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


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----

<S>                                                                                                      <C>
Purpose...................................................................................................1

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


ARTICLE 2  Eligibility, Enrollment, Commencement of Participation.........................................6

      2.1  Eligibility....................................................................................6
      2.2  Enrollment Requirements........................................................................6
      2.3  Commencement of Participation..................................................................7
      2.4  Termination of Participation and/or Deferrals..................................................7

ARTICLE 3  Deferral Commitments/Company Matching/Crediting/Taxes..........................................7

      3.1  Minimum Deferrals..............................................................................7
      3.2  Maximum Deferrals..............................................................................8
      3.3  Election to Defer; Effect of Election Form.....................................................8
      3.4  Withholding of Annual Deferral Amounts.........................................................8
      3.5  Investment of Trust Assets.....................................................................8
      3.6  Vesting........................................................................................8
      3.7  Crediting/Debiting of Account Balances.........................................................9
      3.8  FICA and Other Taxes..........................................................................10
      3.9  Distribution..................................................................................11

ARTICLE 4  Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal
           Election......................................................................................11

      4.1  Short-Term Payout.............................................................................11
      4.2  Other Benefits Take Precedence Over Short-Term................................................11
      4.3  Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies.........................11
      4.4  Withdrawal Election...........................................................................12

ARTICLE 5  Retirement Benefit............................................................................12

      5.1  Amount of Retirement Benefit..................................................................12
      5.2  Payment of Retirement Benefit.................................................................12
      5.3  Death Prior to Completion of Retirement Benefit...............................................12

ARTICLE 6  Pre-Retirement Survivor Benefit...............................................................13

      6.1  Amount of Pre-Retirement Survivor Benefit.....................................................13
      6.2  Payment of Pre-Retirement Survivor Benefit....................................................13
</TABLE>


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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

<TABLE>
<S>                                                                                                 <C>
ARTICLE 7  Termination Benefit...........................................................................13

      7.1  Amount of Termination Benefit.................................................................13
      7.2  Payment of Termination Benefit................................................................13

ARTICLE 8  Disability Waiver and Benefit.................................................................14

      8.1  Disability Waiver.............................................................................14
      8.2  Continued Eligibility; Disability Benefit.....................................................14

ARTICLE 9  Beneficiary Designation.......................................................................15

      9.1  Beneficiary...................................................................................15
      9.2  Beneficiary Designation; Change; Spousal Consent..............................................15
      9.3  Acknowledgement...............................................................................15
      9.4  No Beneficiary Designation....................................................................15
      9.5  Doubt as to Beneficiary.......................................................................15
      9.6  Discharge of Obligations......................................................................16

ARTICLE 10 Leave of Absence..............................................................................16

      10.1 Paid Leave of Absence.........................................................................16
      10.2 Unpaid Leave of Absence.......................................................................16

ARTICLE 11 Termination, Amendment or Modification........................................................16

      11.1 Termination...................................................................................16
      11.2 Amendment.....................................................................................17
      11.3 Plan Agreement................................................................................17
      11.4 Effect of Payment.............................................................................17

ARTICLE 12 Administration................................................................................18

      12.1 Committee Duties..............................................................................18
      12.2 Agents........................................................................................18
      12.3 Binding Effect of Decisions...................................................................18
      12.4 Indemnity of Committee........................................................................18
      12.5 Employer Information..........................................................................18

ARTICLE 13 Other Benefits and Agreements.................................................................18

      13.1 Coordination with Other Benefits..............................................................18
</TABLE>


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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

<TABLE>
<S>                                                                                                  <C>
ARTICLE 14  Claims Procedures.............................................................................19

      14.1  Presentation of Claim.........................................................................19
      14.2  Notification of Decision......................................................................19
      14.3  Review of a Denied Claim......................................................................19
      14.4  Decision on Review............................................................................20
      14.5  Legal Action..................................................................................20

ARTICLE 15  Trust.........................................................................................20

      15.1  Establishment of the Trust....................................................................20
      15.2  Interrelationship of the Plan and the Trust...................................................20
      15.3  Distributions From the Trust..................................................................21

ARTICLE 16  Miscellaneous.................................................................................21

      16.1  Status of Plan................................................................................21
      16.2  Unsecured General Creditor....................................................................21
      16.3  Employer's Liability..........................................................................21
      16.4  Nonassignability..............................................................................21
      16.5  Not a Contract of Employment..................................................................21
      16.6  Furnishing Information........................................................................22
      16.7  Terms.........................................................................................22
      16.8  Captions......................................................................................22
      16.9  Governing Law.................................................................................22
      16.10 Notice........................................................................................22
      16.11 Successors....................................................................................23
      16.12 Spouse's Interest.............................................................................23
      16.13 Validity......................................................................................23
      16.14 Incompetent...................................................................................23
      16.15 Court Order...................................................................................23
      16.16 Distribution in the Event of Taxation.........................................................23
      16.17 Insurance.....................................................................................24
      16.18 Legal Fees To Enforce Rights After Change in Control..........................................24
</TABLE>

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<PAGE>   5
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

                                K N ENERGY, INC.

                      MANAGEMENT DEFERRED COMPENSATION PLAN

                            Effective January 1, 1998


                                     PURPOSE

         The purpose of the K N Energy, Inc. Management Deferred Compensation
Plan (the "Plan") is to provide specified benefits to a select group of
management and highly compensated Employees 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 the Deferral 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 Deferral Amount" shall mean that portion of a Participant's
         Base Annual Salary and Annual Incentive 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.

1.4      "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


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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

         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.

1.5      "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.

1.6      "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.

1.7      "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.

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

1.9      "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


                                      -2-
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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

                  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 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).

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

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

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

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

1.14     "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.


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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

1.15     "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
         pursuant to this limitation shall continue to be credited/debited with
         additional amounts in accordance with Section 3.7 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.

1.16     "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.

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

1.18     "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).

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

1.20     "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.

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


                                      -4-
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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

1.22     "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.

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

1.24     "Participant" shall mean for all purposes of this Plan any Employee (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. 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.

1.25     "Plan" shall mean the Company's Management Deferred Compensation Plan,
         effective January 1, 1998, which shall be evidenced by this instrument
         and by each Plan Agreement, as they may be amended from time to time.

1.26     "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.

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

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

1.29     "Retirement", "Retire(s)" or "Retired" 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.

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



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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

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

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

1.33     "Termination of Employment" shall mean the severing of employment with
         all Employers, voluntarily or involuntarily, for any reason other than
         Retirement, Disability, death or an authorized leave of absence

1.34     "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.

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

1.36     "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. 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 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.


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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

2.3      COMMENCEMENT OF PARTICIPATION. Provided an Employee 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 shall commence participation in the Plan on the first day
         of the Plan Year following the day on which the Employee completes all
         enrollment requirements. If an Employee fails to meet all such
         requirements within the period required, in accordance with Section
         2.2, that Employee 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.

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/CREDITING/TAXES

3.1      MINIMUM DEFERRALS.

         (a)      BASE ANNUAL SALARY AND ANNUAL INCENTIVE. For each Plan Year, a
                  Participant may elect to defer, as his or her Annual Deferral
                  Amount, Base Annual Salary and Annual Incentive 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
                  -------------------------   ------------------------
</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.


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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

MAXIMUM  DEFERRAL. For each Plan Year, a Participant may elect to defer, as his
         or her Annual Deferral Amount, Base Annual Salary and Annual Incentive
         up to the following maximum percentages for each deferral elected:

<TABLE>
<CAPTION>
                  -------------------------   ------------------------
                          DEFERRAL                  MINIMUM AMOUNT
                  -------------------------   ------------------------
                  <S>                         <C>
                      Base Annual Salary                 90%
                  -------------------------   ------------------------
                      Annual Incentive                   90%
                  -------------------------   ------------------------
</TABLE>

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
                  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.

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 portion of the Annual Deferral
         Amount shall be withheld at the time the Annual Incentive is or
         otherwise would be paid to the Participant, whether or not this occurs
         during the Plan Year itself.

3.5      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, in one or more investment vehicles designated by the
         Committee.

3.6      VESTING. A Participant shall at all times be 100% vested in his or her
         Deferral Account.


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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

3.7      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. 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 3.7(c)
                  below) to be used to determine the additional amounts to be
                  credited to his or her 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 Account Balance, or to change the portion of his or
                  her 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 3.7(a) above, the Participant shall specify on the
                  Election Form, in increments of five percentage points (5%),
                  the percentage of his or her Account Balance to be allocated
                  to a Measurement Fund (as if the Participant was making an
                  investment in that Measurement Fund with that portion of his
                  or her Account Balance).

         (c)      MEASUREMENT FUNDS FOR 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
                  Account Balance. 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.

                                      -9-
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Management Deferred Compensation Plan
Master Plan Document
================================================================================

         (d)      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
                  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.

         (e)      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.

3.8      FICA AND OTHER TAXES. 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 3.8.


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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

3.9      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.


                                    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 3.8 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.



                                      -11-
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Management Deferred Compensation Plan
Master Plan Document
================================================================================

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. 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

                                      -12-
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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

         number of years and in the same amounts as that benefit would have been
         paid to the Participant had the Participant survived.

                                        
                                   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


                                      -13-
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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

         Termination Benefit to be paid in a lump sum or in substantially equal
         annual installment 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 excused
                  from fulfilling that portion of the Annual Deferral Amount
                  commitment that would otherwise have been withheld from a
                  Participant's Base Annual Salary and Annual Incentive for the
                  Plan Year during which the Participant first suffers a
                  Disability. 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 with an
                  Employer, after a Disability ceases, the Participant may elect
                  to defer an Annual Deferral 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 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 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.


                                      -14-
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K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

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


                                      -15-
<PAGE>   20
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

                                   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, 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 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 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; 


                                      -16-
<PAGE>   21
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

         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.


                                      -17-
<PAGE>   22
K N ENERGY, INC.
Management 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 such Participant under any
         other plan or program for employees of the Participant's


                                      -18-
<PAGE>   23
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

         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):

         (a)      may review pertinent documents;


                                      -19-
<PAGE>   24
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

         (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
         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.

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.


                                      -20-
<PAGE>   25
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

                                   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
         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 as an Employee
         or to interfere with the right of any Employer to discipline or
         discharge the Participant at any time.



                                      -21-
<PAGE>   26
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

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:

                           Administrative Committee
                           ------------------------------------------------
                           K N Energy, Inc.
                           Management 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.


                                      -22-
<PAGE>   27
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

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 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.


                                      -23-
<PAGE>   28
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

         (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
         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.


                                      -24-

<PAGE>   29
K N ENERGY, INC.
Management Deferred Compensation Plan
Master Plan Document
================================================================================

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


                                      -25-