prevent  dilution or enlargement of  participants’  rights under the Plan,  then the
Board will, in a manner that is  proportionate  to the change to the Common  Stock and is
otherwise  equitable,  adjust (i) any or all of the number or kind of shares  of  Common
 Stock  reserved  for  issuance  under  the Plan and (ii) the  number or kind of shares
of Common  Stock to be subject to Options thereafter  granted  automatically  thereunder,
 and (iii) the number and kind of shares of Common Stock issuable upon exercise of
 outstanding  Options,  or the Option Price per share  thereof,  provided that the number
of shares  subject to any Option will always be a whole number.  



                    (e)
     At least six months must elapse from the date of  acquisition  of the Option to the
date of disposition of the Common Stock issuable  upon  exercise  of the  Option.  This
 restriction  will apply in addition  to any other  restriction  under the Plan.  An
appropriate legend will be placed on stock certificates issued prior to the expiration of
such six month period.  



2  



















          FOURTH:
 (a) The Grantee  shall  exercise the Option by  delivering  or mailing to the President
of the Company at the address of the Company set forth above, a written notice  stating:
 (1) the Option to be exercised;  (2) the number of shares of Common  Stock in respect of
which the Option is being  exercised;  (3) the name and  address of the  Grantee to be
 recorded  on the stock  records of the  Company;  and (4) the place  where the
 certificate  for the  Common  Stock  then  being  purchased  shall be delivered.  With
each such  notice,  the Grantee  shall pay to the Company the full  amount of the
 purchase  price  payable for the number  of  shares  of Common  Stock  then  being
 purchased.  Payment  shall be made in cash or check  payable  to the order of the
Company,  or in shares of Common  Stock  owned by the  Grantee  for at least one year
prior to the  exercise  date of the Option and having a Fair Market Value on the date of
such exercise equal to the Option Price, or any combination of these two methods.  



                    (b)
     In the event the Option shall be  exercised  pursuant to  Paragraph  THIRD (a)
hereof,  by a person other than the Grantee, the Company may require  appropriate proof
of the right of such person to exercise the Option.  



                    (c)
     The Company,  within ten (10) days of receipt of a proper  notice of  exercise,
 payment in full of the Option  Price,  and investment  representation,  if one is
required,  will issue and deliver to the Grantee,  in accordance with such written
notice,  a certificate for the number of shares of Common Stock then  purchased.  The
time of such delivery,  however,  may be postponed by the Company for such period as it
may require using reasonable diligence, to comply with the requirements of law.  



          FIFTH:
  This  Agreement  shall be binding  upon the  Company,  its  successors  and assigns
 and,  subject to the provisions  and  conditions  hereof,  shall inure to the benefit of
the  legatees,  distributees  and legal  representatives  of the Grantee.  



          SIXTH:
  This Agreement and the Plan embody the entire understanding  and agreement of the
parties in relation to the subject matter hereof and no promise,  condition,
 representation  or warranty,  express or implied,  not herein or therein  stated shall
bind either party hereto.  Except as provided in the Plan,  none of the terms and
 conditions of this  Agreement may be changed,  modified,  waived or cancelled  except by
a writing,  signed by the parties hereto  specifying such change,  modification,  waiver
or cancellation.  In the event of a conflict between the terms of the Plan and this
 Agreement,  the terms of the Plan shall  prevail.  A waiver by either party,  at any
time, of compliance  with any of the terms and conditions of this Agreement  shall not be
considered a  modification,  cancellation  or consent to a future waiver of such  terms
and  conditions  or of any  preceding  or  succeeding  breach  thereof,  unless
 expressly  so stated.  If any  section, paragraph,  sentence,  word or other  provision
of this Agreement  shall be deemed to be invalid or  unenforceable,  then all of the
remaining Agreement sections,  paragraphs,  sentences,  words or other provisions shall
remain in full force and effect and shall be binding upon the Grantee.  



3  



















          SEVENTH:
         This  Agreement  shall be  construed  and enforced in  accordance  with the laws
of the State of Delaware.  



          EIGHTH:
 This Agreement may be executed simultaneously in two or more counterparts,  each of
which shall be deemed to be an original as of the date set forth  below and it shall not
be  necessary  in making  proof of this  Agreement  to produce or account for more than
one such counterpart.  



          NINTH:
  The signature of the Grantee hereon will  constitute the Grantee’s  acknowledgement  of
receipt of a copy of the Plan, and the Grantee’s  acceptance of this Agreement and all
terms and provisions  hereof.  This Agreement shall become void and of no force and
effect  whatsoever,  unless 21 days from the date hereof the Grantee  returns to the
 Secretary of the Company a copy of this Agreement signed by the Grantee.  



          IN
WITNESS  WHEREOF,  the Grantee has  executed  this  Agreement  and the Company has caused
this  Agreement to be executed and attested in its name and on its behalf,  by its duly
authorized  signatories,  effective as of the Grant Date set forth above.  




	ATTESTED:   	KCS ENERGY, INC.   
	 
   
	———————————————

Secretary  	By

      ———————————————

      President  
	 
   
	  	By

      ———————————————

      Grantee  






4