<PAGE>   1
                                                                  EXHIBIT 10(aa)

                               KINDER MORGAN, INC.
                   AMENDED AND RESTATED 1999 STOCK OPTION PLAN


                                   SECTION I.
                               PURPOSE OF THE PLAN

         This Plan is an amendment and restatement of the K N Energy, Inc. 1999
Stock Option Plan. The KINDER MORGAN, INC. AMENDED AND RESTATED 1999 STOCK
OPTION PLAN (the "Plan) is intended to provide a means whereby certain employees
of KINDER MORGAN, INC., a Kansas corporation (the "Company"), and its
subsidiaries may develop a sense of proprietorship and personal involvement in
the development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its shareholders.
Accordingly, the Company may grant to certain employees ("Optionees") the option
("Option") to purchase shares of the common stock of the Company, par value
$5.00 per share ("Stock"), as hereinafter set forth. Options granted under the
Plan shall be options that do not constitute incentive stock options within the
meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code").

                                   SECTION II.
                                 ADMINISTRATION

         The Plan shall be administered by a committee (the "Committee") of, and
appointed by, the Board of Directors of the Company (the "Board"), and the
Committee shall be (a) comprised solely of two or more outside directors (within
the meaning of Section 162(m) of the Code and applicable interpretive authority
thereunder), and (b) constituted so as to permit the Plan to comply with Rule
16b-3, as currently in effect or as hereinafter modified or amended ("Rule
16b-3"), promulgated under the Securities Exchange Act of 1934, as amended (the
"1934 Act"). The Committee shall have sole authority to select the Optionees
from among those individuals eligible hereunder and to establish the number of
shares of Stock which may be issued under each Option. In selecting the
Optionees from among individuals eligible hereunder and in establishing the
number of shares of Stock that may be issued under each Option, the Committee
may take into account the nature of the services rendered by such individuals,
their present and potential contributions to the Company's success and such
other factors as the Committee in its discretion shall deem relevant. The
Committee is authorized to interpret the Plan and may from time to time adopt
such rules and regulations, consistent with the provisions of the Plan, as it
may deem advisable to carry out the Plan. All decisions made by the Committee in
selecting the Optionees, in establishing the number of shares of Stock which may
be issued under each Option and in construing the provisions of the Plan shall
be final, conclusive and binding on all persons, including the Company, its
subsidiaries and other entities in which the Company has an ownership interest,
its shareholders, Optionees and their estates and beneficiaries.



<PAGE>   2


                                  SECTION III.
                                OPTION AGREEMENTS

         (a) Each Option shall be evidenced by a written agreement between the
Company and the Optionee ("Option Agreement") which shall contain such terms and
conditions as may be approved by the Committee, including, but not limited to,
the number of shares of Stock that may be purchased under the Option and the
price per share of Stock purchasable under the Option ("Option Price"). The
terms and conditions of the respective Option Agreements need not be identical.
Specifically, an Option Agreement may provide for the surrender of the right to
purchase shares of Stock under the Option in return for a payment in cash or
shares of Stock or a combination of cash and shares of Stock equal in value to
the excess of the fair market value of the shares of Stock with respect to which
the right to purchase is surrendered over the Option Price therefor ("Stock
Appreciation Rights"), on such terms and conditions as the Committee in its sole
discretion may prescribe. Moreover, an Option Agreement may provide for the
payment of the Option Price, in whole or in part, by the delivery of a number of
shares of Stock (plus cash if necessary) having a fair market value equal to
such Option Price.

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

         (c) Each Option and all rights granted thereunder shall not be
transferable other than (i) by will or the laws of descent and distribution,
(ii) between an Optionee and his or her former spouse, but only if such transfer
is incident to a divorce under Section 1041(a) of the Code, or (iii) with the
consent of the Committee.

                                   SECTION IV.
                             ELIGIBILITY OF OPTIONEE

         The Plan is intended to constitute a "broadly-based plan" for purposes
of the shareholder approval policy of the New York Stock Exchange relating to
stock option plans, and the Plan shall be administered accordingly.

         Options may be granted only to individuals who are employees (including
officers and directors who are also employees) of the Company or an entity in
which the Company has an ownership interest, directly or indirectly, at the time
the Option is granted or who will be future employees within 90 days of any
grant of Options, and, in any event, at least a majority of the full-time
employees in the United States of the Company or any parent or subsidiary
corporation (as defined in Section 424 of the Code) (who are "exempt employees"
under the Fair Labor Standards Act of 1938) shall be eligible to receive grants
of Options. Options may be granted to the same individual on more than one
occasion.


                                      -2-
<PAGE>   3



         At least a majority of the shares of Stock underlying Options awarded
under the Plan, during the three-year period commencing on the date the Plan is
adopted by the Company, shall be made to eligible employees who are neither
officers nor directors of the Company.

                                   SECTION V.
                           SHARES SUBJECT TO THE PLAN

         The aggregate number of shares of Stock which may be issued under
Options granted under the Plan shall not exceed 5,500,000. Such shares may
consist of authorized but unissued shares of Stock or previously issued shares
of Stock reacquired by the Company. Any of such shares which remain unissued and
which are not subject to outstanding Options at the termination of the Plan
shall cease to be subject to the Plan, but, until termination of the Plan, the
Company shall at all times make available a sufficient number of shares to meet
the requirements of the Plan. Should any Option hereunder expire or terminate
prior to its exercise in full, the shares theretofore subject to such Option may
again be subject to an Option granted under the Plan to the extent permitted
under Rule 16b-3. The aggregate number of shares of Stock which may be issued
under the Plan shall be subject to adjustment in the same manner as provided in
Paragraph VIII hereof with respect to shares of Stock subject to Options then
outstanding. Exercise of an Option in any manner, including an exercise
involving a Stock Appreciation Right, shall result in a decrease in the number
of shares of Stock which may thereafter be available, both for purposes of the
Plan and for sale to any one individual, by the number of shares as to which the
Option is exercised.

         Notwithstanding any provision in the Plan to the contrary, no more than
1,000,000 shares of Stock may be subject to Options granted under the Plan to
any one individual during the term of the Plan. The limitation set forth in the
preceding sentence shall be applied in a manner which will permit compensation
generated under the Plan to constitute "performance-based" compensation for
purposes of Section 162(m) of the Code, including, without limitation, counting
against such maximum number of shares of Stock, to the extent required under
Section 162(m) of the Code and applicable interpretive authority thereunder, any
shares of Stock subject to Options that are canceled or repriced.

                                   SECTION VI.
                                  OPTION PRICE

         The Option Price of Stock issued under each Option shall be determined
by the Committee, but such Option Price shall not be less than the fair market
value of Stock subject to the Option on the date the Option is granted.

                                  SECTION VII.
                                  TERM OF PLAN


         This Plan was originally effective on October 8, 1999 (the "Effective
Date"). This Plan, as amended and restated, shall be effective on January 20,
2000, which is the date on which the Board adopted this amended and restated
Plan, subject to the approval of the shareholders.


                                      -3-
<PAGE>   4


Except with respect to Options then outstanding, if not sooner terminated under
the provisions of Paragraph IX, the Plan shall terminate upon and no further
Options shall be granted after the expiration of ten years from the Effective
Date.

                                  SECTION VIII.
                       RECAPITALIZATION OR REORGANIZATION

         (a) The existence of the Plan and the Options granted hereunder shall
not affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.

         (b) The shares with respect to which Options may be granted are shares
of Stock as presently constituted, but if, and whenever, prior to the expiration
of an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised (i) in the event
of an increase in the number of outstanding shares shall be proportionately
increased, and the Option Price per share shall be proportionately reduced, and
(ii) in the event of a reduction in the number of outstanding shares shall be
proportionately reduced, and the Option Price per share shall be proportionately
increased. Any fractional share resulting from such adjustment shall be rounded
up to the next whole share.

         (c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "Recapitalization"), the number and
class of shares of Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Optionee would have been entitled
pursuant to the terms of the Recapitalization if, immediately prior to the
Recapitalization, the Optionee had been the holder of record of the number of
shares of Stock then covered by such Option. If (i) any "person," as such term
is used in Sections 13(d) and 14(d) of the 1934 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 1934 Act), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities, (ii) during any period of
two consecutive years (not including any period prior to the Effective Date of
this Plan), individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction described
in (i), (iii) or (iv) of this Paragraph VIII(c)) whose election by the Board or
nomination for election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors


                                      -4-
<PAGE>   5


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, (iii) the shareholders
of the Company approve a merger or consolidation of the Company with any other
person, other than (1) 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, or (2) a
merger in which the Company is the surviving entity but no "person" (as defined
above) acquires more than fifty percent (50%) of the combined voting power of
the Company's then outstanding securities, or (iv) 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) (each such event
described in clauses (i), (ii), (iii) and (iv) is referred to herein as a
"Corporate Change"), no later than (A) ten days after the approval by the
shareholders of the Company of such merger or consolidation, plan of complete
liquidation, or sale or disposition of assets or (B) thirty days after a change
of control of the type described in clause (i) or (ii), the Committee, acting in
its sole discretion without the consent or approval of any Optionee, shall act
to effect one or more of the following alternatives, which may vary among
individual Optionees and which may vary among Options held by any individual
Optionee: (I) accelerate the time at which Options then outstanding may be
exercised so that such Options may be exercised in full for a limited period of
time on or before a specified date (before or after such Corporate Change) fixed
by the Committee, after which specified date all unexercised Options and all
rights of Optionees thereunder shall terminate, (II) require the mandatory
surrender to the Company by selected Optionees of some or all of the outstanding
Options held by such Optionees (irrespective of whether such Options are then
exercisable under the provisions of the Plan) as of a date, before or after such
Corporate Change, specified by the Committee, in which event the Committee shall
thereupon cancel such Options and the Company shall pay to each Optionee an
amount of cash per share equal to the excess, if any, of the amount calculated
in Subparagraph (d) below (the "Change of Control Value") of the shares subject
to such Option over the Option Price(s) under such Options for such shares,
(III) make such adjustments to Options then outstanding as the Committee deems
appropriate to reflect such Corporate Change (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary
to Options then outstanding) or (IV) provide that the number and class of shares
of Stock covered by an Option theretofore granted shall be adjusted so that such
Option shall thereafter cover the number and class of shares of Stock or other
securities or property (including, without limitation, cash) to which the
Optionee would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior to
such merger, consolidation or sale of assets and dissolution, the Optionee had
been the holder of record of the number of shares of Stock then covered by such
Option. Notwithstanding anything herein to the contrary, if a Corporate Change
occurs and, in connection with or as a result of such Corporate Change, neither
William V. Morgan nor Richard D. Kinder holds or continues to hold the office of
Chairman or Vice Chairman of the Company, all Options granted hereunder shall
immediately become fully exercisable.


                                      -5-
<PAGE>   6


         (d) For the purposes of clause (II) in Subparagraph (c) above, the
"Change of Control Value" shall equal the amount determined in clause (i), (ii)
or (iii), whichever is applicable, as follows: (i) the per share price offered
to shareholders of the Company in any such merger, consolidation,
reorganization, sale of assets or dissolution transaction, (ii) the price per
share offered to shareholders of the Company in any tender offer or exchange
offer whereby a Corporate Change takes place, or (iii) if such Corporate Change
occurs other than pursuant to a tender or exchange offer, the fair market value
per share of the shares into which such Options being surrendered are
exercisable, as determined by the Committee as of the date determined by the
Committee to be the date of cancellation and surrender of such Options. In the
event that the consideration offered to shareholders of the Company in any
transaction described in this Subparagraph (d) or Subparagraph (c) above
consists of anything other than cash, the Committee shall determine the fair
cash equivalent of the portion of the consolidation offered which is other than
cash.

         (e) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to Options theretofore granted or the Option
Price per share.

                                   SECTION IX.
                            AMENDMENT OR TERMINATION

         The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time; provided, that (a) no change in any Option theretofore granted may
be made which would impair the rights of the Optionee without the consent of
such Optionee; (b) the Board may not make any alteration or amendment which
would decrease any authority granted to the Committee hereunder in contravention
of Rule 16b-3; and (c) no such action of the Board shall be taken without
approval of the Company's shareholders if such approval is required to comply
with Rule 16b-3, any rule promulgated by the New York Stock Exchange, or Section
162(m) of the Code or any successor provisions.

                                   SECTION X.
                                 SECURITIES LAWS

         (a) The Company shall not be obligated to issue any Stock pursuant to
any Option granted under the Plan at any time when the offering of the shares
covered by such Option have not been registered under the Securities Act of 1933
and such other state and federal laws, rules or regulations as the Company or
the Committee deems applicable and, in the opinion of legal counsel for the
Company, there is no exemption from the registration requirements of such laws,
rules or regulations available for the offering and sale of such shares.


                                      -6-
<PAGE>   7


         (b) It is intended that the Plan and any grant of an Option made to a
person subject to Section 16 of the 1934 Act meet all of the requirements of
Rule 16b-3. If any provision of the Plan or any such Option would disqualify the
Plan or such Option under, or would otherwise not comply with, Rule 16b-3, such
provision or Option shall be construed or deemed amended to conform to Rule
16b-3.

                                   SECTION XI.
                                  MISCELLANEOUS

         (a) Neither the adoption of the Plan by the Company nor any action of
the Board or the Committee shall be deemed to give an employee any right to be
granted an Option or any other rights hereunder except as may be evidenced by an
Option Agreement duly executed on behalf of the Company, and then only to the
extent and on the terms and conditions expressly set forth therein. The Plan
shall be unfunded.

         (b) Nothing contained in the Plan shall (i) confer upon any employee
any right with respect to continuation of employment with the Company or any
subsidiary or (ii) interfere in any way with the right of the Company or any
subsidiary to terminate his or her employment at any time.

         (c) Nothing contained in the Plan shall be construed to prevent the
Company or any subsidiary from taking any corporate action which is deemed by
the Company or such subsidiary to be appropriate or in its best interest,
whether or not such action would have an adverse effect on the Plan or any
Option made under the Plan. No employee, beneficiary or other person shall have
any claim against the Company or any subsidiary as a result of any such action.

         (d) Any Option Agreement or related document may be executed by
facsimile signature. If any officer who shall have signed or whose facsimile
signature shall have been placed upon any such Option Agreement or related
document shall have ceased to be such officer before the related Option is
granted by the Company, such Option may nevertheless be issued by the Company
with the same effect as if such person were such officer at the date of grant.

         (e) This Plan shall be construed in accordance with the laws of the
State of Texas.


                                      -7-
<PAGE>   8


         IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing by the Board of Directors, Kinder Morgan, Inc. has caused these
presents to be duly executed in its name and behalf by its proper officers
thereunto duly authorized as of this ____ day of _______________, 2000.


                                          KINDER MORGAN, INC.



                                          By:

                                          Name:


                                          Title: