KINDER MORGAN, INC.NONQUALIFIED STOCK OPTION AGREEMENT

     This Nonqualified Stock OptionAgreement ("Option Agreement") is between Kinder Morgan, Inc. (the"Company"), and **Employee Name**("Optionee"), who agree asfollows:

     Section 1.  Introduction.The Company has heretofore adopted the Kinder Morgan, Inc. (f/k/a KN Energy, Inc.) 1999Stock Option Plan (the "Plan") for the purpose of providing eligible employeesof the Company and its Affiliates (as defined in the Plan) with incentive and rewardopportunities designed to enhance the profitable growth of the Company. The Company,acting through the Committee (as defined in the Plan), has determined that its interestswill be advanced by the issuance to Optionee of a nonqualified stock option under thePlan.

     Section 2.  Option.Subject to the terms and conditions contained herein, the Company hereby irrevocablygrants to Optionee the right and option ("Option") to purchase from the Company **#of options**shares of the Company's common stock, $5.00 par value ("Stock"),at a price of **_______** per share. 

     Section 3.  OptionPeriod. The Option herein granted may be exercised by Optionee in whole or in part atany time during a ten year period (the "Option Period") beginning on______________ (the "Date of Grant"), subject to the limitation that said Optionshall not be exercisable for more than a percentage of the aggregate number of sharesoffered by this Option determined by the number of full years of employment or servicewith the Company or its Affiliates from the Date of Grant to the last date of employment(not to exceed 10 years) in accordance with the following schedule:

| Number of
Percentage of
Full Years
Shares Purchasable
0 (Date of Grant)
0%
1
25%
2
50%
3
75%
4
100%
Notwithstanding anything in this Option Agreement to the contrary, theCommittee, in its sole discretion, may waive the foregoing schedule of vesting and uponwritten notice to Optionee, accelerate the earliest date or dates on which any of theOptions granted hereunder are exercisable.

     Section 4.  Procedurefor Exercise. The Committee or its designee shall establish procedures for Exercise ofthe Option.

     Section 5.  Terminationof Employment. If, for any reason other than Retirement, death, disability orInvoluntary Termination, Optionee ceases to be employed by the Company or its Affiliates,the Option may be exercised to the extent Optionee would have been entitled to do so atthe date of termination of employment during a thirty (30) day period after such date, butin no event may the Option be exercised after the expiration of the Option Period;provided, however, that if Optionee's employment ceases due to a Termination for Cause,then the Option or unexercised portion thereof shall expire upon such termination ofemployment.

     "Retirement"  shallmean termination of Optionee's employment, other than a Termination for Cause, afterattainment of age 55 with at least five (5) years of service. "InvoluntaryTermination" shall mean termination of Optionee's employment at the election of theCompany or an Affiliate, provided that such termination is not a Termination for Cause.Involuntary Termination shall not include a transfer of assignment or location of Optioneewhere Optionee is employed by the Company or an Affiliate both before and after thetransfer. Involuntary Termination shall include changes in Optionee's employment as aresult of a divestiture of assets whereupon Optionee no longer is an employee of theCompany or its Affiliates. "Termination for Cause" shall mean termination ofOptionee's employment by the Company or an Affiliate because of Optionee's (a) convictionof a felony which in the reasonable, good faith opinion of the Committee would have anadverse impact on the reputation or business of the Company or an Affiliate; (b) willfulrefusal without proper legal cause to perform Optionee's duties and responsibilities; (c)willfully engaging in conduct which Optionee has reason to know is materially injurious tothe Company or an Affiliate; or (d) failure to meet clearly established and reasonableperformance objectives or standards established by the Company or an Affiliate forOptionee's job position. The Committee's determination of the reason for Optionee'stermination of employment or service shall be conclusive and binding.

     Section 6.  Retirement,Death, Disability or Involuntary Termination. In the event that Optionee's employmentor service on the Board is terminated because of Optionee's Retirement, death, disabilityor Involuntary Termination, this Option may be exercised, at any time and from time totime, within a one year period after such termination of employment or service on theBoard, by Optionee or, in the event of Optionee's death, by (i) the guardian of Optionee'sestate, (ii) the executor or administrator of Optionee's estate, or (iii) the person orpersons to whom Optionee's rights under this Option Agreement shall pass by will or thelaws of descent and distribution, but in no event may the Option be exercised after theexpiration of the Option Period. Notwithstanding Section 3, this Option shall beexercisable for the aggregate number of vested shares offered by this Option determined bythe Schedule outlined in Section 3.

     Optionee shall be deemed to bedisabled if Optionee is determined to be disabled under the Company's Long Term DisabilityPlan.

     Section 7. Transferability.This Option shall not be transferable by Optionee otherwise than by Optionee's will or bythe laws of descent and distribution. During the lifetime of Optionee, the Option shall beexercisable only by Optionee or his guardian or authorized legal representative. Any heiror legatee of Optionee shall take rights herein granted subject to the terms andconditions hereof. No such transfer of this Option Agreement to heirs or legatees ofOptionee shall be effective to bind the Company unless the Company shall have beenfurnished with written notice thereof and a copy of such evidence as the Committee maydeem necessary to establish the validity of the transfer and the acceptance by thetransferee or transferees of the terms and conditions hereof.

     Section 8.  No Rightsas Shareholder. Optionee shall have no rights as a shareholder with respect to anyshares of Stock covered by this Option Agreement until the Option is exercised by writtennotice and accompanied by payment as provided in Section 4 of this Option Agreement.

     Section 9.  ExtraordinaryCorporate Transactions. The existence of outstanding Options shall not affect in anyway the right or power of the Company or its shareholders to make or authorize any or alladjustments, recapitalizations, reorganizations, exchanges or other changes in theCompany's capital structure or its business, or any merger or consolidation of theCompany, or any issuance of Stock or other securities or subscription rights thereto, orany issuance of bonds, debentures, preferred or prior preference stock ahead of oraffecting the Stock or the rights thereof, or the dissolution or liquidation of theCompany, or any sale or transfer of all or any part of its assets or business, or anyother corporate act or proceedings, whether of a similar character or otherwise. In theevent there occurs a Corporate Change (as defined in the Plan) and in connection with oras a result of such Corporate Change, neither William V. Morgan nor Richard D. Kinderholds or continues to hold the Office of Chairman or Vice Chairman of the Company, theOptions granted hereunder shall immediately become fully exercisable and shall be governedby Paragraph VIII of the Plan.

     Section 10.  Changesin Capital Structure. If the outstanding shares of Stock or other securities of theCompany, or both, for which the Option is then exercisable shall at any time be changed orexchanged by declaration of a stock dividend, stock split or combination of shares, thenumber and kind of shares of Stock or other securities subject to the Plan or subject tothe Option, and the exercise price, shall be appropriately and equitably adjusted so as tomaintain the proportionate number of shares or other securities without changing theaggregate exercise price.

     Section 11.  ComplianceWith Securities Laws. Upon the acquisition of any shares pursuant to the exercise ofthe Option herein granted, Optionee (or any person acting under Section 7) will enter intosuch written representations, warranties and agreements as the Company may reasonablyrequest in order to comply with applicable securities laws or with this Option Agreement.

     Section 12.  ComplianceWith Laws. Notwithstanding any of the other provisions hereof, Optionee agrees that heor she will not exercise the Option granted hereby, and that the Company will not beobligated to issue any shares pursuant to this Option Agreement, if the exercise of theOption or the issuance of such shares of Stock would constitute a violation by Optionee orby the Company of any provision of any law or regulation of any governmental authority.

     Section 13.  Withholdingof Tax. To the extent that the exercise of this Option or the disposition of shares ofStock acquired by exercise of this Option results in compensation income to Optionee forfederal or state income tax purposes, Optionee shall pay to the Company at the time ofsuch exercise or disposition such amount of money as the Company may require to meet itsobligation under applicable tax laws or regulations and, if Optionee fails to do so, theCompany is authorized to withhold from any cash remuneration then or thereafter payable toOptionee, any tax required to be withheld by reason of such resulting compensation incomeor Company may otherwise refuse to issue or transfer any shares otherwise required to beissued or transferred pursuant to the terms hereof.

     Section 14.  No Rightto Employment or Directorship. Optionee shall be considered to be in the employment ofthe Company or its Affiliates or in service on the Board so long as he or she remains anemployee or director of the Company or its Affiliates. Any questions as to whether andwhen there has been a termination of such employment or service on the Board and the causeof such termination shall be determined by the Committee, and its determination shall befinal. Nothing contained herein shall be construed as conferring upon Optionee the rightto continue in the employ of the Company or its Affiliates or to continue service on theBoard, nor shall anything contained herein be construed or interpreted to limit the"employment at will" relationship between Optionee and the Company or itsAffiliates.

     Section 15.  Resolutionof Disputes. As a condition of the granting of the Option hereby, Optionee andOptionee's heirs, personal representatives and successors agree that any dispute ordisagreement which may arise hereunder shall be determined by the Committee in its solediscretion and judgment, and that any such determination and any interpretation by theCommittee of the terms of this Option Agreement shall be final and shall be binding andconclusive, for all purposes, upon the Company, Optionee, and Optionee's heirs, personalrepresentatives and successors.

     Section 16.  Legendson Certificate. The certificates representing the shares of Stock purchased byexercise of the Option will be stamped or otherwise imprinted with legends in such form asthe Company or its counsel may require with respect to any applicable restrictions on saleor transfer and the stock transfer records of the Company will reflect stop-transferinstructions with respect to such shares.

     Section 17.  Notices.Every notice hereunder shall be in writing and shall be given by registered or certifiedmail or by any other method accepted by the Company or the Company's designee. All noticesof the exercise of any Option hereunder shall be directed to Kinder Morgan, Inc., 500Dallas Street, Suite 1000, Houston, Texas 77002, Attention: Secretary, or to the Company'sdesignee. Any notice given by the Company to Optionee directed to Optionee at the addresson file with the Company shall be effective to bind Optionee and any other person whoshall acquire rights hereunder. The Company shall be under no obligation whatsoever toadvise Optionee of the existence, maturity or termination of any of Optionee's rightshereunder and Optionee shall be deemed to have familiarized himself or herself with allmatters contained herein and in the Plan which may affect any of Optionee's rights orprivileges hereunder.

     Section 18.  Constructionand Interpretation. Whenever the term "Optionee" is used herein undercircumstances applicable to any other person or persons to whom this award, in accordancewith the provisions of Section 7 hereof, may be transferred, the word "Optionee"shall be deemed to include such person or persons.

     Section 19.  AgreementSubject to Plan. This Option Agreement is subject to the Plan. The terms andprovisions of the Plan (including any subsequent amendments thereto) are herebyincorporated herein by reference thereto. In the event of a conflict between any term orprovision contained herein and a term or provision of the Plan, the applicable terms andprovisions of the Plan will govern and prevail. All definitions of words and termscontained in the Plan shall be applicable to this Option Agreement.

     Section 20.  EntireAgreement; Amendment. This Option Agreement and any other agreements and instrumentscontemplated by this Option Agreement contain the entire agreement of the parties, andthis Option Agreement may be amended only in writing signed by both parties.

     Section 21.  Modificationand Severability. If a court of competent jurisdiction declares that any provision ofthis Option Agreement is illegal, invalid or unenforceable, then such provision shall bemodified automatically to the extent necessary to make such provision fully enforceable.If such court does not modify any such provision as contemplated herein, but insteaddeclares it to be wholly illegal, invalid or unenforceable, then such provision shall besevered from this Option Agreement, and such declaration shall in no way affect thelegality, validity and enforceability of the other provisions of this Option Agreement towhich such declaration does not relate. In this event, this Option Agreement shall beconstrued as if it did not contain the particular provision held to be illegal, invalid orunenforceable, the rights and obligations of the parties hereto shall be construed andenforced accordingly, and this Option Agreement otherwise shall remain in full force andeffect. If any provision of this Option Agreement is capable of two constructions, one ofwhich would render the provision void and the other of which would render the provisionvalid, then the provision shall have the construction which renders it valid.

     Section 22.  BindingEffect. This Option Agreement shall be binding upon and inure to the benefit of anysuccessors to the Company and all persons lawfully claiming under Optionee as providedherein.

     Section 23.  GoverningLaw. This Option Agreement shall be interpreted and construed in accordance with thelaws of the State of Colorado and applicable federal law.

[Signature page follows]

IN WITNESS WHEREOF, this Nonqualified Stock Option Agreement has beenexecuted as of the ____ day of ___________, ______.

KINDER MORGAN, INC.

___________________________
Joseph Listengart    VP, General Counsel
_________________________
Print Employee Name
_________________________
Employee Signature
_________________________
Employee Social Security    Number |
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