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                                                                 EXHIBIT 10(vii)

                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of
December 1, 2001 between KCS ENERGY, INC., a Delaware corporation whose
principal place of business is located at 5555 San Felipe, Suite 1200, Houston,
Texas 77056 (the "COMPANY") and JAMES W. CHRISTMAS (the "EXECUTIVE").

The Company and Executive agree as follows:

         1. RECITALS.

                  1.1. Executive is employed by the Company.

                  1.2. The Company and Executive each believe it to be in their
respective best interest to enter into this Agreement setting forth the mutual
understandings and agreements reached between them with respect to Executive's
continuing employment with the Company.

         2. EMPLOYMENT; TERM. The Company shall employ Executive, and Executive
shall be employed by the Company, upon the terms and conditions provided in this
Agreement, commencing as of the date of this Agreement. Unless Executive's
employment is earlier terminated as provided in this Agreement, the term of this
Agreement, and Executive's employment pursuant to this Agreement, shall continue
until the Expiration Date. The Expiration Date shall initially be December 31,
2004 and shall automatically be extended until the next December 31 on each
December 31, commencing December 31, 2002. For example, on December 31, 2002,
the Expiration Date shall automatically be extended until December 31, 2005.

         3. POSITION AND DUTIES. Executive shall serve as the President and
Chief Executive Officer of the Company and shall have such duties,
responsibilities and authority as are customary to his position and as are
reasonably necessary for the performance of his obligations hereunder, subject
at all times to the authority of the board of directors of the Company.
Executive shall devote all of his business time, attention, skill and efforts
and his undivided loyalty to the business and affairs of the Company.

         4. SALARY AND BONUS. The Company shall pay to Executive an annual
salary of $350,000 payable in periodic installments in accordance with the
customary payroll practices of the Company. The annual salary shall be subject
to annual review, commencing in 2002, for appropriate increases at the
discretion of the board of directors of the Company.


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                  4.1. In addition to his salary, Executive will be eligible for
an annual cash bonus award depending upon the performance of the Company and
Executive each year measured against the Company's business plan and the goals
for Executive for such year as determined by the board of directors of the
Company, or its compensation committee. The amount of the annual cash bonus
shall be equal to a percentage of Executive's base salary for the applicable
year, and the applicable percentage shall be based on the performance levels for
the applicable year, as follows:

<Table>
<Caption>
              Performance Level                       Percentage
              -----------------                       ----------
<S>                                                   <C>
                  Threshold                               27.5%
                  Target                                  55.0%
                  Maximum                                110.0%
</Table>

The bonus percentages shall be prorated between performance levels. The bonus
percentages for performance levels shall be subject to review and modification
annually by the board of directors of the Company, or its compensation committee
consistent with the Company's compensation philosophy and market compensation.

                  4.2. All salary and bonus payments shall be subject to all
employee payroll deductions required by law.

         5. BENEFITS. Executive shall be entitled to continuation of executive
life and disability insurance coverage with premiums paid by the Company under
the existing life and disability insurance policies to the extent available to
the Company for costs comparable to those presently in effect. Executive shall
also be eligible to participate in the medical, health, insurance, 401(k), stock
option and similar plans and benefits of the Company from time to time in effect
for senior executives of the Company, subject to and in accordance with the
terms and conditions of each such plan or benefit; provided, however, that the
Company shall be entitled to modify or abolish any such plans or benefits and
nothing contained in this Agreement shall be deemed to limit the Company's
discretion to modify or abolish such plans or benefits for all covered
employees, including Executive. Executive acknowledges that any stock options or
other benefits that may be granted under the Company's stock option plan shall
be subject to the discretion of the board of directors of the Company. Executive
shall be entitled to vacation time each year in accordance with the Company's
policies.

         6. EXPENSE REIMBURSEMENT. The Company shall reimburse Executive for all
reasonable costs and expenses incurred by him in the performance of his duties
subject to and in accordance with the expense reimbursement policies of the
Company in effect from time to time.



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         7. TERMINATION OF EMPLOYMENT. Executive's employment with the Company,
and the term of this Agreement, shall be subject to termination prior to the
Expiration Date, as follows:

                  7.1. The Company shall be entitled to terminate Executive's
employment at any time either for Cause or without Cause by giving Executive
notice of such termination setting forth the Termination Date, and if such
termination is for Cause, then the notice shall also set out the event or events
giving rise to such termination for Cause.

                  7.2. Executive shall be entitled to terminate Executive's
employment at any time either for Good Reason or other than for Good Reason by
giving the Company notice of such termination setting forth the Termination
Date. If Executive gives a termination notice pursuant to this Section 7.2, the
Company shall be entitled to accelerate the date of Executive's termination of
employment to any date prior to the date set forth in Executive's notice of
termination.

                  7.3. Either the Company or Executive shall be entitled to
terminate Executive's employment at any time because of Executive's permanent
disability.

                  7.4. Executive's employment shall automatically terminate upon
his death.

         8. COMPENSATION IN EVENT OF TERMINATION. Except as provided in this
Section 8, Executive shall not be entitled to any severance or other
compensation from the Company after his termination of employment.

                  8.1. If Executive's employment is terminated by the Company
for Cause or by Executive for other than Good Reason, then the Company shall pay
Executive any earned but unpaid salary and any accrued but unpaid vacation pay
as of the Termination Date and Executive shall not be entitled to any other
compensation from the Company.

                  8.2. If Executive's employment is terminated because of death
or permanent disability, then the Company shall pay Executive any accrued but
unpaid salary and any accrued but unpaid vacation pay as of the Termination Date
and a pro rata amount of Executive's targeted bonus for the year in which
Executive dies or becomes permanently disabled, and Executive shall not be
entitled to any further compensation from the Company, except that in the case
of a disability, Executive shall be entitled to such benefits, if any, payable
by the Company to its employees under any disability benefit plan which the
Company may have in effect as of the date of any such disability in which
Executive is a participant.



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                  8.3. 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 other than within three (3) years after
a Change in Control, then the Company shall pay to Executive: (i) an amount
equal to two (2) times Executive's annual base salary in effect as of the
Termination Date; plus (ii) an amount equal to two (2) times the amount of any
cash bonus paid to Executive for the year preceding the year in which the
Termination Date occurs; plus (iii) the amount of any accrued but unpaid salary
as of the Termination Date; plus (iv) a pro rata amount of Executive's targeted
bonus for the year in which the Termination Date occurs; plus (v) the amount of
any accrued but unpaid vacation pay through the Termination Date.

                  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 Executive for the
year in which the Termination Date occurs (provided that if 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 Executive earned 100% of the
targeted bonus for such year) or (b) the amount of any cash bonus paid to
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 Executive's targeted bonus for
the year in which the Termination Date occurs; plus (v) the amount of any
accrued but unpaid vacation pay through the Termination Date.

                  8.5. If the Company terminates Executive's employment at any
time other than for Cause, death or permanent disability or Executive terminates
his employment at any time for Good Reason, then any stock options or restricted
stock granted to Executive by the Company as of the Termination Date shall
immediately vest and 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.

                  8.6. If the Company terminates Executive's employment at any
time other than for Cause, death or permanent disability or Executive terminates
his employment at any time for Good Reason, then the Company shall continue to
maintain and pay the premiums for 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) in the case such termination occurs at
any time other than within three (3) years after a Change in Control, the second
anniversary after the Termination Date, or in the case such termination occurs
within three (3) years



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after a Change in Control, the third anniversary of the Termination Date or (ii)
the date 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 Executive with substantially similar insurance through another
insurance carrier or (b) reimburse Executive for the full cost of obtaining such
insurance.

                  8.7. All payments to Executive required to be made pursuant to
Sections 8.3 and 8.4 shall be paid by the Company within five (5) days after the
Termination Date and all payments to Executive required to be made under clause
(b) of the last sentence of Section 8.6 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 Executive's option. All
payments required to be made to Executive pursuant to this Agreement shall be
subject to the withholding of such payroll taxes as may be required by law.

         9. EXCISE TAXES. In the event it shall be determined that any payment
by the Company to or for the benefit of Executive pursuant to Section 8 of this
Agreement (determined without regard to any additional payments required under
this Section 9) (a "PAYMENT") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code or any successor statute (the "EXCISE
TAX"), then Executive shall be entitled to receive an additional payment (an
"EXCISE TAX PAYMENT") in an amount equal to the Excise Tax.

                  9.1. All determinations required to be made under this Section
9, including whether and when an Excise Tax Payment is required, the amount of
such Excise Tax Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm as shall
be designated by the Company (the "ACCOUNTING FIRM"). All fees and expenses of
the Accounting Firm shall be paid by the Company. Any Excise Tax Payment, as
determined pursuant to this Section 9, shall be paid by the Company to Executive
(or to the Internal Revenue Service on Executive's behalf) within thirty (30)
days of the receipt of the Accounting Firm's determination. All determinations
made by the Accounting Firm shall be binding upon the Company and Executive.

                  9.2. Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Excise Tax Payment. Such notification shall be
given as soon as practicable but no later than ten business days after Executive
receives written notification of such claim (provided, however, that the failure
to provide such notification within such period as provided herein shall not
relieve the Company of its obligations



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under this Section 9 except to the extent that the Company is materially
prejudiced thereby) and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive shall not
pay such claim prior to the expiration of the 30-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall take such action in
connection with contesting such claim as the Company shall reasonably request
from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,
cooperating with the Company in good faith in order to effectively contest such
claim, and permitting the Company to participate in any proceeding relating to
such claim; provided, however, that the Company shall bear and pay directly all
reasonable costs and expenses (including additional interest and penalties)
incurred in connection with such contest. Without limiting the foregoing
provisions of this Section 9.2, the Company shall control all proceedings taken
in connection with such contest and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, as the Company shall determine and direct; provided,
however, that if the Company directs Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to Executive, on an
interest-free basis; and further provided that any extension of the statute of
limitations relating to the payment of taxes for Executive's taxable year with
respect to which such contested amount is claimed to be due is limited solely to
such contested amount. If any Excise Tax, employment tax or income tax is
imposed on Executive as a result of any costs and expenses paid by the Company
in connection with any contest relating to the Excise Tax in accordance with
this Section 9.2, then the Company shall reimburse Executive for the amount of
any such Excise Tax, employment tax or income tax so imposed on Executive as, if
and when any such tax is imposed on Executive. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which an
Excise Tax Payment would be payable hereunder and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

         9.3. If, after Executive's receipt of an amount advanced by the Company
pursuant to this Section 9, Executive becomes entitled to receive any refund
with respect to such claim, Executive shall promptly pay to the Company the
amount of such refund attributable to the Excise Tax on the Payment.

         9.4. The provisions of this Section 9 shall survive the expiration of
the Term.



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         10. NON-DISCLOSURE; NON-SOLICITATION.

                  10.1. Executive agrees that he will not, at any time during
the term of his employment by the Company, except in the performance of his
duties hereunder, or at any time after the termination of his employment
communicate or disclose to any person (other than the Company or its
affiliates), or use for his own account or the benefit of any other person any
Confidential Information (as hereinafter defined). For purposes of this
Agreement, the term "CONFIDENTIAL INFORMATION" shall mean any and all
confidential or proprietary knowledge and information relating to the business
of the Company or any of its subsidiaries or affiliates, except for any
information which shall be in the public domain other than as a result of
Executive's violations of his obligations under this Agreement.

                  10.2. Executive agrees that he will not, at any time during
the term of his employment by the Company, or at any time within two (2) years
after the termination of his employment, for his own account or benefit or for
the account or benefit of any other person, firm or entity, directly or
indirectly, solicit for employment or hire any employee of the Company or any of
its subsidiaries or induce any employee of the Company or any of its
subsidiaries to terminate his employment with the Company or any of its
subsidiaries.

         11. DEFINITIONS. As used in this Agreement, the following terms shall
have the indicated meanings:

                  11.1. "CHANGE IN CONTROL": The first to occur of any of the
following events which occurs at any time after the date of this Agreement and
on or before August 31, 2004 (but not thereafter): (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



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(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.

                  11.2. "CAUSE": The occurrence of any of the following events:

                           11.2.1. The commission by 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 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 owed to the Company by Executive
involving personal profit;

                           11.2.2. The commission by Executive of an act of
dishonesty relating to the performance of Executive's duties, habitual unexcused
absence from work, willful failure to perform duties in any material respect
(other than any such failure resulting from 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 (provided, however, that in the event of Executive's
willful failure to perform duties in any material respect, Executive shall be
provided with written notice of such event and shall be provided with a
reasonable opportunity, and in no event more than thirty (30) days, to cure such
failure to perform his duties); or

                           11.2.3. Any felony conviction of 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.

                  11.3. "GOOD REASON": The occurrence of any of the following
events without the consent of Executive which remain in effect ten (10) days
after the Company receives written notice of any such event from Executive:

                           11.3.1. Any material diminution of Executive's
position with the Company including Executive's status, office, title,
responsibilities and reporting requirements;

                           11.3.2. Any reduction in Executive's annual base
salary or targeted bonus compensation; or

                           11.3.3. The Company's requiring Executive to be based
at any office location further than fifty (50) miles from Executive's office
location as of the date of this Agreement.



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                  11.4. "TERMINATION DATE": (i) The date on which the Company
receives written notice (or any later date specified in such notice) that
Executive's employment with the Company is terminated (or such earlier date to
which the Company accelerates the date of Executive's termination of employment
as provided in Section 7.2) or (ii) the date on which Executive receives written
notice (or any later date specified in such notice) that Executive's employment
is terminated by the Company.

         12. RELEASE OF CLAIMS. No payments shall be made to Executive under
Sections 8.3, 8.4 and/or 8.6 of this Agreement unless and until Executive shall
sign and deliver to the Company an agreement in a form reasonably satisfactory
to the Company pursuant to which Executive agrees to release all claims he may
have against the Company, other than (i) 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, (ii) claims he may have as a holder of options to acquire equity
securities of the Company (which shall be governed by the documents by which
Executive was granted such options) and (iii) claims he may have as a
shareholder of the Company.

         13. PRIOR AGREEMENTS. This Agreement shall supercede and replace all
prior agreements between the Company and Executive concerning Executive's
employment by the Company or the termination thereof, including but not limited
to the Change in Control Agreement dated August 1, 2001, and all of such prior
agreements are hereby terminated.

         14. MISCELLANEOUS PROVISIONS.

                  14.1. NO MITIGATION. Executive shall not be required to seek
other employment or otherwise mitigate damages in order to be entitled to the
full amount of any payment and benefits to which Executive is entitled under
this Agreement. The amount of such payments and benefits shall not be reduced by
any compensation or benefits received by Executive from other employment other
than with respect to the insurance benefits as provided in Section 8.6.

                  14.2. LITIGATION COSTS. In the event of any litigation between
the Company and Executive concerning this Agreement or any of the terms thereof,
the prevailing party in such litigation shall be entitled to recover its costs
of suit, including reasonable attorneys fees, from the other party.

                  14.3. AMENDMENTS. This Agreement shall not be amended or
modified in any way unless such amendment or modification is in writing and
signed by the Company and Executive.



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                  14.4. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the Company and Executive concerning the subject matter hereof
and supersedes any prior or contemporaneous agreement, written or oral, with
respect to the same subject matter.

                  14.5. BINDING EFFECT. This Agreement is binding on the Company
and Executive and their respective successors in interest and as applicable,
personal representatives and beneficiaries.

                  14.6. GOVERNING LAW This Agreement is made and delivered in
the State of Texas, and shall be governed by and construed according to Texas
law, but without giving effect to any Texas choice of law provisions which would
make the laws of a different jurisdiction govern or apply.

                  14.7. NOTICES. All notices given pursuant to this Agreement
must be in writing and shall be deemed to have been duly given and to be
effective on delivery or refusal of delivery, if hand-delivered; or mailed,
postage prepaid, by certified or registered mail, return receipt requested; or
sent by Federal Express or other national courier service for next business day
delivery; or upon confirmation of receipt, if transmitted by fax; in each case
addressed to the Company at its principal place of business and to Executive
either at his office address (but if at his office address, then only by
hand-delivery) or his residence address as reflected on the Company's records,
or to such other address as the Company or Executive shall specify to the other
by a notice given pursuant to this Section 12.6.

                  14.8. INTERPRETATION. The terms of this Agreement have been
fully negotiated by the Company and Executive in consultation with their
respective counsel, and the final wording of this Agreement has been arrived at
by all of them as a result of such mutual discussions and negotiations.
Accordingly, no provision of this Agreement shall be construed against one
party, or in favor of another party, merely because of which party (or its
representative) drafted or supplied the wording for such provision.



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                  IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and Executive has signed this
Agreement, all as of the first date above written.

                                        KCS ENERGY, INC.



                                        By
                                          --------------------------------------
                                          Name:
                                               ---------------------------------
                                          Title;
                                                --------------------------------



                                        ----------------------------------------
                                        JAMES W. CHRISTMAS



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