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                                                                    EXHIBIT 10.1

                          TAX INDEMNIFICATION AGREEMENT

         This TAX INDEMNIFICATION AGREEMENT (the "Agreement") dated as of
_________, 2001 between Kinder Morgan, Inc., a Kansas corporation ("KMI") and
Kinder Morgan Management, LLC, a Delaware limited liability company
("Management").


                                    PREAMBLE

         WHEREAS, Management was formed pursuant to the Limited Liability
Company Agreement of Kinder Morgan Management, LLC, dated as of February 14,
2001 which was amended by the Amended and Restated Limited Liability Company
Agreement of Kinder Morgan Management, LLC (the "Management LLC Agreement").

         WHEREAS, Management issued two classes of limited liability company
interests consisting of the "Listed Shares" and the "Voting Shares," the rights
and obligations of which are more specifically described in the Management LLC
Agreement.

         WHEREAS, Kinder Morgan Energy Partners, L.P., a Delaware limited
partnership ("KMEP"), pursuant to the Third Amended and Restated Agreement of
Limited Partnership of KMEP (the "KMEP Partnership Agreement"), authorized the
issuance of the new class of partnership interest hereinafter referred to as the
"I-Unit."

         WHEREAS, Management issued the Voting Shares to KMGP (as defined
herein) in exchange for $100,000.

         WHEREAS, Management issued and sold the Listed Shares to the public.

         WHEREAS, Management applied the net proceeds of issuance and sale of
the Listed Shares to the public to acquire I-Units from KMEP in exchange for
$_______ million. In addition, Management purchased the Exchange Rights (as
defined herein), the Purchase Rights (as defined herein) and its rights under
this Agreement from KMI for $________ million.

         WHEREAS, KMI has agreed to indemnify Management for certain tax
consequences attributable to the Indemnifiable Events described below.

         ACCORDINGLY, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the parties hereto do hereby agree as
follows:


                                    AGREEMENT

         1. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings. Any reference to any person shall include
such person and its permitted successors and assigns. Except where expressly
stated otherwise, any agreement referred to in this Agreement shall mean such
agreement as amended, supplemented or modified from time to time in accordance
with the applicable provisions thereof. Capitalized terms not otherwise defined
herein have the meaning assigned them in the Management LLC Agreement.



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         "After-Tax Basis" means in respect of any amount received or accrued by
any Person (or in the case of a payee which is a pass-through or disregarded
entity for the relevant Tax purposes, the Persons who are required to take into
account any items of income, gain, loss or deduction with respect to such
entity) (the "base amount"), the base amount supplemented by a further payment,
if necessary, to such Person such that, after reduction for all Taxes actually
imposed on such Person as a result of the receipt or accrual of the base amount
and such further payment (after giving effect to all deductions and credits, if
any, actually utilized by such Person arising from the event or circumstance
giving rise to the base amount), the net amount received by such Person shall be
equal to the base amount.

         "Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or the
states of New York or Texas shall not be regarded as a Business Day.

         "Change in Law" means the occurrence after the date hereof of (i) the
enactment of, or amendment to, any provision of the Code, Treasury Regulations
thereunder or any administrative pronouncement, (ii) the enactment of, or
amendment to, any provision of the Tax law of any state (or political
subdivision thereof) in which Management is subject to Tax, or (iii) the
issuance of a Final Determination of the United States Supreme Court or the
United States Court of Appeals for the federal judicial circuit to which appeal
would lie from a case concerning Indemnifiable Events relating to Management;
provided, that (x) a change in the rate of any Tax shall not be treated as a
Change in Law, and (y) an administrative pronouncement shall be treated as a
Change in Law only if Management provides KMI a written opinion of independent,
nationally-recognized tax counsel selected by Management (such counsel and form
of opinion to be reasonably satisfactory to KMI) to the effect that such counsel
is unable to conclude that a Reasonable Basis exists to take a position contrary
to such administrative pronouncement.

         "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of successor law.

         "Common Unit" has the meaning set forth in the KMEP Partnership
Agreement.

         "Exchange Rights" means the various rights of holders of the Listed
Shares to exchange Listed Shares for Common Units of KMEP owned by KMI or cash,
the terms and provisions of which are more specifically set forth in Annex A of
the Management LLC Agreement.

         "Final Determination," in respect of KMI, KMEP or Management means: (i)
any judicial decisions, a decision, judgment, decree or other order by any court
of competent jurisdiction, which decision, judgment, decree or other order has
become final after all appeals allowable by law as of right and hereunder by
either party to the action have been exhausted or the time for filing such
appeals has expired; (ii) a closing agreement entered into under section 7121 of
the Code or any other settlement agreement entered into with the applicable
taxing authority in connection with an administrative or judicial proceeding
(including a state or local proceeding); (iii) the expiration of the time for
instituting a suit with respect to a claimed deficiency; or (iv)


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the expiration of the time for instituting a claim for refund, or if such a
claim were filed, the expiration of the time for instituting a suit with respect
thereto.

         "I-Unit" is defined in the preamble to this Agreement. The terms and
provisions of the I-Units are more specifically set forth in the KMEP
Partnership Agreement.

         "Indemnifiable Event" means either (i) an increase, as a result of a
Change in Law, an audit by the applicable taxing authority or any action taken
by KMI or KMGP that is inconsistent with the Tax Assumptions, in the sum of
Taxes imposed on, payable by, or withheld from payments to Management, over the
sum of Taxes, if any, Management would have paid or incurred in such year or
shorter tax period with respect thereto based on the Tax Assumptions, computed
in each case as provided in Section 4, (ii) any insufficiency or inadequacy of
cash to pay Taxes as contemplated by the definition of "Tax Assumptions" (which
insufficiency or inadequacy shall be treated as additional Tax for purposes of
Section 3(a)(1)), or (iii) any of the situations described in the last sentence
of Section 3(a)(3).

         "Indemnity Amount" has the meaning set forth in Section 3(a)(1).

         "Interest Rate" means the applicable federal rate (within the meaning
of section 1274(d) of the Code).

         "IRS" means the United States Internal Revenue Service.

         "KMGP" means Kinder Morgan G.P., Inc., a Delaware corporation, the sole
general partner of KMEP and the owner of the Voting Shares.

         "KMI" is defined in the introduction to this Agreement.

         "Listed Shares" means the ownership interests in Management issued to
the public for cash, the rights and obligations of which are more specifically
described in the Management LLC Agreement.

         "Management" is defined in the introduction to this Agreement.

         "Management LLC Agreement" is defined in the preamble to this
Agreement.

          "Non-Taxable" means in respect of any transaction, event or
circumstance, not causing or giving rise to the realization or recognition of
any taxable income or other basis for the imposition of Tax.

         "Purchase Rights" means the rights and obligations associated with the
optional and mandatory purchase of Listed Shares by KMI, the terms and
provisions of which are more specifically set forth in Annex B of the Management
LLC Agreement.

         "Realized Tax Savings" shall have the meaning set forth in Section
3(a)(3).


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         "Reasonable Basis" for a position exists if tax counsel may properly
advise reporting such position on a Tax return in accordance with Formal Opinion
85-352 of the American Bar Association or any successor thereto.

         "Revenue Agent's Report" means a report sent to a taxpayer under cover
of a transmittal (30 day) letter relating to proposed adjustments in such
taxpayer's United States federal income tax liability referred to in Treasury
Regulation Section 601.105(c)(2)(i).

         "Tax" or "Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions or withholdings (including, without limitation,
income, franchise, gross receipts, sales, rental, use, turnover, value added,
property (tangible and intangible), excise and stamp taxes) of any nature
whatsoever, together with any and all assessments, penalties, fines, additions
and interest relating thereto.

         "Tax Assumptions" means the following assumptions with respect to the
basis of taxation of Management and its capability to pay Taxes to which it may
be subject relative to the cash which it has available to pay such Taxes:

         (1)      The formation and capitalization of Management and all
                  transactions related or incidental thereto (including, without
                  limitation, this Agreement), its issuance of Listed Shares and
                  Voting Shares and its acquisition of I-Units in KMEP will be
                  Non-Taxable to Management.

         (2)      Management's receipt of the Exchange Rights and Purchase
                  Rights from KMI will be Non-Taxable to Management.

         (3)      Management's transfer of the Exchange Rights and Purchase
                  Rights to the holders of Listed Shares will be Non-Taxable to
                  Management.

         (4)      Management is treated as a corporation for United States
                  federal, state and local income Tax purposes.

         (5)      Each Listed Share and Voting Share is treated as an ownership
                  interest in Management, and each owner of a Listed Share or a
                  Voting Share is treated as a shareholder of Management, for
                  United States federal, state and local income Tax purposes.

         (6)      KMEP is treated as a partnership for United States federal,
                  state and local income Tax purposes.

         (7)      Management, by virtue of its ownership of I-Units in KMEP, is
                  treated as a partner in KMEP for United States federal, state
                  and local income Tax purposes.

         (8)      The allocation of KMEP Tax Items, as set forth in the KMEP
                  Partnership Agreement, is respected for United States federal,
                  state and local income Tax purposes.


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         (9)      Distributions of additional I-Units to Management by KMEP made
                  pursuant to the KMEP Partnership Agreement are Non-Taxable to
                  Management.

         (10)     Distributions of additional Listed Shares and Voting Shares by
                  Management to holders of Listed Shares and Voting Shares, made
                  pursuant to the Management LLC Agreement, are Non-Taxable to
                  Management.

         (11)     To the extent that Management engages in the management and
                  control of KMEP and receives reimbursement from KMEP or KMGP
                  in respect of its services and other expenses incurred by
                  Management, such reimbursement will, after the payment by
                  Management of any fees or expenses incurred by Management in
                  respect of the management and control of KMEP, be adequate to
                  pay all Taxes, if any, payable by Management by virtue of
                  either (i) its management and control of KMEP, or (ii) the
                  receipt of such reimbursement from KMEP or KMGP.

         (12)     The only assets owned by Management, other than cash, are
                  I-Units in KMEP.

         (13)     If there is a sale, exchange, redemption or other disposition
                  of I-Units owned by Management or a complete or partial
                  liquidation of KMEP resulting in distributions in respect of
                  the I-Units held by Management, the cash received by
                  Management will be sufficient to satisfy any Tax payable by
                  Management as a result of such sale, exchange, redemption,
                  liquidation or other disposition.

         "Tax Items" means items of income, gain, loss, deduction and credit for
income Tax purposes.

         "KMEP Partnership Agreement" is defined in the preamble to this
Agreement.

         "Treasury Regulations" means temporary or final United States Treasury
regulations.

         "Voting Shares" means the ownership interest in Management held by
KMGP, the rights and obligations of which are more specifically set forth in the
Management LLC Agreement.

         2. Tax Representations. Management represents, warrants and covenants
to KMI, and KMI represents, warrants and covenants to Management that, for all
United States federal, state and local income Tax purposes:

                  (a) It will treat Management as a corporation.

                  (b) It will treat the owners of Listed Shares and Voting
Shares as shareholders of Management.

                  (c) It will treat the distributions by Management of
additional Listed Shares and Voting Shares to holders of Listed Shares and
Voting Shares made pursuant to the Management LLC Agreement as Non-Taxable.


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                  (d) It will treat KMEP as a partnership and will treat
Management as a partner of KMEP with respect to its ownership of I-Units.

                  (e) It will respect the allocation of Tax Items made with
respect to the I-Units owned by Management as provided in the KMEP Partnership
Agreement.

                  (f) It will prepare and file all Tax elections, Tax returns
and information returns on a basis consistent with the treatment described in
(a) through (e) and will not take any contrary position on any Tax return or
information return or take any other action that is inconsistent with such
treatment.

Notwithstanding anything to the contrary herein, neither KMI nor Management
shall be obligated to take a position subsequent to (i) a Final Determination to
the contrary or (ii) the receipt of a written opinion of independent,
nationally-recognized tax counsel selected by Management (such counsel and form
of opinion to be reasonably satisfactory to KMI) to the effect that, due solely
to a Change in Law, such counsel is unable to conclude that a Reasonable Basis
exists to take such position.

         3. Indemnification and Reimbursements.

                  (a) Indemnity Obligation; Reimbursement for Realized Tax
Savings.

                           (1) In General. Upon the occurrence of an
Indemnifiable Event, KMI shall become obligated, in accordance with the terms of
this Agreement, to pay as an indemnity such amounts as, on an After-Tax Basis,
shall be equal to the amount of the additional Taxes incurred by Management as a
result of such Indemnifiable Event (the "Indemnity Amount"). In addition, the
Indemnity Amount shall be increased, on an After-Tax Basis, by the amount of all
reasonable out-of-pocket expenses incurred by Management that would not
otherwise have been incurred by Management, and that have not otherwise been
previously paid by KMI to Management as result of: (i) any Indemnifiable Event
or (ii) any determination by Management of the existence or amount of any
Realized Tax Savings.

                           (2) Increase for Interest. The Indemnity Amount shall
be increased by an amount equal to interest accrued at the Interest Rate on the
amount of indemnified Taxes that have actually been paid to the IRS or other
applicable taxing authority by Management from the assumed date of payment of
such Taxes (as provided in Section 4(b)), provided that (x) a payment of Taxes
in respect of which KMI has advanced funds to Management pursuant to Section
5(d) shall not accrue interest and (y) such interest shall cease to accrue if
the payment date of the Indemnity Amount is delayed as a result of the failure
of Management to provide notice and computations to KMI within a reasonable time
pursuant to Section 3(b).

                           (3) Reimbursement for Realized Tax Savings. To the
extent that any Indemnity Amount is paid pursuant to this Section 3 in respect
of an Indemnifiable Event, Management shall reimburse KMI for any Tax savings
(i) which are realized and which Management would not have realized but for such
Indemnifiable Event and (ii) which are actually received or recognized by
Management in the form of cash or a cash savings at a time when such cash or
cash savings is not otherwise required by Management to pay its legal


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obligations, including, without limitation, its Taxes, and excluding the
obligation created by this Section 3(a)(3) ("Realized Tax Savings") Management
shall pay any Realized Tax Savings within fifteen (15) days of the earlier of
(i) Management determining that such Realized Tax Savings exist or (ii) any
final determination, pursuant to Section 6, that any such Realized Tax Savings
exist and are available for payment pursuant to this Section 3(a)(3).
Notwithstanding the foregoing, Management shall not be required to make any
payment pursuant to this Section 3(a)(3) to the extent that the amount of such
payment would exceed (i) the amount of all prior payments by KMI to Management
pursuant to Section 3(a)(1) with respect to the Indemnifiable Event which gave
rise to the Realized Tax Savings, less (ii) the amount of all prior payments by
Management pursuant to this Section 3(a)(3) with respect to such Indemnifiable
Event. If for any reason any Realized Tax Savings paid to KMI pursuant to this
Section 3(a)(3) or taken into account in computing the amount of any indemnity
payable hereunder pursuant to Section 3(a)(1) shall, as a result of a Final
Determination or otherwise, be unavailable, such unavailability shall be treated
as an Indemnifiable Event subject to indemnification by KMI pursuant to Section
3(a)(1), above.

                  (b) Date for Payment. The amount payable by KMI pursuant to
Section 3(a) shall be paid upon the occurrence of the latest of:

                           (1) subject to Section 6 and the next sentence, 15
Business Days after the receipt by KMI of a notice from Management accompanied
by its computations in accordance with Section 6;

                           (2) if any such indemnity payment relates to an
Indemnifiable Event that is contested pursuant to Section 5, 15 Business Days
after the date of a Final Determination with respect to such Indemnifiable
Event; and

                           (3) in the case of, and to the extent such amount
payable by KMI pursuant to Section 3(a) relates to, the redemption or other
disposition of the KMEP I-Units, and subject to Section 6 and the next sentence,
15 Business Days after the redemption or other disposition of the KMEP I-Unit.

The date required for payment pursuant to the preceding sentence shall be
delayed until 15 Business Days after delivery to KMI of any verification
requested pursuant to Section 6.

         4. Computational Assumptions.

                  (a) In General. For purposes of (i) computing the amount of
Taxes payable as a result of an Indemnifiable Event and (ii) the definition of
"After-Tax Basis," Management shall be assumed to be subject to United States
federal income Tax at the maximum effective statutory rate generally applicable
to corporations for the relevant period or periods, and to the extent Management
is subject to state and local income Taxes it shall be assumed to be subject to
state and local income taxes at the composite rate equal to the highest
generally applicable composite rate for corporations whose principal place of
business is such state or local jurisdiction before taking into account the
deductibility of such Taxes in computing taxable income for United States
federal income Tax purposes.


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                  (b) Due Date for Taxes; Date of Realized Tax Savings. Taxes
will be assumed to be payable on the later of (i) the due date, without
extensions, of the Tax return on which such Taxes are reported or (ii) the date
on which such Taxes are actually paid to the IRS or other applicable taxing
authority. Realized Tax Savings pursuant to Section 3(a)(3) will be assumed to
be realized on the date when the cash or cash savings from such Realized Tax
Savings is realized by Management and is not otherwise required by Management to
pay its legal obligations.

         5. Contests; Records.

                  (a) Notice of Claim. If Management receives written notice
(including in the form of a proposed Revenue Agent's Report) of any action by
the IRS or other taxing authority that, if successful, would result in an
Indemnifiable Event for which KMI may be required to indemnify Management
hereunder, Management hereby agrees promptly to notify KMI in writing of such
claim (but a failure to do so will not diminish KMI's obligations under this
Agreement); provided, however, that if KMGP receives any such notice as the tax
matters partner of KMEP, KMI shall be deemed to have received notice under this
Section 5(a).

                  (b) Agreement to Contest. Except as set forth in Section 5(d)
and provided the conditions set forth in Section 5(c) are satisfied, Management
agrees to contest (or join in contesting) in good faith such claim or proposed
action and agrees not to settle such claim without the written approval of KMI.
The conduct of the contest shall be controlled by Management (or such other
person as Management shall have designated, subject to KMI's right of
involvement set forth in this Section 5).

                  (c) Conditions to Indemnified Party's Obligation to Contest
and Not Settle.

                           (1) Prior to taking any action to contest the claim
described in Section 5(a), and again prior to any appeal of an adverse judicial
decision, KMI shall have delivered to Management a written opinion of
independent, nationally-recognized tax counsel selected by KMI (such counsel and
form of opinion to be reasonably satisfactory to Management) to the effect that
there is a Reasonable Basis for contesting such action or proposed action by the
IRS or other taxing authority;

                           (2) KMI shall have agreed to pay, on an After-Tax
Basis as verified under Section 6 hereof, and shall be currently paying for
Management, all reasonable out-of-pocket expenses (including reasonable
attorneys fees of legal counsel reasonably selected by Management) that
Management shall incur in connection with contesting such action or proposed
action; and

                           (3) the amount of the indemnity that would be payable
hereunder (which shall include prospective exposure in future tax years
attributable to the position being challenged) shall exceed U.S. $5,000.

                  (d) Refund Claims. If Management shall determine in its
reasonable discretion to pay the Tax claimed and sue for a refund, KMI must
either, at its option and to the extent necessary for the contest to proceed,
(i) promptly advance to Management on an interest-free basis sufficient funds to
pay the Tax payable with respect thereto or (ii) pay to Management the


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amount payable pursuant to Section 3 (but without regard to the time of payment
in Section 3(b)) with respect to such claim.

                  (e) Supreme Court Appeals. Notwithstanding any other provision
of this Section 5, no appeal to the Supreme Court of the United States shall be
required in contesting a Tax claim or proposed action hereunder.

                  (f) Time at Which Obligations Operative. In any circumstance
where judicial review shall be unavailable, KMI's right to cause a contest
hereunder, and Management's obligation to contest hereunder, shall become
operative at the earliest time such a contest may, pursuant to law, be
initiated, provided that KMI has then satisfied all of the necessary
preconditions to the exercise of its contest rights.

                  (g) Deferral of Indemnification. If KMI shall have requested
Management to contest such claim as above provided and shall have duly complied
and remains in compliance with all the terms of this Section 5, KMI's liability
for indemnification shall be deferred (as provided in Section 3) until a Final
Determination of the liability of Management. At such time, KMI shall become
obligated for the payment of any indemnification hereunder resulting from the
outcome of such contest, and, to the extent funds were advanced by KMI pursuant
to Section 5(d) hereof, Management shall become obligated to refund to KMI any
amount received as a refund by Management or credited to Management and fairly
attributable to advances by KMI, net of any Taxes attributable to the receipt of
such refund or credit. Within 15 Business Days following such Final
Determination, any amounts due hereunder shall be paid first by set off against
each other and then either:

                           (1) KMI shall pay to Management any excess of the
full amount due hereunder over the amount of any advances previously made by KMI
and applied against its indemnity obligation as aforesaid; or

                           (2) Management shall repay to KMI any excess of such
advances, net of any Taxes attributable to Management's receipt of such refund
or credit, over such full amount due hereunder, together with any interest
received from the IRS or other taxing authority by Management that is properly
attributable to such advances during the period such advances were outstanding
and that is in excess of the amount of any Taxes attributable to Management's
receipt or accrual of such interest.

                  (h) Records and Participation.

                           (1) Indemnified Party. Management shall provide KMI
with all documents and information related to the contest as may be reasonably
requested by KMI, shall keep KMI fully informed, shall afford KMI the
opportunity to attend and participate in any meetings or negotiations with the
IRS or other taxing authority regarding such contest and will consult in good
faith with (and consider in good faith suggestions by) KMI and its counsel
regarding relevant aspects of the progress and nature of any such contest,
provided that nothing in this Agreement shall require Management to provide KMI
with its Tax returns or other


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proprietary information relating to the identity of Management's shareholders,
owners, members or lenders.

                           (2) KMI. Within a reasonable time under the
circumstances after reasonable written request therefor from Management, KMI
shall provide such information and copies of records as are within its control
to enable Management to fulfill its Tax return filing, audit and litigation
obligations in connection with the transactions contemplated by the Management
LLC Agreement, provided that nothing in this Agreement shall require KMI to
provide Management with its Tax returns.

         6. Verification. The results of all computations to be made with
respect to Management under this Agreement, together with a statement describing
in reasonable detail the manner in which such computations were made, shall be
delivered to KMI in writing. Preparation and delivery of such computations shall
be pursued diligently, in a timely manner and in good faith, and notice of an
Indemnifiable Event and delivery of such computations to KMI shall be made
within a reasonable time under the circumstances. If KMI so requests within ten
(10) Business Days after receipt of such computations, any determination shall
be reviewed by the independent accounting firm who regularly audits Management,
who shall be asked to verify, after consulting with KMI and Management, whether
Management's computations are correct, and to report its conclusions (within 20
Business Days upon being requested to verify and determine the correct
computation) to both KMI and Management. KMI also may request that such
accounting firm review Management's Tax returns for any year to determine if
Management is required to make any payment pursuant to Section 3(a)(3).
Management and KMI hereby agree to provide such accountants with all information
and materials as shall be reasonably necessary or desirable in connection
herewith. Any information provided to such accountants by any person shall be
and remain the exclusive property of such person and shall be deemed by the
parties to be (and the accountants shall confirm in writing that they shall
treat such information as) the private, proprietary and confidential property of
such person, and no person other than such person and the accountants shall be
entitled thereto, and all such materials shall be returned to such person. The
reasonable fees and expenses of the accountants in verifying an amount pursuant
to this Agreement shall be paid by KMI; provided, that Management and not KMI
shall be required to pay such fees if the computations provided by Management
were not prepared in good faith. The parties hereto agree that the sole
responsibility of the accountants hereunder shall be to verify calculations
hereunder and that all matters of interpretation of this Agreement shall not be
within the scope of the accountant's responsibilities.

         7. Late Payments. Except as otherwise provided in this Agreement, any
amount payable to Management or KMI under this Agreement not paid when due shall
bear interest from the date due to the date paid at the Interest Rate.

         8. No Duplication of Payments. Nothing contained in this Agreement
shall be construed to permit Management to receive payment with respect to an
Indemnifiable Event hereunder more than once, to permit Management to receive
payment with respect to an Indemnifiable Event in duplication of any payment
with respect to such Indemnifiable Event previously received by any transferor
of Management's interest, to permit any third-party beneficiary hereof



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to recover any amount hereunder or to require Management to pay any Realized Tax
Savings arising out of any Indemnifiable Event more than once.

         9. Notices. All notices and other communications shall be given in the
manner, to the respective addresses, and shall become effective as provided in
the Management LLC Agreement except to the extent otherwise expressly provided
herein, except that notices or communications shall be directed to KMI at:


                                    Kinder Morgan, Inc.
                                    500 Dallas Street, suite 1000
                                    Houston, Texas 77002
                                    Attn:  Joseph Listengart
                                    713/369-9000

         10. Assignment. The obligations and liabilities of KMI and Management
arising under this Agreement are expressly made for the benefit of, and shall be
enforceable by, Management and KMI and their respective successors and permitted
assigns. Any assignment by KMI of any of its obligations or liabilities
hereunder will not relieve KMI of any such obligations or liabilities without
the consent of Management.

         11. Survival. The obligations, rights and liabilities of KMI and
Management hereunder shall continue in full force and effect (notwithstanding
the cancellation, sale, exchange, redemption or other disposition of Listed
Shares, or the dissolution, liquidation or termination of Management, KMEP or
KMI) until the 180th day following the expiration of the relevant statute of
limitations for all relevant taxable years (taking into account all extensions
thereof).

         12. Method of Payment. All payments to be made to a party pursuant to
this Agreement shall be made in United States Dollars by wire transfer to such
bank account of such party as such party from time to time shall have directed
in writing at least five (5) Business Days prior to the due date thereof.

         13. Governing Law. THIS TAX INDEMNIFICATION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE,
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO
ANY CONFLICT OF LAW PROVISIONS.

         14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts together shall constitute and be one and the same instrument.

         15. Miscellaneous.

                  (a) Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render


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unenforceable such provision in any other jurisdiction, unless the provisions
declared prohibited as unenforceable are essential to effectuate the intent of
the parties with respect to the Agreement taken as a whole. To the extent
permitted by applicable Law, each of the parties hereto hereby agrees that any
provision hereof that renders any other term or provision hereof invalid or
unenforceable in any respect shall be modified, but only to the extent necessary
to avoid rendering such other term or provision invalid or unenforceable, and
such modification shall be accomplished in a manner that most nearly preserves
the benefit of the parties' bargains hereunder.

                  (b) Amendments. Neither this Agreement nor any of the terms
hereof may be terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or modification is
sought.

                  (c) Headings. The section and paragraph headings in this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof.

                  (d) No Intended Third Party Beneficiaries. There are no
intended third party beneficiaries of this Agreement.


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                                      -12-
<PAGE>   13





         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.



                                       KINDER MORGAN, INC.


                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------



                                       KINDER MORGAN MANAGEMENT, LLC

                                       By: Kinder Morgan G.P., Inc., its Voting
                                           Shares member


                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------



                                       KINDER MORGAN ENERGY PARTNERS, L.P.

                                       By:  Kinder Morgan G.P., Inc., its
                                            general partner


                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------


                [SIGNATURE PAGE TO TAX INDEMNIFICATION AGREEMENT]



                                      -13-