Kinder Morgan, Inc. Amended and Restated 1999 Stock Option Plan




  
    Exhibit 10.2

    KINDER MORGAN, INC.

    AMENDED AND RESTATED 1999 STOCK OPTION PLAN

    (Effective January 17, 2001)

  





Section I.

Purpose of the Plan



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



Section II.

Administration



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






Section III.

Option Agreements



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



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



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



Section IV.

Eligibility of Optionee



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



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






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



Section V.

Shares Subject to the Plan



     Effective January 17, 2001, the
aggregate number of shares of Stock which may be issued under Options granted under the
Plan shall not exceed 10,500,000. Such shares may consist of authorized but unissued
shares of Stock or previously issued shares of Stock reacquired by the Company. Any of
such shares which remain unissued and which are not subject to outstanding Options at the
termination of the Plan shall cease to be subject to the Plan, but, until termination of
the Plan, the Company shall at all times make available a sufficient number of shares to
meet the requirements of the Plan. Should any Option hereunder expire or terminate prior
to its exercise in full, the shares theretofore subject to such Option may again be
subject to an Option granted under the Plan to the extent permitted under Rule 16b-3.
The aggregate number of shares of Stock which may be issued under the Plan shall be
subject to adjustment in the same manner as provided in Paragraph VIII hereof with
respect to shares of Stock subject to Options then outstanding. Exercise of an Option in
any manner, including an exercise involving a Stock Appreciation Right, shall result in a
decrease in the number of shares of Stock which may thereafter be available, both for
purposes of the Plan and for sale to any one individual, by the number of shares as to
which the Option is exercised.



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



Section VI.

Option Price



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



Section VII.

Term of Plan



     This Plan was originally effective
on October 8, 1999 (the "Effective Date") and was amended and restated,
effective January 20, 2000. This Plan, as further amended and restated, shall be effective
on January 17, 2001, which is the date on which the Board adopted this 





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



Section VIII.

Recapitalization or Reorganization



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



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



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





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






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



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



Section IX.

Amendment or Termination



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



Section X.

Securities Laws



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






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



Section XI.

Miscellaneous



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



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



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



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



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






     IN WITNESS WHEREOF, and as
conclusive evidence of the adoption of the foregoing by the Board of Directors, Kinder
Morgan, Inc. has caused these presents to be duly executed in its name and behalf by its
proper officers thereunto duly authorized as of this 17th day of January, 2001.


		KINDER MORGAN, INC.

		  
	
		  
	
		  
	
		By:
	/s/
    James E. Street

		Name:
	James E. Street

		Title:
	Senior Vice President - Human

    Resources and Administration