<PAGE>   1
K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================










                            EFFECTIVE JANUARY 1, 1998




















                               COPYRIGHT(C) 1997
                      BY COMPENSATION RESOURCE GROUP, INC.
                               ALL RIGHTS RESERVED


<PAGE>   2



K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                 <C>                                                                                         <C>
     Purpose ......................................................................................................1

     ARTICLE 1      Definitions....................................................................................1

     ARTICLE 2      Eligibility, Enrollment, Commencement of Participation.........................................9

           2.1      Eligibility....................................................................................9
           2.2      Enrollment Requirements........................................................................9
           2.3      Commencement of Participation..................................................................9
           2.4      Termination of Participation and/or Deferrals..................................................10

     ARTICLE 3      Deferral Commitments/Company Matching/Crediting/Taxes..........................................10

           3.1      Minimum Deferrals..............................................................................10
           3.2      Maximum Deferrals..............................................................................11
           3.3      Election to Defer; Effect of Election Form.....................................................11
           3.4      Withholding of Annual Deferral Amounts.........................................................12
           3.5      Annual Company Matching Amount.................................................................12
           3.6      Annual Company Profit Sharing Account..........................................................13
           3.7      Stock Option Amount............................................................................13
           3.8      Restricted Stock Amount........................................................................13
           3.9      Investment of Trust Assets.....................................................................13
           3.10     Sources of Stock...............................................................................13
           3.11     Vesting........................................................................................14
           3.12     Crediting/Debiting of Account Balances.........................................................15
           3.13     FICA and Other Taxes...........................................................................18
           3.14     Distribution...................................................................................18

     ARTICLE 4      Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election....................19

           4.1      Short-Term Payout..............................................................................19
           4.2      Other Benefits Take Precedence Over Short-Term.................................................19
           4.3      Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies..........................19
           4.4      Withdrawal Election............................................................................19

     ARTICLE 5      Retirement Benefit.............................................................................20

           5.1      Amount of Retirement Benefit...................................................................20
           5.2      Payment of Retirement Benefit..................................................................20
           5.3      Death Prior to Completion of Retirement Benefit................................................20
</TABLE>


                                      -i-


<PAGE>   3

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

<TABLE>
<S>                 <C>                                                                                         <C>
     ARTICLE 6      Pre-Retirement Survivor Benefit................................................................21

           6.1      Amount of Pre-Retirement Survivor Benefit......................................................21
           6.2      Payment of Pre-Retirement Survivor Benefit.....................................................21

     ARTICLE 7      Termination Benefit............................................................................21

           7.1      Amount of Termination Benefit..................................................................21
           7.2      Payment of Termination Benefit.................................................................21

     ARTICLE 8      Disability Waiver and Benefit..................................................................22

           8.1      Disability Waiver..............................................................................22
           8.2      Continued Eligibility; Disability Benefit......................................................22

     ARTICLE 9      Beneficiary Designation........................................................................23

           9.1      Beneficiary....................................................................................23
           9.2      Beneficiary Designation; Change; Spousal Consent...............................................23
           9.3      Acknowledgement................................................................................23
           9.4      No Beneficiary Designation.....................................................................23
           9.5      Doubt as to Beneficiary........................................................................23
           9.6      Discharge of Obligations.......................................................................24

     ARTICLE 10     Leave of Absence...............................................................................24

           10.1     Paid Leave of Absence..........................................................................24
           10.2     Unpaid Leave of Absence........................................................................24

     ARTICLE 11     Termination, Amendment or Modification.........................................................24

           11.1     Termination....................................................................................24
           11.2     Amendment......................................................................................25
           11.3     Plan Agreement.................................................................................25
           11.4     Effect of Payment..............................................................................25

     ARTICLE 12     Administration.................................................................................26

           12.1     Committee Duties...............................................................................26
           12.2     Agents.........................................................................................26
           12.3     Binding Effect of Decisions....................................................................26
           12.4     Indemnity of Committee.........................................................................26
           12.5     Employer Information...........................................................................26
</TABLE>


                                      -ii-

<PAGE>   4

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

<TABLE>
<S>                 <C>                                                                                         <C>
     ARTICLE 13     Other Benefits and Agreements.................................................................16

           13.1     Coordination with Other Benefits..............................................................16

     ARTICLE 14     Claims Procedures.............................................................................27

           14.1     Presentation of Claim.........................................................................27
           14.2     Notification of Decision......................................................................27
           14.3     Review of a Denied Claim......................................................................27
           14.4     Decision on Review............................................................................28
           14.5     Legal Action..................................................................................28

     ARTICLE 15     Trust.........................................................................................28

           15.1     Establishment of the Trust....................................................................28
           15.2     Interrelationship of the Plan and the Trust...................................................28
           15.3     Distributions From the Trust..................................................................29
           15.4     Stock Transferred to the Trust................................................................29

     ARTICLE 16     Miscellaneous.................................................................................29

           16.1     Status of Plan................................................................................29
           16.2     Unsecured General Creditor....................................................................29
           16.3     Employer's Liability..........................................................................29
           16.4     Nonassignability..............................................................................29
           16.5     Not a Contract of Employment..................................................................30
           16.6     Furnishing Information........................................................................30
           16.7     Terms.........................................................................................30
           16.8     Captions......................................................................................30
           16.9     Governing Law.................................................................................30
           16.10    Notice........................................................................................30
           16.11    Successors....................................................................................31
           16.12    Spouse's Interest.............................................................................31
           16.13    Validity......................................................................................31
           16.14    Incompetent...................................................................................31
           16.15    Court Order...................................................................................31
           16.16    Distribution in the Event of Taxation.........................................................32
           16.17    Insurance.....................................................................................32
           16.18    Legal Fees To Enforce Rights After Change in Control..........................................32
</TABLE>


                                     -iii-

<PAGE>   5

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================



                                K N ENERGY, INC.


               DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN


                            Effective January 1, 1998



                                     PURPOSE


         The purpose of the K N Energy, Inc. Directors and Executives Deferred
Compensation Plan (the "Plan") is to provide specified benefits to a select
group of management and highly compensated Employees and Directors who
contribute materially to the continued growth, development and future business
success of K N Energy, Inc., a Kansas corporation, and its subsidiaries, if any,
that sponsor this Plan. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.


                                    ARTICLE 1
                                   DEFINITIONS


         For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:

1.1      "Account Balance" shall mean, with respect to a Participant, a credit
         on the records of the Employer equal to the sum of (i) the Deferral
         Account balance, (ii) the vested Company Matching Account balance,
         (iii) the Company Profit Sharing Account balance, (iv) the Stock Option
         Account balance and (v) the Restricted Stock Account balance. The
         Account Balance, and each other specified account balance, shall be a
         bookkeeping entry only and shall be utilized solely as a device for the
         measurement and determination of the amounts to be paid to a
         Participant, or his or her designated Beneficiary, pursuant to this
         Plan.

1.2      "Annual Incentive" shall mean any compensation, in addition to Base
         Annual Salary relating to services performed during any calendar year,
         whether or not paid in such calendar year or included on the Federal
         Income Tax Form W-2 for such calendar year, payable to a Participant as
         an Employee under any Employer's Annual Incentive, bonus or cash
         incentive plans, excluding stock options and restricted stock.

1.3      "Annual Company Matching Amount" for any one Plan Year shall be the
         amount determined in accordance with Section 3.5.

1.4      "Annual Company Profit Sharing Amount" for any one Plan Year shall be
         the amount determined in accordance with Section 3.6.




                                      -1-
<PAGE>   6

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

1.5      "Annual Deferral Amount" shall mean that portion of a Participant's
         Base Annual Salary, Annual Incentive and Director's Fees that a
         Participant elects to have, and is deferred, in accordance with Article
         3, for any one Plan Year. In the event of a Participant's Retirement,
         Disability (if deferrals cease in accordance with Section 8.1), death
         or a Termination of Employment prior to the end of a Plan Year, such
         year's Annual Deferral Amount shall be the actual amount withheld prior
         to such event.

1.6      "Annual Installment Method" shall be an annual installment payment over
         the number of years selected by the Participant in accordance with this
         Plan, calculated as follows: The Account Balance of the Participant
         shall be calculated as of the close of business on the last business
         day of the year. The annual installment shall be calculated by
         multiplying this balance by a fraction, the numerator of which is one,
         and the denominator of which is the remaining number of annual payments
         due the Participant. By way of example, if the Participant elects a 10
         year Annual Installment Method, the first payment shall be 1/10 of the
         Account Balance, calculated as described in this definition. The
         following year, the payment shall be 1/9 of the Account Balance,
         calculated as described in this definition. Each annual installment
         shall be paid on or as soon as practicable after the last business day
         of the applicable year.

1.7      "Annual Restricted Stock Amount" shall mean, with respect to a
         Participant for any one Plan Year, the value of unvested restricted
         stock under any K N Energy, Inc. stock incentive plan, deferred in
         accordance with Section 3.8 of this Plan.

1.8      "Annual Stock Option Amount" shall mean, with respect to a Participant
         for any one Plan Year, the amount of Qualifying Gains deferred on
         Eligible Stock Option exercise in accordance with Section 3.7 of this
         Plan, calculated using the closing price of Stock as of the end of the
         business day closest to the date of such Eligible Stock Option 
         exercise.

1.9      "Base Annual Salary" shall mean the annual cash compensation relating
         to services performed during any calendar year, whether or not paid in
         such calendar year or included on the Federal Income Tax Form W-2 for
         such calendar year, excluding bonuses, commissions, overtime, fringe
         benefits, stock options, relocation expenses, incentive payments,
         non-monetary awards, directors fees and other fees, automobile and
         other allowances paid to a Participant for employment services rendered
         (whether or not such allowances are included in the Employee's gross
         income). Base Annual Salary shall be calculated before reduction for
         compensation voluntarily deferred or contributed by the Participant
         pursuant to all qualified or non-qualified plans of any Employer and
         shall be calculated to include amounts not otherwise included in the
         Participant's gross income under Code Sections 125, 402(e)(3), 402(h),
         or 403(b) pursuant to plans established by any Employer; provided,
         however, that all such amounts will be included in compensation only to
         the extent that, had there been no such plan, the amount would have
         been payable in cash to the Employee.




                                      -2-
<PAGE>   7

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

1.10     "Beneficiary" shall mean one or more persons, trusts, estates or other
         entities, designated in accordance with Article 9, that are entitled to
         receive benefits under this Plan upon the death of a Participant.

1.11     "Beneficiary Designation Form" shall mean the form established from
         time to time by the Committee that a Participant completes, signs and
         returns to the Committee to designate one or more Beneficiaries.

1.12     "Board" shall mean the board of directors of the Company.

1.13     "Change in Control" shall mean the occurrence of one or more 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 under the Exchange Act), directly or
                  indirectly, of securities of the Company representing thirty
                  percent (30%) or more of the combined voting power of the
                  Company's then outstanding securities and twenty-five percent
                  (25%) or more of the seats on the Board of Directors of the
                  Company comes under the control of that same 30% beneficial
                  owner; or

         (b)      during any period of two consecutive years (not including any
                  period prior to the effective date of this Agreement),
                  individuals who at the beginning of such period constitute the
                  Board of Directors, and any new director (other than a
                  director designated by a person who has or has threatened to
                  enter into an agreement with the Company to effect a
                  transaction described in (a), (c) or (d) of this Paragraph)
                  whose election by the Board of Directors 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, or

         (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 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 such surviving entity outstanding immediately after such
                  merger or consolidation, and (ii) a merger in which no
                  "person" (as defined above) acquires more than 30% of the
                  combined 




                                      -3-
<PAGE>   8

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                  voting power of the Company's then outstanding securities and
                  twenty-five percent (25%) or more of the seats on the Board of
                  Directors of the Company comes under the control of that same
                  30% beneficial owner, 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).

1.14     "Chief Executive Officer" shall mean the chief executive officer of the
         Company.

1.15     "Claimant" shall have the meaning set forth in Section 14.1.

1.16     "Code" shall mean the Internal Revenue Code of 1986, as it may be
         amended from time to time.

1.17     "Committee" shall mean the committee described in Article 12.

1.18     "Company" shall mean K N Energy, Inc., a Kansas corporation, and any
         successor to all or substantially all of the Company's assets or
         business.

1.19     "Company Matching Account" shall mean (i) the sum of all of a
         Participant's Annual Company Matching Amounts, plus (ii) amounts
         credited in accordance with all the applicable crediting provisions of
         this Plan that relate to the Participant's Company Matching Account,
         less (iii) all distributions made to the Participant or his or her
         Beneficiary pursuant to this Plan that relate to the Participant's
         Company Matching Account.

1.20     "Company Profit Sharing Account" shall mean (i) the sum of all of a
         Participant's Annual Company Profit Sharing Amounts, plus (ii) amounts
         credited in accordance with all the applicable crediting provisions of
         this Plan that relate to the Participant's Company Profit Sharing
         Account, less (iii) all distributions made to the Participant or his or
         her Beneficiary pursuant to this Plan that relate to the Participant's
         Company Profit Sharing Account.

1.21     "Deduction Limitation" shall mean the following described limitation on
         a benefit that may otherwise be distributable pursuant to the
         provisions of this Plan. Except as otherwise provided, this limitation
         shall be applied to all distributions that are "subject to the
         Deduction Limitation" under this Plan. If an Employer determines in
         good faith prior to a Change in Control that there is a reasonable
         likelihood that any compensation paid to a Participant for a taxable
         year of the Employer would not be deductible by the Employer solely by
         reason of the limitation under Code Section 162(m), then to the extent
         deemed necessary by the Employer to ensure that the entire amount of
         any distribution to the Participant pursuant to this Plan prior to the
         Change in Control is deductible, the Employer may defer all or any
         portion of a distribution under this Plan. Any amounts deferred



                                      -4-
<PAGE>   9

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         pursuant to this limitation shall continue to be credited/debited with
         additional amounts in accordance with Section 3.12 below, even if such
         amount is being paid out in installments. The amounts so deferred and
         amounts credited thereon shall be distributed to the Participant or his
         or her Beneficiary (in the event of the Participant's death) at the
         earliest possible date, as determined by the Employer in good faith, on
         which the deductibility of compensation paid or payable to the
         Participant for the taxable year of the Employer during which the
         distribution is made will not be limited by Section 162(m), or if
         earlier, the effective date of a Change in Control. Notwithstanding
         anything to the contrary in this Plan, the Deduction Limitation shall
         not apply to any distributions made after a Change in Control.

1.22     "Deferral Account" shall mean (i) the sum of all of a Participant's
         Annual Deferral Amounts, plus (ii) amounts credited in accordance with
         all the applicable crediting provisions of this Plan that relate to the
         Participant's Deferral Account, less (iii) all distributions made to
         the Participant or his or her Beneficiary pursuant to this Plan that
         relate to his or her Deferral Account.

1.23     "Director" shall mean any member of the board of directors of any
         Employer.

1.24     "Director's Fees" shall mean the annual fees paid by any Employer,
         including retainer fees and meetings fees, as compensation for serving
         on the board of directors.

1.25     "Disability" shall mean a period of disability during which a
         Participant qualifies for permanent disability benefits under the
         Participant's Employer's long-term disability plan, or, if a
         Participant does not participate in such a plan, a period of disability
         during which the Participant is "permanently and totally disabled" as
         that term is defined under Code Section 22(e)(3).

1.26     "Disability Benefit" shall mean the benefit set forth in Article 8.

1.27     "Election Form" shall mean the form established from time to time by
         the Committee that a Participant completes, signs and returns to the
         Committee to make an election under the Plan.

1.28     "Eligible Stock Option" shall mean one or more non-qualified stock
         option(s) selected by the Committee in its sole discretion and
         exercisable under a plan or arrangement of any Employer permitting a
         Participant under this Plan to defer gain with respect to such option.

1.29     "Employee" shall mean a person who is an employee of any Employer.

1.30     "Employer(s)" shall mean the Company and any of its subsidiaries (now
         in existence or hereafter formed or acquired) that have been selected
         by the Board to participate in the Plan and have adopted the Plan as a
         sponsor.




                                      -5-
<PAGE>   10

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

1.31     "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
         as it may be amended from time to time.

1.32     "Participant" shall mean for all purposes of this Plan other than the
         Annual Profit Sharing Amount any Employee or Director (i) who is
         selected to participate in the Plan, (ii) who elects to participate in
         the Plan, (iii) who signs a Plan Agreement, an Election Form and a
         Beneficiary Designation Form, (iv) whose signed Plan Agreement,
         Election Form and Beneficiary Designation Form are accepted by the
         Committee, (v) who commences participation in the Plan, and (vi) whose
         Plan Agreement has not terminated. For purposes of the Annual Profit
         Sharing Amount, "Participant" shall mean any Employee (i) who is
         selected to participate in the Plan, (ii) who signs a Plan Agreement,
         an Election Form and a Beneficiary Designation Form, (iii) whose signed
         Plan Agreement, Election Form and Beneficiary Designation Form are
         accepted by the Committee, (iv) who commences participation in the
         Plan, and (v) whose Plan Agreement has not terminated. A spouse or
         former spouse of a Participant shall not be treated as a Participant in
         the Plan or have an account balance under the Plan, even if he or she
         has an interest in the Participant's benefits under the Plan as a
         result of applicable law or property settlements resulting from legal
         separation or divorce.

1.33     "Plan" shall mean the Company's Directors and Executives Deferred
         Compensation Plan, effective January 1, 1998, into which the Company's
         1987 Director's Deferred Fee Plan, as amended, and a portion of the
         Company's Non-Qualified Profit Sharing Restoration Plan, have been
         merged effective January 1, 1998, all of which shall be evidenced by
         this instrument and by each Plan Agreement, as they may be amended from
         time to time.

1.34     "Plan Agreement" shall mean a written agreement, as may be amended from
         time to time, which is entered into by and between an Employer and a
         Participant. Each Plan Agreement executed by a Participant and the
         Participant's Employer shall provide for the entire benefit to which
         such Participant is entitled under the Plan; should there be more than
         one Plan Agreement, the Plan Agreement bearing the latest date of
         acceptance by the Employer shall supersede all previous Plan Agreements
         in their entirety and shall govern such entitlement. The terms of any
         Plan Agreement may be different for any Participant, and any Plan
         Agreement may provide additional benefits not set forth in the Plan or
         limit the benefits otherwise provided under the Plan; provided,
         however, that any such additional benefits or benefit limitations must
         be agreed to by both the Employer and the Participant.

1.35     "Plan Year" shall mean a period beginning on January 1 of each calendar
         year and continuing through December 31 of such calendar year.

1.36     "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
         Article 6.

1.37     "Qualifying Gain" shall mean the value accrued upon exercise of an
         Eligible Stock Option (i) using a Stock-for-Stock payment method and
         (ii) having an aggregate fair market value 


                                      -6-
<PAGE>   11

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         in excess of the total Stock purchase price necessary to exercise the
         option. In other words, the Qualifying Gain upon exercise of an
         Eligible Stock Option equals the total market value of the shares (or
         share equivalent units) acquired minus the total stock purchase price.
         For example, assume a Participant elects to defer the Qualifying Gain
         accrued upon exercise of an Eligible Stock Option to purchase 1000
         shares of Stock at an exercise price of $20 per share, when Stock has a
         current fair market value of $25 per share. Using the Stock-for-Stock
         payment method, the Participant would deliver 800 shares of Stock
         (worth $20,000) to exercise the Eligible Stock Option and receive, in
         return, 800 shares of Stock plus a Qualifying Gain (in this case, in
         the form of an unfunded and unsecured promise to pay money or property
         in the future) equal to $5,000 (i.e., the current value of the
         remaining 200 shares of Stock).

1.38     "Restricted Stock" shall mean unvested shares of restricted stock
         selected by the Committee in its sole discretion and awarded to the
         Participant under any K N Energy, Inc. stock incentive plan.

1.39     "Restricted Stock Account" shall mean (i) the sum of the Participant's
         Annual Restricted Stock Amounts, plus (ii) amounts credited/debited in
         accordance with all the applicable crediting/debiting provisions of
         this Plan that relate to the Participant's Restricted Stock Account,
         less (iii) all distributions made to the Participant or his or her
         Beneficiary pursuant to this Plan that relate to the Participant's
         Restricted Stock Account.

1.40     "Restricted Stock Amount" shall mean, for any grant of Restricted
         Stock, the amount of such Restricted Stock deferred in accordance with
         Section 3.7 of this Plan, calculated using the closing price of Stock
         as of the end of the business day closest to the date such Restricted
         Stock would otherwise vest, but for the election to defer.

1.41     "Retirement", "Retire(s)" or "Retired" for purposes of the Company
         Profit Sharing Account, shall have the same meaning as such term(s)
         have in the K N Energy, Inc. Profit Sharing Plan, as it may be amended
         from time to time. For all other purposes under this Plan, such term(s)
         shall mean, with respect to an Employee, severance from employment from
         all Employers for any reason other than a leave of absence, death or
         Disability on or after the earlier of the attainment of (a) age
         sixty-five (65) or (b) age fifty-five (55) with ten (10) Years of
         Service; and shall mean with respect to a Director who is not an
         Employee, severance of his or her directorships with all Employers on
         or after the later of (y) the attainment of age seventy (70), or (z) in
         the sole discretion of the Committee, an age later than age seventy
         (70). If a Participant is both an Employee and a Director, Retirement
         shall not occur until he or she Retires as both an Employee and a
         Director, which Retirement shall be deemed to be a Retirement as a
         Director; provided, however, that such a Participant may elect, at
         least three years prior to Retirement and in accordance with the
         policies and procedures established by the Committee, to Retire for
         purposes of this Plan at the time he 




                                      -7-
<PAGE>   12

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         or she Retires as an Employee, which Retirement shall be deemed to be a
         Retirement as an Employee.

1.42     "Retirement Benefit" shall mean the benefit set forth in Article 5.

1.43     "Short-Term Payout" shall mean the payout set forth in Section 4.1.

1.44     "Stock" shall mean K N Energy, Inc. common stock, $5 par value, or any
         other equity securities of the Company designated by the Committee.

1.45     "Stock Option Account" shall mean the sum of (i) the Participant's
         Annual Stock Option Amounts, plus (ii) amounts credited/debited in
         accordance with all the applicable crediting/debiting provisions of
         this Plan that relate to the Participant's Stock Option Account, less
         (iii) all distributions made to the Participant or his or her
         Beneficiary pursuant to this Plan that relate to the Participant's
         Stock Option Account.

1.46     "Stock Option Amount" shall mean, for any Eligible Stock Option, the
         amount of Qualifying Gains deferred in accordance with Section 3.7 of
         this Plan, calculated using the closing price of Stock as of the end of
         the business day closest to the date of exercise of such Eligible Stock
         Option.

1.47     "Termination Benefit" shall mean the benefit set forth in Article 7.

1.48     "Termination of Employment" shall mean the severing of employment with
         all Employers, or service as a Director of all Employers, voluntarily
         or involuntarily, for any reason other than Retirement, Disability,
         death or an authorized leave of absence. If a Participant is both an
         Employee and a Director, a Termination of Employment shall occur only
         upon the termination of the last position held; provided, however, that
         such a Participant may elect, at least three years before Termination
         of Employment and in accordance with the policies and procedures
         established by the Committee, to be treated for purposes of this Plan
         as having experienced a Termination of Employment at the time he or she
         ceases employment with an Employer as an Employee.

1.49     "Trust" shall mean one or more trusts established pursuant to that
         certain Nonqualified Benefit Plans Trust Agreement, dated as of
         February 28, 1996 between the Company and the trustee named therein, as
         amended from time to time.

1.50     "Unforeseeable Financial Emergency" shall mean an unanticipated
         emergency that is caused by an event beyond the control of the
         Participant that would result in severe financial hardship to the
         Participant resulting from (i) a sudden and unexpected illness or
         accident of the Participant or a dependent of the Participant, (ii) a
         loss of the Participant's property due to casualty, or (iii) such other
         extraordinary and unforeseeable circumstances arising as a 



                                      -8-
<PAGE>   13

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         result of events beyond the control of the Participant, all as
         determined in the sole discretion of the Committee.

1.51     "Years of Service" shall mean the total number of full years in which a
         Participant has been employed by one or more Employers. For purposes of
         this definition, a year of employment shall be a 365 day period (or 366
         day period in the case of a leap year) that, for the first year of
         employment, commences on the Employee's date of hiring and that, for
         any subsequent year, commences on an anniversary of that hiring date.
         Any partial year of employment shall not be counted.



                                    ARTICLE 2
             ELIGIBILITY, ENROLLMENT, COMMENCEMENT OF PARTICIPATION

2.1      ELIGIBILITY. An Employee's eligibility for participation in this Plan
         shall be determined on an individual basis by recommendation from the
         Chief Executive Officer and approval by the Committee. Any Employee who
         satisfies all of the requirements of the preceding sentence, and who in
         addition is affected by the limitations of either Section 401(a)(17) or
         Section 415 of the Code with respect to the allocation of Company
         contributions under the K N Energy, Inc. Profit Sharing Plan, shall be
         eligible to participate in the Company Profit Sharing Amount under this
         Plan. In addition, Directors shall be eligible to participate in this
         Plan with respect to their Director's Fees. Notwithstanding the
         foregoing, however, no Employee shall be selected for participation in
         this Plan unless he or she qualifies as a member of a select group of
         management or as a highly compensated employee of the Company.

2.2      ENROLLMENT REQUIREMENTS. As a condition to participation, each selected
         Employee or Director shall complete, execute and return to the
         Committee a Plan Agreement, an Election Form and a Beneficiary
         Designation Form, all within 30 days after he or she is selected and
         becomes eligible to participate in the Plan. In addition, the Committee
         shall establish from time to time such other enrollment requirements as
         it determines in its sole discretion are necessary.

2.3      COMMENCEMENT OF PARTICIPATION. Provided an Employee or Director
         selected to participate in the Plan has met all enrollment requirements
         set forth in this Plan and required by the Committee, including
         returning all required documents to the Committee within the specified
         time period, that Employee or Director shall commence participation in
         the Plan on the first day of the Plan Year following the day on which
         the Employee or Director completes all enrollment requirements. If an
         Employee or a Director fails to meet all such requirements within the
         period required, in accordance with Section 2.2, that Employee or
         Director shall not be eligible to participate in the Plan until the
         first day of the Plan Year following the delivery to and acceptance by
         the Committee of the required documents.



                                      -9-
<PAGE>   14

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

2.4      TERMINATION OF PARTICIPATION AND DEFERRALS. If the Committee determines
         in good faith that a Participant no longer qualifies as a member of a
         select group of management or highly compensated employees, as
         membership in such group is determined in accordance with Sections
         201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the
         right, in its sole discretion, to (i) terminate any deferral election
         the Participant has made for the remainder of the Plan Year in which
         the Participant's membership status changes, (ii) prevent the
         Participant from making future deferral elections and (iii) immediately
         distribute the Participant's then Account Balance as a Termination
         Benefit and terminate the Participant's participation in the Plan.



                                    ARTICLE 3
              DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES

3.1      MINIMUM DEFERRALS.

         (a)      BASE ANNUAL SALARY, ANNUAL INCENTIVE AND DIRECTOR'S FEES. For
                  each Plan Year, a Participant may elect to defer, as his or
                  her Annual Deferral Amount, Base Annual Salary, Annual
                  Incentive and Director's Fees in the following minimum amounts
                  for each deferral elected:

<TABLE>
<CAPTION>
                  ---------------------------------- --------------------------
                               DEFERRAL                    MINIMUM AMOUNT
                  ---------------------------------- --------------------------
<S>                                                  <C>
                       Base Annual Salary and/or
                           Annual Incentive                    $2,000
                  ---------------------------------- --------------------------
                            Directors Fees                     $    0
                  ---------------------------------- --------------------------
</TABLE>

                  If an election is made for less than a stated minimum amount,
                  or if no election is made, the amount deferred for that
                  category of deferral shall be zero.

         (b)      STOCK OPTION AMOUNT. For each Eligible Stock Option, a
                  Participant may elect to defer, as his or her Stock Option
                  Amount, the following minimum percentage of Qualifying Gain
                  with respect to exercise of the Eligible Stock Option:

<TABLE>
<CAPTION>
                  -------------------------------- -----------------------------
                              DEFERRAL                   MINIMUM PERCENTAGE
                  -------------------------------- -----------------------------
<S>                                                <C>
                         Qualifying Gain                       10%
                  -------------------------------- -----------------------------
</TABLE>

                  provided, however, that such Stock Option Amount shall be no
                  less than the lesser of $20,000 or 100% of such Qualifying
                  Gain.

         (c)      RESTRICTED STOCK AMOUNT. For Restricted Stock, a Participant
                  may elect to defer, as his or her Restricted Stock Amount, the
                  following minimum percentage of the Participant's Restricted
                  Stock:



                                      -10-
<PAGE>   15

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

<TABLE>
<CAPTION>
                  ------------------------------ ------------------------------
                            DEFERRAL                  MINIMUM PERCENTAGE
                  ------------------------------ ------------------------------
<S>                                              <C>
                       Restricted Stock                       10%
                  ------------------------------ ------------------------------
</TABLE>

                  provided, however, that the Annual Restricted Stock Amount
                  shall be no less than the lesser of $20,000 or 100% of the
                  Participant's Restricted Stock.

3.2      MAXIMUM DEFERRAL.

         (a)      BASE ANNUAL SALARY, ANNUAL INCENTIVE AND DIRECTORS FEES. For
                  each Plan Year, a Participant may elect to defer, as his or
                  her Annual Deferral Amount, Base Annual Salary, Annual
                  Incentive and Directors Fees up to the following maximum
                  percentages for each deferral elected:

<TABLE>
<CAPTION>
                  ------------------------------ -----------------------------
                            DEFERRAL                 MAXIMUM PERCENTAGE
                  ------------------------------ -----------------------------
<S>                                              <C>
                       Base Annual Salary                    90%
                  ------------------------------ -----------------------------
                       Annual Incentive                      90%
                  ------------------------------ -----------------------------
                       Directors Fees                       100%
                  ------------------------------ -----------------------------
</TABLE>

                  For each Eligible Stock Option, a Participant may elect to
                  defer, as his or her Stock Option Amount, Qualifying Gain up
                  to the following maximum percentage with respect to exercise
                  of the Eligible Stock Option:

<TABLE>
<CAPTION>
                  ------------------------------ ------------------------------
                            DEFERRAL                  MAXIMUM PERCENTAGE
                  ------------------------------ ------------------------------
<S>                                              <C>
                       Qualifying Gain                       100%
                  ------------------------------ ------------------------------
</TABLE>

                  Stock Option Amounts may also be limited by other terms or
                  conditions set forth in the stock option plan or agreement
                  under which such options are granted.

3.3      ELECTION TO DEFER; EFFECT OF ELECTION FORM.

         (a)      FIRST PLAN YEAR. In connection with a Participant's
                  commencement of participation in the Plan, the Participant
                  shall make an irrevocable deferral election for the Plan Year
                  in which the Participant commences participation in the Plan,
                  along with such other elections as the Committee deems
                  necessary or desirable under the Plan. For these elections to
                  be valid, the Election Form must be completed and signed by
                  the Participant, timely delivered to the Committee (in
                  accordance with Section 2.2 above) and accepted by the
                  Committee.

         (b)      SUBSEQUENT PLAN YEARS. For each succeeding Plan Year, an
                  irrevocable deferral election for that Plan Year, and such
                  other elections as the Committee deems necessary or desirable
                  under the Plan, shall be made by timely delivering to the


                                      -11-


<PAGE>   16

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                  Committee, in accordance with its rules and procedures, before
                  the end of the Plan Year preceding the Plan Year for which the
                  election is made, a new Election Form. If no such Election
                  Form is timely delivered for a Plan Year, the Annual Deferral
                  Amount shall be zero for that Plan Year. 

         (c)      STOCK OPTION DEFERRAL. For an election to defer gain upon an
                  Eligible Stock Option exercise to be valid: (i) a separate
                  Election Form must be completed and signed by the Participant
                  with respect to the Eligible Stock Option; (ii) the Election
                  Form must be timely delivered to the Committee and accepted by
                  the Committee at least six (6) months prior to the date the
                  Participant elects to exercise the Eligible Stock Option;
                  (iii) the Eligible Stock Option must be exercised using a
                  Stock-for-Stock payment method; and (iv) the Stock actually or
                  constructively delivered by the Participant to exercise the
                  Eligible Stock Option must have been owned by the Participant
                  during the entire six (6) month period prior to its delivery.

         (d)      RESTRICTED STOCK. For an election to defer Restricted Stock
                  Amounts to be valid: (i) a separate irrevocable Election Form
                  must be completed and signed by the Participant, with respect
                  to such Restricted Stock; and (ii) such Election Form must be
                  timely delivered to the Committee and accepted by the
                  Committee at least six (6) months prior to the date such
                  Restricted Stock vests under the terms of the K N Energy, Inc.
                  stock incentive plan.

         (e)      SECURITIES LAW COMPLIANCE. Notwithstanding anything in this
                  Plan to the contrary, no deferral election, exercise of an
                  option, or form of consideration or payment that would
                  otherwise constitute a non-exempt violation of Section 16(b)
                  of the Exchange Act shall be permitted.

3.4      WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, the Base
         Annual Salary portion of the Annual Deferral Amount shall be withheld
         from each regularly scheduled Base Annual Salary payroll in equal
         amounts, as adjusted from time to time for increases and decreases in
         Base Annual Salary. The Annual Incentive and Directors Fees portion of
         the Annual Deferral Amount shall be withheld at the time the Annual
         Incentive or Directors Fees are or otherwise would be paid to the
         Participant, whether or not this occurs during the Plan Year itself.

3.5      ANNUAL COMPANY MATCHING AMOUNT. An Employee's Annual Company Matching
         Amount for any Plan Year shall be equal to a percentage of the
         Employee's Annual Deferral Amount for such Plan Year, up to an amount
         that does not exceed 15% of the Employee's Base Annual Salary. The
         matching percentage to be applied to the Employee's Annual Deferral
         Amount shall be based on the Company's annual attainment of performance
         objectives announced prior to the commencement of the Plan Year during
         which the match will be earned. If a Participant is not employed by an
         Employer as of the last business day of a Plan Year other than by
         reason of his or her Retirement or death, the Annual Company 


                                      -12-
<PAGE>   17
K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         Matching Amount for such Plan Year shall be zero. In the event of
         Retirement or death, a Participant shall be credited with the Annual
         Company Matching Amount, if any, for the Plan Year in which he or she
         Retires or dies.

3.6      ANNUAL COMPANY PROFIT SHARING AMOUNT. A Participant's Annual Profit
         Sharing Amount for any Plan Year shall be equal to the difference, if
         any, between (i) the contribution that the Company would have made to
         the K N Energy, Inc. Profit Sharing Plan and that would have been
         allocated to the Participant's account in such plan if there were no
         limitations due to Code Section 415 and 401(a)(17), and (ii) the
         Company contribution that was actually allocated to such Participant's
         account in such plan.

3.7      STOCK OPTION AMOUNT. Subject to any terms and conditions imposed by the
         Committee, Participants may elect to defer, under the Plan, Qualifying
         Gains attributable to an Eligible Stock Option exercise. Stock Option
         Amounts shall be credited/debited to the Participant on the books of
         the Employer at the time Stock would otherwise have been delivered to
         the Participant pursuant to the Eligible Stock Option exercise, but for
         the election to defer.

3.8      RESTRICTED STOCK AMOUNT. Subject to any terms and conditions imposed by
         the Committee, Participants may elect to defer, under the Plan,
         Restricted Stock Amounts. Restricted Stock Amounts shall be
         credited/debited to the Participant on the books of the Employer in
         connection with such an election at the time the Restricted Stock would
         otherwise vest under the terms of the K N Energy, Inc. stock incentive
         plan, but for the election to defer.

3.9      INVESTMENT OF TRUST ASSETS. The Trustee of the Trust shall be
         authorized, upon written instructions received from the Committee or
         investment manager appointed by the Committee, to invest and reinvest
         the assets of the Trust in accordance with the applicable Trust
         Agreement, including the disposition of Stock and reinvestment of the
         proceeds in one or more investment vehicles designated by the
         Committee.

3.10     SOURCES OF STOCK. If Stock is credited under the Plan in the Trust in
         connection with an Eligible Stock Option exercise or in connection with
         a deferral of Restricted Stock, the shares so credited shall be deemed
         to have originated, and shall be counted against the number of shares
         reserved, under such other plan, program or arrangement.



                                      -13-
<PAGE>   18

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

3.11     VESTING.

         (a)      A Participant shall at all times be 100% vested in his or her
                  Deferral Account, Stock Option Account and Restricted Stock
                  Account.

         (b)      A Participant shall be vested in his or her Company Matching
                  Account as follows:

                  (i)      with respect to all benefits under this Plan other
                           than the Termination Benefit, a Participant's vested
                           Company Matching Account shall equal 100% of such
                           Participant's Company Matching Account; and

                  (ii)     with respect to the Termination Benefit, a
                           Participant's Company Matching Account shall vest on
                           the basis of the Participant's Years of Service at
                           the time the Participant experiences a Termination of
                           Employment, in accordance with the following
                           schedule:

<TABLE>
<CAPTION>
                           --------------------------------------------- --------------------------------------------
                                   YEARS OF SERVICE AT DATE OF                      VESTED PERCENTAGE OF
                                    TERMINATION OF EMPLOYMENT                     COMPANY MATCHING ACCOUNT
                           --------------------------------------------- --------------------------------------------
<S>                        <C>                                           <C>
                                         Less than 1 year                                       0%
                           --------------------------------------------- --------------------------------------------
                                 1 year or more, but less than 2                               25%
                           --------------------------------------------- --------------------------------------------
                                 2 years or more, but less than 3                              50%
                           --------------------------------------------- --------------------------------------------
                                 3 years or more, but less than 4                              75%
                           --------------------------------------------- --------------------------------------------
                                         4 years or more                                      100%
                           --------------------------------------------- --------------------------------------------
</TABLE>

         (c)      A Participant shall be vested in his or her Company Profit
                  Sharing Account at any time to the same extent that he or she
                  is vested in his or her Company contributions account under
                  the K N Energy, Inc. Profit Sharing Plan, as amended from time
                  to time.

         (d)      Notwithstanding anything to the contrary contained in this
                  Section 3.11, in the event of a Change in Control, a
                  Participant's Company Matching Account shall immediately
                  become 100% vested (if it is not already vested in accordance
                  with the above vesting schedules).

         (e)      Notwithstanding subsection (d), the vesting schedule for a
                  Participant's Company Matching Account shall not be
                  accelerated to the extent that the Committee determines that
                  such acceleration would cause the deduction limitations of
                  Section 280G of the Code to become effective. In the event
                  that all of a Participant's Company Matching Account is not
                  vested pursuant to such a determination, the Participant may
                  request independent verification of the Committee's
                  calculations with respect to the application of Section 280G.
                  In such case, the Committee must provide to the Participant
                  within 15 business days of such a request an opinion from 



                                      -14-
<PAGE>   19

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                  a nationally recognized accounting firm selected by the
                  Participant (the "Accounting Firm"). The opinion shall state
                  the Accounting Firm's opinion that any limitation in the
                  vested percentage hereunder is necessary to avoid the limits
                  of Section 280G and contain supporting calculations. The cost
                  of such opinion shall be paid for by the Company.

3.12     CREDITING/DEBITING OF ACCOUNT BALANCES. In accordance with, and subject
         to, the rules and procedures that are established from time to time by
         the Committee, in its sole discretion, amounts shall be credited or
         debited to a Participant's Account Balance in accordance with the
         following rules:

         (a)      ELECTION OF MEASUREMENT FUNDS FOR DEFERRAL ACCOUNT, COMPANY
                  MATCHING ACCOUNT BALANCE AND PROFIT SHARING ACCOUNT BALANCE. A
                  Participant, in connection with his or her initial deferral
                  election in accordance with Section 3.3(a) above, shall elect,
                  on the Election Form, one or more Measurement Fund(s) (as
                  described in Section 3.12(c) below) to be used to determine
                  the additional amounts to be credited to his or her Deferral
                  Account, Company Matching Account and Company Profit Sharing
                  Account balance for the first calendar quarter in which the
                  Participant commences participation in the Plan and continuing
                  thereafter for each subsequent calendar quarter in which the
                  Participant participates in the Plan, unless changed in
                  accordance with the next sentence. Commencing with the first
                  calendar quarter that follows the Participant's commencement
                  of participation in the Plan and continuing thereafter for
                  each subsequent calendar quarter in which the Participant
                  participates in the Plan, no later than the next to last
                  business day of the calendar quarter, the Participant may (but
                  is not required to) elect, by submitting an Election Form to
                  the Committee that is accepted by the Committee, to add or
                  delete one or more Measurement Fund(s) to be used to determine
                  the additional amounts to be credited to his or her Deferral
                  Account, Company Matching Account and Company Profit Sharing
                  Account balance, or to change the portion of his or her
                  Deferral Account, Company Matching Account and Company Profit
                  Sharing Account balance allocated to each previously or newly
                  elected Measurement Fund. If an election is made in accordance
                  with the previous sentence, it shall apply to the next
                  calendar quarter and continue thereafter for each subsequent
                  calendar quarter in which the Participant participates in the
                  Plan, unless changed in accordance with the previous sentence.

         (b)      PROPORTIONATE ALLOCATION. In making any election described in
                  Section 3.12(a) above, the Participant shall specify on the
                  Election Form, in increments of five percentage points (5%),
                  the percentage of his or her Deferral Account Balance, Company
                  Matching Account and Company Profit Sharing Account balance to
                  be allocated to a Measurement Fund (as if the Participant was
                  making an investment in 



                                      -15-
<PAGE>   20

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                  that Measurement Fund with that portion of his or her Deferral
                  Account, Company Matching Account and Company Profit Sharing
                  Account balance).

         (c)      MEASUREMENT FUNDS FOR DEFERRAL ACCOUNT, COMPANY MATCHING
                  ACCOUNT AND COMPANY PROFIT SHARING ACCOUNT BALANCE. The
                  Participant may elect one or more measurement funds, based on
                  certain mutual funds (the "Measurement Funds") made available
                  by the Company, for the purpose of crediting additional
                  amounts to his or her Deferral Account, Company Matching
                  Account and Company Profit Sharing Account balance.


                  The portion of a Participant's Deferral Account, if any, that
                  is attributable to a Director's deferral of Director's Fees
                  may be deemed invested in the Company Stock Measurement Fund
                  (the "Company Stock Measurement Fund") at all times prior to
                  distribution, for the purpose of crediting additional amounts
                  to his or her Deferral Account balance. Amounts deemed
                  invested in the Company Stock Measurement Fund shall be
                  credited or debited, based on the performance of the Company's
                  common stock, as if 100% of any such amounts had been invested
                  in Stock, with any dividends declared and paid on such Stock
                  deemed to be reinvested in additional Stock.


                  As necessary, the Committee may, in its sole discretion,
                  discontinue, substitute or add a Measurement Fund. Each such
                  action will take effect as of the first day of the calendar
                  quarter that follows by thirty (30) days the day on which the
                  Committee gives Participants advance written notice of such
                  change.

         (d)      MANDATORY COMPANY STOCK MEASUREMENT FUND FOR STOCK OPTION AND
                  RESTRICTED STOCK ACCOUNT BALANCE. Notwithstanding anything to
                  the contrary contained in this Section 3.12, a Participant's
                  Stock Option Account and Restricted Stock Account balance must
                  be deemed invested in the Company Stock Measurement Fund at
                  all times prior to distribution, for the purpose of crediting
                  additional amounts to his or her Stock Option Account and
                  Restricted Stock Account balance. Amounts deemed invested in
                  the Company Stock Measurement Fund shall be credited or
                  debited, based on the performance of the Company's common
                  stock, as if 100% of any such amounts had been invested in
                  Stock, with any dividends declared and paid on such Stock
                  deemed to be reinvested in additional Stock.

         (e)      CREDITING OR DEBITING METHOD. The performance of each
                  Measurement Fund (either positive or negative) will be
                  determined by the Committee, in its sole discretion, based on
                  the performance of the Measurement Funds themselves. A
                  Participant's Account Balance shall be credited or debited on
                  a daily basis based on the performance of each Measurement
                  Fund selected or required by the Participant, as though (i) a
                  Participant's Account Balance were invested in the Measurement



                                      -16-
<PAGE>   21

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                  Fund(s) selected or required by the Participant, in the
                  percentages applicable to such calendar quarter, as of the
                  close of business on the first business day of such calendar
                  quarter, at the closing price on such date; (ii) the portion
                  of the Annual Deferral Amount that was actually deferred
                  during any calendar quarter were invested in the Measurement
                  Fund(s) selected or required by the Participant, in the
                  percentages applicable to such calendar quarter, no later than
                  the close of business on the business day on which such
                  amounts are actually deferred from the Participant's Base
                  Annual Salary through reductions in his or her payroll, at the
                  closing price on such date; and (iii) any distribution made to
                  a Participant that decreases such Participant's Account
                  Balance ceased being invested in the Measurement Fund(s), in
                  the percentages applicable to such calendar quarter, no
                  earlier than the business day of the distribution, at the
                  closing price on such date. The Participant's Annual Company
                  Matching Amount shall be credited to his or her Company
                  Matching Account for purposes of this Section 3.12(e) as of
                  the close of business on the first business day in February of
                  the Plan Year following the Plan Year to which it relates. The
                  Participant's Annual Company Profit Sharing Amount shall be
                  credited to his or her Company Profit Sharing Account for
                  purposes of this Section 3.12(e) as of the close of business
                  on the first business day in February of the Plan Year
                  following the Plan Year to which it relates. The Participant's
                  Annual Stock Option Amount(s) and Restricted Stock Amount(s)
                  shall be credited to his or her Stock Option Account or
                  Restricted Stock Account, as the case may be, no later than
                  the close of business on the business day on which the
                  Eligible Stock Option was exercised or otherwise disposed of
                  or the Restricted Stock would vest under the terms of the K N
                  Energy, Inc. stock incentive plan, but for the election to
                  defer.

         (f)      NO ACTUAL INVESTMENT. Notwithstanding any other provision of
                  this Plan that may be interpreted to the contrary, the
                  Measurement Funds are to be used for measurement purposes
                  only, and a Participant's election of any such Measurement
                  Fund, the allocation to his or her Account Balance thereto,
                  the calculation of additional amounts and the crediting or
                  debiting of such amounts to a Participant's Account Balance
                  shall not be considered or construed in any manner as an
                  actual investment of his or her Account Balance in any such
                  Measurement Fund. In the event that the Company or the Trustee
                  (as that term is defined in the Trust), in its own discretion,
                  decides to invest funds in any or all of the Measurement
                  Funds, no Participant shall have any rights in or to such
                  investments themselves. Without limiting the foregoing, a
                  Participant's Account Balance shall at all times be a
                  bookkeeping entry only and shall not represent any investment
                  made on his or her behalf by the Company or the Trust; the
                  Participant shall at all times remain an unsecured creditor of
                  the Company.




                                      -17-
<PAGE>   22

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

3.13     FICA AND OTHER TAXES.

         (a)      ANNUAL DEFERRAL AMOUNTS. For each Plan Year in which an Annual
                  Deferral Amount is being withheld from a Participant, the
                  Participant's Employer(s) shall withhold from that portion of
                  the Participant's Base Annual Salary and Bonus that is not
                  being deferred, in a manner determined by the Employer(s), the
                  Participant's share of FICA and other employment taxes on such
                  Annual Deferral Amount. If necessary, the Committee may reduce
                  the Annual Deferral Amount to comply with this Section 3.13.

         (b)      COMPANY MATCHING AMOUNTS. When a participant becomes vested in
                  a portion of his or her Company Matching Account, the
                  Participant's Employer(s) shall withhold from the
                  Participant's Base Annual Salary and Bonus that is not
                  deferred, in a manner determined by the Employer(s), the
                  Participant's share of FICA and other employment taxes. If
                  necessary, the Committee may reduce the vested portion of the
                  Participant's Company Matching Account to comply with this
                  Section 3.13.

         (c)      COMPANY PROFIT SHARING AMOUNTS. When a Participant becomes
                  vested in a portion of his or her Company Profit Sharing
                  Account, the Participant's Employer(s) shall withhold from the
                  Participant's Base Annual Salary and Bonus that is not
                  deferred, in a manner determined by the Employer(s), the
                  Participant's share of FICA and other employment taxes. If
                  necessary, the Committee may reduce the vested portion of the
                  Participant's Company Profit Sharing Account to comply with
                  this Section 3.13.

         (d)      ANNUAL STOCK OPTION AMOUNTS AND ANNUAL RESTRICTED STOCK
                  AMOUNTS. For each Plan Year in which an Annual Stock Option
                  Amount or Annual Restricted Stock Amount is being first
                  withheld from a Participant, the Participant's Employer(s)
                  shall withhold from that portion of the Participant's Base
                  Annual Salary, Bonus, Qualifying Gains and Restricted Stock
                  that is not being deferred, in a manner determined by the
                  Employer(s), the Participant's share of FICA and other
                  employment taxes on such Annual Stock Option Amount or Annual
                  Restricted Stock Amount. If necessary, the Committee may
                  reduce the Annual Stock Option Amount or Annual Restricted
                  Stock Amount to comply with this Section 3.13.

3.14     DISTRIBUTIONS. Distributions that are made pursuant to this Plan may,
         in the sole discretion of the Committee, be made in cash or in kind,
         including in shares of the common stock of the Company. The
         Participant's Employer(s), or the trustee of the Trust, shall withhold
         from any payments made to a Participant under this Plan all federal,
         state and local income, employment and other taxes required to be
         withheld by the Employer(s), or the trustee of the Trust, in connection
         with such payments, in amounts and in a manner to be determined in the
         sole discretion of the Employer(s) and the trustee of the Trust.




                                      -18-
<PAGE>   23

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                                    ARTICLE 4
   SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL ELECTION

4.1      SHORT-TERM PAYOUT. In connection with each election to defer an Annual
         Deferral Amount, a Participant may irrevocably elect to receive a
         future "Short-Term Payout" from the Plan with respect to such Annual
         Deferral Amount. Subject to the Deduction Limitation, the Short-Term
         Payout shall be a lump sum payment in an amount that is equal to the
         Annual Deferral Amount plus amounts credited or debited in the manner
         provided in Section 3.12 above on that amount, determined at the time
         that the Short-Term Payout becomes payable (rather than the date of a
         Termination of Employment). Subject to the Deduction Limitation and the
         other terms and conditions of this Plan, each Short-Term Payout elected
         shall be paid out during a period beginning 1 day and ending 60 days
         after the last day of any Plan Year designated by the Participant that
         is at least three Plan Years after the Plan Year in which the Annual
         Deferral Amount is actually deferred. By way of example, if a three
         year Short-Term Payout is elected for Annual Deferral Amounts that are
         deferred in the Plan Year commencing January 1, 1998, the three year
         Short-Term Payout would become payable during a 60 day period
         commencing January 1, 2002.

4.2      OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM. Should an event occur
         that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral
         Amount, plus amounts credited or debited thereon, that is subject to a
         Short-Term Payout election under Section 4.1 shall not be paid in
         accordance with Section 4.1 but shall be paid in accordance with the
         other applicable Article.

4.3      WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.
         If the Participant experiences an Unforeseeable Financial Emergency,
         the Participant may petition the Committee to (i) suspend any deferrals
         required to be made by a Participant and (ii) receive a partial or full
         payout from the Plan. The payout shall not exceed the lesser of the
         Participant's Account Balance, calculated as if such Participant were
         receiving a Termination Benefit, or the amount reasonably needed to
         satisfy the Unforeseeable Financial Emergency. If, subject to the sole
         discretion of the Committee, the petition for a suspension and payout
         is approved, suspension shall take effect upon the date of approval and
         any payout shall be made within 60 days of the date of approval. The
         payment of any amount under this Section 4.3 shall not be subject to
         the Deduction Limitation.

4.4      WITHDRAWAL ELECTION. A Participant (or, after a Participant's death,
         his or her Beneficiary) may elect, at any time, to withdraw all of his
         or her Account Balance, calculated as if there had occurred a
         Termination of Employment as of the day of the election, less a
         withdrawal penalty equal to 10% of such amount (the net amount shall be
         referred to as the "Withdrawal Amount"). This election can be made at
         any time, before or after Retirement, Disability, death or Termination
         of Employment, and whether or not the Participant (or Beneficiary) is
         in the process of being paid pursuant to an installment payment
         schedule. 



                                      -19-
<PAGE>   24

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         If made before Retirement, Disability or death, a Participant's
         Withdrawal Amount shall be his or her Account Balance calculated as if
         there had occurred a Termination of Employment as of the day of the
         election. No partial withdrawals of the Withdrawal Amount shall be
         allowed. The Participant (or his or her Beneficiary) shall make this
         election by giving the Committee advance written notice of the election
         in a form determined from time to time by the Committee. The
         Participant (or his or her Beneficiary) shall be paid the Withdrawal
         Amount within 60 days of his or her election. Once the Withdrawal
         Amount is paid, the Participant's participation in the Plan shall
         terminate and the Participant shall not be eligible to participate in
         the Plan in the future. The payment of this Withdrawal Amount shall not
         be subject to the Deduction Limitation.



                                    ARTICLE 5
                               RETIREMENT BENEFIT

5.1      AMOUNT OF RETIREMENT BENEFIT. Subject to the Deduction Limitation, a
         Participant who Retires shall receive, as a Retirement Benefit, his or
         her Account Balance.

5.2      PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his or
         her commencement of participation in the Plan, shall elect on an
         Election Form to receive the Retirement Benefit in a lump sum or
         pursuant to an Annual Installment Method of 5, 10 or 15 years. The
         Participant may annually change his or her election to an allowable
         alternative payout period by submitting a new Election Form to the
         Committee, provided that any such Election Form is submitted at least 1
         year prior to the Participant's Retirement and is accepted by the
         Committee in its sole discretion. The Election Form most recently
         accepted by the Committee shall govern the payout of the Retirement
         Benefit. If a Participant does not make any election with respect to
         the payment of the Retirement Benefit, then such benefit shall be
         payable in a lump sum. Any lump sum payment shall be made no later than
         60 days after the date the Participant Retires. Any installment
         payments shall commence no later than 60 days after the last day of the
         Plan Year in which the Participant Retires. Any payment made shall be
         subject to the Deduction Limitation.

5.3      DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT. If a Participant dies
         after Retirement but before the Retirement Benefit is paid in full, the
         Participant's unpaid Retirement Benefit payments shall continue and
         shall be paid to the Participant's Beneficiary over the remaining
         number of years and in the same amounts as that benefit would have been
         paid to the Participant had the Participant survived.



                                      -20-
<PAGE>   25

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================



                                    ARTICLE 6
                         PRE-RETIREMENT SURVIVOR BENEFIT

6.1      AMOUNT OF PRE-RETIREMENT SURVIVOR BENEFIT. Subject to the Deduction
         Limitation, the Participant's Beneficiary shall receive a
         Pre-Retirement Survivor Benefit equal to the Participant's Account
         Balance if the Participant dies before he or she Retires, experiences a
         Termination of Employment or suffers a Disability.

6.2      PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. A Participant, in
         connection with his or her commencement of participation in the Plan,
         shall elect on an Election Form whether the Pre-Retirement Survivor
         Benefit shall be received by his or her Beneficiary in a lump sum or
         pursuant to an Annual Installment Method of 5, 10 or 15 years. The
         Participant may annually change this election to an allowable
         alternative payout period by submitting a new Election Form to the
         Committee, which form must be accepted by the Committee in its sole
         discretion. The Election Form most recently accepted by the Committee
         prior to the Participant's death shall govern the payout of the
         Participant's Pre-Retirement Survivor Benefit. If a Participant does
         not make any election with respect to the payment of the Pre-Retirement
         Survivor Benefit, then such benefit shall be paid in a lump sum.
         Despite the foregoing, if the Participant's Account Balance at the time
         of his or her death is less than $25,000, payment of the Pre-Retirement
         Survivor Benefit may be made, in the sole discretion of the Committee,
         in a lump sum or pursuant to an Annual Installment Method of not more
         than 5 years. Any lump sum payment shall be made no later than 60 days
         after the date the Committee is provided with proof that is
         satisfactory to the Committee of the Participant's death. Any
         installment payments shall commence no later than 60 days after the
         last day of the Plan Year in which the Committee is provided with proof
         satisfactory to the Committee of the Participant's death. Any payment
         made shall be subject to the Deduction Limitation.



                                    ARTICLE 7
                               TERMINATION BENEFIT

7.1      AMOUNT OF TERMINATION BENEFIT. Subject to the Deduction Limitation, the
         Participant shall receive a Termination Benefit, which shall be equal
         to the Participant's Account Balance if a Participant experiences a
         Termination of Employment prior to his or her Retirement, death or
         Disability.

7.2      PAYMENT OF TERMINATION BENEFIT. If the Participant's Account Balance at
         the time of his or her Termination of Employment is less than $25,000,
         payment of his or her Termination Benefit shall be paid in a lump sum.
         If his or her Account Balance at such time is equal to or greater than
         that amount, the Committee, in its sole discretion, may cause the
         Termination Benefit to be paid in a lump sum or in substantially equal
         annual installment 



                                      -21-
<PAGE>   26

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         payments over a period of time that does not exceed two years in
         duration. Any lump sum payment shall be made no later than 60 days
         after the date the date of the Participant's Termination of Employment.
         Any installment payments shall commence no later than 60 days after the
         last day of the Plan Year in which the Participant experiences the
         Termination of Employment. Any payment made shall be subject to the
         Deduction Limitation.


                                    ARTICLE 8
                          DISABILITY WAIVER AND BENEFIT

8.1      DISABILITY WAIVER.

         (a)      WAIVER OF DEFERRAL. A Participant who is determined by the
                  Committee to be suffering from a Disability shall be (i)
                  excused from fulfilling that portion of the Annual Deferral
                  Amount commitment that would otherwise have been withheld from
                  a Participant's Base Annual Salary, Annual Incentive and
                  Director's Fees for the Plan Year during which the Participant
                  first suffers a Disability and (ii) excused from fulfilling
                  any existing unvested Restricted Stock Amount or unexercised
                  Stock Option Amount commitments. During the period of
                  Disability, the Participant shall not be allowed to make any
                  additional deferral elections, but will continue to be
                  considered a Participant for all other purposes of this Plan.

         (b)      RETURN TO WORK. If a Participant returns to employment, or
                  service as a Director, with an Employer, after a Disability
                  ceases, the Participant may elect to defer an Annual Deferral
                  Amount, Stock Option Amount and Restricted Stock Amount for
                  the Plan Year following his or her return to employment or
                  service and for every Plan Year thereafter while a Participant
                  in the Plan; provided such deferral elections are otherwise
                  allowed and an Election Form is delivered to and accepted by
                  the Committee for each such election in accordance with
                  Section 3.3 above.

8.2      CONTINUED ELIGIBILITY; DISABILITY BENEFIT. A Participant suffering a
         Disability shall, for benefit purposes under this Plan, continue to be
         considered to be employed, or in the service of an Employer as a
         Director, and shall be eligible for the benefits provided for in
         Articles 4, 5, 6 or 7 in accordance with the provisions of those
         Articles. Notwithstanding the above, the Committee shall have the right
         to, in its sole and absolute discretion and for purposes of this Plan
         only, and must in the case of a Participant who is otherwise eligible
         to Retire, deem the Participant to have experienced a Termination of
         Employment, or in the case of a Participant who is eligible to Retire,
         to have Retired, at any time (or in the case of a Participant who is
         eligible to Retire, as soon as practicable) after such Participant is
         determined to be suffering a Disability, in which case the Participant
         shall receive a Disability Benefit equal to his or her Account Balance
         at the time of the Committee's determination; provided, however, that
         should the Participant otherwise have been eligible to Retire, he or
         she shall be paid in accordance with Article 5. The Disability Benefit
         shall 



                                      -22-
<PAGE>   27

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         be paid in a lump sum within 60 days of the Committee's exercise of
         such right. Any payment made shall be subject to the Deduction
         Limitation.


                                    ARTICLE 9
                             BENEFICIARY DESIGNATION

9.1      BENEFICIARY. Each Participant shall have the right, at any time, to
         designate his or her Beneficiary(ies) (both primary as well as
         contingent) to receive any benefits payable under the Plan to a
         beneficiary upon the death of a Participant. The Beneficiary designated
         under this Plan may be the same as or different from the Beneficiary
         designation under any other plan of an Employer in which the
         Participant participates.

9.2      BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT. A Participant shall
         designate his or her Beneficiary by completing and signing the
         Beneficiary Designation Form, and returning it to the Committee or its
         designated agent. A Participant shall have the right to change a
         Beneficiary by completing, signing and otherwise complying with the
         terms of the Beneficiary Designation Form and the Committee's rules and
         procedures, as in effect from time to time. If the Participant names
         someone other than his or her spouse as a Beneficiary, a spousal
         consent, in the form designated by the Committee, must be signed by
         that Participant's spouse and returned to the Committee. Upon the
         acceptance by the Committee of a new Beneficiary Designation Form, all
         Beneficiary designations previously filed shall be canceled. The
         Committee shall be entitled to rely on the last Beneficiary Designation
         Form filed by the Participant and accepted by the Committee prior to
         his or her death.

9.3      ACKNOWLEDGMENT. No designation or change in designation of a
         Beneficiary shall be effective until received and acknowledged in
         writing by the Committee or its designated agent.

9.4      NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
         Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
         designated Beneficiaries predecease the Participant or die prior to
         complete distribution of the Participant's benefits, then the
         Participant's designated Beneficiary shall be deemed to be his or her
         surviving spouse. If the Participant has no surviving spouse, the
         benefits remaining under the Plan to be paid to a Beneficiary shall be
         payable to the executor or personal representative of the Participant's
         estate.

9.5      DOUBT AS TO BENEFICIARY. If the Committee has any doubt as to the
         proper Beneficiary to receive payments pursuant to this Plan, the
         Committee shall have the right, exercisable in its discretion, to cause
         the Participant's Employer to withhold such payments until this matter
         is resolved to the Committee's satisfaction.

9.6      DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
         Beneficiary shall fully and completely discharge all Employers and the
         Committee from all further obligations 



                                      -23-
<PAGE>   28

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         under this Plan with respect to the Participant, and that Participant's
         Plan Agreement shall terminate upon such full payment of benefits.


                                   ARTICLE 10
                                LEAVE OF ABSENCE

10.1     PAID LEAVE OF ABSENCE. If a Participant is authorized by the
         Participant's Employer for any reason to take a paid leave of absence
         from the employment of the Employer, the Participant shall continue to
         be considered employed by the Employer and the Annual Deferral Amount
         shall continue to be withheld during such paid leave of absence in
         accordance with Section 3.3.

10.2     UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the
         Participant's Employer for any reason to take an unpaid leave of
         absence from the employment of the Employer, the Participant shall
         continue to be considered employed by the Employer and the Participant
         shall be excused from making deferrals until the earlier of the date
         the leave of absence expires or the Participant returns to a paid
         employment status. Upon such expiration or return, deferrals shall
         resume for the remaining portion of the Plan Year in which the
         expiration or return occurs, based on the deferral election, if any,
         made for that Plan Year. If no election was made for that Plan Year, no
         deferral shall be withheld.



                                   ARTICLE 11
                     TERMINATION, AMENDMENT OR MODIFICATION

11.1     TERMINATION. Although each Employer anticipates that it will continue
         the Plan for an indefinite period of time, there is no guarantee that
         any Employer will continue the Plan or will not terminate the Plan at
         any time in the future. Accordingly, each Employer reserves the right
         to discontinue its sponsorship of the Plan and to terminate the Plan at
         any time with respect to any or all of its participating Employees and
         Directors, by action of its board of directors. Upon the termination of
         the Plan with respect to any Employer, the Plan Agreements of the
         affected Participants who are employed by that Employer, or in the
         service of that Employer as Directors, shall terminate and their
         Account Balances, determined as if they had experienced a Termination
         of Employment on the date of Plan termination or, if Plan termination
         occurs after the date upon which a Participant was eligible to Retire,
         then with respect to that Participant as if he or she had Retired on
         the date of Plan termination, shall be paid to the Participants as
         follows: Prior to a Change in Control, if the Plan is terminated with
         respect to all of its Participants, an Employer shall have the right,
         in its sole discretion, and notwithstanding any elections made by the
         Participant, to pay such benefits in a lump sum or pursuant to an
         Annual Installment Method of up to 15 years, with amounts credited and
         debited during the installment period as provided herein. If the Plan
         is terminated with respect to less than all of its Participants, an
         Employer shall be required to pay such benefits in a lump sum. After a
         Change in 



                                      -24-
<PAGE>   29

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         Control, the Employer shall be required to pay such benefits in a lump
         sum. The termination of the Plan shall not adversely affect any
         Participant or Beneficiary who has become entitled to the payment of
         any benefits under the Plan as of the date of termination; provided
         however, that the Employer shall have the right to accelerate
         installment payments without a premium or prepayment penalty by paying
         the Account Balance in a lump sum or pursuant to an Annual Installment
         Method using fewer years (provided that the present value of all
         payments that will have been received by a Participant at any given
         point of time under the different payment schedule shall equal or
         exceed the present value of all payments that would have been received
         at that point in time under the original payment schedule).

11.2     AMENDMENT. Any Employer may, at any time, amend or modify the Plan in
         whole or in part with respect to that Employer by the action of its
         board of directors; provided, however, that no amendment or
         modification shall be effective to decrease or restrict the value of a
         Participant's Account Balance in existence at the time the amendment or
         modification is made, calculated as if the Participant had experienced
         a Termination of Employment as of the effective date of the amendment
         or modification or, if the amendment or modification occurs after the
         date upon which the Participant was eligible to Retire, the Participant
         had Retired as of the effective date of the amendment or modification.
         The amendment or modification of the Plan shall not affect any
         Participant or Beneficiary who has become entitled to the payment of
         benefits under the Plan as of the date of the amendment or
         modification; provided, however, that the Employer shall have the right
         to accelerate installment payments by paying the Account Balance in a
         lump sum or pursuant to an Annual Installment Method using fewer years
         (provided that the present value of all payments that will have been
         received by a Participant at any given point of time under the
         different payment schedule shall equal or exceed the present value of
         all payments that would have been received at that point in time under
         the original payment schedule).

11.3     PLAN AGREEMENT. Despite the provisions of Sections 11.1 and 11.2 above,
         if a Participant's Plan Agreement contains benefits or limitations that
         are not in this Plan document, the Employer may only amend or terminate
         such provisions with the consent of the Participant.

11.4     EFFECT OF PAYMENT. The full payment of the applicable benefit under
         Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
         obligations to a Participant and his or her designated Beneficiaries
         under this Plan and the Participant's Plan Agreement shall terminate.



                                      -25-
<PAGE>   30

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                                   ARTICLE 12
                                 ADMINISTRATION

12.1     COMMITTEE DUTIES. This Plan shall be administered by a Committee which
         shall consist of the compensation committee of the Board, or such
         committee as the Compensation Committee of the Board shall appoint.
         Members of the Committee may be Participants under this Plan. The
         Committee shall also have the discretion and authority to (i) make,
         amend, interpret, and enforce all appropriate rules and regulations for
         the administration of this Plan and (ii) decide or resolve any and all
         questions including interpretations of this Plan, as may arise in
         connection with the Plan. Any individual serving on the Committee who
         is a Participant shall not vote or act on any matter relating solely to
         himself or herself. When making a determination or calculation, the
         Committee shall be entitled to rely on information furnished by a
         Participant or the Company.

12.2     AGENTS. In the administration of this Plan, the Committee may, from
         time to time, employ agents and delegate to them such administrative
         duties as it sees fit (including acting through a duly appointed
         representative) and may from time to time consult with counsel who may
         be counsel to any Employer.

12.3     BINDING EFFECT OF DECISIONS. The decision or action of the Committee
         with respect to any question arising out of or in connection with the
         administration, interpretation and application of the Plan and the
         rules and regulations promulgated hereunder shall be final and
         conclusive and binding upon all persons having any interest in the
         Plan.

12.4     INDEMNITY OF COMMITTEE. All Employers shall indemnify and hold harmless
         the members of the Committee, and any Employee to whom the duties of
         the Committee may be delegated, against any and all claims, losses,
         damages, expenses or liabilities arising from any action or failure to
         act with respect to this Plan, except in the case of willful misconduct
         by the Committee or any of its members or any such Employee.

12.5     EMPLOYER INFORMATION. To enable the Committee to perform its functions,
         each Employer shall supply full and timely information to the Committee
         on all matters relating to the compensation of its Participants, the
         date and circumstances of the Retirement, Disability, death or
         Termination of Employment of its Participants, and such other pertinent
         information as the Committee may reasonably require.



                                   ARTICLE 13
                          OTHER BENEFITS AND AGREEMENTS

13.1     COORDINATION WITH OTHER BENEFITS. The benefits provided for a
         Participant and Participant's Beneficiary under the Plan are in
         addition to any other benefits available to 



                                      -26-
<PAGE>   31

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         such Participant under any other plan or program for employees of the
         Participant's Employer. The Plan shall supplement and shall not
         supersede, modify or amend any other such plan or program except as may
         otherwise be expressly provided.


                                   ARTICLE 14
                                CLAIMS PROCEDURES

14.1     PRESENTATION OF CLAIM. Any Participant or Beneficiary of a deceased
         Participant (such Participant or Beneficiary being referred to below as
         a "Claimant") may deliver to the Committee a written claim for a
         determination with respect to the amounts distributable to such
         Claimant from the Plan. If such a claim relates to the contents of a
         notice received by the Claimant, the claim must be made within 60 days
         after such notice was received by the Claimant. All other claims must
         be made within 180 days of the date on which the event that caused the
         claim to arise occurred. The claim must state with particularity the
         determination desired by the Claimant.

14.2     NOTIFICATION OF DECISION. The Committee shall consider a Claimant's
         claim within a reasonable time, and shall notify the Claimant in
         writing:

         (a)      that the Claimant's requested determination has been made, and
                  that the claim has been allowed in full; or

         (b)      that the Committee has reached a conclusion contrary, in whole
                  or in part, to the Claimant's requested determination, and
                  such notice must set forth in a manner calculated to be
                  understood by the Claimant:

                  (i)      the specific reason(s) for the denial of the claim,
                           or any part of it;

                  (ii)     specific reference(s) to pertinent provisions of the
                           Plan upon which such denial was based;

                  (iii)    a description of any additional material or
                           information necessary for the Claimant to perfect the
                           claim, and an explanation of why such material or
                           information is necessary; and

                  (iv)     an explanation of the claim review procedure set
                           forth in Section 14.3 below.

14.3     REVIEW OF A DENIED CLAIM. Within 60 days after receiving a notice from
         the Committee that a claim has been denied, in whole or in part, a
         Claimant (or the Claimant's duly authorized representative) may file
         with the Committee a written request for a review of the denial of the
         claim. Thereafter, but not later than 30 days after the review
         procedure began, the Claimant (or the Claimant's duly authorized
         representative):




                                      -27-
<PAGE>   32

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         (a)      may review pertinent documents;

         (b)      may submit written comments or other documents; and

         (c)      may request a hearing, which the Committee, in its sole
                  discretion, may grant.

14.4     DECISION ON REVIEW. The Committee shall render its decision on review
         promptly, and not later than 60 days after the filing of a written
         request for review of the denial, unless a hearing is held or other
         special circumstances require additional time, in which case the
         Committee's decision must be rendered within 120 days after such date.
         Such decision must be written in a manner calculated to be understood
         by the Claimant, and it must contain:

         (a)      specific reasons for the decision;

         (b)      specific reference(s) to the pertinent Plan provisions upon
                  which the decision was based; and

         (c)      such other matters as the Committee deems relevant.

14.5     LEGAL ACTION. A Claimant's compliance with the foregoing provisions of
         this Article 14 is a mandatory prerequisite to a Claimant's right to
         commence any legal action with respect to any claim for benefits under
         this Plan.


                                   ARTICLE 15
                                      TRUST

15.1     ESTABLISHMENT OF THE TRUST. The Company shall establish the Trust, and
         each Employer shall at least annually transfer over to the Trust such
         assets as the Employer determines, in its sole discretion, are
         necessary to provide, on a present value basis, for its respective
         future liabilities created with respect to the Annual Deferral Amounts,
         Annual Company Matching Amounts, Annual Company Profit Sharing Amounts,
         Annual Stock Option Amounts and Annual Restricted Stock Amounts for
         such Employer's Participants for all periods prior to the transfer, as
         well as any debits and credits to the Participants' Account Balances
         for all periods prior to the transfer, taking into consideration the
         value of the assets in the trust at the time of the transfer.

15.2     INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
         and the Plan Agreement shall govern the rights of a Participant to
         receive distributions pursuant to the Plan. The provisions of the Trust
         shall govern the rights of the Employers, Participants and the
         creditors of the Employers to the assets transferred to the Trust. Each
         Employer shall at all times remain liable to carry out its obligations
         under the Plan.




                                      -28-
<PAGE>   33

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

15.3     DISTRIBUTIONS FROM THE TRUST. Each Employer's obligations under the
         Plan may be satisfied with Trust assets distributed pursuant to the
         terms of the Trust, and any such distribution shall reduce the
         Employer's obligations under this Plan.

15.4     STOCK TRANSFERRED TO THE TRUST. Notwithstanding any other provision of
         this Plan or the Trust: (i) if Trust assets are distributed to a
         Participant in a distribution which reduces the Participant's Stock
         Option Account balance under this Plan, such distribution must be made
         in the form of Stock during every 6 month period beginning on the date
         an Eligible Stock Option of the Participant is exercised, to the extent
         of the Qualifying Gain deferred in accordance with Section 3.7 with
         respect to that Eligible Stock Option; and (ii) any Stock transferred
         to the Trust in accordance with Sections 3.7 or 3.8 may not be
         otherwise distributed or disposed of by the Trustee until at least 6
         months after the date such Stock is transferred to the Trust.


                                   ARTICLE 16
                                  MISCELLANEOUS

16.1     STATUS OF PLAN. The Plan is intended to be a plan that is not qualified
         within the meaning of Code Section 401(a) and that "is unfunded and is
         maintained by an employer primarily for the purpose of providing
         deferred compensation for a select group of management or highly
         compensated employee" within the meaning of ERISA Sections 201(2),
         301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted
         to the extent possible in a manner consistent with that intent.

16.2     UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries,
         heirs, successors and assigns shall have no legal or equitable rights,
         interests or claims in any property or assets of an Employer. For
         purposes of the payment of benefits under this Plan, any and all of an
         Employer's assets shall be, and remain, the general, unpledged
         unrestricted assets of the Employer. An Employer's obligation under the
         Plan shall be merely that of an unfunded and unsecured promise to pay
         money in the future.

16.3     EMPLOYER'S LIABILITY. An Employer's liability for the payment of
         benefits shall be defined only by the Plan and the Plan Agreement, as
         entered into between the Employer and a Participant. An Employer shall
         have no obligation to a Participant under the Plan except as expressly
         provided in the Plan and his or her Plan Agreement.

16.4     NONASSIGNABILITY. Neither a Participant nor any other person shall have
         any right to commute, sell, assign, transfer, pledge, anticipate,
         mortgage or otherwise encumber, transfer, hypothecate, alienate or
         convey in advance of actual receipt, the amounts, if any, payable
         hereunder, or any part thereof, which are, and all rights to which are
         expressly declared to be, unassignable and non-transferable. No part of
         the amounts payable shall, prior to actual payment, be subject to
         seizure, attachment, garnishment or sequestration for the payment of
         any debts, judgments, alimony or separate maintenance owed by a



                                      -29-
<PAGE>   34

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         Participant or any other person, be transferable by operation of law in
         the event of a Participant's or any other person's bankruptcy or
         insolvency or be transferable to a spouse as a result of a property
         settlement or otherwise, except as otherwise required by applicable
         law.

16.5     NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan
         shall not be deemed to constitute a contract of employment between any
         Employer and the Participant. Such employment is hereby acknowledged to
         be an "at will" employment relationship that can be terminated at any
         time for any reason, or no reason, with or without cause, and with or
         without notice, unless expressly provided in a written employment
         agreement. Nothing in this Plan shall be deemed to give a Participant
         the right to be retained in the service of any Employer, either as an
         Employee or a Director, or to interfere with the right of any Employer
         to discipline or discharge the Participant at any time.

16.6     FURNISHING INFORMATION. A Participant or his or her Beneficiary will
         cooperate with the Committee by furnishing any and all information
         requested by the Committee and take such other actions as may be
         requested in order to facilitate the administration of the Plan and the
         payments of benefits hereunder, including but not limited to taking
         such physical examinations as the Committee may deem necessary.

16.7     TERMS. Whenever any words are used herein in the masculine, they shall
         be construed as though they were in the feminine in all cases where
         they would so apply; and whenever any words are used herein in the
         singular or in the plural, they shall be construed as though they were
         used in the plural or the singular, as the case may be, in all cases
         where they would so apply.

16.8     CAPTIONS. The captions of the articles, sections and paragraphs of this
         Plan are for convenience only and shall not control or affect the
         meaning or construction of any of its provisions.

16.9     GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall be
         construed and interpreted according to the internal laws of the State
         of Colorado without regard to its conflicts of laws principles.

16.10    NOTICE. Any notice or filing required or permitted to be given to the
         Committee under this Plan shall be sufficient if in writing and
         hand-delivered, or sent by registered or certified mail, to the address
         below:




                                      -30-
<PAGE>   35

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

                 Administrative Committee
                 ---------------------------------------------------------------
                 K N Energy, Inc.
                 Directors and Executives Deferred Compensation Plan
                 ---------------------------------------------------------------
                 370 Van Gordon Street
                 ---------------------------------------------------------------
                 Lakewood, Colorado 80228-8304
                 ---------------------------------------------------------------

         Such notice shall be deemed given as of the date of delivery or, if
         delivery is made by mail, as of the date shown on the postmark on the
         receipt for registration or certification.


         Any notice or filing required or permitted to be given to a Participant
         under this Plan shall be sufficient if in writing and hand-delivered,
         or sent by mail, to the last known address of the Participant.

16.11    SUCCESSORS. The provisions of this Plan shall bind and inure to the
         benefit of the Participant's Employer and its successors and assigns
         and the Participant and the Participant's designated Beneficiaries.

16.12    SPOUSE'S INTEREST. The interest in the benefits hereunder of a spouse
         of a Participant who has predeceased the Participant shall
         automatically pass to the Participant and shall not be transferable by
         such spouse in any manner, including but not limited to such spouse's
         will, nor shall such interest pass under the laws of intestate
         succession.

16.13    VALIDITY. In case any provision of this Plan shall be illegal or
         invalid for any reason, said illegality or invalidity shall not affect
         the remaining parts hereof, but this Plan shall be construed and
         enforced as if such illegal or invalid provision had never been
         inserted herein.

16.14    INCOMPETENT. If the Committee determines in its discretion that a
         benefit under this Plan is to be paid to a minor, a person declared
         incompetent or to a person incapable of handling the disposition of
         that person's property, the Committee may direct payment of such
         benefit to the guardian, legal representative or person having the care
         and custody of such minor, incompetent or incapable person. The
         Committee may require proof of minority, incompetence, incapacity or
         guardianship, as it may deem appropriate prior to distribution of the
         benefit. Any payment of a benefit shall be a payment for the account of
         the Participant and the Participant's Beneficiary, as the case may be,
         and shall be a complete discharge of any liability under the Plan for
         such payment amount.

16.15    COURT ORDER. The Committee is authorized to make any payments directed
         by court order in any action in which the Plan or the Committee has
         been named as a party. In addition, if a court determines that a spouse
         or former spouse of a Participant has an interest in the Participant's
         benefits under the Plan in connection with a property settlement or
         otherwise, the Committee, in its sole discretion, shall have the right,
         notwithstanding any election made 



                                      -31-
<PAGE>   36

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         by a Participant, to immediately distribute the spouse's or former
         spouse's interest in the Participant's benefits under the Plan to that
         spouse or former spouse.

16.16    DISTRIBUTION IN THE EVENT OF TAXATION.

         (a)      IN GENERAL. If, for any reason, all or any portion of a
                  Participant's benefits under this Plan becomes taxable to the
                  Participant prior to receipt, a Participant may petition the
                  Committee before a Change in Control, or the trustee of the
                  Trust after a Change in Control, for a distribution of that
                  portion of his or her benefit that has become taxable. Upon
                  the grant of such a petition, which grant shall not be
                  unreasonably withheld (and, after a Change in Control, shall
                  be granted), a Participant's Employer shall distribute to the
                  Participant immediately available funds in an amount equal to
                  the taxable portion of his or her benefit (which amount shall
                  not exceed a Participant's unpaid Account Balance under the
                  Plan). If the petition is granted, the tax liability
                  distribution shall be made within 90 days of the date when the
                  Participant's petition is granted. Such a distribution shall
                  affect and reduce the benefits to be paid under this Plan.

         (b)      TRUST. If the Trust terminates in accordance with Section
                  3.6(e) of the Trust and benefits are distributed from the
                  Trust to a Participant in accordance with that Section, the
                  Participant's benefits under this Plan shall be reduced to the
                  extent of such distributions.

16.17    INSURANCE. The Employers, on their own behalf or on behalf of the
         trustee of the Trust, and, in their sole discretion, may apply for and
         procure insurance on the life of the Participant, in such amounts and
         in such forms as the Trust may choose. The Employers or the trustee of
         the Trust, as the case may be, shall be the sole owner and beneficiary
         of any such insurance. The Participant shall have no interest
         whatsoever in any such policy or policies, and at the request of the
         Employers shall submit to medical examinations and supply such
         information and execute such documents as may be required by the
         insurance company or companies to whom the Employers have applied for
         insurance.

16.18    LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company and
         each Employer is aware that upon the occurrence of a Change in Control,
         the Board or the board of directors of a Participant's Employer (which
         might then be composed of new members) or a shareholder of the Company
         or the Participant's Employer, or of any successor corporation might
         then cause or attempt to cause the Company, the Participant's Employer
         or such successor to refuse to comply with its obligations under the
         Plan and might cause or attempt to cause the Company or the
         Participant's Employer to institute, or may institute, litigation
         seeking to deny Participants the benefits intended under the Plan. In
         these circumstances, the purpose of the Plan could be frustrated.
         Accordingly, if, following a Change in Control, it should appear to any
         Participant that the Company, the Participant's Employer or any
         successor corporation has failed to comply with any of its obligations




                                      -32-
<PAGE>   37

K N ENERGY, INC.
Directors and Executives Deferred Compensation Plan
Master Plan Document
================================================================================

         under the Plan or any agreement thereunder or, if the Company, such
         Employer or any other person takes any action to declare the Plan void
         or unenforceable or institutes any litigation or other legal action
         designed to deny, diminish or to recover from any Participant the
         benefits intended to be provided, then the Company and the
         Participant's Employer irrevocably authorize such Participant to retain
         counsel of his or her choice at the expense of the Company and the
         Participant's Employer (who shall be jointly and severally liable) to
         represent such Participant in connection with the initiation or defense
         of any litigation or other legal action, whether by or against the
         Company, the Participant's Employer or any director, officer,
         shareholder or other person affiliated with the Company, the
         Participant's Employer or any successor thereto in any jurisdiction.


         IN WITNESS WHEREOF, the Company has signed this Plan document as of
________, 199_.

                                   "Company"


                                   K N Energy, Inc., a Kansas
                                     corporation


                                   By: /s/ Martha B. Wyrsch
                                       ----------------------------------------

                                   Title: Vice President, General Counsel and 
                                          -------------------------------------
                                            Secretary
                                          -------------------------------------

                                      -33-