Exhibit 10.1

KINDER MORGAN, INC. NON-EMPLOYEE DIRECTORS
STOCK AWARDS PLAN

     

ARTICLE 1.   Purpose of the Plan.

     

The Kinder Morgan, Inc. Non-Employee Directors Stock Awards Plan (the "Plan") is
intended to provide a means for the granting, from time to time, of (i) the
option ("Option") to purchase shares of common stock, $5.00 par value ("Common
Stock"), of Kinder Morgan, Inc. (the "Company"), as hereinafter described,
and/or (ii) shares of Common Stock subject to certain restrictions and
conditions ("Restricted Stock"), as hereinafter described, to non-employee
members of the Company's Board of Directors (the "Board") (each such director,
upon receipt of an Option or a grant of Restricted Stock, a "Participant"), and
thereby to promote the interests of the Company and its stockholders by
increasing the potential compensation of the directors, thereby assisting the
Company in its efforts to attract well-qualified individuals to serve as its
directors and to retain their services. Options granted under this Plan are
intended to constitute nonqualified stock options (options that do not qualify
as incentive stock options within the meaning of Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code")), and the Plan shall be construed
so as to carry out that intention.

     

ARTICLE 2.   Stock Reserved for Awards.

     

The aggregate number of shares of Common Stock of the Company that may be issued
under the Plan shall be 500,000. Any shares of Common Stock that remain unissued
and which are not subject to outstanding Options or awards of Restricted Stock
at the termination of the Plan shall cease to be subject to the Plan, but, until
termination of the Plan, the Company shall reserve a sufficient number of shares
to meet the requirements of the Plan. Should any Option hereunder expire or
terminate prior to its exercise in full, the shares theretofore subject to such
Option may again be subject to an Option granted under the Plan to the extent
permitted under Rule 16b-3 ("Rule 16b-3")) promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934 ("Exchange Act").
Should any shares of Restricted Stock be forfeited, such shares may not again be
subject to an award of Restricted Stock. Shares awarded under the Plan shall be
authorized but unissued shares, or shares reacquired by the Company (except for
shares of Restricted Stock forfeited and returned to the Company in accordance
with the terms of the Plan), as determined from time to time by the Committee
(as defined in Article 3). Shares shall be awarded and issued under the Plan
only if all necessary actions shall have been taken to render such shares, when
issued, validly issued, fully paid, and non-assessable. All amounts set forth
hereinabove shall be subject to adjustment as provided in ARTICLE 8. Exercise of
an Option in any manner shall result in a decrease in the number of shares of
Common Stock which may thereafter be available, both for purposes of the Plan
and for sale to any one individual, by the number of shares as to which the
Option is exercised.

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ARTICLE 3.   Administration of the Plan.

     

3.1   The Plan shall be administered by the Compensation Committee (the
"Committee") designated by the Board, which shall also designate the Chairman of
the Committee. The Committee shall be composed entirely of not less than two (2)
non-employee directors (within the meaning of Rule 16b-3.

     

3.2   The Committee shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum, and all
determinations of the Committee shall be made by not less than a majority of its
members. Any decision or determination reduced to writing and signed by a
majority of the members shall be effective as if it had been made by a majority
vote of its members at a meeting duly called and held. The Committee may
designate the Secretary of the Company or other Company employees to assist the
Committee in the administration of the Plan ("Delegatee"), and may grant
authority to a Delegatee to execute agreements or other documents on behalf of
the Committee and the Company.

     

3.3   The Committee shall have the power and authority to interpret the Plan, to
adopt rules governing its execution and administration, and to appoint and
authorize a Delegatee to perform such functions in the execution and
administration of the Plan (other than the interpretation of the Plan and the
adoption of rules governing its execution and administration, or any other
function the performance of which by such Delagatee would violate Rule 16b-3) as
the Committee shall determine from time to time. All interpretations, rules,
appointments, and other determinations by the Committee shall be final and
conclusive, and each Participant shall be bound by such interpretations, rules,
appointments, and determinations upon communication thereof to such Participant,
effective as of such date, prior to, subsequent to, or concurrent with, such
communication.

     

3.4   All expenses and liabilities incurred by the Committee in the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants or other persons.

     

ARTICLE 4.   Eligibility.

     The persons eligible to participate in the Plan as a Participant shall
include only directors of the Company who are not salaried employees of the
Company.

     

ARTICLE 5.   Awards.

     

The Committee shall determine, in its discretion, when grants of Options or
Restricted Stock are to be made under the Plan and the number of shares, if any,
to be awarded to each eligible director, and the terms and conditions,
consistent with the terms of the Plan, upon which Options or Restricted Stock
are to be awarded, and shall make awards to eligible directors for the numbers
of shares and upon the terms and conditions so determined; provided, however,
that the Committee shall grant Options or Restricted Stock only in amounts that
are reasonable under the circumstances.

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In making its determination, the Committee may take into account such factors as
the Committee in its discretion shall deem relevant.

     

ARTICLE 6.   Options.

     

6.1   At any time, the Committee, in its discretion, may grant to each director
an Option for a particular calendar year not to exceed 10,000 shares of Common
Stock. A director receiving an Option pursuant to the Plan may purchase the
shares issuable thereunder, in whole at any time, or in part from time to time,
commencing on the date of grant. Each Option shall cease to be exercisable upon
the expiration of a period not to exceed ten (10) years from the date of grant.
Notwithstanding the foregoing, if a grant of an Option is made prior to the
annual stockholders meeting for the calendar year to which such grant relates,
the Option may not be exercised until the first business day after the annual
stockholders meeting for such calendar year ("Vesting Date"); provided, however,
that if the Participant to whom such Option is granted is not a director on the
Option's Vesting Date, such Option shall immediately expire and may not be
exercised.

     

6.2   Each Option shall be evidenced by a written agreement between the Company
and the Participant ("Option Agreement") which shall contain such terms and
conditions as may be approved by the Committee, including, but not limited to,
the number of shares of Stock that may be purchased under the Option and the
price per share of Common Stock purchasable under the Option ("Option Price").
The terms and conditions of the respective Option Agreements need not be
identical.

     

6.3   The Option Price of Common Stock issued under each Option shall be
determined by the Committee, but such Option Price shall not be less than the
fair market value of Common Stock subject to the Option on the date the Option
is granted. For all purposes under the Plan, the fair market value of a share of
Common Stock on a particular date shall be equal to the closing sales price of
the Common Stock reported on the New York Stock Exchange Composite Tape on that
date; or, if no prices are reported on that date, on the last preceding date on
which such prices of the Common Stock are so reported. In the event Common Stock
is not publicly traded at the time a determination of its value is required to
be made hereunder, the determination of its fair market value shall be made by
the Committee in such manner as it deems appropriate.

     

6.4   An Option may be exercised by giving written notice to the Company
addressed to the attention of the Vice President of Human Resources and
Administration or the General Counsel (i) specifying the number of shares to be
purchased and accompanied by payment therefor in full, and (ii) unless the
Company consents to the contrary, representing that all shares purchased are
being acquired for investment and not with a view to, or for resale in
connection with, any distribution of said shares.

     

6.5   No Option granted under the Plan shall be transferable otherwise than by
will or the laws of descent and distribution and shall be exercisable, during
his or her lifetime, only by the Participant to whom an Option is granted.
Except as permitted by the preceding sentence, no Option or any right thereunder
shall be transferred, assigned, pledged or hypothecated in any way (whether

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by operation of law or otherwise) or be subject to execution, attachment or
similar process. Upon any attempt so to transfer, assign, pledge, hypothecate or
otherwise dispose of, or be subject to execution, attachment or similar process,
any option, or of any right thereunder, contrary to the provisions hereof, such
Option and all rights thereunder shall immediately become null and void.
Notwithstanding the foregoing, if a Participant obtains the approval of the
Committee after making a request to the Committee in writing, the Participant
may transfer or assign an Option for estate planning purposes or to a charity.

     

6.6   Each Option shall be subject to the requirement that, if at any time the
Board determines, in its discretion, that the listing, registration or
qualification of the shares subject to such Option upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the issue or purchase of shares thereunder, such Option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained and the
same shall have been free of any conditions not acceptable to the Board. The
Company may require that certificates evidencing shares issued upon the exercise
of any Option bear an appropriate legend indicating that the sale, transfer or
other disposition thereof by the holder is prohibited unless such shares have
been registered under the Securities Act of 1933, as amended, for transfer in
accordance with the intended method of distribution or the Company shall have
been furnished with an opinion of counsel satisfactory to it to the effect that
such registration is not required.

     ARTICLE 7.  Restricted Stock.

     

7.1   Each grant of Restricted Stock shall be evidenced by a written agreement
between the Company and the Participant ("Restricted Stock Agreement") which
shall contain such terms and conditions as may be approved by the Committee. A
fully executed original counterpart of the Restricted Stock Agreement shall be
provided to the Company and the Participant.

     

7.2   Shares of Common Stock that are the subject of an award of Restricted
Stock shall be subject to restrictions on disposition by the Participant and an
obligation of the Participant to forfeit and surrender the shares to the Company
under certain circumstances (the "Forfeiture Restrictions"). The Forfeiture
Restrictions shall be determined by the Committee in its sole discretion and set
forth in the Restricted Stock Agreement. The Committee may, at any time and from
time to time after the granting of an award of Restricted Stock under the Plan,
specify such additional terms and conditions with respect to such award as may
be deemed necessary or appropriate to assure compliance with any and all
applicable laws. The terms and conditions (including Forfeiture Restrictions)
with respect to any award of Restricted Stock, or with respect to any award to
any Participant, need not be identical to the terms and conditions with respect
to any other award, or with respect to any award to any other Participant.

     

7.3   The Committee may, in its sole discretion, prescribe additional terms,
conditions or restrictions relating to awards of Restricted Stock, including,
but not limited to, rules pertaining to

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the termination of service (by retirement, disability, death or otherwise) of a
Participant prior to the lapse of the Forfeiture Restrictions. Such additional
terms, conditions or restrictions shall be set forth in the Restricted Stock
Agreement. The Restricted Stock Agreement may also include, without limitation,
provisions relating to (i) tax matters (including provisions (A) covering any
applicable wage withholding requirements and (B) prohibiting an election by the
Participant under Code Section 83(b)), and (ii) any other matters not
inconsistent with the terms and provisions of this Plan that the Committee shall
in its sole discretion determine. The terms and conditions of the respective
Restricted Stock Agreements need not be identical.

     

7.4   Unless otherwise provided in his or her Restricted Stock Agreement, a
Participant shall have the right to receive dividends with respect to shares
subject to an award of Restricted Stock, to vote such shares and to enjoy all
other stockholder rights, except that (i) the Participant shall not be entitled
to delivery of the stock certificate until the Forfeiture Restrictions have
lapsed, (ii) the Company shall retain custody of the shares until the Forfeiture
Restrictions have lapsed, (iii) the Participant may not sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of the shares until the Forfeiture
Restrictions have lapsed, and (iv) a breach of the terms and conditions
established by the Committee pursuant to the Restricted Stock Agreement shall
cause a forfeiture of the shares by the Participant. Certificates for shares
subject to awards of Restricted Stock shall, at the option of the Company, bear
the following legend:

THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE
TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN THE KINDER MORGAN, INC. NON-EMPLOYEE DIRECTORS STOCK AWARDS PLAN
AND AN AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND KINDER MORGAN,
INC. A RELEASE FROM SUCH TERMS AND CONDITIONS SHALL BE OBTAINED ONLY IN
ACCORDANCE WITH THE PROVISIONS OF SUCH PLAN AND AGREEMENT, A COPY OF EACH OF
WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF KINDER MORGAN, INC.

     

7.5   Notwithstanding any other provision in this paragraph to the contrary, the
Committee, in its sole discretion, may, upon a Participant's termination of
service for any reason, waive any restrictions, terms, conditions and Forfeiture
Restrictions on all or a portion of any shares theretofore awarded to such
Participant, and upon such action taken by the Committee, the Company shall
thereupon deliver or cause to be delivered to such Participant or legal
representative the certificate or certificates for such shares, free of the
legend provided in Section 7.4.

     

7.6   Upon expiration, with respect to shares of Restricted Stock awarded under
the Plan, of the applicable Forfeiture Restrictions, such shares shall be
released from all further restrictions and prohibitions under this ARTICLE, any
similar restrictions and prohibitions under the Restricted Stock Agreement, and
all of the forfeiture provisions of the Plan, and the Company shall thereupon
deliver or cause to be delivered to such Participant or legal representative the
certificate or certificates for such shares, free of the legend provided in
Section 7.4. Upon the occurrence of a

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Change in Control (as defined in ARTICLE 9) all shares of Common Stock subject
to an award of Restricted Stock shall be released from all Forfeiture
Restrictions, and the Company shall thereupon deliver or cause to be delivered
to such Participant or legal representative the certificate or certificates for
such shares, free of the legend provided in Section 7.4.

     

ARTICLE 8.  Recapitalization or Reorganization.

     

8.1   Except as hereinafter otherwise provided, Options and awards of Restricted
Stock and any agreements evidencing Options and awards of Restricted Stock shall
be subject to adjustment by the Committee at its discretion as to the number of
shares of Common Stock and the Option Price in the event of changes in the
outstanding Common Stock by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Options and awards of Restricted Stock.

     

8.2   The existence of the Plan and the Options and awards of Restricted Stock
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity securities having any priority or preference with respect to
or affecting Common Stock or the rights thereof, the dissolution or liquidation
of the Company or any sale, lease, exchange or other disposition of all or any
part of its assets or business or any other corporate act or proceeding.

     

8.3   The shares with respect to which Options and awards of Restricted Stock
may be granted are shares of Common Stock as presently constituted, but if, and
whenever, prior to the expiration of an Option or award of Restricted Stock
theretofore granted, the Company shall effect a subdivision or consolidation of
shares of Common Stock or the payment of a stock dividend on Common Stock
without receipt of consideration by the Company, the number of shares of Common
Stock with respect to which such Option or award of Restricted Stock may
thereafter pertain (i) in the event of an increase in the number of outstanding
shares shall be proportionately increased, and (ii) in the event of a reduction
in the number of outstanding shares shall be proportionately reduced, and in the
case of an Option, the Option Price shall be appropriately adjusted as
necessary.

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ARTICLE 9.  Change in Control.

     

Upon the occurrence of a Change in Control, the Committee may take any action
with respect to outstanding Restricted Stock that it deems appropriate,
including but not limited to causing the Forfeiture Restrictions to lapse;
provided, however, that if a Change in Control occurs and, in connection with or
as a result of such Change in Control, Richard D. Kinder no longer holds or does
not continue to hold the office of Chairman of the Company, to the extent any
shares of Restricted Stock are subject to Forfeiture Restrictions, such
Forfeiture Restrictions shall lapse, and the Company shall thereupon deliver or
cause to be delivered to each Participant or legal representative the
certificate or certificates for such shares, free of the legend provided in
Section 7.4. Upon the occurrence of a Change in Control, there shall be
substituted for each share of Common Stock then subject to an Option, the number
and kind of shares of stock, or other securities into which each outstanding
share of Common Stock shall be converted by such Change in Control. As used
herein, the term "Change in Control" shall mean the occurrence with respect to
the Company of any of the following events:

     

(a)   any "person," as such term is used in Section 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities;

     

(b)   during any period of two consecutive years (not including any period prior
to the effective date of the Plan), individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in paragraph (a), (c) or (d) of this Article 9)
whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason other than normal retirement, death or disability to
constitute at least a majority thereof;

     

(c)   the shareholders of the Company approve a merger or consolidation of the
Company with any other person, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities for the surviving entity) more than fifty
percent (50%) of the combined voting power of the voting securities of the
Company or surviving entity outstanding immediately after such merger or
consolidation, or (ii) a merger in which the Company is the surviving entity but
no "person" (as defined above) acquires more than fifty percent (50%) of the
combined voting power of

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the Company's then outstanding securities; or

     

(d)   the shareholders of the Company 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 (or any transaction having a similar
effect).

     

ARTICLE 10.  Effective Date, Amendment and Termination of the Plan.

     

10.1  The Plan shall become effective as of January 18, 2005, subject to
stockholder approval at the 2005 annual stockholders meeting, and shall be
effective for ten years thereafter (the "Plan Expiration Date"). If stockholder
approval of the Plan is not obtained at the 2005 annual stockholders meeting,
any Options and awards of Restricted Stock theretofore granted under the Plan
shall immediately expire. No Options or awards of Restricted Stock shall be
granted under the Plan after the Plan Expiration Date, but any outstanding
Options or awards of Restricted Stock theretofore granted shall extend beyond
that date in accordance with their provisions.

     

10.2  The Board may amend, alter or discontinue the Plan, but no amendment or
alteration shall be made which would impair the rights of any Participant under
any Option or award of Restricted Stock granted without his consent, and no such
action of the Board shall be taken without approval of the Company's
shareholders if such approval is required to comply with Rule 16b-3 or any rule
promulgated by the New York Stock Exchange.

ARTICLE 11.  Miscellaneous

.

     

11.1  The Plan does not, directly or indirectly, create any right for the
benefit of any directors to receive any Options or awards of Restricted Stock
under the Plan, or create in any directors any right with respect to
continuation of service as a director.

     

11.2  The grantee of an Option or award of Restricted Stock shall not, with
respect to such grant, be deemed to have become a Participant or to have any
rights with respect to such Option or award of Restricted Stock until and unless
such grantee shall have executed an Option Agreement or Restricted Stock
Agreement, as applicable, and delivered a fully executed copy thereof to the
Company, and otherwise complied with the terms and conditions as to which
compliance is in order at the time of the granting of such Option or award of
Restricted Stock.

     

11.3  The provisions of the Plan and the terms and conditions of any Option or
award of Restricted Stock shall, in accordance with their terms, be binding
upon, and inure to the benefit of, all successors of each Participant,
including, without limitation, such Participant's estate and the executors,
administrators, or trustees thereof, heirs and legatees, and any receiver,
trustee in bankruptcy, or representative of creditors of such Participant.

     

11.4  Notwithstanding anything to the contrary expressed in the Plan, any
provisions that vary from or conflict with any applicable federal or state
securities laws (including any regulations

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promulgated thereunder) shall be deemed to be modified to conform to and comply
with such laws. Without limiting the generality of the foregoing, it is the
intention of the Company that the Plan shall comply in all respects with
Rule 16b-3, and if any Plan provision, Option or Restricted Stock is later found
not to be in compliance with Section 16 of the Exchange Act, the provision,
Option or Restricted Stock shall be construed or deemed amended to conform to
Rule 16b-3. Notwithstanding anything in the Plan to the contrary, the Board, in
its absolute discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to Participants who are subject
to Section 16 of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other Participants.

     

11.5  In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
provisions of the Plan, and the Plan shall be construed and enforced as though
the illegal or invalid provision had not been included.

ARTICLE 12.  Jurisdiction.

     

All provisions of the Plan shall be construed in accordance with the laws of
Texas except to the extent pre-empted by Federal law.

     

IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing,
Kinder Morgan, Inc. has caused these presents to be duly executed in its name
and on its behalf by its proper officers thereunto duly authorized this _____day
of __________________, _____.

  

Kinder Morgan, Inc.

  

  

  

  

  

  

By:

  

  

  

  

Name:

  

  

  

  

Title:

  

 

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