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                                                                   EXHIBIT 10.13

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of
the 5th day of January, 2000 (the "Effective Date"), between HCC INSURANCE
HOLDINGS, INC. ("HCC" or "Company"), and FRANK J. BRAMANTI ("Executive"),
sometimes collectively referred to herein as the "Parties."

                                    RECITALS:

         WHEREAS, Executive is to be employed as Executive Vice President of
HCC, and as an integral part of its management who participates in the
decision-making process relative to short and long-term planning and policy for
the Company, will serve on the Company's Executive Management Committee;

         WHEREAS, it is the desire to the Board of Directors of HCC (the
"Board") to (i) directly engage Executive as an officer of HCC and its
subsidiaries; and (ii) directly engage, if elected, the services of Executive as
a director of HCC and its subsidiaries;

         WHEREAS, Executive is desirous of committing himself to serve HCC on
the terms herein provided; and

         WHEREAS, Executive and HCC have previously entered into an Employment
Agreement effective as of January 1, 1998 (the "1998 Contract") which is to be
cancelled, terminated and of no further force or effect.

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties agree as follows:

         1. TERMINATION OF 1998 CONTRACT AND TERM. Effective as of the Effective
Date, the 1998 Contract shall be cancelled, terminated and of no further force
or effect. The Company hereby agrees to employ Executive as an Executive Vice
President, and Executive hereby agrees to accept such employment, on the terms
and conditions set forth herein, for the period commencing on the Effective Date
and expiring as of 11:59 p.m. on December 31, 2002 (the "Basic Term") (unless
sooner terminated as hereinafter set forth).

         2. DUTIES.

            (a) DUTIES AS EMPLOYEE OF THE COMPANY. Executive shall, subject to
the supervision of the Chief Executive Officer, the President, and the Board,
have general management responsibilities in the ordinary course of HCC's
business with all such powers with respect to such management as may be
reasonably incident to such responsibilities. During normal business hours,
Executive shall devote his full time and attention to diligently attending to
the business of the Company during the Basic Term. During the Basic Term,
Executive shall not directly or indirectly render any services of a business,
commercial, or professional nature to any other person, firm, corporation, or
organization, whether for compensation or otherwise, without the prior written

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consent of the Chairman of the Board. However, Executive shall have the right to
engage in such activities as may be appropriate in order to manage his personal
investments so long as such activities do not interfere or conflict with the
performance of his duties to the Company hereunder. The conduct of such activity
shall not be deemed to materially interfere or conflict with Executive's
performance of his duties until Executive has been notified in writing thereof
and given a reasonable period in which to cure the same.

            (b) OTHER DUTIES. At all times during the Basic Term, the Company
shall use its best efforts to cause Executive to be elected a director and to
serve on the Executive Committee and Senior Management Committee of HCC. Any
such failure to use its best efforts prior to a Change of Control shall be a
material breach of this Agreement for purposes of Paragraph (4)(a)(iv). If
elected, Executive agrees to serve as a director and on the Executive Committee
and Senior Management Committee of HCC and of any of its subsidiaries and in one
or more executive offices of any of HCC's subsidiaries, provided Executive is
indemnified for serving in any and all such capacities in a manner acceptable to
the Company and Executive. If elected, Executive agrees that he shall not be
entitled to receive any compensation for serving as a director of HCC or in any
capacities of HCC's subsidiaries other than the compensation to be paid to
Executive by the Company pursuant to this Agreement..

         3. COMPENSATION AND RELATED MATTERS.

            (a) BASE SALARY. Executive shall receive a base salary (the "Base
Salary") paid by the Company at the annual rate of $350,000, during the period
beginning on January 1, 2000, and ending December 31, 2000; $375,000 for the
period from January 1, 2001 through December 31, 2001; and $400,000 for the
period from January 1, 2002 through December 31, 2002, payable not less
frequently than in substantially equal monthly installments. Effective January
1, 2003, Executive's employment shall terminate with the Company and Executive
shall become a consultant to the Company for the period beginning on such date
and ending on December 31, 2005 (the "Consulting Period"). Executive shall
receive an annual consulting fee and be required to perform the hours of
consulting services (the "Consulting Services") as follows: during Year 1 of the
Consulting Period - $200,000 and 200 annual hours; during Year 2 of the
Consulting Period - $150,000 and 150 annual hours; and during Year 3 of the
Consulting Period - $100,000 and 100 annual hours. The Consulting Services to be
provided shall be commensurate with Executive's training, background, experience
and prior duties with the Company. Executive agrees to make himself reasonably
available to provide such Consulting Services during the Consulting Period;
provided, however, the Company agrees that it shall provide reasonable advance
notice to Executive of its expected consulting needs and any request for
Consulting Services hereunder shall not unreasonably interfere with Executive's
other business activities and personal affairs, as determined in good faith by
Executive. In addition, Executive shall not be required to perform any requested
Consulting Services which, in Executive's good faith opinion, would cause
Executive to breach any fiduciary duty or contractual obligation Executive may
have to another employer. Further, during the Consulting Period, Executive shall
not be subject to any non-competition provisions except for the two-year period
provided for in Paragraph 5(c). Executive's travel time shall constitute hours

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of Consulting Services for purposes of this Paragraph 3(a). The Parties
contemplate that, when appropriate, the Consulting Services shall be performed
at Executive's office, residence or at the Company's executive offices in
Houston, Texas and may be performed at such other locations only as they may
mutually agree upon. Executive shall be promptly reimbursed for all travel and
other expenses reasonably incurred by Executive in rendering the Consulting
Services. Executive's annual consulting fee shall be paid quarterly in advance.
In such event, Executive, acting as a consultant, shall be entitled to no
further benefits from the Company other than medical insurance as set forth
herein. At Executive's election, Executive may terminate his employment and
commence the Consulting Period at any earlier time than as set forth herein. In
such event, the Consulting Period shall commence on such date and shall
terminate on the third anniversary thereof.

            (b) BONUS PAYMENTS. Executive shall be entitled to receive, in
addition to the Base Salary, an annual cash bonus payment in an amount, which
may be zero, to be determined at the sole discretion of the Compensation
Committee. If Executive elects to become a Consultant, he shall receive no
bonus.

            (c) EXPENSES. During the Basic Term, Executive shall be entitled to
receive reimbursement for all reasonable expenses incurred by him in accordance
with the policies and procedures established by the Board for the Company's
senior executive officers in performing services hereunder, provided that
Executive properly accounts therefor in accordance with Company policy.

            (d) OTHER BENEFITS. Except if Executive elects to become a
consultant, as set forth above, Executive shall be entitled to participate in or
receive benefits under any compensatory employee benefit plan or other
arrangement made available by the Company now or in the future to its senior
executive officers and key management employees, subject to and on a basis
consistent with the terms, conditions, and overall administration of such plan
or arrangement. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the Base Salary payable to Executive pursuant to Paragraph (a) of this
Section. The Company shall not make any changes in any employee benefit plans or
other arrangements in effect on the date hereof or subsequently in effect in
which Executive currently or in the future participates (including, without
limitation, each pension and retirement plan, supplemental pension and
retirement plan, savings and profit sharing plan, stock or unit ownership plan,
stock or unit purchase plan, stock or unit option plan, life insurance plan,
medical insurance plan, disability plan, dental plan, health and accident plan,
or any other similar plan or arrangement) that would adversely affect
Executive's rights or benefits thereunder, unless such change occurs pursuant to
a program applicable to substantially all executives of the Company and does not
result in a proportionately greater reduction in the rights of or benefits to
Executive as compared with any other executive of the Company.

            (e) VACATIONS. (i) Executive shall be entitled to thirty (30) paid
vacation days per year during the Basic Term. There shall be no carryover of
unused vacation from year to year. For

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purposes of this Paragraph, weekends shall not count as vacation days, and
Executive shall also be entitled to all paid holidays and personal days given by
the Company to its senior executive officers.

            (f) PERQUISITES. During Executive's employment, but not during the
Consulting Period, except as specifically set forth herein, Executive shall be
entitled to receive the perquisites and fringe benefits appertaining to an
executive officer of HCC in accordance with any practice established by the
Compensation Committee. Notwithstanding, and in addition to, any perquisites to
which Executive is entitled pursuant to the preceding sentence, Executive shall,
whether acting as an employee or as a consultant: (i) have use of a new Mercedes
500 SEL automobile, and the Company shall pay all expenses related to
Executive's use of such car, including gasoline, insurance, and maintenance,
such automobile to be granted to Executive, without cost, on an "as-is" basis at
the beginning of the Consulting Period; (ii) be allowed to travel on business
utilizing first class passage (whether domestic or international) (such
perquisite to be for the Basic Term and the Consulting Period); (iii) be
reimbursed for annual club dues for Lakeside Country Club, such membership to be
granted to Executive, without cost, at the beginning of the Consulting Period;
(iv) receive a total of $1,000,000 term life insurance (which shall be in
addition to the standard benefits provided to Executive under the Company's
group life insurance program that covers officers); (v) in addition to the other
benefits provided in this Agreement, Executive shall be entitled to receive
medical insurance as currently provided under the Company's group program, as
such group program may be changed from time-to-time in the future, and Executive
shall be entitled to continue to be covered by such group program or, if not
permitted under the terms of the group program, then the Company shall provide
Executive with a medical insurance policy providing substantially similar
benefits as to the group program, for the period ending on the date of the later
to die of Executive or, if Executive is married on the date of his death,
Executive's spouse or the date all of Executive's children complete college (as
defined in the Company's group program). Executive shall be entitled to receive
the medical benefits defined herein at no cost to the Executive. However,
Executive's rights pursuant to this subsection (v) shall be void if Executive is
terminated for Cause or if Executive voluntarily terminates his employment
except as provided for herein; and (vi) HCC shall pay for Executive's
preparation of estate planning and wealth preservation documents during the
course of Executive's employment with the Company. Such estate planning and
wealth preservation documents may be changed from time-to-time at the Company's
cost and expense, pursuant to Executive's change in circumstances.

            (g) PRORATION. Any payments or benefits payable to Executive
hereunder in respect of any calendar year during which Executive is employed by
the Company for less than the entire year, unless otherwise provided in the
applicable plan or arrangement, shall be prorated in accordance with the number
of days in such calendar year during which he is so employed. Notwithstanding
the foregoing, any payments pursuant to Paragraphs 4(b)(4), 4(c) or 4(d) of this
Agreement shall not be subject to proration.

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         4.       TERMINATION.

                  (a)      DEFINITIONS.

                           (1)      "CAUSE" shall mean:

                                    (i) Material dishonesty which is not the
         result of an inadvertent or innocent mistake of Executive with respect
         to the Company or any of its subsidiaries;

                                    (ii) Willful misfeasance or nonfeasance of
         duty by Executive intended to injure or having the effect of injuring
         in some material fashion the reputation, business, or business
         relationships of the Company or any of its subsidiaries or any of their
         respective officers, directors, or employees;

                                    (iii) Material violation by Executive of any
         material term of this Agreement; or

                                    (iv) Conviction of Executive of any felony,
         any crime involving moral turpitude or any crime other than a vehicular
         offense which could reflect in some material fashion unfavorably upon
         the Company or any of its subsidiaries.

Executive may not be terminated for Cause unless and until there has been
delivered to Executive written notice from the Board supplying the particulars
of Executive's acts or omissions that the Board believes constitute Cause, a
reasonable period of time (not less than 30 days) has been given to Executive
after such notice to either cure the same or to meet with the Board, with his
attorney if so desired by Executive, and following which the Board by action of
not less than two-thirds of its members furnishes to Executive a written
resolution specifying in detail its findings that Executive has been terminated
for Cause as of the date set forth in the notice to Executive.

                           (2)      A "CHANGE OF CONTROL" shall be deemed to
have occurred if:

                                    (i) Any "person" or "group" (within the
         meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act
         of 1934) other than a trustee or other fiduciary holding securities
         under an employee benefit plan of the Company becomes the "beneficial
         owner" (as defined in Rule 13d-3 under the Securities Exchange Act of
         1934), directly or indirectly, of 50% or more of the Company's then
         outstanding voting common stock; or

                                    (ii) At any time during the period of three
         (3) consecutive years (not including any period prior to the date
         hereof), individuals who at the beginning of such period constituted
         the Board (and any new director whose election by the Board or whose
         nomination for election by the Company's shareholders were approved by
         a vote of at least two-thirds of the directors then still in office who
         either were directors at the beginning of

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         such period or whose election or nomination for election was previously
         so approved) cease for any reason to constitute a majority thereof; or

                                    (iii) The shareholders of the Company
         approve a merger or consolidation of the Company with any other
         corporation, other than a merger or consolidation (a) in which a
         majority of the directors of the surviving entity were directors of the
         Company prior to such consolidation or merger, and (b) which would
         result in the voting securities of the Company outstanding immediately
         prior thereto continuing to represent (either by remaining outstanding
         or by being changed into voting securities of the surviving entity)
         more than 50% of the combined voting power of the voting securities of
         the surviving entity outstanding immediately after such merger or
         consolidation; or

                                    (iv) The shareholders approve a plan of
         complete liquidation of the Company or an agreement for the sale or
         disposition by the Company of all or substantially all of the Company's
         assets.

                           (3)      A "DISABILITY" shall mean the absence of
Executive from Executive's duties with the Company on a full-time basis for 180
consecutive days, or 180 days in a 365-day period, as a result of incapacity due
to mental or physical illness which results in the Executive being unable to
perform the essential functions of his position, with or without reasonable
accommodation.

                           (4) A "GOOD REASON" shall mean any of the
following (without Executive's express written consent):

                                    (i) Following a Change of Control, a
         material alteration in the nature or status of Executive's title,
         duties or responsibilities, or the assignment of duties or
         responsibilities inconsistent with Executive's status, title, duties
         and responsibilities;

                                    (ii) A failure by the Company to continue in
         effect any employee benefit plan in which Executive was participating,
         or the taking of any action by the Company that would adversely affect
         Executive's participation in, or materially reduce Executive's benefits
         under, any such employee benefit plan, unless such failure or such
         taking of any action adversely affects the senior members of corporate
         management of the Company generally to the same extent;

                                    (iii) A relocation of the Company's
         principal executive offices, or Executive's relocation to any place
         other than the principal executive offices, exceeding a distance of
         fifty (50) miles from the Company's current executive office located in
         Houston, Texas, except for reasonably required travel by Executive on
         the Company's business;

                                    (iv) Any material breach by the Company of
         any provision of this Agreement; or

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                                    (v) Any failure by the Company to obtain the
         assumption and performance of this Agreement by any successor (by
         merger, consolidation, or otherwise) or assign of the Company.

However, Good Reason shall exist with respect to an above specified matter only
if such matter is not corrected by the Company within thirty (30) days of its
receipt of written notice of such matter from Executive, and in no event shall a
termination by Executive occurring more than one hundred eighty (180) days
following the date of the event described above be a termination for Good Reason
due to such event.

                           (5) "TERMINATION DATE" shall mean the date Executive
is terminated for any reason pursuant to this Agreement.

                  (b) TERMINATION WITHOUT CAUSE, OR TERMINATION FOR GOOD REASON:
BENEFITS. In the event there is a termination by the Company without Cause, or
if Executive terminates for Good Reason within one hundred eighty (180) days
after a Change of Control (a "Termination Event"), this Agreement shall
terminate and Executive shall be entitled to the following severance benefits:

                           (1) For a period of twelve (12) months after the
         Termination Date (unless the remainder of the Basic Term is less than
         twelve (12) months, in which case, for an amount of time equal to the
         remainder of the Basic Term), Base Salary (as defined in Paragraph
         3(a)), at the rate and payable quarterly unless such termination is by
         the Company without Cause, in which event such amount of Base Salary
         shall be paid in a lump sum within ten (10) days of the Termination
         Event.

                           (2) If there is a Change of Control or a Termination
         Event any stock options ("Stock Awards") which Executive has received
         under this Agreement shall vest immediately, and if there is a
         Termination Event, all such Stock Awards shall be exercisable for
         thirty (30) days from the date of such Termination Event or the
         remainder of their term, whichever is less.

                           (3) To the extent not theretofore paid or provided,
         the Company shall timely pay or provide to Executive any other amounts
         or benefits required to be paid or provided or which Executive is
         eligible to receive under any plan, program, policy or practice, or
         contract or agreement of the Company and its affiliated companies for
         the period of time equal to the remainder of the Basic Term (such other
         amounts and benefits shall be hereinafter referred to as the "Other
         Benefits"). Without limiting the preceding sentence and without
         limiting any other provision of this Agreement, through December 31,
         2002 the Company, at its sole expense, shall continue to provide
         (through its own plan and/or individual policies) Executive (and
         Executive's dependents) with health benefits no less favorable than the
         group health plan benefits provided during such period to any senior
         executive officer of the Company or any affiliated company (to the
         extent any such coverage

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         or benefits are taxable to Executive by reason of being provided under
         a self-insured health plan of the Company or an affiliate, the Company
         shall make Executive "whole" for the same on an after-tax basis). In
         any event, the Other Benefits provided for pursuant to this Paragraph
         shall be secondary to any benefits and coverage Executive (or his
         dependents) receive from another employer.

                           (4) If any such Termination occurs on or after
         October 1 of any year, such cash and/or stock bonus that Executive
         otherwise would have received if such Termination had not taken place.

                           (5) If Executive receives any payments whether or not
         pursuant to this Agreement which are subject to an excise tax imposed
         under Section 4999 of the Internal Revenue Code of 1986, as amended, or
         any similar tax imposed under federal, state, or local law
         (collectively, "Excise Taxes"), the Company shall pay to Executive (on
         or before the date on which the Company is required to withhold such
         Excise Taxes), 1) an additional amount equal to all Excise Taxes then
         due and payable, and 2) the amount necessary to defray Executive's
         increased (federal, state, and local) tax liability arising due to
         payment of the amount specified in this Subsection (5) which shall
         include any costs and expenses, including penalties and interest
         incurred by Executive in connection with any audit, proceedings, etc.
         related to the payment of such Excise Taxes or this payment. For
         purposes of calculating the amount payable to Executive under this
         Paragraph, the federal and state income tax rates used shall be the
         highest marginal federal and state rates applicable to ordinary income
         in Executive's state of residence, taking into account any federal
         income tax deductions or credits available to Executive for state
         income taxes. The Company shall cause its independent auditors to
         calculate such amount and provide Executive a copy of such calculation
         at least ten (10) days prior to the date specified above for payment of
         such amount. It is the intent of the Parties that this Subsection (5)
         shall place Executive in the same net after-tax position Executive
         would have been in had no payment been subject to an Excise Tax and,
         notwithstanding anything herein to the contrary, it shall be construed
         to effectuate said result.

                           (6) All accrued compensation and unreimbursed
         expenses through the Termination Date. Such amounts shall be paid to
         Executive in a lump sum in cash within thirty (30) days after the
         Termination Date; and

                           (7) Executive shall be free to accept other
         employment during such period, and there shall be no offset of any
         employment compensation earned by Executive in such other employment
         during such period against payments due Executive under this Paragraph
         (4), and there shall be no offset in any compensation received from
         such other employment against the Base Salary set forth above.

                  (c) TERMINATION IN EVENT OF DEATH: BENEFITS. If Executive's
employment is terminated by reason of Executive's death during the Basic Term,
this Agreement shall terminate

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without further obligation to Executive's legal representatives under this
Agreement, other than for payment of all accrued compensation, unreimbursed
expenses, the timely payment or provision of Other Benefits through the date of
death, and, if such death occurs on or after October 1 of any year, such cash or
stock bonus as Executive would otherwise have been awarded in such year if
Executive's death had not occurred. Such amounts shall be paid to Executive's
estate or beneficiary, as applicable, in a lump sum in cash within ninety (90)
days after the date of death. With respect to the provision of Other Benefits,
the term Other Benefits as used in this Paragraph 4(c) shall include, without
limitation, and Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the
Company to the estates and beneficiaries of other executive level employees of
the Company under such plans, programs, practices, and policies relating to
death benefits, if any, as in effect with respect to other executives and their
beneficiaries at any time during the 120-day period immediately preceding the
date of death. Additionally, all Stock Awards shall be vested immediately and
shall be exercisable for the greater of one year after the date of such vesting
or the remaining term of such option.

                  (d) TERMINATION IN EVENT OF DISABILITY: BENEFITS. If
Executive's employment is terminated by reason of Executive's Disability during
the Basic Term, this Agreement shall continue in full force for a period of one
(1) year following such Disability and if such Disability occurs on or after
October 1 of any year Executive shall be entitled to the same cash or stock
bonus in such year that Executive would have been awarded if such Disability had
not occurred. Following such one (1) year period, this Agreement shall continue
in full force except that (a) the Base Salary shall be reduced by 50% and (b)
Executive shall not be entitled to any subsequent cash or stock bonuses. In
addition, all outstanding Stock Awards shall vest immediately upon such
termination due to Disability. Additionally, all Stock Awards shall be vested
immediately and shall be exercisable for the greater of one year after the date
of such vesting or the remaining term of such option.

                  (e) VOLUNTARY TERMINATION BY EMPLOYEE AND TERMINATION FOR
CAUSE: BENEFITS. Executive may terminate his employment with the Company without
Good Reason by giving written notice of his intent and stating an effective
Termination Date at least ninety (90) days after the date of such notice;
provided, however, that the Company may accelerate such effective date by paying
Executive through the proposed Termination Date and also vesting awards that
would have vested but for this acceleration of the proposed Termination Date.
Upon such a termination by Executive, except as provided in Paragraph 3(a), or
upon termination for Cause by the Company, this Agreement shall terminate, and
the Company shall pay to Executive all accrued compensation, unreimbursed
expenses and the Other Benefits through the Termination Date. Such amounts shall
be paid to Executive in a lump sum in cash within thirty (30) days after the
date of termination. In addition, all unvested stock options shall terminate and
all vested options will terminate thirty (30) days after the Termination Date.

                  (f) DIRECTOR POSITIONS. Executive agrees that upon termination
of employment, for any reason, at the request of the Chairman of the Board,
Executive will immediately tender his resignation from any and all Board
positions held with the Company and/or any of its subsidiaries

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and affiliates. If Executive remains as a director, after such termination,
Executive shall be compensated as an outside director.

         5. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. Executive
recognizes and agrees that the benefit of not being employed at-will, is
provided in consideration for, among other things, the agreements contained in
this Section as well as the Stock Awards granted to Executive pursuant to this
Agreement. The Company agrees that while employed pursuant to this Agreement,
Executive will be provided with confidential information of Company; specialized
training on how to perform his duties; and contact with the Company's customers
and potential customers. Furthermore, in the event Executive is terminated
without Cause, or terminates for Good Reason; and more than one (1) year remains
on the existing Basic Term, then Executive shall receive additional
consideration in an amount equal to the quotient of the Base Salary divided by
12, which shall thereupon be multiplied by the number of months remaining in the
Basic Term minus 12 months, and which shall be paid in one lump sum within ten
(10) days of such termination.

         In consideration of all of the foregoing, Executive agrees as follows:

                  (a) NON-COMPETITION DURING EMPLOYMENT. Executive agrees during
the Basic Term and the Consulting Period he will not compete with the Company by
engaging in the conception, design, development, production, marketing, or
servicing of any product or service that is substantially similar to the
products or services which the Company provides, and that he will not work for,
in any capacity, assist, or become affiliated with as an owner, partner, etc.,
either directly or indirectly, any individual or business which offers or
performs services, or offers or provides products substantially similar to the
services and products provided by Company, provided, Executive shall not be
prevented from owning no more than 2% of any Company whose stock is publicly
traded.

                  (b) CONFLICTS OF INTEREST. Executive agrees that during the
Basic Term and the Consulting Period, he will not engage, either directly or
indirectly, in any activity (a "Conflict of Interest") which might adversely
affect the Company or its affiliates, including ownership of a material interest
in any supplier, contractor, distributor, subcontractor, customer or other
entity with which the Company does business or accepting any material payment,
service, loan, gift, trip, entertainment, or other favor from a supplier,
contractor, distributor, subcontractor, customer or other entity with which the
Company does business, and that Executive will promptly inform the Chairman of
the Company as to each offer received by Executive to engage in any such
activity. Executive further agrees to disclose to the Company any other facts of
which Executive becomes aware which might in Executive's good faith judgment
reasonably be expected to involve or give rise to a Conflict of Interest or
potential Conflict of Interest.

                  (c) NON-COMPETITION AFTER TERMINATION. Executive agrees that
Executive shall not, at any time during the period of two (2) years after the
termination of the later of the Basic Term or the Consulting Period for any
reason, within any of the markets in which the Company has sold products or
services or formulated a plan to sell products or services into a market during
the last

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twelve (12) months of Executive's employ or which the Company enters into within
three (3) months thereafter, engage in or contribute Executive's knowledge to
any work which is competitive with or similar to a product, process, apparatus,
service, or development on which Executive worked or with respect to which
Executive had access to Confidential Information while employed by the Company;
provided, however, this Paragraph (c) shall not operate to prevent Executive
from engaging in retail insurance or re-insurance activities during such
two-year period to the extent such activities do not compete or permit any other
person or entity to compete with any business the Company or any of its
subsidiaries or affiliated companies were engaged in at the time of such
termination or which the Company enters into within three (3) months thereafter.
Following the expiration of said two (2) year period, Executive shall continue
to be obligated under the Confidential Information Paragraph of this Agreement
not to use or to disclose Confidential Information of the Company so long as it
shall not be publicly available. It is understood that the geographical area set
forth in this covenant is divisible so that if this clause is invalid or
unenforceable in an included geographic area, that area is severable and the
clause remains in effect for the remaining included geographic areas in which
the clause is valid.

                  (d) NON-SOLICITATION OF CUSTOMERS. Executive further agrees
that for a period of two (2) years after the termination of the Basic Term, he
will not solicit or accept any business from any customer or client or
prospective customer or client with whom Executive dealt or solicited while
employed by Company during the last twelve (12) months of his employment.

                  (e) NON-SOLICITATION OF EMPLOYEES. Executive agrees that for
the duration of the Basic Term, and for a period of two (2) years after the
termination of the Basic Term, he will not either directly or indirectly, on his
own behalf or on behalf of others, solicit, attempt to hire, or hire any person
employed by Company to work for Executive or for another entity, firm,
corporation, or individual.

                  (f) CONFIDENTIAL INFORMATION. Executive further agrees that he
will not, except as the Company may otherwise consent or direct in writing,
reveal or disclose, sell, use, lecture upon, publish or otherwise disclose to
any third party any Confidential Information or proprietary information of the
Company, or authorize anyone else to do these things at any time either during
or subsequent to his employment with the Company. This Section shall continue in
full force and effect after termination of Executive's employment and after the
termination of this Agreement. Executive's obligations under this Paragraph with
respect to any specific Confidential Information and proprietary information
shall cease when that specific portion of the Confidential Information and
proprietary information becomes publicly known, in its entirety and without
combining portions of such information obtained separately. It is understood
that such Confidential Information and proprietary information of the Company
include matters that Executive conceives or develops, as well as matters
Executive learns from other employees of Company. Confidential Information is
defined to include information: (1) disclosed to or known by the Executive as a
consequence of or through his employment with the Company; (2) not generally
known outside the Company; and (3) which relates to any aspect of the Company or
its business, finances, operation plans, budgets, research, or strategic
development. "Confidential Information" includes, but is not limited to the

                                       11
<PAGE>   12

Company's trade secrets, proprietary information, financial documents, long
range plans, customer lists, employer compensation, marketing strategy, data
bases, costing data, computer software developed by the Company, investments
made by the Company, and any information provided to the Company by a third
party under restrictions against disclosure or use by the Company or others.

                  (g) RETURN OF DOCUMENTS, EQUIPMENT, ETC. All writings,
records, and other documents and things comprising, containing, describing,
discussing, explaining, or evidencing any Confidential Information, and all
equipment, components, parts, tools, and the like in Executive's custody or
possession that have been obtained or prepared in the course of Executive's
employment with the Company shall be the exclusive property of the Company,
shall not be copied and/or removed from the premises of the Company, except in
pursuit of the business of the Company, and shall be delivered to the Company,
without Executive retaining any copies, upon notification of the termination of
Executive's employment or at any other time requested by the Company. The
Company shall have the right to retain, access, and inspect all property of
Executive of any kind in the office, work area, and on the premises of the
Company upon termination of Executive's employment and at any time during
employment by the Company to ensure compliance with the terms of this Agreement.

                  (h) REAFFIRM OBLIGATIONS. Upon termination of his employment
with the Company, Executive, if requested by Company, shall reaffirm in writing
Executive's recognition of the importance of maintaining the confidentiality of
the Company's Confidential Information and proprietary information, and reaffirm
any other obligations set forth in this Agreement.

                  (i) PRIOR DISCLOSURE.  Executive represents and warrants that
he has not used or disclosed any Confidential Information he may have obtained
from Company prior to signing this Agreement, in any way inconsistent with the
provisions of this Agreement.

                  (j) CONFIDENTIAL INFORMATION OF PRIOR COMPANIES. Executive
will not disclose or use during the period of his employment with the Company
any proprietary or Confidential Information or Copyright Works which Executive
may have acquired because of employment with an employer other than the Company
or acquired from any other third party, whether such information is in
Executive's memory or embodied in a writing or other physical form.

                  (k) BREACH. Executive agrees that any breach of Paragraphs
5(a), (c), (d), (e) or (f) above cannot be remedied solely by money damages, and
that in addition to any other remedies Company may have, Company is entitled to
obtain injunctive relief against Executive. Nothing herein, however, shall be
construed as limiting Company's right to pursue any other available remedy at
law or in equity, including recovery of damages and termination of this
Agreement and/or any payments that may be due pursuant to this Agreement.

                  (l) RIGHT TO ENTER AGREEMENT. Executive represents and
covenants to Company that he has full power and authority to enter into this
Agreement and that the execution of this

                                       12
<PAGE>   13

Agreement will not breach or constitute a default of any other agreement or
contract to which he is a party or by which he is bound.

                  (m) EXTENSION OF POST-EMPLOYMENT RESTRICTIONS. In the event
Executive breaches Paragraphs 5(b), (d), or (e) above, the restrictive time
periods contained in those provisions will be extended by the period of time
Executive was in violation of such provisions.

                  (n) ENFORCEABILITY. The agreements contained in Section 5 are
independent of the other agreements contained herein. Accordingly, failure of
the Company to comply with any of its obligations outside of this Paragraph do
not excuse Executive from complying with the agreements contained herein.

                  (o) SURVIVABILITY.  The agreements contained in Paragraphs
5(c)-(g) shall survive the termination of this Agreement for any reason.

         6. ASSIGNMENT. This Agreement cannot be assigned by Executive. The
Company may assign this Agreement only to a successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and assets of the Company provided such
successor expressly agrees in writing reasonably satisfactory to Executive to
assume and perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession and assignment
had taken place. Failure of the Company to obtain such written agreement prior
to the effectiveness of any such succession shall be a material breach of this
Agreement.

         7. BINDING AGREEMENT.  Executive understands that his obligations under
this Agreement are binding upon Executive's heirs, successors, personal
representatives, and legal representatives.

         8. NOTICES. All notices pursuant to this Agreement shall be in writing
and sent certified mail, return receipt requested, addressed as set forth below,
or by delivering the same in person to such party, or by transmission by
facsimile to the number set forth below (which shall not constitute notice).
Notice deposited in the United States Mail, mailed in the manner described
hereinabove, shall be effective upon deposit. Notice given in any other manner
shall be effective only if and when received:

                  If to Executive:          Frank J. Bramanti
                                            13707 Cottrell Court
                                            Houston, Texas  77077
                                            Fax: (281) 558-5461

                                       13
<PAGE>   14
                  If to Company:             HCC Insurance Holdings, Inc.
                                             13403 Northwest Freeway
                                             Houston, Texas  77040
                                             Fax:  (713) 462-2401

                  with a copy (which shall   Arthur S. Berner, Esq.
                  not constitute notice) to: Haynes and Boone, LLP
                                             1000 Louisiana Street,
                                             Suite 4300
                                             Houston, Texas  77002-5012
                                             Fax:  (713) 236-5652

         9. WAIVER.  No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof, shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.

         10. SEVERABILITY.  If any provision of this Agreement is determined to
be void, invalid, unenforceable, or against public policy, such provisions shall
be deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect.

         11. ARBITRATION. In the event any dispute arises out of Executive's
employment with or by the Company, or separation/termination therefrom, whether
as an employee or as a consultant which cannot be resolved by the Parties to
this Agreement, such dispute shall be submitted to final and binding
arbitration. The arbitration shall be conducted in accordance with the National
Rules for the resolution of Employment Disputes of the American Arbitration
Association ("AAA"). If the Parties cannot agree on an arbitrator, a list of
seven (7) arbitrators will be requested from AAA, and the arbitrator will be
selected using alternate strikes with Executive striking first. The cost of the
arbitration will be shared equally by Executive and Company; provided, however,
the Company shall promptly reimburse Executive for all costs and expenses
incurred in connection with any dispute in an amount up to, but not exceeding
twenty percent (20%) of Executive's Base Salary (or, if the dispute arises
during the Consulting Period, Executive's Base Salary as in effect immediately
prior to the beginning of the Consulting Period) unless such termination was for
Cause in which event Executive shall not be entitled to reimbursement unless and
until it is determined he was terminated other than for Cause. Arbitration of
such disputes is mandatory and in lieu of any and all civil causes of action and
lawsuits either party may have against the other arising out of Executive's
employment with Company, or separation therefrom. Such arbitration shall be held
in Houston, Texas.

         12. ENTIRE AGREEMENT. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to Executive's
employment with Company during the time period covered by this Agreement. This
Agreement replaces and supersedes any and all existing Agreements entered into
between Executive and the Company relating generally to the same

                                       14
<PAGE>   15

subject matter, if any, and shall be binding upon Executive's heirs, executors,
administrators, or other legal representatives or assigns.

         13. MODIFICATION OF AGREEMENT. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Executive and
an officer or other authorized executive of Company.

         14. UNDERSTAND AGREEMENT. Executive represents and warrants that he has
read and understood each and every provision of this Agreement, and Executive
understands that he has the right to obtain advice from legal counsel of choice,
if necessary and desired, in order to interpret any and all provisions of this
Agreement, and that Executive has freely and voluntarily entered into this
Agreement.

         15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

         16. JURISDICTION AND VENUE. With respect to any litigation regarding
this Agreement, Executive agrees to venue in the state or federal courts in
Harris County, Texas, and agrees to waive and does hereby waive any defenses
and/or arguments based upon improper venue and/or lack of personal jurisdiction.
By entering into this Agreement, Executive agrees to personal jurisdiction in
the state and federal courts in Harris County, Texas.

                [REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

                                       15
<PAGE>   16

         IN WITNESS WHEREOF, the Parties have executed this Agreement in
multiple copies, effective as of the date first written above.

EXECUTIVE                                   COMPANY

                                            HCC INSURANCE HOLDINGS, INC.

/s/ FRANK J. BRAMANTI                       By: /s/ STEPHEN L. WAY
-----------------------------------            ---------------------------------
FRANK J. BRAMANTI                              STEPHEN L. WAY,
                                               Chief Executive Officer and
                                               Chairman of the Board

Dated: June 16, 2000                        Dated: June 17, 2000
      -----------------------------               ------------------------------

                [SIGNATURE PAGE OF BRAMANTI EMPLOYMENT AGREEMENT]<PAGE>   1

                                                                EXHIBIT (4)(iii)

--------------------------------------------------------------------------------

                                KCS ENERGY, INC.,

                              SUBSIDIARY GUARANTORS

                                  NAMED HEREIN

                                       AND

                               FLEET NATIONAL BANK

                                     TRUSTEE

                                   ----------

                          FIRST SUPPLEMENTAL INDENTURE

                          DATED AS OF DECEMBER 2, 1996

                                   ----------

                    SUPPLEMENTING AND AMENDING THE INDENTURE
                                   DATED AS OF
                                JANUARY 15, 1996

--------------------------------------------------------------------------------

<PAGE>   2

         THIS FIRST SUPPLEMENTAL INDENTURE dated as of December 2, 1996 is
between KCS ENERGY, INC., a Delaware corporation (the "Company"), the SUBSIDIARY
GUARANTORS (as defined herein) and FLEET NATIONAL BANK (formerly known as Fleet
National Bank of Connecticut), a national banking association (the "Trustee").

                             RECITALS OF THE COMPANY

         The Company has duly authorized the creation of an issue of 11% Senior
Notes due 2003, Series A (the "Series A Securities") and an issue of 11% Senior
Notes due 2003, Series B (the "Series B Securities" and the Series A Securities
and the Series B Securities, as amended or supplemented from time to time in
accordance with the terms of the Indenture (as defined herein), being herein
collectively called the "Securities"), of substantially the tenor and in the
aggregate principal amount set forth in the Indenture; and the Company and the
Subsidiary Guarantors have heretofore made, executed and delivered to the
Trustee its Indenture dated as of January 15, 1996 (such Indenture being
sometimes referred to herein as the "Original Indenture") pursuant to which the
Securities are issuable.

         The Securities are guaranteed by the Subsidiary Guarantors (as defined
in the Indenture) on the terms provided in the Indenture.

         It is deemed desirable to supplement and amend the Original Indenture
to add a Restricted Subsidiary of the Company as a Subsidiary Guarantor (the
Original Indenture, as so supplemented and amended by this First Supplemental
Indenture, being sometimes referred to herein as the "Indenture").

         Article X, Section 10.13 of the Original Indenture provides that
certain Restricted Subsidiaries of the company shall become Subsidiary
Guarantors by executing and delivering a supplemental indenture agreeing to be
bound by the terms of the Original Indenture.

         The Series A Securities were issued on January 25, 1996 under the
Original Indenture and the Series B Securities were issued on June 5, 1996, also
under the Original Indenture.

         All things necessary to authorize the execution and delivery of this
First Supplemental Indenture to add KCS Energy Services, Inc. as a Subsidiary
Guarantor pursuant to the Original Indenture, as provided for in this First
Supplemental Indenture, and to make the Original Indenture, as supplemented and
amended by this First Supplemental Indenture, a valid agreement of the Company,
in accordance with its terms, have been done.

<PAGE>   3

         NOW, THEREFORE, in consideration of the premises and the purchase of
the Securities by the Holders, the Company, the Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and proportionate benefit of
the respective Holders from time to time of the Securities as follows:

                                   ARTICLE I

                     MODIFICATION OF THE ORIGINAL INDENTURE

         Section 1.1 Amendment of Article I of the Original Indenture. Section
1.1 of the Original Indenture is amended by changing the definition of
"Subsidiary Guarantor" to read as follows:

                  "Subsidiary Guarantor" means i) Enercorp Gas Marketing, Inc.,
         a Delaware corporation, ii) KCS Resources, Inc., a Delaware
         corporation, iii) KCS Michigan Resources, Inc., a Delaware corporation,
         iv) KCS Pipeline Systems, Inc., a Delaware corporation, v) KCS Energy
         Marketing, Inc., a New Jersey corporation, vi) KCS Power Marketing,
         Inc., a Delaware corporation, vii) KCS Energy Risk Management, Inc., a
         Delaware corporation, viii) National Enerdrill Corporation, a New
         Jersey corporation, ix) Proliq, Inc., a New Jersey corporation, x) KCS
         Energy Services, Inc., a Delaware corporation, xi) each of the
         Company's other Restricted Subsidiaries, if any, executing a
         supplemental indenture in compliance with the provisions of Section
         10.13(a) hereof and xii) any Person that becomes a successor guarantor
         of the Securities in compliance with the provisions of Section 13.2
         hereof.

                                   ARTICLE II

                         ADDITIONAL SUBSIDIARY GUARANTOR

         Section 2.1 Addition of a Subsidiary Guarantor. KCS Energy Services,
Inc., a Delaware corporation and wholly owned subsidiary of the company, by
execution of this First Supplemental Indenture hereby agrees to be bound by the
terms of the Indenture as a Subsidiary Guarantor.

         Section 2.2 Subsidiary Guarantee of the Securities. ARTICLE XIII of the
Original Indenture, incorporated herein by reference,

                                      -2-
<PAGE>   4

contains the Subsidiary Guarantee, to which KCS Energy Services, Inc. agrees to
be bound by execution and delivery of this First Supplemental Indenture.

                                   ARTICLE III

                           PARTICULAR REPRESENTATIONS
                          AND COVENANTS OF THE COMPANY

         Section 3.1 Authority of the Company. The Company is duly authorized by
a resolution of the Board of Directors to execute and deliver this First
Supplemental Indenture, and all corporate action on its part required for the
execution and delivery of this First Supplemental Indenture has been duly and
effectively taken.

         Section 3.2 Authority of the Subsidiary Guarantors. Each of the
Subsidiary Guarantors is duly authorized by a resolution of its Board of
Directors to execute and deliver this First Supplemental Indenture, and all
corporation action on the part of each required for the execution and delivery
of this First Supplemental Indenture has been duly and effectively taken.

         Section 3.3 Truth of Recitals and Statements. The Company warrants that
the recitals of fact and statements contained in this First Supplemental
Indenture are true and correct, and that the recitals of fact and statements
contained in all certificates and other documents furnished hereunder will be
true and correct.

                                   ARTICLE IV

                             CONCERNING THE TRUSTEE

         Section 4.1 Acceptance of Trusts. The Trustee accepts the trusts
hereunder and agrees to perform the same, but only upon the terms and conditions
set forth in the Original Indenture and in this First Supplemental Indenture, to
all of which the Company, the Subsidiary Guarantors and the respective Holders
of Securities at any time hereafter outstanding agree by their acceptance
thereof.

         Section 4.2 Responsibility of Trustee for Recitals, etc. The recitals
and statements contained in this First Supplemental Indenture shall be taken as
the recitals and statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this First Supplemental
Inden-

                                      -3-
<PAGE>   5

ture, except that the Trustee is duly authorized to execute and deliver this
First Supplemental Indenture.

                                    ARTICLE V

                            MISCELLANEOUS PROVISIONS

         Section 5.1 Relation to the Indenture. The provisions of this First
Supplemental Indenture shall become effective immediately upon the execution and
delivery hereof. This First Supplemental Indenture and all the terms and
provisions herein contained shall form a part of the Indenture as fully and with
the same effect as if all such terms and provisions had been set forth in the
Original Indenture. The Original Indenture is hereby ratified and confirmed and
shall remain and continue in full force and effect in accordance with the terms
and provisions thereof, as supplemented and amended by this First Supplemental
Indenture, and the Original Indenture and this First Supplemental Indenture
shall be read, taken and construed together as one instrument.

         Section 5.2 Meaning of Terms. Any capitalized term used in this First
Supplemental Indenture and not defined herein that is defined in the Original
Indenture shall have the meaning specified in the Original Indenture, unless the
context shall otherwise require.

         Section 5.3 Counterparts of First Supplemental Indenture. This First
Supplemental Indenture may be executed in several counterparts, each of which
shall be deemed and original, but all of which together shall constitute one
instrument.

         Section 5.4 Governing Law. This First Supplemental Indenture shall be
governed by and construed in accordance with the laws of the State of New York.

         IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the day and year first
above written.

Company:                            KCS ENERGY, INC.

                                    By:
                                       ---------------------------------------
                                       Henry A. Jurand, Vice President
                                       and Chief Financial Officer

                                      -4-
<PAGE>   6

Subsidiary Guarantors:              ENERCORP GAS MARKETING, INC.,
                                    KCS RESOURCES, INC.,
                                    KCS MICHIGAN RESOURCES, INC.,
                                    KCS PIPELINE SYSTEMS,INC.,
                                    KCS ENERGY MARKETING, INC.,
                                    KCS POWER MARKETING,INC.,
                                    KCS ENERGY RISK MANAGEMENT, INC.,
                                    NATIONAL ENERDRILL CORPORATION,
                                    PROLIQ, INC., and
                                    KCS ENERGY SERVICES, INC.

                                    By:
                                       ----------------------------------------
                                       Henry A. Jurand, Vice President

Trustee:                            FLEET NATIONAL BANK,
                                    As Trustee

                                    By:
                                       ----------------------------------------
                                       Susan C. Merker
                                       Assistant Vice President

                                      -5-
<PAGE>   7

                                                                EXHIBIT (4)(iii)

--------------------------------------------------------------------------------

                                KCS ENERGY, INC.,

                              SUBSIDIARY GUARANTORS

                                  Named Herein

                                       and

                               FLEET NATIONAL BANK

                                     Trustee

                                   ----------

                          SECOND SUPPLEMENTAL INDENTURE

                           Dated as of January 3, 1997

                                   ----------

                    Supplementing and Amending the Indenture
                                   dated as of
                                January 15, 1996

--------------------------------------------------------------------------------

<PAGE>   8

         THIS SECOND SUPPLEMENTAL INDENTURE dated as of January 3, 1997 is
between KCS ENERGY, INC., a Delaware corporation (the "Company"), the SUBSIDIARY
GUARANTORS (as defined herein) and FLEET NATIONAL BANK (formerly known as Fleet
National Bank of Connecticut), a national banking association (the "Trustee").

                             RECITALS OF THE COMPANY

         The Company has duly authorized the creation of an issue of 11% Senior
Notes due 2003, Series A (the "Series A Securities") and an issue of 11% Senior
Notes due 2003, Series B (the "Series B Securities" and the Series A Securities
and the Series B Securities, as amended or supplemented from time to time in
accordance with the terms of the Indenture (as defined herein), being herein
collectively called the "Securities"), of substantially the tenor and in the
aggregate principal amount set forth in the Indenture; and the Company and the
Subsidiary Guarantors have heretofore made, executed and delivered to the
Trustee its Indenture dated as of January 15, 1996 (such Indenture being
sometimes referred to herein as the "Original Indenture") pursuant to which the
Securities are issuable. The Original Indenture was supplemented by a First
Supplemental Indenture dated as of December 2, 1996 (the "First Supplement")
pursuant to which an additional Subsidiary Guarantor became party to the
Original Indenture.

         The Securities are guaranteed by the Subsidiary Guarantors (as defined
in the Indenture) on the terms provided in the Indenture.

         It is deemed desirable to supplement and amend the Original Indenture
to add four Restricted Subsidiaries of the Company as Subsidiary Guarantors (the
Original Indenture, as supplemented by the First Supplement and as so
supplemented and amended by this Second Supplemental Indenture, being sometimes
referred to herein as the "Indenture").

         Article X, Section 10.13 of the Original Indenture provides that
certain Restricted Subsidiaries of the company shall become Subsidiary
Guarantors by executing and delivering a supplemental indenture agreeing to be
bound by the terms of the Original Indenture.

         The Series A Securities were issued on January 25, 1996 under the
Original Indenture and the Series B Securities were issued on June 5, 1996, also
under the Original Indenture.

<PAGE>   9

         All things necessary to authorize the execution and delivery of this
Second Supplemental Indenture to add KCS Medallion Resources, Inc., Medallion
Gas Services, Inc., GED Energy Services, Inc. and Medallion California
Properties Company, as Subsidiary Guarantors pursuant to the Original Indenture
as provided for in this Second Supplemental Indenture, and to make the Original
Indenture, as supplemented and amended by The First Supplement and this Second
Supplemental Indenture, a valid agreement of the Company, in accordance with its
terms, have been done.

         NOW, THEREFORE, in consideration of the premises and the purchase of
the Securities by the Holders, the Company, the Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and proportionate benefit of
the respective Holders from time to time of the Securities as follows:

                                    ARTICLE I

                     MODIFICATION OF THE ORIGINAL INDENTURE

         Section 1.1 Amendment of Article I of the Original Indenture. Section
1.1 of the Original Indenture is amended by changing the definition of
"Subsidiary Guarantor" to read as follows:

                  "Subsidiary Guarantor" means i) Enercorp Gas Marketing, Inc.,
         a Delaware corporation, ii) KCS Resources, Inc., a Delaware
         corporation, iii) KCS Michigan Resources, Inc., a Delaware corporation,
         iv) KCS Pipeline Systems, Inc., a Delaware corporation, v) KCS Energy
         Marketing, Inc., a New Jersey corporation, vi) KCS Power Marketing,
         Inc., a Delaware corporation, vii) KCS Energy Risk Management, Inc., a
         Delaware corporation, viii) National Enerdrill Corporation, a New
         Jersey corporation, ix) Proliq, Inc., a New Jersey corporation, x) KCS
         Energy Services, Inc., a Delaware corporation, xi) KCS Medallion
         Resources, Inc., a Delaware corporation, xii) Medallion Gas Services,
         Inc., an Oklahoma corporation, xiii) GED Energy Services, Inc., a
         Delaware corporation, xiv) Medallion California Properties Company, a
         Texas corporation xv) each of the Company's other Restricted
         Subsidiaries, if any, executing a supplemental indenture in compliance
         with the provisions of Section 10.13(a) hereof and xvi) any Person that
         becomes a successor guarantor of the Securities in compliance with the
         provisions of Section 13.2 hereof.

                                      -2-
<PAGE>   10

                                   ARTICLE II

                         ADDITIONAL SUBSIDIARY GUARANTOR

         Section 2.1 Addition of Subsidiary Guarantors. Each of KCS Medallion
Resources, Inc., a Delaware corporation, Medallion Gas Services, Inc., an
Oklahoma corporation, GED Energy Services, Inc., a Delaware corporation, and
Medallion California Properties Company, a Texas corporation, each of which is a
wholly owned direct or indirect subsidiary of the company, by execution of this
Second Supplemental Indenture hereby agrees to be bound by the terms of the
Indenture as a Subsidiary Guarantor.

         Section 2.2 Subsidiary Guarantee of the Securities. ARTICLE XIII of the
Original Indenture, incorporated herein by reference, contains the Subsidiary
Guarantee, to which KCS Medallion Resources, Inc, Medallion Gas Services, Inc.,
GED Energy Services, Inc. and Medallion California Properties Company agree to
be bound by execution and delivery of this Second Supplemental Indenture.

                                   ARTICLE III

                           PARTICULAR REPRESENTATIONS
                          AND COVENANTS OF THE COMPANY

         Section 3.1 Authority of the Company. The Company is duly authorized by
a resolution of the Board of Directors to execute and deliver this Second
Supplemental Indenture, and all corporate action on its part required for the
execution and delivery of this Second Supplemental Indenture has been duly and
effectively taken.

         Section 3.2 Authority of the Subsidiary Guarantors. Each of the
Subsidiary Guarantors is duly authorized by a resolution of its Board of
Directors to execute and deliver this Second Supplemental Indenture, and all
corporation action on the part of each required for the execution and delivery
of this Second Supplemental Indenture has been duly and effectively taken.

         Section 3.3 Truth of Recitals and Statements. The Company warrants that
the recitals of fact and statements contained in this Second Supplemental
Indenture are true and correct, and that the recitals of fact and statements
contained in all certificates and other documents furnished hereunder will be
true and correct.

                                      -3-
<PAGE>   11

                                   ARTICLE IV

                             CONCERNING THE TRUSTEE

         Section 4.1 Acceptance of Trusts. The Trustee accepts the trusts
hereunder and agrees to perform the same, but only upon the terms and conditions
set forth in the Original Indenture, the First Supplement and in this Second
Supplemental Indenture, to all of which the Company, the Subsidiary Guarantors
and the respective Holders of Securities at any time hereafter outstanding agree
by their acceptance thereof.

         Section 4.2 Responsibility of Trustee for Recitals, etc. The recitals
and statements contained in this Second Supplemental Indenture shall be taken as
the recitals and statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Second Supplemental
Indenture, except that the Trustee is duly authorized to execute and deliver
this Second Supplemental Indenture.

                                    ARTICLE V

                            MISCELLANEOUS PROVISIONS

         Section 5.1 Relation to the Indenture. The provisions of this Second
Supplemental Indenture shall become effective immediately upon the execution and
delivery hereof. This Second Supplemental Indenture and all the terms and
provisions herein contained shall form a part of the Indenture as fully and with
the same effect as if all such terms and provisions had been set forth in the
Original Indenture. The Original Indenture is hereby ratified and confirmed and
shall remain and continue in full force and effect in accordance with the terms
and provisions thereof, as supplemented and amended by the First Supplement and
this Second Supplemental Indenture, and the Original Indenture, First Supplement
and this Second Supplemental Indenture shall be read, taken and construed
together as one instrument.

         Section 5.2 Meaning of Terms. Any capitalized term used in this Second
Supplemental Indenture and not defined herein that is defined in the Original
Indenture shall have the meaning specified in the Original Indenture, unless the
context shall otherwise require.

         Section 5.3 Counterparts of Second Supplemental Indenture. This Second
Supplemental Indenture may be executed in several

                                      -4-
<PAGE>   12

counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

         Section 5.4 Governing Law. This Second Supplemental Indenture shall be
governed by and construed in accordance with the laws of the State of New York.

         IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, all as of the day and year first
above written.

Company:                         KCS ENERGY, INC.

                                 By:
                                    --------------------------------
                                    Henry A. Jurand, Vice President
                                    and Chief Financial Officer

Subsidiary Guarantors:           ENERCORP GAS MARKETING, INC.,
                                 KCS RESOURCES, INC.,
                                 KCS MICHIGAN RESOURCES, INC.,
                                 KCS PIPELINE SYSTEMS,INC.,
                                 KCS ENERGY MARKETING, INC.,
                                 KCS POWER MARKETING,INC.,
                                 KCS ENERGY RISK MANAGEMENT, INC.,
                                 NATIONAL ENERDRILL CORPORATION,
                                 PROLIQ, INC.,
                                 KCS ENERGY SERVICES, INC.,
                                 KCS MEDALLION RESOURCES, INC.,
                                 MEDALLION GAS SERVICES, INC.,
                                 GED ENERGY SERVICES, INC., and
                                 MEDALLION CALIFORNIA PROPERTIES
                                   COMPANY

                                 By:
                                    --------------------------------------------
                                    Henry A. Jurand, Vice President

Trustee:                         FLEET NATIONAL BANK,
                                 As Trustee

                                 By:
                                    --------------------------------------------
                                    Susan C. Merker
                                    Assistant Vice President

                                      -5-
<PAGE>   13

                                                                EXHIBIT (4)(iii)

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                                KCS ENERGY, INC.,

                              SUBSIDIARY GUARANTORS

                                  NAMED HEREIN

                                       AND

                       STATE STREET BANK AND TRUST COMPANY

                                     TRUSTEE

                                   ----------

                          THIRD SUPPLEMENTAL INDENTURE

                          DATED AS OF FEBRUARY 20, 2001

                                   ----------

                    SUPPLEMENTING AND AMENDING THE INDENTURE
                                   DATED AS OF
                                JANUARY 15, 1996

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         THIS THIRD SUPPLEMENTAL INDENTURE dated as of February 20, 2001 is
between KCS ENERGY, INC., a Delaware corporation (the "COMPANY"), the SUBSIDIARY
GUARANTORS (as defined herein) and STATE STREET BANK AND TRUST COMPANY, a
national banking association (the "TRUSTEE").

                             RECITALS OF THE COMPANY

         The Company has duly authorized the creation of an issue of 11% Senior
Notes due 2003, Series A (the "SERIES A SECURITIES") and an issue of 11% Senior
Notes due 2003, Series B (the "SERIES B SECURITIES") and the Series A Securities
and the Series B Securities, as amended or supplemented from time to time in
accordance with the terms of the Indenture (as defined herein), being herein
collectively called the ("SECURITIES"), of substantially the tenor and in the
aggregate principal amount set forth in the Indenture; and the Company and the
Subsidiary Guarantors have heretofore made, executed and delivered to the
Trustee its Indenture dated as of January 15, 1996 (such Indenture being
sometimes referred to herein as the "ORIGINAL INDENTURE") pursuant to which the
Securities are issuable. $150,000,000 in total aggregate principal amount of
Securities have been issued pursuant to the Original Indenture and are
outstanding. The Original Indenture was supplemented by (a) a First Supplemental
Indenture dated as of December 2, 1996 (the "FIRST SUPPLEMENT") pursuant to
which an additional Subsidiary Guarantor became party to the Original Indenture
and (b) a Second Supplemental Indenture dated as of January 3, 1997 (the "SECOND
SUPPLEMENT") pursuant to which four additional Subsidiary Guarantors became
parties to the Original Indenture.

         It is deemed desirable to supplement and amend the Original Indenture
as set forth in this Third Supplemental Indenture (the Original Indenture, as
supplemented by the First Supplement and the Second Supplement and as so
supplemented and amended by this Third Supplemental Indenture, being sometimes
referred to herein as the "INDENTURE").

         Provision for the making of this Third Supplemental Indenture is
contained in an order (the "ORDER") dated January 30, 2001 of the United States
Bankruptcy Court for the District of Delaware in In re KCS Energy, Inc., et al.,
Debtors, Case No. 00-0028 (PJW) and Case Nos. 00-0310 (PJW) through 00-0318
(PJW) confirming the KCS Energy, Inc., et al., Debtors, Chapter 11 Plan of
Reorganization (the "PLAN").

         Pursuant to the Plan, the Company will distribute to the Holders cash
equal to the sum of (a) $60,000,000, plus the amount of past due accrued and
unpaid interest on the $60,000,000 in aggregate principal amount of Securities
as of the effective date of the Order, compounded semi-annually at 11% per
annum, whereupon $60,000,000 in principal amount of the Securities shall be
deemed paid and shall no longer be outstanding and (b) the amount of past due
accrued and unpaid interest on $90,000,000 in

<PAGE>   15

aggregate principal amount of Securities as of January 15, 2001, compounded
semi-annually at 11% per annum. After such payments, the remaining aggregate
principal amount of Securities outstanding will be $90,000,000. In accordance
with the Order, the obligations of the Company under the remaining $90,000,000
in Securities have been renewed and shall constitute the obligations of the
Company, as reorganized pursuant to the Order and the Plan, and the Company, as
so reorganized, is assuming all of the obligations and duties of the Company
under the Indenture. In accordance with the Order, the unconditional guarantees
of such remaining Securities by all of the Subsidiary Guarantors are reinstated
and are the unconditional obligations of the Subsidiary Guarantors, as
reorganized pursuant to the Order and the Plan.

         All things necessary to authorize the execution and delivery of this
Third Supplemental Indenture to amend certain provisions of the Original
Indenture as set forth in this Third Supplemental Indenture, and to make the
Original Indenture, as supplemented and amended by the First Supplement, the
Second Supplement and this Third Supplemental Indenture, a valid agreement of
the Company, in accordance with its terms, have been done.

         NOW, THEREFORE, in consideration of the premises, the Company, the
Subsidiary Guarantors and the Trustee mutually covenant and agree:

                                    ARTICLE I

                     MODIFICATION OF THE ORIGINAL INDENTURE

                  1.1 New Definitions. Section 1.1 of the Original Indenture is
amended to add the following definitions:

                  (i)      "Production Payment 2001 Facility" means the
                           transactions contemplated by one or more Purchase and
                           Sale Agreements dated as of February 14 2001, among
                           KCS Resources, Inc., KCS Energy, Services, Inc., KCS
                           Michigan Resources, Inc., KCS Medallion Resources,
                           Inc. and Star VPP, LP as the same may be amended,
                           modified, supplemented, extended, restated, replaced
                           or renewed from time to time, including the sale by
                           certain of the Restricted Subsidiaries of a term
                           overriding royalty interest and/or production payment
                           in a specified volume or dollar denominated amount of
                           hydrocarbons (or the proceeds thereof) in designated
                           Properties for an aggregate purchase price of
                           approximately $178,000,000.

                  (ii)     "Production Payment 2001 Obligations" means, as of
                           any date on which the amount thereof is to be
                           determined, the obligations of the

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<PAGE>   16

                           Company or any Restricted Subsidiary under the
                           Production Payment 2001 Facility either recorded as
                           liabilities in accordance with GAAP or as deferred
                           revenues in accordance with GAAP.

                  (iii)    "SEC PV-10 Value" means the SEC PV-10 Value of the
                           Company and its Restricted Subsidiaries described in,
                           and calculated in accordance with, the provisions of
                           Sections 10.10(d) and (e) hereof.

                  (iv)     "Senior Debt" means, as of the date on which the
                           amount thereof is to be determined, the principal
                           amount outstanding under the Bank Credit Facilities
                           together with the face amount of all letters of
                           credit issued and outstanding under the Bank Credit
                           Facilities and the outstanding principal amount of
                           the Securities, collectively.

                  (v)      "Senior Subordinated Notes" means the Company's
                           8.875% Senior Subordinated Notes due January 15, 2006
                           issued pursuant to the Indenture governing the Senior
                           Subordinated Notes dated as of January 15, 1998, as
                           amended.

                  (vi)     "Series A Convertible Preferred Stock" means the
                           Series A Convertible Preferred Stock of the Company
                           having a stated value and liquidation preference of
                           $30,000,000.

                  1.2. Definition of Bank Credit Facilities. The definition of
"Bank Credit Facilities" in the Original Indenture is amended to read as
follows:

                           "Bank Credit Facilities" means one or more credit or
                           loan agreements among the Company, the Restricted
                           Subsidiaries signatory thereto, the lenders signatory
                           thereto, and one or more agents signatory thereto
                           providing for secured loans to the Company and one or
                           more of its Restricted Subsidiaries together with any
                           guarantees relating thereto, as the same may be
                           amended, modified, supplemented, extended, restated,
                           replaced, renewed or refinanced from time to time in
                           one or more credit agreements, loan agreements,
                           instruments or similar agreements, as such may be
                           further amended, modified, supplemented, extended,
                           restated, replaced, renewed or refinanced.

                  1.3. Definition of Permitted Indebtedness. The definition of
"Permitted Indebtedness" in the Original Indenture is amended by amending clause
(i) to read as follows, by striking the word "and" at the end of clause (ix),
changing the period at the end of clause (x) to a semicolon, adding the word
"and" after the semicolon at the end of clause (x) and adding a clause (xi)
reading as follows:

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                  (i)      Indebtedness under the Bank Credit Facilities in an
                           aggregate principal amount at any one time
                           outstanding not to exceed the greater of $165,000,000
                           plus an amount to secure hedging obligations or 15%
                           of Adjusted Consolidated Net Tangible Assets (the
                           "MAXIMUM CREDIT AMOUNT"), plus all interest and fees
                           under such facilities and any guarantee of any such
                           Indebtedness; PROVIDED, HOWEVER, that such
                           Indebtedness shall not constitute Permitted
                           Indebtedness unless the total of (x) the aggregate
                           principal amount outstanding under the Bank Credit
                           Facilities plus (y) the outstanding amounts, if any,
                           of the Production Payment 2001 Obligations shall not
                           exceed (i) $190,000,000 at any time prior to December
                           31, 2001 and (ii) $155,000,000 at any time after
                           December 31, 2001; PROVIDED FURTHER, HOWEVER, that if
                           the Production Payment 2001 Facility is consummated
                           and if the aggregate principal amount outstanding
                           under the Bank Credit Facilities exceeds $15,000,000,
                           then at any time that amounts of principal are
                           advanced under the Bank Credit Facilities such that
                           the aggregate principal amount outstanding exceeds
                           $15,000,000, the principal amount so advanced at any
                           such time shall not constitute Permitted Indebtedness
                           to the extent that two (2) times the outstanding
                           Senior Debt after giving effect to any such advance
                           shall be greater than the SEC PV-10 value of the
                           Company and its Restricted Subsidiaries' proved
                           developed oil and gas reserves, determined (in
                           accordance with the provisions of Section 10.10(e))
                           as of the end of the fiscal quarter preceding any
                           such advance, it being understood that any such
                           principal which is advanced under the Bank Credit
                           Facilities shall constitute Permitted Indebtedness if
                           it satisfies the foregoing provisions of this proviso
                           when advanced even if it subsequently fails to
                           satisfy the foregoing;

                  (xi)     Indebtedness, if any, under the Production Payment
                           2001 Facility; PROVIDED, HOWEVER, that the purchase
                           price received with respect thereto shall not exceed
                           $178,000,000.

                  1.4. Definition of Permitted Liens. The definition of
Permitted Liens in the Original Indenture is amended by adding thereto a last
sentence which shall read as follows:

                           Notwithstanding anything to the contrary contained in
                           this Indenture, including without limitation the
                           provisions of the immediately preceding sentence,
                           Liens securing any of the obligations (including
                           without limitation any Indebtedness) of the Company
                           and any Restricted Subsidiary under or pursuant to
                           the Production Payment

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                           2001 Facility shall be Permitted Liens if the
                           purchase price received under the Production Payment
                           2001 Facility does not exceed $178,000,000.

                  1.5. Section 10.10(a)(1). Section 10.10(a)(1) of the Original
Indenture is amended to read as follows:

                  (1)      50% of the Consolidated Net Income of the Company
                           accrued on a cumulative basis during the period
                           beginning after December 31, 2000 and ending on the
                           last day of the Company's last fiscal quarter ending
                           prior to the date of such proposed Restricted Payment
                           (or, if such Consolidated Net Income shall be a loss,
                           minus 100% of such loss), plus

                  1.6. Section 10.10(a)(6). Section 10.10(a)(6) of the Original
Indenture is deleted.

                  1.7. Section 10.10. Section 10.10 of the Original Indenture is
amended to add paragraphs 10.10(d), (e), (f) and (g) as follows:

                  (d)      In addition to any restriction contained in any other
                           provision of this Section 10.10 and notwithstanding
                           any provision in this Section 10.10 or any other
                           Section of this Indenture to the contrary, the
                           Company shall not and shall not permit any Restricted
                           Subsidiary to, directly or indirectly, purchase or
                           redeem the Senior Subordinated Notes or the Company's
                           Common Stock, in whole or in part, for cash or
                           property other than Capital Stock unless and only to
                           the extent that (A) such purchase or redemption is
                           made with the proceeds of the issuance of Capital
                           Stock (other than to a Subsidiary of the Company)
                           issued within 120 days of such purchase or redemption
                           or (B)(i) the SEC PV-10 Value of the Company's and
                           its Restricted Subsidiaries' proved developed oil and
                           gas reserves, determined as of the end of the fiscal
                           quarter preceding any such purchase or redemption,
                           exceeds two (2) times the total outstanding Senior
                           Debt as of the date of any such purchase or
                           redemption, and (ii) the total outstanding Senior
                           Debt as of the date of any such purchase or
                           redemption per Mcfe of proved developed oil and gas
                           reserves, determined as of the end of the fiscal
                           quarter preceding any such purchase or redemption is
                           not more than $.75, and (iii) the aggregate principal
                           amount of (x) the Senior Subordinated Notes being
                           purchased or redeemed and (y) the Senior Subordinated
                           Notes purchased or redeemed during the six (6) month
                           period preceding the date of the proposed purchase or
                           redemption does not exceed 60% of the amount by which
                           the SEC PV-10 Value of the Company's and its

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                           Restricted Subsidiaries' proved developed oil and gas
                           reserves as determined as of the end of the fiscal
                           quarter preceding any such purchase or redemption
                           exceeds two (2) times the total outstanding Senior
                           Debt as of the date of any such purchase or
                           redemption.

                  (e)      The SEC PV-10 Value to be calculated under paragraph
                           (d) above, shall be calculated utilizing Securities
                           and Exchange Commission guidelines and (i) a gas
                           price not to exceed $3.50 per Mcf and a West Texas
                           Intermediate oil price not to exceed $20 per barrel
                           (the "UNHEDGED CEILING PRICES") for reserves not
                           subject to hedges, and (ii) the floor hedge price for
                           reserves as to which the Company and its Restricted
                           Subsidiaries have in effect hedges having floor
                           prices greater than the unhedged ceiling prices. The
                           SEC PV-10 Value shall be calculated at the end of
                           each fiscal quarter of the Company beginning with the
                           fiscal quarter ending March 31, 2001. The annual
                           reserve report of the Company and its Restricted
                           Subsidiaries to be utilized for calculating SEC PV-10
                           Value for the purposes of paragraphs (d) and (e) of
                           this Section 10.10 shall be prepared by Netherland,
                           Sewell & Associates, Inc. or another reservoir
                           engineering firm of similar reputation and, to the
                           extent that any mid-year reserve report of the
                           Company and its Restricted Subsidiaries reflects an
                           increase in proved oil and gas reserves in excess of
                           10% from the prior year end report, the Company will
                           arrange for such reservoir engineering firm to review
                           the major changes from the preceding year end report.

                  (f)      Notwithstanding any provision in this Section 10.10
                           or any other Section of this Indenture to the
                           contrary and in addition to any other restriction
                           contained in any other provision of this Indenture,
                           the Company shall not and shall not permit any
                           Restricted Subsidiary to, directly or indirectly, (1)
                           purchase or redeem the Series A Convertible Preferred
                           Stock for cash or property or (2) pay any dividend on
                           any shares of Capital Stock of the Company in cash
                           other than dividends on shares of Series A
                           Convertible Preferred Stock payable in cash in lieu
                           of fractional shares of Common Stock in those cases
                           where dividends are declared on shares of Series A
                           Convertible Preferred Stock in shares of Common
                           Stock.

                  (g)      Notwithstanding any provision in this Section 10.10
                           or any other Section of this Indenture to the
                           contrary and in addition to any other restriction
                           contained in any other provision of this Indenture,
                           the Company shall not and shall not permit any
                           Restricted Subsidiary to make a net Investment of
                           more than $20,000,000 in the aggregate in

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                           Unrestricted Subsidiaries nor will it permit any
                           Unrestricted Subsidiary to make any payments of the
                           type characterized in clauses (i), (ii) and (iii) of
                           Section 10.10(a) hereof.

                  1.8. Section 10.17. Section 10.17 of the Original Indenture is
amended to add paragraph (f) as follows:

                  (f)      Notwithstanding any provision in this Section 10.17
                           or any other Section of this Indenture to the
                           contrary and in addition to any other restriction
                           contained in any other provision of this Indenture,
                           the Company shall not, and shall not permit any
                           Restricted Subsidiary, to sell any Production Payment
                           (other than pursuant to the Production Payment 2001
                           Facility) unless at least 50% of the Net Available
                           Proceeds from the sale are applied by the Company to
                           purchase or redeem Securities.

                  1.9. Section 11.4. Section 11.4 of the Original Indenture is
amended so that the proviso at the end of the first sentence is deleted.

                                   ARTICLE II

                           PARTICULAR REPRESENTATIONS
                          AND COVENANTS OF THE COMPANY

                  2.1 Authority of the Company. The Company is duly authorized
to execute and deliver this Third Supplemental Indenture pursuant to an Order
(the "ORDER") dated January 30, 2001 of the United States Bankruptcy Court for
the District of Delaware in In re KCS Energy, Inc., et al., Debtors, Case No.
00-0028 (PJW) and Case Nos. 00-0310 (PJW) through 00-0318 (PJW) confirming the
KCS Energy, Inc., et. al., Debtors, Chapter 11 Plan of Reorganization, and all
corporate action on its part required for the execution and delivery of this
Third Supplemental Indenture has been duly and effectively taken.

                    2.2 Authority of the Subsidiary Guarantors. Each of the
Subsidiary Guarantors is duly authorized pursuant to the Order to execute and
deliver this Third Supplemental Indenture, and all corporate action on the part
of each required for the execution and delivery of this Third Supplemental
Indenture has been duly and effectively taken.

                    2.3 Assumption of Indenture Obligations. The Company and
each of the Subsidiary Guarantors, each as reorganized pursuant to the Order and
the Plan, hereby

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<PAGE>   21

assume all of the obligations of the Company and each of the Subsidiary
Guarantors under the Securities and the Indenture.

                    2.4 Truth of Recitals and Statements. The Company warrants
that the recitals of fact and statements contained in this Third Supplemental
Indenture are true and correct, and that the recitals of fact and statements
contained in all certificates and other documents furnished hereunder will be
true and correct.

                                   ARTICLE III

                             CONCERNING THE TRUSTEE

                    3.1 Acceptance of Trusts. The Trustee accepts the trusts
hereunder and agrees to perform the same, but only upon the terms and conditions
set forth in the Original Indenture, the First Supplement, Second Supplement and
in this Third Supplemental Indenture, to all of which the Company, the
Subsidiary Guarantors and the respective Holders of Securities at any time
hereafter outstanding agree by their acceptance thereof.

                    3.2 Responsibility of Trustee for Recitals, etc. The
recitals and statements contained in this Third Supplemental Indenture shall be
taken as the recitals and statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Third Supplemental
Indenture, except that the Trustee is duly authorized to execute and deliver
this Third Supplemental Indenture.

                                   ARTICLE IV

                            MISCELLANEOUS PROVISIONS

                    4.1 Relation to the Indenture. The provisions of this Third
Supplemental Indenture shall become effective immediately upon the execution and
delivery hereof. This Third Supplemental Indenture and all the terms and
provisions herein contained shall form a part of the Indenture as fully and with
the same effect as if all such terms and provisions had been set forth in the
Original Indenture. The Original Indenture is hereby ratified and confirmed and
shall remain and continue in full force and effect in accordance with the terms
and provisions thereof, as supplemented and amended by the First Supplement, the
Second Supplement and this Third Supplemental Indenture, and the Original
Indenture, First Supplement, Second Supplement and this Third Supplemental
Indenture shall be read, taken and construed together as one instrument.

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                  4.2 Meaning of Terms. Any capitalized term used in this Third
Supplemental Indenture and not defined herein that is defined in the Original
Indenture shall have the meaning specified in the Original Indenture, unless the
context shall otherwise require.

                  4.3 Counterparts of Third Supplemental Indenture. This Third
Supplemental Indenture may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
instrument.

                  4.4 Governing Law. This Third Supplemental Indenture shall be
governed by and construed in accordance with the laws of the State of New York.

         IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, all as of the day and year first
above written.

Company:                               KCS ENERGY, INC.

                                       By:
                                          --------------------------------------

Subsidiary Guarantors:                 KCS RESOURCES, INC.,
                                       KCS MICHIGAN RESOURCES, INC.,
                                       KCS ENERGY MARKETING, INC.,
                                       NATIONAL ENERDRILL CORPORATION
                                       PROLIQ, INC.,
                                       KCS ENERGY SERVICES, INC.,
                                       KCS MEDALLION RESOURCES, INC.,
                                       MEDALLION GAS SERVICES, INC., and
                                       MEDALLION CALIFORNIA PROPERTIES
                                          COMPANY

                                       By:
                                          --------------------------------------

Trustee:                               STATE STREET BANK AND
                                       TRUST COMPANY, As Trustee

                                       By:
                                          --------------------------------------

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