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                      AMENDED AND RESTATED CREDIT AGREEMENT

                           dated as of June 18, 1998,

                                  by and among

                              KINDER MORGAN, INC.,

                                  as Borrower,

                         the Lenders referred to herein,

                                       and

                           FIRST UNION NATIONAL BANK,
                             as Administrative Agent



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<PAGE>

                               

                                TABLE OF CONTENTS


                                                                            PAGE

ARTICLE I  DEFINITIONS.........................................................1
   SECTION 1.1.  Definitions...................................................1
   SECTION 1.2.  General......................................................15
   SECTION 1.3.  Other Definitions and Provisions.............................16

ARTICLE II  REVOLVING CREDIT FACILITY.........................................16
   SECTION 2.1.  Revolving Credit Loans.......................................16
   SECTION 2.2.  Procedure for Advances of Revolving Credit Loans.............16
   SECTION 2.3.  Repayment of Revolving Credit Loans..........................17
   SECTION 2.4.  Revolving Credit Notes.......................................17
   SECTION 2.5.  Permanent Reduction of the Revolving Credit Commitment.......18
   SECTION 2.6.  Termination of the Revolving Credit Facility.................18
   SECTION 2.7.  Use of Proceeds..............................................18
   SECTION 2.8.  Security.....................................................18

ARTICLE III  LETTER OF CREDIT FACILITY........................................18
   SECTION 3.1.  L/C Commitment...............................................18
   SECTION 3.2.  Procedure for Issuance of Letters of Credit..................19
   SECTION 3.3.  Letter of Credit Fees and Other Charges......................19
   SECTION 3.4.  L/C Participations...........................................20
   SECTION 3.5.  Reimbursement Obligation of the Borrower.....................21
   SECTION 3.6.  Obligations Absolute.........................................21
   SECTION 3.7.  Effect of Application........................................22

ARTICLE IV  TERM LOAN FACILITY................................................22
   SECTION 4.1.  Term Loans...................................................22
   SECTION 4.2.  Procedure for Advance of Term Loans..........................22
   SECTION 4.3.  Repayment of Term Loans......................................22
   SECTION 4.4.  Optional Prepayments of Term Loans...........................22
   SECTION 4.5.  Term Notes...................................................23
   SECTION 4.6.  Use of Proceeds..............................................23
   SECTION 4.7.  Security.....................................................23

ARTICLE V  GENERAL LOAN PROVISIONS............................................23
   SECTION 5.1.  Interest.....................................................23
   SECTION 5.2.  Fees.........................................................25
   SECTION 5.3.  Notice and Manner of Conversion or Continuation of Loans.....25
   SECTION 5.4.  Mandatory Prepayments of Loans...............................26
   SECTION 5.5.  Manner of Payment............................................27
   SECTION 5.6.  Crediting of Payments and Proceeds...........................28
   SECTION 5.7.  Adjustments..................................................28
   SECTION 5.8.  Nature of Obligations of Lenders Regarding Extensions of 
                 Credit; Assumption by the Administrative Agent...............28
   SECTION 5.9.  Changed Circumstances........................................29

                                       i

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   SECTION 5.10. Indemnity....................................................31
   SECTION 5.11. Capital Requirements.........................................31
   SECTION 5.12. Taxes........................................................31

ARTICLE VI  CLOSING; CONDITIONS OF CLOSING AND BORROWING......................33
   SECTION 6.1.  Closing......................................................33
   SECTION 6.2.  Conditions to Closing and Extensions of Credit...............33
   SECTION 6.3.  Conditions to All Extensions of Credit.......................36

ARTICLE VII  REPRESENTATIONS AND WARRANTIES OF THE BORROWER...................37
   SECTION 7.1.  Representations and Warranties...............................37
   SECTION 7.2.  Survival of Representations and Warranties, Etc..............43

ARTICLE VIII  FINANCIAL INFORMATION AND NOTICES...............................43
   SECTION 8.1.  Financial Statements.........................................44
   SECTION 8.2.  Compliance Certificates......................................44
   SECTION 8.3.  Other Reports................................................44
   SECTION 8.4.  Notice of Litigation and Other Matters.......................45
   SECTION 8.5.  Accuracy of Information......................................46

ARTICLE IX  AFFIRMATIVE COVENANTS.............................................46
   SECTION 9.1.  Preservation of Corporate Existence and Related Matters......46
   SECTION 9.2.  Maintenance of Property......................................46
   SECTION 9.3.  Insurance....................................................46
   SECTION 9.4.  Accounting Methods and Financial Records.....................47
   SECTION 9.5.  Payment and Performance of Obligations.......................47
   SECTION 9.6.  Compliance With Laws and Approvals...........................47
   SECTION 9.7.  Environmental Laws...........................................47
   SECTION 9.8.  Compliance with ERISA........................................47
   SECTION 9.9.  Compliance With Agreements...................................48
   SECTION 9.10. Conduct of Business..........................................48
   SECTION 9.11. Visits and Inspections.......................................48
   SECTION 9.12. Additional Collateral........................................48
   SECTION 9.13. Kinder Morgan G.P. Security Agreement........................48
   SECTION 9.14. Further Assurances...........................................49

ARTICLE X  FINANCIAL COVENANTS................................................49
   SECTION 10.1. Leverage Ratio...............................................49
   SECTION 10.2. Combined Leverage Ratio......................................49
   SECTION 10.3  Interest Coverage Ratio......................................49
   SECTION 10.4  Combined Interest Coverage Ratio.............................50

ARTICLE XI  NEGATIVE COVENANTS................................................50
   SECTION 11.1. Limitations on Debt..........................................50
   SECTION 11.2. Limitations on Liens.........................................51
   SECTION 11.3. Limitations on Loans, Advances, Investments and Acquisitions.52
   SECTION 11.4. Limitations on Mergers and Liquidation.......................53
   SECTION 11.5. Limitations on Sale of Assets................................53
   SECTION 11.6. Limitations on Dividends and Distributions...................54
   SECTION 11.7. Limitations on Exchange and Issuance of Capital Stock........54

                                       ii
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   SECTION 11.8. Transactions with Affiliates.................................55
   SECTION 11.9. Certain Accounting Changes...................................55
   SECTION 11.10. Material Amendments.........................................55
   SECTION 11.11. Operating Leases............................................55
   SECTION 11.12. Restrictive Agreements......................................55

ARTICLE XII  DEFAULT AND REMEDIES.............................................55
   SECTION 12.1. Events of Default............................................55
   SECTION 12.2. Remedies.....................................................58
   SECTION 12.3. Rights and Remedies Cumulative; Non-Waiver; etc..............59

ARTICLE XIII  THE ADMINISTRATIVE AGENT........................................59
   SECTION 13.1. Appointment..................................................59
   SECTION 13.2. Delegation of Duties.........................................59
   SECTION 13.3. Exculpatory Provisions.......................................59
   SECTION 13.4. Reliance by the Administrative Agent.........................60
   SECTION 13.5. Notice of Default............................................60
   SECTION 13.6. Non-Reliance on the Administrative Agent and Other Lenders...60
   SECTION 13.7. Indemnification..............................................61
   SECTION 13.8. The Administrative Agent in Its Individual Capacity..........61
   SECTION 13.9. Resignation of the Administrative Agent; Successor
                 Administrative Agent.........................................62

ARTICLE XIV  MISCELLANEOUS....................................................62
   SECTION 14.1. Notices......................................................62
   SECTION 14.2. Expenses; Indemnity..........................................63
   SECTION 14.3. Set-off......................................................64
   SECTION 14.4. Governing Law................................................64
   SECTION 14.5. Consent to Jurisdiction......................................64
   SECTION 14.6. Binding Arbitration; Waiver of Jury Trial....................64
   SECTION 14.7. Reversal of Payments.........................................65
   SECTION 14.8. Injunctive Relief............................................66
   SECTION 14.9. Accounting Matters...........................................66
   SECTION 14.10. Successors and Assigns; Participations......................66
   SECTION 14.11. Amendments, Waivers and Consents............................69
   SECTION 14.12. Performance of Duties.......................................70
   SECTION 14.13. All Powers Coupled with Interest............................70
   SECTION 14.14. Survival of Indemnities.....................................70
   SECTION 14.15. Titles and Captions.........................................70
   SECTION 14.16. Severability of Provisions..................................70
   SECTION 14.17. Counterparts................................................70
   SECTION 14.18. Term of Agreement...........................................71

                                      iii


<PAGE>


EXHIBITS

Exhibit A            -    Form of Amended and Restated Revolving Credit Note
Exhibit B            -    Form of Term Loan Note
Exhibit C-1          -    Form of Notice of Revolving Credit Borrowing
Exhibit C-2          -    Form of Notice of Term Loan Borrowing
Exhibit C-3          -    Form of Notice of Conversion/Continuation
Exhibit D            -    Form of Notice of Prepayment
Exhibit E            -    Form of Notice of Account Designation
Exhibit F            -    Form of Officer's Compliance Certificate
Exhibit G            -    Form of Assignment and Acceptance
Exhibit H            -    Form of Amended and Restated Security Agreement


SCHEDULES

Schedule 1           -    Lenders and Commitments
Schedule 7.1(a)      -    Jurisdictions of Organization and Qualification
Schedule 7.1(b)      -    Subsidiaries and Capitalization
Schedule 7.1(e)      -    Compliance with Laws and Governmental Approvals
Schedule 7.1(h)      -    Environmental Matters
Schedule 7.1(i)      -    ERISA Plans
Schedule 7.1(l)      -    Material Contracts
Schedule 7.1(m)      -    Labor and Collective Bargaining Agreements
Schedule 7.1(s)      -    Debt and Guaranty Obligations
Schedule 7.1(t)      -    Litigation
Schedule 11.2        -    Existing Liens
Schedule 11.3        -    Existing Loans, Advances and Investments
Schedule 11.8        -    Affiliate Transactions




<PAGE>


     AMENDED AND RESTATED  CREDIT  AGREEMENT,  dated as of the 18th day of June,
1998, by and among KINDER MORGAN,  INC., a corporation  organized under the laws
of Delaware (the "Borrower"),  the Lenders who are or may become a party to this
Agreement (the  "Lenders"),  and FIRST UNION  NATIONAL  BANK, as  Administrative
Agent for the Lenders.

                              STATEMENT OF PURPOSE
                              --------------------

     Pursuant to the Credit Agreement dated as of February 14, 1997 by and among
the Borrower, the lenders party thereto (the "Original Lenders") and First Union
National Bank (f/k/a First Union National Bank of North Carolina), as agent (the
"Original  Agent") as amended by the letter  agreement dated August 4, 1997 from
the  Borrower to the Original  Agent,  the First  Amendment to Credit  Agreement
dated as of September 26, 1997 among the Borrower,  the Original Lenders and the
Original Agent and the Second Amendment to Credit Agreement dated as of December
31, 1997 among the Borrower,  the Original Lenders and the Original Agent (as so
amended, the "Existing Facility"), the Original Lenders agreed to extend certain
credit  facilities to the  Borrower.  The Borrower and the Lenders now desire to
amend and restate the Existing  Facility in its  entirety  pursuant to the terms
and conditions of this Agreement.

     NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:

                                    ARTICLE I
                                    ---------

                                   DEFINITIONS
                                   -----------

     SECTION 1.1.  Definitions.  The following terms when used in this Agreement
shall have the meanings assigned to them below:

     "Administrative Agent" means First Union in its capacity as Administrative
Agent hereunder, and any successor thereto appointed pursuant to Section 13.9.

      "Administrative  Agent's  Office"  means the office of the  Administrative
Agent  specified in or determined in accordance  with the  provisions of Section
14.1.

     "Affiliate" means, with respect to any Person, any other Person (other
than  a  Subsidiary)   which   directly  or  indirectly   through  one  or  more
intermediaries,  controls, or is controlled by, or is under common control with,
such first Person or any of its  Subsidiaries.  The term "control" means (a) the
power to vote  five  percent  (5%) or more of the  securities  or  other  equity
interests of a Person  having  ordinary  voting  power,  or (b) the  possession,
directly or  indirectly,  of any other power to direct or cause the direction of
the management  and policies of a Person,  whether  through  ownership of voting
securities, by contract or otherwise.

     "Aggregate   Commitment"   means  the  aggregate  amount  of  the  Lenders'
Commitments hereunder,  as such amount may be reduced or modified at any time or
from time to time  pursuant  to the  terms  hereof.  On the  Closing  Date,  the
Aggregate Commitment shall be One Hundred Million Dollars ($100,000,000).



<PAGE>


     "Agreement" means this Amended and Restated Credit  Agreement,  as amended,
restated or otherwise modified from time to time.

     "Applicable  Law"  means  all  applicable   provisions  of   constitutions,
statutes,  laws,  rules,  treaties,  regulations and orders of all  Governmental
Authorities and all orders and decrees of all courts and arbitrators.

     "Application"  means an  application,  in the form specified by the Issuing
Lender from time to time,  requesting  the  Issuing  Lender to issue a Letter of
Credit.

     "Assignment  and  Acceptance"  shall have the meaning  assigned  thereto in
Section 14.10.

     "Base Rate" means,  at any time, the higher of (a) First Union's Prime Rate
or (b) the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in the Prime
Rate or the Federal Funds Rate.

      "Base Rate Loan" means any Loan bearing  interest at a rate based upon the
Base Rate as provided in Section 5.1(a).

     "Borrower" means Kinder Morgan, Inc. in its capacity as borrower hereunder.

     "Business Day" means (a) for all purposes other than as set forth in clause
(b) below, any day other than a Saturday, Sunday or legal holiday on which banks
in Charlotte, North Carolina and New York, New York, are open for the conduct of
their  commercial  banking  business,  and (b) with  respect to all  notices and
determinations  in connection  with,  and payments of principal and interest on,
any LIBOR Rate Loan,  any day that is a Business Day described in clause (a) and
that is also a day for  trading by and between  banks in Dollar  deposits in the
London interbank market.

     "Capital Asset" means,  with respect to any Person,  any asset that should,
in accordance with GAAP, be classified and accounted for as a capital asset on a
Consolidated balance sheet of such Person.

     "Capital  Expenditures"  means,  with respect to any Person for any period,
the  aggregate  cost of all Capital  Assets  acquired by such Person during such
period, as determined in accordance with GAAP.

     "Capital  Lease"  means,  with  respect  to any  Person,  any  lease of any
property that should,  in accordance  with GAAP, be classified and accounted for
as a capital lease on a Consolidated balance sheet of such Person.

     "Capital  Stock"  means,  with  respect to any Person,  any and all shares,
interests,  rights  to  purchase,  warrants,  options,  participations  or other
equivalents (however  designated) of such Person's equity,  including all common
stock and preferred stock, any limited or general  partnership  interest and any
limited liability company membership.

                                       2

<PAGE>


     "Cash  Equivalents"  shall  have the  meaning  assigned  thereto in Section
11.3(b).

     "Change in  Control"  shall have the  meaning  assigned  thereto in Section
12.1(h).

     "Closing  Date" means the date of this Agreement or such later Business Day
upon which each  condition  described in Article VI shall be satisfied or waived
in all respects in a manner acceptable to the Administrative Agent.

     "Code"  means  the  Internal  Revenue  Code  of  1986,  and the  rules  and
regulations thereunder, each as amended or supplemented from time to time.

     "Collateral"   means  any   collateral   pledged  by  the   Borrower,   its
shareholders,  or any of their Subsidiaries to the Administrative Agent, for the
ratable benefit of itself and the Lenders, in order to secure the Obligations or
any portion thereof.

     "Combined   Debt"  means  Debt  of  the  Borrower   and  its   Consolidated
Subsidiaries  (including  Kinder  Morgan  G.P.),  Kinder  Morgan  Energy and its
Restricted  Subsidiaries  (excluding the Debt of SFPP), calculated on a combined
basis in accordance with GAAP.

     "Combined  Interest Expense" means Interest Expense of the Borrower and its
Consolidated  Subsidiaries  (including Kinder Morgan G.P.), Kinder Morgan Energy
and its Restricted  Subsidiaries  (excluding  Interest Expense in respect of the
Debt of SFPP), calculated on a combined basis in accordance with GAAP.

     "Commitment"  means, as to any Lender,  the sum of such Lender's  Revolving
Credit Commitment and Term Loan Commitment.

     "Consolidated"  means, when used with reference to financial  statements or
financial statement items of any Person or Persons,  such statements or items on
a consolidated  basis in accordance with applicable  principles of consolidation
under GAAP.

     "Consolidated  Subsidiaries"  shall mean each  Subsidiary  of the  Borrower
(whether now existing or hereafter acquired or created) the financial statements
of  which  shall be (or  should  have  been)  consolidated  with  the  financial
statements  of the Borrower in  accordance  with GAAP.  As of the Closing  Date,
Kinder Morgan G.P. is the only Consolidated Subsidiary of the Borrower.

     "Credit Facilities" means the collective  reference to the Revolving Credit
Facility, the L/C Facility and the Term Loan Facility.

     "Custodian and Negative Pledge  Agreement" means that certain Custodian and
Negative  Pledge  Agreement  executed by Kinder Morgan G.P., the  Administrative
Agent and First Union, in its capacity as custodian,  on or prior to the Closing
Date.

     "Debt"  means,  with  respect  to  any  Person  at  any  date  and  without
duplication,  the sum of the following  calculated in accordance  with GAAP: (a)
all  liabilities,  obligations and indebtedness for borrowed money including but
not limited to obligations evidenced by bonds, debentures, notes

                                       3

<PAGE>


or other similar  instruments  of any such Person,  (b) all  obligations of such
Person under  conditional sale or other title retention  agreements  relating to
property  acquired  by such  Person,  (c) all  obligations  to pay the  deferred
purchase price of property or services of any such Person, except trade payables
arising in the  ordinary  course of business not more than ninety (90) days past
due, (d) the portion of  obligations  of any such Person as lessee under Capital
Leases  that is  properly  classified  as a  liability  on a  balance  sheet  in
accordance  with GAAP, (e) the lesser of (i) Debt of any other Person secured by
a Lien on any  asset of any such  Person or (ii) the fair  market  value of such
assets  subject to such Lien,  (f) all Guaranty  Obligations  of any such Person
(except those permitted by Section 11.1(f)), (g) all obligations,  contingent or
otherwise,  of any such Person relative to the face amount of letters of credit,
whether or not drawn, including without limitation any Reimbursement Obligation,
and banker's  acceptances  issued for the account of any such Person and (h) all
net obligations incurred by any such Person pursuant to Hedging Agreements.

     "Default" means any of the events  specified in Section 12.1 which with the
passage of time, the giving of notice or any other  condition,  would constitute
an Event of Default.

     "Dollars"  or "$"  means,  unless  otherwise  qualified,  dollars in lawful
currency of the United States.

     "EBITDA"  means (without  duplication),  with respect to any Person for any
period,  the Net Income of such Person for such period  determined in accordance
with GAAP,  increased (to the extent  deducted in determining  such earnings for
such period) by the sum of (a) all income taxes (including state franchise taxes
based upon  income) of such  Person paid or accrued  according  to GAAP for such
period;   (b)  Interest  Expense  of  such  Person  for  such  period;  and  (c)
depreciation  and  amortization  of such  Person for such period  determined  in
accordance  with GAAP;  provided,  that if during any period  such  Person  (the
"Acquiring Person") acquires any other Person or all or substantially all of the
assets of such other Person, the EBITDA attributable to such assets or an amount
equal to the  percentage  of  ownership  of the  Acquiring  Person in such other
Person times the EBITDA of such other  Person,  for such period  determined on a
pro forma  basis  (which  determination,  in each  case,  may take into  account
adjustments  for cost  savings  and  shall be  subject  to the  approval  of the
Required Lenders, not to be unreasonably  withheld) may be included as EBITDA of
the Acquiring Company for such period.

     "Employee  Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is  maintained  for employees of the Borrower
or any ERISA  Affiliate  or (b) has at any time within the  preceding  six years
been maintained for the employees of the Borrower or any current or former ERISA
Affiliate.

     "Environmental  Laws"  means any and all  federal,  state  and local  laws,
statutes,   ordinances,   rules,  regulations,   permits,  licenses,  approvals,
interpretations  and orders of courts or Governmental  Authorities,  relating to
the protection of human health or the  environment,  including,  but not limited
to, requirements pertaining to the manufacture,  processing,  distribution, use,
treatment, storage, disposal,  transportation,  handling, reporting,  licensing,
permitting, investigation or remediation of Hazardous Materials.

                                       4

<PAGE>


     "ERISA" means the Employee  Retirement Income Security Act of 1974, and the
rules and regulations thereunder, each as amended or modified from time to time.

     "ERISA  Affiliate"  means any  Person who  together  with the  Borrower  is
treated as a single employer  within the meaning of Section 414(b),  (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.

     "Eurodollar   Reserve  Percentage"  means,  for  any  day,  the  percentage
(expressed as a decimal and rounded  upwards,  if necessary,  to the next higher
1/100th  of 1%) which is in effect  for such day as  prescribed  by the  Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic,  supplemental or emergency reserves) in
respect of Eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.

     "Event of  Default"  means any of the events  specified  in  Section  12.1,
provided  that any  requirement  for passage of time,  giving of notice,  or any
other condition, has been satisfied.

     "Excess Cash Flow" means, with respect to the Borrower and its Consolidated
Subsidiaries  for any period,  the sum of the  following for such period (a) KMI
Cash Flow plus any  extraordinary  cash gains minus (b) the sum of (i)  Interest
Expense, (ii) Capital Expenditures and (iii) taxes paid or payable in cash.

     "Existing  Facility"  shall  have  the  meaning  assigned  thereto  in  the
Statement of Purpose.

     "Extensions of Credit" means (a) with respect to all Lenders, the aggregate
principal  amount  of all  outstanding  Loans and L/C  Obligations  and (b) with
respect to each Lender, the sum of (i) such Lender's Revolving Credit Commitment
Percentage of the  outstanding  Revolving  Credit Loans and L/C  Obligations and
(ii) such Lender's Term Loan Percentage of the Term Loans.

     "FDIC" means the Federal Deposit  Insurance  Corporation,  or any successor
thereto.

     "Federal  Funds  Rate"  means,  the rate per  annum  (rounded  upwards,  if
necessary,  to the next higher 1/100th of 1%)  representing  the daily effective
federal  funds  rate as quoted by the  Administrative  Agent  and  confirmed  in
Federal  Reserve  Board  Statistical  Release  H.15  (519) or any  successor  or
substitute publication selected by the Administrative Agent. If, for any reason,
such rate is not  available,  then "Federal  Funds Rate" shall mean a daily rate
which is determined,  in the opinion of the Administrative Agent, to be the rate
at which federal funds are being offered for sale in the national  federal funds
market at 9:00 a.m.  (Charlotte  time).  Rates for weekends or holidays shall be
the same as the rate for the most immediate preceding Business Day.

     "Fee  Letter"  means the  separate  fee letter  agreement  executed  by the
Borrower and First Union on the Closing Date.

     "First  Union"  means  First  Union  National  Bank,  a  national   banking
association, and its successors.

                                       5

<PAGE>


     "Fiscal Quarter" means,  with respect to the Borrower and its Subsidiaries,
any  three-month  period  ending on the last day of March,  June,  September  or
December.

     "Fiscal  Year" means the fiscal year of the Borrower  and its  Subsidiaries
ending on December 31.

     "GAAP" means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants and the Financial  Accounting
Standards Board,  consistently  applied and maintained on a consistent basis for
the Borrower and its  Subsidiaries  throughout the period indicated and, subject
to Section 14.9,  consistent with the prior  financial  practice of the Borrower
and its Subsidiaries.

     "Governmental  Approvals" means all  authorizations,  consents,  approvals,
licenses and exemptions of,  registrations and filings with, and reports to, all
Governmental Authorities.

     "Governmental  Authority"  means any nation,  province,  state or political
subdivision  thereof,  and any  government or any Person  exercising  executive,
legislative,   regulatory  or  administrative  functions  of  or  pertaining  to
government,  and any  corporation or other entity owned or  controlled,  through
stock or capital ownership or otherwise, by any of the foregoing.

     "Guaranty   Obligation"  means,  with  respect  to  any  Person  ,  without
duplication,  any  obligation,  contingent  or  otherwise,  of any  such  Person
pursuant to which such Person has directly or indirectly  guaranteed any Debt or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation,  direct or indirect,  contingent or otherwise, of any
such Person (a) to purchase or pay (or advance or supply  funds for the purchase
or  payment  of) such Debt or other  obligation  (whether  arising  by virtue of
partnership arrangements,  by agreement to keep well, to purchase assets, goods,
securities  or services,  to  take-or-pay,  or to maintain  financial  statement
condition or  otherwise)  or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect  such  obligee  against  loss in respect  thereof  (in whole or in
part);   provided,   that  the  term  Guaranty   Obligation  shall  not  include
endorsements for collection or deposit in the ordinary course of business.

     "Hazardous  Materials"  means any  substances or materials (a) which are or
become  defined  as  hazardous   wastes,   hazardous   substances,   pollutants,
contaminants,  chemical  substances  or mixtures or toxic  substances  under any
Environmental  Law,  (b)  which  are  toxic,  explosive,  corrosive,  flammable,
infectious, radioactive,  carcinogenic,  mutagenic or otherwise harmful to human
health  or the  environment  and are or  become  regulated  by any  Governmental
Authority,  (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which  requires  a  permit  or  license  under  any  Environmental  Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance, a trespass
or pose a health or safety  hazard to persons  or  neighboring  properties,  (f)
which are materials  consisting of  underground  or  aboveground  storage tanks,
whether  empty,  filled or  partially  filled with any  substance,  or (g) which
contain,  without  limitation,   asbestos,   polychlorinated   biphenyls,   urea
formaldehyde  foam  insulation,   petroleum   hydrocarbons,   petroleum  derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.

                                       6

<PAGE>


     "Hedging  Agreement"  means any agreement  with respect to an interest rate
swap,  collar,  cap,  floor or a  forward  rate  agreement  or  other  agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Borrower under this Agreement, and any
confirming letter executed pursuant to such hedging  agreement,  all as amended,
restated or otherwise modified.

     "Interest Expense" means, without  duplication,  with respect to any Person
for  any  period,  the  aggregate  amount  of  interest,   whether  expensed  or
capitalized, paid, accrued or scheduled to be paid during such period in respect
of the Debt of such Person  including  (a) the interest  portion of any deferred
payment  obligation,  (b) the  portion  of any rental  obligation  in respect of
Capital  Leases  allocable to interest  expenses  and (c) any non-cash  interest
payments or accruals of such Person,  all  determined in  accordance  with GAAP.
Interest  Expense shall be adjusted in a manner  reasonably  satisfactory to the
Administrative  Agent to include on a pro forma basis as of the first day of any
calculation  period any Interest Expense on Debt attributable to any acquisition
consummated  during such period and exclude on a pro forma basis as of the first
day of any calculation  period any Interest Expense on Debt  attributable to any
Subsidiary  or assets  sold  during  such period (to the extent any such Debt is
discharged in connection with any such sale).

     "Interest  Period"  shall  have the  meaning  assigned  thereto  in Section
5.1(b).

     "Issuing Lender" means First Union, in its capacity as issuer of any Letter
of Credit, or any successor thereto.

     "Kinder  Morgan  Energy"  means  Kinder  Morgan  Energy  Partners,  L.P., a
Delaware limited partnership.

     "Kinder   Morgan  G.P."  means  Kinder   Morgan  G.P.,   Inc.,  a  Delaware
corporation.

     "KMEP Cash Flow" means (without  duplication),  for any period,  the sum of
(a) OLP "A" EBITDA for such  period,  (b) the EBITDA of OLP "B" for such period,
(c) the  EBITDA  of OLP "C" for such  period,  (d) cash  distributions  actually
received by Kinder  Morgan Energy from OLP "D" for such period in respect of its
Capital  Stock  (but not in excess of an amount  equal to the EBITDA of SFPP for
the same period less the sum for such  period of (i) all  scheduled  payments of
principal in respect of Debt of SFPP not  refinanced,  including  the  principal
component  of any such  payments  in respect of Capital  Leases,  (ii)  Interest
Expense of SFPP,  and (iii) without  duplication  the amount of all  Maintenance
Capital  Expenditures),  (e) the  EBITDA  of any other  Wholly-Owned  Restricted
Subsidiary, and (f) cash distributions actually received by Kinder Morgan Energy
from any other  Restricted  Subsidiary  (other  than a  Wholly-Owned  Restricted
Subsidiary);  provided, that, if during any period Kinder Morgan Energy acquires
any Person or all or substantially  all of the assets of any Person,  the EBITDA
attributable to such assets or an amount equal to the percentage of ownership of
Kinder  Morgan  Energy in such Person times the EBITDA of such Person,  for such
period determined on a pro forma basis (which  determination,  in each case, may
take into account  adjustments for cost savings and shall be subject to approval
of the Required  Lenders,  not to be  unreasonably  withheld) may be included as
KMEP  Cash  Flow for such  period,  if on the date of such  acquisition  no Debt
(other than Debt otherwise  permitted under any credit facility  restricting the
Debt incurred or

                                       7

<PAGE>


maintained by Kinder  Morgan  Energy) is incurred by reason of and giving effect
to such acquisition and such Person or the entity acquiring such assets,  as the
case may be, is a Restricted Subsidiary.

     "KMEP Operating Subsidiaries" means OLP "A", OLP "B", OLP "C", OLP "D", and
any other operating  partnerships  (or  partnerships  created or acquired to own
interests  in  operating  partnerships),  hereafter  established  or acquired by
Kinder Morgan Energy.

     "KMI Cash Flow" means (without  duplication),  with respect to the Borrower
and its Consolidated  Subsidiaries for any period,  EBITDA for such period, plus
all  cash   distributions   received  by  the  Borrower  and  its   Consolidated
Subsidiaries for such period in excess of Net Income.

     "KMI Dividend"  means  dividends to the  shareholders of the Borrower in an
amount not to exceed  Seventy-Five  Million  Dollars  ($75,000,000) a portion of
which  shall be paid on the  Closing  Date and  portion  of which  shall be paid
during 1998.

     "L/C Commitment" means One Million Dollars ($1,000,000).

     "L/C Facility" means the letter of credit facility  established pursuant to
Article III hereof.

     "L/C Obligations"  means at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate  amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5.

     "L/C Participants" means the collective  reference to all the Lenders other
than the Issuing Lender.

     "Lender"  means each Person  executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter  becomes a party to
this Agreement as a Lender pursuant to Section 14.10.

     "Lending  Office"  means,  with  respect to any Lender,  the office of such
Lender maintaining such Lender's Extensions of Credit.

     "Letters  of Credit"  shall have the  meaning  assigned  thereto in Section
3.1(a).

     "Leverage  Ratio"  means,  as of  any  date  of  determination,  the  ratio
determined in accordance with Section 10.1 as of the Fiscal Quarter ending on or
most recently prior to such date of determination.

     "LIBOR"  means the rate for  deposits in Dollars for a period  equal to the
Interest   Period   selected   which  appears  on  the  Telerate  Page  3750  at
approximately  11:00  a.m.  London  time,  two (2)  Business  Days  prior to the
commencement of the applicable Interest Period. If, for any reason, such rate is
not  available,  then  "LIBOR"  shall  mean  the rate per  annum  at  which,  as
determined by the Administrative  Agent, Dollars in the amount of $5,000,000 are
being offered to leading banks at

                                       8

<PAGE>


approximately  11:00  a.m.  London  time,  two (2)  Business  Days  prior to the
commencement  of the  applicable  Interest  Period for settlement in immediately
available  funds by leading  banks in the London  interbank  market for a period
equal to the Interest Period selected.

     "LIBOR Rate" means a rate per annum (rounded upwards, if necessary,  to the
next higher  1/100th of 1%) determined by the  Administrative  Agent pursuant to
the following formula:

      LIBOR Rate =             LIBOR
                  ------------------------------               
                   1.00-Eurodollar Reserve Percentage

     "LIBOR Rate Loan" means any Loan bearing  interest at a rate based upon the
LIBOR Rate as provided in Section 5.1(a).

     "Lien"  means,  with  respect to any asset,  any  mortgage,  lien,  pledge,
charge,  security  interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset  which it has  acquired  or holds  subject to the  interest  of a
vendor or lessor under any conditional  sale  agreement,  Capital Lease or other
title retention agreement relating to such asset.

     "Loan"  means  any  Revolving  Credit  Loan or any  Term  Loan  made to the
Borrower pursuant to Articles II and IV, and all such Loans  collectively as the
context requires.

     "Loan  Documents"  means,  collectively,  this  Agreement,  the Notes,  the
Applications,  any Hedging Agreement  executed by any Lender,  the Custodian and
Negative  Pledge  Agreement,  the Security  Agreement  and each other  document,
instrument   and  agreement   executed  and  delivered  by  the  Borrower,   its
Subsidiaries  or their  counsel in connection  with this  Agreement or otherwise
referred to herein or contemplated  hereby,  all as may be amended,  restated or
otherwise modified.

     "LP Units" means the limited partner units of Kinder Morgan Energy.

     "Maintenance Capital  Expenditures" means cash Capital Expenditures made to
maintain  the  throughput,   deliverable  capacity,   terminaling  capacity,  or
fractionation   capacity  (assuming  normal  operating   conditions,   including
down-time  and  maintenance)  of the  assets of  Kinder  Morgan  Energy  and its
Restricted  Subsidiaries,  taken as a whole, and shall,  therefore,  not include
cash capital expenditures made in respect of capital additions and improvements.
Where cash  capital  expenditures  are made in part to  effectuate  the capacity
maintenance level referred to in the immediately  preceding sentence and in part
for other  purposes,  the good faith  allocation  thereof by Kinder  Morgan G.P.
between  the part used to  maintain  such  capacity  level and the part used for
other purposes shall be conclusive.

     "Material Adverse Effect" means, with respect to the Borrower or any of its
Subsidiaries, a material adverse effect on the properties,  business, operations
or condition  (financial  or  otherwise) of any such Persons taken as a whole or
the  ability  of any such  Person  to  perform  its  obligations  under any Loan
Document or Material Contract, in each case to which it is a party.

                                       9

<PAGE>


     "Material  Contract" means (a) any contract or other agreement,  written or
oral, of the Borrower or any of its Consolidated Subsidiaries involving monetary
liability  of or to any such Person in an amount in excess of $300,000 per annum
or (b) any other contract or agreement,  written or oral, of the Borrower or any
of its  Consolidated  Subsidiaries  the  failure  to  comply  with  which  could
reasonably be expected to have a Material Adverse Effect.

     "Multiemployer  Plan"  means a  "multiemployer  plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA  Affiliate is making,  or
is accruing an obligation to make, contributions within the preceding six years.

     "Net Cash Proceeds"  means, as applicable,  (a) with respect to any sale or
other disposition of assets, the gross cash proceeds received by the Borrower or
any of its  Consolidated  Subsidiaries  from  such  sale less the sum of (i) all
income taxes and other taxes assessed by a Governmental Authority as a result of
such sale and any other  reasonable  fees and  expenses  incurred in  connection
therewith and (ii) the principal amount of, premium, if any, and interest on any
Debt secured by a Lien on the asset (or a portion  thereof) sold,  which Debt is
required  to be repaid in  connection  with such sale,  (b) with  respect to any
offering of Capital Stock or other equity  securities  or issuance of Debt,  the
gross  cash  proceeds  received  by the  Borrower  or  any  of its  Consolidated
Subsidiaries  therefrom less all legal,  underwriting  and other reasonable fees
and  expenses  incurred  in  connection  therewith  and (c) with  respect to any
payment  under  an  insurance  policy  or  in  connection  with  a  condemnation
proceeding,  the  amount  of  cash  proceeds  received  by the  Borrower  or its
Consolidated  Subsidiaries from an insurance  company or Governmental  Authority
net of all  reasonable  expenses of collection  less the amount of such proceeds
which the Borrower or its Consolidated Subsidiaries has or will, in a reasonably
prompt manner, apply to the repair or replacement of the assets affected by such
loss or proceeding .

     "Net  Income"  means for any Person for any period,  the net income or (net
loss)  of such  Person  for  such  period  (taken  as a  cumulative  whole),  as
determined  in  accordance  with GAAP,  provided  that there shall be  excluded,
without  duplication,  from such net income (to the  extent  otherwise  included
therein):

          (a) net  extraordinary  gains and losses  (other than,  in the case of
     losses,  losses  resulting from charges  against net income to establish or
     increase reserves for potential environmental  liabilities and reserves for
     exposure of such Person under rate cases);

          (b) net gains or losses in respect  of  dispositions  of assets  other
     than in the ordinary course of business;

          (c) any gains or losses  attributable  to write-ups or  write-downs of
     assets; and

          (d) proceeds of any key man  insurance,  or any insurance on property,
     plant or equipment.

     "Notes"  means  the  Revolving   Credit  Notes,  the  Term  Notes,  or  any
combination  thereof,  made by the Borrower  payable to the order of each of the
Lenders, any amendments and

                                       10

<PAGE>


modifications   thereto,  any  substitutes   therefor,   and  any  replacements,
restatements,  renewals or extensions thereof, in whole or in part; "Note" means
any of such Notes.

     "Notice of Account Designation" means a notice given by the Borrower to the
Administrative  Agent  with  respect  to  the  distribution  of  Loan  proceeds,
substantially in the form of Exhibit E.

     "Notice of Conversion/Continuation" means a notice given by the Borrower to
the Administrative Agent substantially in the form of Exhibit C-3.

     "Notice  of  Payment"   means  a  Notice  given  by  the  Borrower  to  the
Administrative   Agent  with  respect  to  any  optional   repayment  of  Loans,
substantially in the form of Exhibit D.

     "Notice  of  Revolving  Credit  Borrowing"  means the  notice  given by the
Borrower to the Administrative Agent substantially in the form of Exhibit C-1.

     "Notice of Term Loan  Borrowing"  means the notice given by the Borrower to
the Administrative Agent substantially in the form of Exhibit C-2.

     "Obligations"  means,  in each case,  whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing after
the  filing of any  bankruptcy  or  similar  petition)  the  Loans,  (b) the L/C
Obligations,  (c) all payment and other obligations owing by the Borrower to any
Lender or the  Administrative  Agent under any Hedging Agreement with any Lender
(which such Hedging  Agreement is permitted or required  hereunder)  and (d) all
other fees and commissions  (including attorney's fees), charges,  indebtedness,
loans, liabilities, financial accommodations,  obligations, covenants and duties
owing by the Borrower to the Lenders or the  Administrative  Agent,  under or in
respect of this  Agreement,  any Note,  any Letter of Credit or any of the other
Loan Documents.

     "Officer's  Compliance  Certificate"  means the  certificate  appropriately
completed and substantially in the form of Exhibit F.

     "OLP "A"" means  Kinder  Morgan  Operating  L.P.  "A",  a Delaware  limited
partnership.

     "OLP "B"" means  Kinder  Morgan  Operating  L.P.  "B",  a Delaware  limited
partnership.

     "OLP "C"" means  Kinder  Morgan  Operating  L.P.  "C",  a Delaware  limited
partnership.

     "OLP "D"" means  Kinder  Morgan  Operating  L.P.  "D",  a Delaware  limited
partnership.

     "OLP "A" EBITDA" " means (without duplication),  for any period, the sum of
(a) the EBITDA of OLP "A" for such period (not including, however, the EBITDA of
any Person in which OLP "A" owned Capital Stock at any time during such period),
plus (b) the  aggregate  of all  distributions  actually  received by OLP "A" in
respect  of such  period  from any Person in which OLP "A" owned  Capital  Stock
during all or any portion of such period.

                                       11

<PAGE>


     "Other Taxes" shall have the meaning assigned thereto in Section 5.12(b).

     "PBGC" means the Pension  Benefit  Guaranty  Corporation  or any  successor
agency.

     "Pension Plan" means any Employee  Benefit Plan, other than a Multiemployer
Plan,  which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained  for employees of the Borrower or any ERISA
Affiliates or (b) has at any time within the preceding six years been maintained
for the  employees  of the  Borrower  or any of their  current  or former  ERISA
Affiliates.

     "Person"  means an  individual,  corporation,  limited  liability  company,
partnership,  association,  trust,  business trust,  joint venture,  joint stock
company,  pool,  syndicate,  sole proprietorship,  unincorporated  organization,
Governmental Authority or any other form of entity or group thereof.

     "Prime Rate" means,  at any time,  the rate of interest per annum  publicly
announced from time to time by First Union as its prime rate. Each change in the
Prime Rate shall be  effective  as of the  opening of  business  on the day such
change in the Prime Rate occurs.  The parties hereto  acknowledge  that the rate
announced publicly by First Union as its Prime Rate is an index or base rate and
shall not  necessarily  be its lowest or best rate  charged to its  customers or
other banks.

     "Register" shall have the meaning assigned thereto in Section 14.10(d).

     "Reimbursement   Obligation"  means  the  obligation  of  the  Borrower  to
reimburse  the Issuing  Lender  pursuant to Section 3.5 for amounts  drawn under
Letters of Credit.

     "Required  Lenders"  means any  combination  of  Lenders  holding  at least
seventy-five percent (75%) of the Extensions of Credit.

     "Restricted  Subsidiary" means any Subsidiary of Kinder Morgan Energy other
than an Unrestricted  Subsidiary.  The Board of Directors of the Borrower,  by a
board resolution,  may designate any Unrestricted  Subsidiary to be a Restricted
Subsidiary; provided, that (a) before and after giving effect thereto no Default
or Event of Default  shall have  occurred  and be  continuing,  (b) the Borrower
shall be in  compliance,  on a pro  forma  basis,  after  giving  effect to such
designation,  with the  covenants  contained in Article X,  recomputed as at the
last day of the most  recently  ended Fiscal  Quarter of the Borrower as if such
designation  had occurred on the first day of each  relevant  period for testing
such compliance and (c) the Borrower shall have delivered to the  Administrative
Agent and the  Lenders a  certificate  of the chief  financial  officer  to such
effect,  together  with all  relevant  financial  information  and  calculations
demonstrating  such  compliance.  For such  purposes of this  definition  and of
Article X, a newly designated or acquired Restricted  Subsidiary shall be deemed
to have incurred or made on the date of its designation or  acquisition,  as the
case may be, all such Debt,  Liens and investments  then outstanding as would be
reflected on its balance  sheet,  prepared in  accordance  with GAAP, as at such
date. A true and correct list of the  Restricted  Subsidiaries  of Kinder Morgan
Energy as of the Closing Date is set forth on Schedule 7.1(a).

                                       12

<PAGE>


     "Revolving Credit Commitment" means (a) as to any Lender, the obligation of
such  Lender  to make  Revolving  Credit  Loans to and issue or  participate  in
Letters  of Credit  issued  for the  account  of the  Borrower  hereunder  in an
aggregate  principal amount at any time outstanding not to exceed the amount set
forth  opposite  such Lender's name on Schedule 1, as such amount may be reduced
or modified at any time or from time to time  pursuant to Sections 2.5 and 14.10
and (b) as to all  Lenders,  the  aggregate  commitment  of all  Lenders to make
Revolving  Credit Loans and issue or participate  in Letters of Credit,  as such
amount may be reduced or modified  at any time or from time to time  pursuant to
such  Sections.  The Revolving  Credit  Commitment of all Lenders on the Closing
Date shall be Fifteen Million Dollars ($15,000,000).

     "Revolving  Credit  Commitment  Percentage"  means,  as to  the  respective
Revolving  Credit  Commitment  of any  Lender at any time,  the ratio of (a) the
amount  of the  Revolving  Credit  Commitment  of such  Lender to (b) all of the
Revolving Credit Commitments of all Lenders.

     "Revolving Credit Facility" means the revolving credit facility established
pursuant to Article II hereof.

     "Revolving Credit Loans" means the revolving credit loans to be made to the
Borrower pursuant to Section 2.1.

     "Revolving Credit Notes" means the separate Amended and Restated  Revolving
Credit  Notes  made  by the  Borrower  payable  to the  order  of  each  Lender,
substantially  in the form of Exhibit A hereto,  evidencing the Revolving Credit
Facility,   and  any  amendments  and  modifications  thereto,  any  substitutes
therefor, and any replacements,  restatements, renewals or extension thereof, in
whole or in part.

     "Revolving  Credit  Termination  Date"  means  the  earliest  of the  dates
referred to in Section 2.6.

     "SEC"  means  the  Securities  and  Exchange  Commission  or any  successor
Governmental Authority.

     "Security  Agreement" means the Amended and Restated Security  Agreement of
even date executed by the Borrower in favor of the Administrative  Agent for the
ratable benefit of itself and the Lenders,  substantially in the form of Exhibit
H, as amended,  restated  or  otherwise  modified  and each other  agreement  or
writing  pursuant to which the  Borrower or any  Subsidiary  thereof  pledges or
grants a security interest in any property or assets securing the Obligations.

     "SFPP" means SFPP, L.P., a Delaware limited partnership.

     "Solvent" means, as to the Borrower and its Consolidated  Subsidiaries on a
particular date, that any such Person (a) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage and is able to pay its debts as they mature,  (b) owns property having
a value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities  (including  contingencies),
and (c) does not

                                       13

<PAGE>


believe that it will incur debts or  liabilities  beyond its ability to pay such
debts or liabilities as they mature.

     "Subsidiary" means as to any Person, any corporation,  partnership or other
entity of which more than fifty percent (50%) of the  outstanding  Capital Stock
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other  managers of such  corporation,  partnership  or
other entity is at the time, directly or indirectly,  owned by or the management
is otherwise  controlled by such Person  (irrespective of whether,  at the time,
Capital  Stock of any other class or classes of such  corporation  shall have or
might have voting power by reason of the happening of any  contingency).  Unless
otherwise  qualified  references to "Subsidiary" or "Subsidiaries"  herein shall
refer to those of the Borrower.  For purposes of this  Agreement,  Kinder Morgan
Energy, the KMEP Operating Subsidiaries and their respective  Subsidiaries shall
be deemed to be Subsidiaries of the Borrower commencing on the Closing Date.

     "Taxes" shall have the meaning assigned thereto in Section 5.12(a).

     "Term Loans" means the term loans made to the Borrower  pursuant to Section
4.1.

     "Term Loan Commitment"  means (a) as to any Lender,  the obligation of such
Lender to make a Term  Loan for the  account  of the  Borrower  hereunder  in an
aggregate  principal  amount not to exceed the  amount set forth  opposite  such
Lender's name on Schedule 1 and (b) as to all Lenders,  the aggregate commitment
of all Lenders to make Term Loans. The Term Loan Commitment of all Lenders as of
the Closing Date shall be Eighty-Five Million Dollars ($85,000,000).

     "Term Loan  Percentage"  means,  as to any Lender,  (a) prior to making the
Term Loans, the ratio of (i) the Term Loan Commitment of such Lender to (ii) the
Term Loan  Commitments of all Lenders and (b) after the Term Loans are made, the
ratio of (i) the outstanding  principal  balance of the Term Loan of such Lender
to (ii) the  aggregate  outstanding  principal  balance of the Term Loans of all
Lenders.

     "Term Loan Facility" means the term loan facility  established  pursuant to
Article IV hereof under which the Lenders make Term Loans to the Borrower.

     "Term Loan Maturity Date" means May 31, 2000.

     "Term Notes" means the Term Notes made by the Borrower payable to the order
of  each  of the  Lenders,  substantially  in the  form  of  Exhibit  B  hereto,
evidencing  the  Term  Loan  Facility,  and any  amendments,  modifications  and
supplements   thereto,   any  substitutes   therefor,   and  any   replacements,
restatements, renewals or extensions thereof, in whole or in part.

     "Termination  Event" means:  (a) a "Reportable  Event" described in Section
4043 of ERISA,  (b) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension  Plan  during a plan year in which it was a  "substantial  employer"  as
defined in Section  4001(a)(2) of ERISA,  (c) the termination of a Pension Plan,
the filing of a notice of intent to terminate a Pension Plan or the treatment of
a Pension Plan amendment as a termination  under Section 4041 of ERISA,  (d) the
institution of proceedings  to terminate,  or the  appointment of a trustee with
respect to, any Pension

                                       14

<PAGE>


Plan by the PBGC,  (e) any  other  event or  condition  which  would  constitute
grounds  under  Section  4042(a)  of  ERISA  for  the  termination  of,  or  the
appointment  of a trustee to  administer,  any Pension Plan,  (f) the partial or
complete  withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan,  (g) the  imposition  of a Lien  pursuant  to  Section  412 of the Code or
Section  302  of  ERISA,  (h)  any  event  or  condition  which  results  in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA,  or (i) any event or condition  which results in the  termination of a
Multiemployer  Plan under Section 4041A of ERISA or the  institution  by PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.

     "Uniform Customs" the Uniform Customs and Practice for Documentary  Credits
(1994 Revision), International Chamber of Commerce Publication No. 500.

     "UCC" means the Uniform  Commercial Code as in effect in the State of North
Carolina.

     "United States" means the United States of America.

     "Unrestricted  Subsidiary"  means  (a) any  Subsidiary  of an  Unrestricted
Subsidiary  or (b) any  Subsidiary  of Kinder  Morgan  Energy or of a Restricted
Subsidiary  that  is  designated  as  an  Unrestricted  Subsidiary  by  a  board
resolution of the Borrower in accordance with the  requirements of the following
sentence with the consent of the Required  Lenders  (which  consent shall not be
unreasonably  withheld).  The Borrower may hereafter designate any Subsidiary of
Kinder Morgan Energy or of a Restricted Subsidiary (other than OLP "A", OLP "B",
OLP  "C",  OLP  "D"  and  SFPP)  to be an  Unrestricted  Subsidiary  by a  board
resolution of the Borrower,  as evidenced by written notice thereof delivered to
the  Administrative  Agent,  if at the time of and after  giving  effect to such
designation,  (i) no  Default or Event of Default  shall  have  occurred  and be
continuing,  (ii) such  Subsidiary  does not own or hold any Capital Sock of, or
any Lien on any property of, Kinder Morgan Energy or any  Restricted  Subsidiary
and (iii) such  Subsidiary does not own or hold any Debt of Kinder Morgan Energy
or any Restricted  Subsidiary that would not be permitted pursuant to any credit
facility  governing the Debt of Kinder  Morgan  Energy or any of its  Restricted
Subsidiaries  as if  incurred  on the date of such  designation.  As of the date
hereof, Kinder Morgan Energy has no Unrestricted Subsidiaries.

     "Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary of which
all  issued  and  outstanding  Capital  Stock  (excluding  (a) in the  case of a
corporation,  directors'  qualifying  shares,  (b)  in  the  case  of a  limited
partnership,  a 1.5% general  partner  interest and (c) in the case of a limited
liability  company,  a 1.5% member  interest) is directly or indirectly owned by
Kinder Morgan Energy or any of its Restricted Subsidiaries.

     SECTION  1.2.  General.  Unless  otherwise  specified,  a reference in this
Agreement  to  a  particular  section,  subsection,  Schedule  or  Exhibit  is a
reference to that section,  subsection,  Schedule or Exhibit of this  Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the  masculine,  feminine or neuter  gender  shall  include the  masculine,  the
feminine and the neuter. Any reference herein to "Charlotte time" shall refer to
the applicable time of day in Charlotte, North Carolina.

                                       15

<PAGE>


     SECTION 1.3. Other Definitions and Provisions.

     (a)  Use of  Capitalized  Terms.  Unless  otherwise  defined  therein,  all
capitalized terms defined in this Agreement shall have the defined meanings when
used  in  this  Agreement,  the  Notes  and  the  other  Loan  Documents  or any
certificate,  report  or  other  document  made or  delivered  pursuant  to this
Agreement.

     (b) Miscellaneous.  The words "hereof",  "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

                                   ARTICLE II
                                   ----------

                            REVOLVING CREDIT FACILITY
                            -------------------------

     SECTION 2.1. Revolving Credit Loans. Subject to the terms and conditions of
this Agreement,  each Lender  severally agrees to make Revolving Credit Loans to
the  Borrower  from time to time from the Closing  Date  through  the  Revolving
Credit  Termination  Date as requested by the  Borrower in  accordance  with the
terms of Section 2.2; provided,  that (a) the aggregate  principal amount of all
outstanding Revolving Credit Loans (after giving effect to any amount requested)
shall not exceed the Revolving Credit Commitment of all the Lenders less the L/C
Obligations and (b) each Lender's Revolving Credit Commitment  Percentage of the
sum of the aggregate principal amount of all outstanding  Revolving Credit Loans
and L/C Obligations shall not at any time exceed such Lender's  Revolving Credit
Commitment.  Each  Revolving  Credit  Loan by a Lender  shall be in a  principal
amount equal to such  Lender's  Revolving  Credit  Commitment  Percentage of the
aggregate principal amount of Revolving Credit Loans requested on such occasion.
Subject to the terms and conditions hereof,  the Borrower may borrow,  repay and
reborrow Revolving Credit Loans hereunder until the Revolving Credit Termination
Date.

     SECTION 2.2. Procedure for Advances of Revolving Credit Loans.

     (a) Requests for  Borrowing.  The  Borrower  shall give the  Administrative
Agent a  Notice  of  Revolving  Credit  Borrowing  not  later  than  11:00  a.m.
(Charlotte  time) (i) at least one (1)  Business  Day before each Base Rate Loan
and (ii) at least three (3)  Business  Days before each LIBOR Rate Loan,  of its
intention to borrow, specifying (A) the date of such borrowing, which shall be a
Business Day, (B) the amount of such borrowing,  which shall be (x) with respect
to Base Rate  Loans in an  aggregate  principal  amount of  $500,000  or a whole
multiple of $100,000 in excess  thereof and (y) with respect to LIBOR Rate Loans
in an aggregate  principal amount of $500,000 or a whole multiple of $100,000 in
excess  thereof,  (C) whether the  Revolving  Credit  Loans are to be LIBOR Rate
Loans or Base Rate Loans, and (D) in the case of a LIBOR Rate Loan, the duration
of the Interest Period  applicable  thereto.  Notices  received after 11:00 a.m.
(Charlotte  time)  shall be  deemed  received  on the  next  Business  Day.  The
Administrative  Agent  shall  promptly  notify  the  Lenders  of each  Notice of
Revolving Credit Borrowing.

     (b)  Disbursement  of  Revolving  Credit  Loans.  Not later  than 2:00 p.m.
(Charlotte time) on the proposed borrowing date, each Lender will make available
to the Administrative Agent, for

                                       16

<PAGE>


the account of the Borrower,  at the office of the Administrative Agent in funds
immediately  available to the  Administrative  Agent,  such  Lender's  Revolving
Credit  Commitment  Percentage of the Revolving  Credit Loans to be made on such
borrowing date. The Borrower hereby  irrevocably  authorizes the  Administrative
Agent to disburse  the  proceeds of each  borrowing  requested  pursuant to this
Section 2.2 in immediately  available funds by transferring such proceeds to the
deposit account designated by the Borrower in the Notice of Account  Designation
delivered on the Closing Date or any date thereafter (any such subsequent notice
to supersede  any prior  notice).  Subject to Section 5.8 hereof,  to the extent
that any Lender has not made available to the Administrative Agent its Revolving
Credit Commitment  Percentage of any Revolving Credit Loan requested pursuant to
this Section 2.2,  the  Administrative  Agent shall not be obligated to disburse
such portion of the proceeds of such Revolving Credit Loan.

     SECTION 2.3. Repayment of Revolving Credit Loans.

     (a)  Repayment on Revolving Credit Termination  Date.   The Borrower  shall
repay the outstanding  principal  amount of all Revolving  Credit Loans in full,
together with all accrued but unpaid interest  thereon,  on the Revolving Credit
Termination Date.

     (b)  Mandatory Repayments.  If at any time the outstanding principal amount
of all Revolving Credit Loans exceeds the Revolving Credit Commitment of all the
Lenders less the L/C  Obligations,  the Borrower  shall repay  immediately  upon
notice from the Administrative Agent, by payment to the Administrative Agent for
the account of the  Lenders,  the  Revolving  Credit Loans in an amount equal to
such excess.  Each such repayment shall be accompanied by any amount required to
be paid pursuant to Section 5.10 hereof.

     (c)  Optional Repayments.  The Borrower may  at any time  and from  time to
time repay the Revolving  Credit Loans, in whole or in part, upon at least three
(3) Business Days irrevocable notice to the Administrative Agent with respect to
LIBOR Rate Loans and one (1)  Business  Day  irrevocable  notice with respect to
Base Rate Loans, in the form of Notice of Payment  attached hereto as Exhibit D,
specifying  the date and amount of  repayment  and whether the  repayment  is of
LIBOR  Rate  Loans,  Base  Rate  Loans,  or a  combination  thereof,  and,  if a
combination  thereof, the amount allocable to each. Upon receipt of such notice,
the  Administrative  Agent shall promptly notify each Lender. If any such notice
is given,  the amount  specified  in such notice shall be due and payable on the
date set  forth in such  notice.  Partial  repayments  shall be in an  aggregate
amount of $500,000  or a whole  multiple  of  $100,000  in excess  thereof  with
respect to Base Rate  Loans,  and  $500,000  or a whole  multiple of $100,000 in
excess thereof with respect to LIBOR Rate Loans.  Each such  repayment  shall be
accompanied by any amount required to be paid pursuant to Section 5.10 hereof.

     SECTION 2.4.  Revolving Credit Notes. Each Lender's  Revolving Credit Loans
and the obligation of the Borrower to repay such Revolving Credit Loans shall be
evidenced by a Revolving  Credit Note  executed by the  Borrower  payable to the
order of such Lender representing the Borrower's obligation to pay such Lender's
Revolving Credit Commitment in accordance with the terms hereof.  Each Revolving
Credit Note shall be dated the date hereof and shall bear interest on the unpaid
principal amount thereof at the applicable  interest rate per annum specified in
Section 5.1.

                                       17

<PAGE>


     SECTION 2.5. Permanent Reduction of the Revolving Credit Commitment.

     (a)  The  Borrower shall  have the right at any time and from time to time,
upon at least five (5) Business Days prior written notice to the  Administrative
Agent, to permanently reduce, in whole at any time or in part from time to time,
without  premium or penalty,  the  Revolving  Credit  Commitment in an aggregate
principal amount not less than $5,000,000 or any whole multiple of $1,000,000 in
excess thereof.

     (b)  Each permanent reduction  permitted pursuant to this Section 2.5 shall
be  accompanied  by a payment of principal  sufficient  to reduce the  aggregate
principal  amount of  Revolving  Credit  Loans and L/C  Obligations  after  such
reduction to the Revolving Credit Commitment as so reduced. Any reduction of the
Revolving  Credit  Commitment  to zero  shall be  accompanied  by payment of all
outstanding  Obligations  with respect to the  Revolving  Credit  Facility  (and
furnishing of cash collateral  satisfactory to the Administrative  Agent for all
L/C  Obligations)  and  termination of the Revolving  Credit  Commitment and the
Revolving Credit  Facility.  Such cash collateral shall be applied in accordance
with Section  12.2(b).  If the  reduction  of the  Revolving  Credit  Commitment
requires the repayment of any LIBOR Rate Loan,  such  reduction may be made only
on the last day of the then current  Interest Period  applicable  thereto unless
such  repayment is  accompanied  by any amount  required to be paid  pursuant to
Section 5.10 hereof.

     SECTION 2.6.  Termination of the Revolving Credit  Facility.  The Revolving
Credit  Facility  shall  terminate on the earliest of (a) May 31, 2000,  (b) the
date of termination by the Borrower pursuant to Section 2.5, and (c) the date of
termination  by the  Administrative  Agent on behalf of the Lenders  pursuant to
Section 12.2(a) (the "Revolving Credit Termination Date").

     SECTION 2.7. Use of  Proceeds.  The Borrower  shall use the proceeds of the
Revolving  Credit  Loans  solely  (a)  prior to August  15,  1998,  for  general
corporate  purposes in an amount not greater than  $5,600,000 and (b) to finance
investments permitted by Section 11.3(d).

     SECTION 2.8. Security.  The Obligations of the Borrower under the Revolving
Credit Facility shall be secured as provided in the Security Agreement.

                                   ARTICLE III
                                   -----------

                            LETTER OF CREDIT FACILITY
                            -------------------------

     SECTION 3.1. L/C Commitment.

     (a)  Subject to the terms and conditions  hereof,  the Issuing  Lender,  in
reliance on the  agreements  of the other  Lenders set forth in Section  3.4(a),
agrees to issue standby letters of credit  ("Letters of Credit") for the account
of the  Borrower  on any  Business  Day from the  Closing  Date  through but not
including the Revolving Credit  Termination Date in such form as may be approved
from time to time by the Issuing Lender; provided, that the Issuing Lender shall
have no obligation to issue any Letter of Credit if, after giving effect to such
issuance,  (a) the L/C  Obligations  would exceed the L/C  Commitment or (b) the
aggregate principal amount of the Revolving Credit Loans

                                       18

<PAGE>


and  L/C  Obligations  then  outstanding   would  exceed  the  Revolving  Credit
Commitment of all Lenders.

     (b)  Each Letter of Credit shall (i) be denominated in Dollars in a minimum
amount of  $50,000,  (ii) be a  standby  letter  of  credit  issued  to  support
obligations of the Borrower or any of its Subsidiaries  incurred in the ordinary
course of business,  (iii) expire on a date  satisfactory to the Issuing Lender,
which date shall be no later than the Revolving Credit Termination Date and (iv)
be subject to the Uniform Customs and, to the extent not inconsistent therewith,
the laws of the State of North  Carolina.  The Issuing  Lender  shall not at any
time be obligated to issue any Letter of Credit hereunder if such issuance would
conflict with, or cause the Issuing Lender or any L/C  Participant to exceed any
limits  imposed  by,  any  Applicable  Law.  References  herein to  "issue"  and
derivations  thereof  with  respect  to Letters  of Credit  shall  also  include
extensions  or  modifications  of any  existing  Letters of  Credit,  unless the
context otherwise requires.

     SECTION 3.2.  Procedure for Issuance of Letters of Credit. The Borrower may
from time to time  request  that the Issuing  Lender issue a Letter of Credit by
delivering  to the  Issuing  Lender  at the  Administrative  Agent's  Office  an
Application  therefor,  completed to the satisfaction of the Issuing Lender, and
such other  certificates,  documents  and other  papers and  information  as the
Issuing Lender may request. Upon receipt of any Application,  the Issuing Lender
shall process such Application and the certificates,  documents and other papers
and information  delivered to it in connection  therewith in accordance with its
customary  procedures  and shall,  subject to Section 3.1 and Article VI hereof,
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing  Lender be required to issue any Letter of Credit earlier than three (3)
Business Days after its receipt of the  Application  therefor and all such other
certificates,  documents and other papers and information  relating  thereto) by
issuing the original of such Letter of Credit to the  beneficiary  thereof or as
otherwise  may be agreed by the  Issuing  Lender and the  Borrower.  The Issuing
Lender shall furnish to the Borrower a copy of such Letter of Credit and furnish
to each Lender a copy of such  Letter of Credit and the amount of each  Lender's
L/C Participation therein, all promptly following the issuance of such Letter of
Credit.

     SECTION 3.3. Letter of Credit Fees and Other Charges.

     (a)  The Borrower shall pay to the Administrative Agent, for the account of
the Issuing Lender and the L/C Participants, a letter of credit fee with respect
to each  Letter of Credit in an  amount  equal to the  product  of (i) the daily
average  amount  available  to be drawn  under  such  Letter of  Credit  for the
applicable Fiscal Quarter times (ii) 2.25% per annum; provided, that each Letter
of Credit shall bear a minimum  letter of credit fee of $500. The Borrower shall
pay such letter of credit fee  quarterly in arrears on the last  Business Day of
each  Fiscal  Quarter  and  on  the  Revolving  Credit   Termination  Date.  The
Administrative Agent shall,  promptly following its receipt thereof,  distribute
such fee to the Lenders pro rata in accordance with their  respective  Revolving
Commitment Percentages.

     (b)  In addition to the foregoing letter of credit fee, the Borrower  shall
pay to the Administrative Agent, for the account of the Issuing Lender, a facing
fee of  one-eighth  of one  percent  (1/8%) per annum on the face amount of each
Letter of Credit,  payable quarterly in arrears on the last Business Day of each
Fiscal Quarter and on the Revolving Credit Termination Date. The

                                       19

<PAGE>


Administrative Agent shall,  promptly following its receipt thereof,  distribute
such fee to the Issuing Lender.

     (c)  The Borrower shall pay or reimburse the Issuing Lender for such normal
and customary  non-duplicative  costs and expenses as are incurred or charged by
the Issuing Lender in issuing,  effecting  payment under,  amending or otherwise
administering any Letter of Credit.

     SECTION 3.4. L/C Participations.

     (a)  The Issuing Lender  irrevocably  agrees to grant and hereby  grants to
each L/C  Participant,  and,  to induce the Issuing  Lender to issue  Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby  accepts  and  purchases  from the Issuing  Lender,  on the terms and
conditions  hereinafter  stated, for such L/C Participant's own account and risk
an  undivided  interest  equal  to  such  L/C  Participant's   Revolving  Credit
Commitment  Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit  issued  hereunder  and the  amount of each  draft  paid by the
Issuing Lender thereunder.  Each L/C Participant unconditionally and irrevocably
agrees  with the  Issuing  Lender  that,  if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement,  such L/C Participant  shall pay to
the  Issuing  Lender upon  demand at the  Issuing  Lender's  address for notices
specified  herein an amount  equal to such L/C  Participant's  Revolving  Credit
Commitment Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.

     (b)  Upon  becoming  aware  of any  amount  required  to be paid by any L/C
Participant to the Issuing  Lender  pursuant to Section 3.4(a) in respect of any
unreimbursed  portion of any payment made by the Issuing Lender under any Letter
of Credit,  the Issuing  Lender shall notify each L/C  Participant of the amount
and due date of such required payment and such L/C Participant  shall pay to the
Issuing  Lender the amount  specified on the  applicable  due date.  If any such
amount is paid to the Issuing  Lender after the date such  payment is due,  such
L/C Participant  shall pay to the Issuing Lender on demand,  in addition to such
amount,  the product of (i) such amount,  times (ii) the daily  average  Federal
Funds Rate as determined by the Administrative  Agent during the period from and
including  the date such  payment  is due to the date on which  such  payment is
immediately  available  to the  Issuing  Lender,  times  (iii)  a  fraction  the
numerator of which is the number of days that elapse  during such period and the
denominator of which is 360. A certificate of the Issuing Lender with respect to
any  amounts  owing under this  Section  shall be  conclusive  in the absence of
manifest  error.   With  respect  to  payment  to  the  Issuing  Lender  of  the
unreimbursed  amounts  described in this Section 3.4(b), if the L/C Participants
receive  notice that any such  payment is due (A) prior to 1:00 p.m.  (Charlotte
time) on any Business  Day, such payment shall be due that Business Day, and (B)
after 1:00 p.m.  (Charlotte time) on any Business Day, such payment shall be due
on the following Business Day.

     (c)  Whenever, at any time after the Issuing  Lender has made payment under
any Letter of Credit and has received  from any L/C  Participant  its  Revolving
Credit  Commitment  Percentage of such payment in  accordance  with this Section
3.4, the Issuing  Lender  receives any payment  related to such Letter of Credit
(whether directly from the Borrower or otherwise), or any payment of interest on
account thereof,  the Issuing Lender will distribute to such L/C Participant its
pro rata

                                       20

<PAGE>


share thereof; provided, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender,  such L/C
Participant  shall return to the Issuing Lender the portion  thereof  previously
distributed by the Issuing Lender to it.

     SECTION 3.5. Reimbursement  Obligation of the Borrower. The Borrower agrees
to  reimburse  the  Issuing  Lender  on each date on which  the  Issuing  Lender
notifies the Borrower of the date and amount of a draft paid under any Letter of
Credit for the amount of (a) such draft so paid and (b) any taxes, fees, charges
or other costs or expenses  incurred by the Issuing  Lender in  connection  with
such  payment.  Each such  payment  shall be made to the  Issuing  Lender at its
address for notices specified herein in lawful money of the United States and in
immediately  available  funds.  Interest shall be payable on any and all amounts
remaining  unpaid by the  Borrower  under  this  Article  III from the date such
amounts  become  payable  (whether  at  stated  maturity,   by  acceleration  or
otherwise)  until  payment  in full at the rate  which  would be  payable on any
outstanding  Base Rate Loans which were then overdue.  If the Borrower  fails to
timely reimburse the Issuing Lender on the date the Borrower receives the notice
referred to in this Section  3.5,  the  Borrower  shall be deemed to have timely
given a  Notice  of  Revolving  Credit  Borrowing  to the  Administrative  Agent
pursuant to Section 2.2 requesting  the Lenders to make a Revolving  Credit Loan
on such date in an amount equal to the amount of such  drawing  and,  subject to
the satisfaction or waiver of the conditions  precedent specified in Article VI,
the Lenders shall make  Revolving  Credit Loans in such amount,  the proceeds of
which shall be applied to  reimburse  the  Issuing  Lender for the amount of the
related drawing and costs and expenses.

     SECTION 3.6. Obligations  Absolute.  The Borrower's  obligations under this
Article III (including without limitation the Reimbursement Obligation) shall be
absolute and  unconditional  under any and all circumstances and irrespective of
any set-off,  counterclaim  or defense to payment which the Borrower may have or
have had against the Issuing  Lender or any  beneficiary  of a Letter of Credit.
The Borrower also agrees with the Issuing  Lender that the Issuing  Lender shall
not be  responsible  for,  and the  Borrower's  Reimbursement  Obligation  under
Section  3.5 shall not be  affected  by,  among other  things,  the  validity or
genuineness  of  documents  or of any  endorsements  thereon,  even  though such
documents  shall in fact  prove to be  invalid,  fraudulent  or  forged,  or any
dispute  between  or among the  Borrower  and any  beneficiary  of any Letter of
Credit or any other party to which such Letter of Credit may be  transferred  or
any claims  whatsoever of a Borrower  against any  beneficiary of such Letter of
Credit or any such  transferee.  The Issuing  Lender shall not be liable for any
error, omission, interruption or delay in transmission,  dispatch or delivery of
any message or advice,  however  transmitted,  in connection  with any Letter of
Credit,  except for errors or  omissions  caused by the Issuing  Lender's  gross
negligence or willful  misconduct.  The Borrower agrees that any action taken or
omitted by the Issuing  Lender under or in connection  with any Letter of Credit
or the related drafts or documents,  if done in the absence of gross  negligence
or willful  misconduct and in accordance with the standards of care specified in
the Uniform Customs and, to the extent not inconsistent therewith, the UCC shall
be binding on the Borrower and shall not result in any  liability of the Issuing
Lender to the Borrower. The responsibility of the Issuing Lender to the Borrower
in  connection  with any draft  presented for payment under any Letter of Credit
shall,  in addition to any payment  obligation  expressly  provided  for in such
Letter of Credit,  be limited to determining that the documents  (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.

                                       21

<PAGE>


     SECTION 3.7. Effect of Application. To the extent that any provision of any
Application  related to any Letter of Credit is inconsistent with the provisions
of this Article III, the provisions of this Article III shall apply.


                                   ARTICLE IV
                                   ----------

                               TERM LOAN FACILITY
                               ------------------


     SECTION  4.1.  Term  Loans.  Subject  to the terms and  conditions  of this
Agreement,  each Lender  severally  agrees to make Term Loans to the Borrower on
the  Closing  Date in a  principal  amount  equal  to such  Lender's  Term  Loan
Commitment.

     SECTION 4.2. Procedure for Advance of Term Loans.

     (a)  The Borrower shall give the Administrative Agent a Notice of Term Loan
Borrowing prior to 11:00 a.m.  (Charlotte time) on the Closing Date,  requesting
that the  Lenders  make the Term  Loans as a Base  Rate  Loan on such date in an
amount equal to the aggregate Term Loan Commitment.

     (b)  To the extent  any  conversion  of the  applicable  interest  rate  is
effected pursuant to Section 5.3, each borrowing of a Base Rate Loan shall be in
an aggregate principal amount of at least $5,000,000 or any integral multiple of
$1,000,000 in excess thereof and each borrowing of a LIBOR Rate Loan shall be in
an  aggregate  principal  amount  of  $5,000,000  or any  integral  multiple  of
$1,000,000 in excess thereof.

     (c)  Not later than 1:00 p.m. (Charlotte  time) on the Closing  Date,  each
Lender will make  available to the  Administrative  Agent for the account of the
Borrower,  at the  office  of the  Administrative  Agent  in  funds  immediately
available to the  Administrative  Agent,  the amount of such Lender's Term Loan.
The Borrower hereby irrevocably  authorizes the Administrative Agent to disburse
the proceeds of the Term Loans in immediately  available  funds by wire transfer
in  accordance  with the Notice of Account  Designation  delivered  pursuant  to
Section 6.2(f).

     SECTION  4.3.  Repayment  of Term  Loans.  The  Borrower  shall  repay  the
outstanding  principal  amount of the Term Loans in full,  together with accrued
interest thereon, on the Term Loan Maturity Date.

     SECTION 4.4.  Optional  Prepayments of Term Loans.  The Borrower shall have
the right at any time and from time to time upon delivery to the  Administrative
Agent of a Notice of  Payment  at least  three (3)  Business  Days  prior to the
repayment of any LIBOR Rate Loan and one (1) Business Day prior to the repayment
of any Base  Rate  Loan to  repay  the  Term  Loans in whole or in part  without
premium or penalty;  provided,  that any voluntary  prepayment of the Term Loans
prior to December 15, 1998 shall be accompanied by a prepayment fee equal to one
percent  (1%) of the  principal  amount of such Term Loans to be  prepaid.  Upon
receipt of such  Notice of Payment,  the  Administrative  Agent  shall  promptly
notify each Lender. If any such Notice of

                                       22

<PAGE>



Payment is given,  the amount  specified in such notice shall be due and payable
on the date set forth in such notice. Each optional prepayment of the Term Loans
hereunder shall be in an aggregate  principal  amount of at least  $2,000,000 or
any whole  multiple of  $1,000,000  in excess  thereof with respect to Base Rate
Loans and  $2,000,000 or any whole multiple of $1,000,000 in excess thereof with
respect to LIBOR Rate Loans.  Each such  repayment  shall be  accompanied by any
amount required to be paid pursuant to Section 5.10 hereof

     SECTION 4.5. Term Notes. Each Lender's Term Loans and the obligation of the
Borrower to repay such Term Loans shall be evidenced by a Term Note,  payable to
the order of such Lender  representing  the  Borrower's  obligation  to pay such
Lender's Term Loan  Commitment in  accordance  with the terms hereof.  Each Term
Note  shall be dated the  Closing  Date and shall  bear  interest  on the unpaid
principal amount thereof at the applicable  interest rate per annum specified in
Section 5.1.

     SECTION 4.6. Use of  Proceeds.  The Borrower  shall use the proceeds of the
Term Loans solely to (a) finance the KMI Dividend;  provided,  that any proceeds
of the Term Loans not used to pay the KMI  Dividend on the Closing Date shall be
invested in accordance with Section 11.3(b) pending payment of the KMI Dividend,
(b) repay the Existing  Facility and (c) pay certain fees and expenses  incurred
in connection with the transactions contemplated hereby.

     SECTION 4.7. Security.  The Obligations of the Borrower under the Term Loan
Facility shall be secured as provided in the Security Agreement.

                                    ARTICLE V
                                    ---------

                             GENERAL LOAN PROVISIONS
                             -----------------------

     SECTION 5.1 Interest.

     (a)  Interest Rate Options.  Subject to the provisions of this Section 5.1,
at the election of the Borrower, the aggregate principal balance of the Notes or
any portion  thereof shall bear interest at (i) the Base Rate plus 0.50% or (ii)
the LIBOR Rate plus 3.00%; provided, the LIBOR Rate shall not be available until
three (3) Business  Days after the Closing Date.  The Borrower  shall select the
rate of interest and Interest Period, if any, applicable to any Loan at the time
a Notice of Borrowing is given  pursuant to Section 2.2 and 4.2 or at the time a
Notice of Conversion/Continuation is given pursuant to Section 5.3. Each Loan or
portion  thereof  bearing  interest based on the Base Rate shall be a "Base Rate
Loan" and each Loan or portion thereof bearing  interest based on the LIBOR Rate
shall be a "LIBOR  Rate Loan".  Any Loan or any portion  thereof as to which the
Borrower  has not duly  specified an interest  rate as provided  herein shall be
deemed a Base Rate Loan.

     (b)  Interest  Periods.  In  connection  with each  LIBOR  Rate  Loan,  the
Borrower, by giving notice at the times described in Section 5.1(a), shall elect
an interest period (each,  an "Interest  Period") to be applicable to such LIBOR
Rate Loan,  which Interest Period shall be a period of one (1), two (2) or three
(3) months; provided that:

                                       23

<PAGE>


          (i)    the Interest Period shall commence on the date of advance of or
conversion  to any LIBOR Rate Loan and,  in the case of  immediately  successive
Interest Periods,  each successive Interest Period shall commence on the date on
which the next preceding Interest Period expires;

          (ii)   if any Interest Period would otherwise expire  on a day that is
not  a Business Day,  such  Interest Period shall expire  on the next succeeding
Business Day; provided, that if any Interest Period with respect to a LIBOR Rate
Loan would  otherwise expire on a day that is not a Business Day but is a day of
the  month  after  which  no  further  Business Day  occurs in such month,  such
Interest Period shall expire on the next preceding Business Day;

          (iii)  any Interest Period  with  respect  to  a  LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no  numerically  corresponding day  in the calendar  month at the end of such
Interest Period)  shall end on the last  Business Day  of the relevant  calendar
month at the end of such Interest Period;

          (iv)   no Interest  Period shall extend  beyond  the Revolving  Credit
Termination Date or the Term Loan Maturity Date, as applicable,  and no Interest
Periods shall be selected by the Borrower which would result in the repayment of
any LIBOR Rate Loan prior to the end of an Interest Period; and

          (v)    there  shall  be  no  more  than  five  (5)  Interest   Periods
outstanding at any time.

     (c)  Default Rate.  Upon the occurrence  and during the  continuance  of an
Event of Default,  (i) the  Borrower  shall no longer have the option to request
LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall bear interest at a
rate per annum two percent (2%) in excess of the rate then  applicable  to LIBOR
Rate Loans until the end of the applicable  Interest  Period and thereafter at a
rate equal to two  percent  (2%) in excess of the rate then  applicable  to Base
Rate Loans,  and (iii) all outstanding  Base Rate Loans shall bear interest at a
rate per annum equal to two percent  (2%) in excess of the rate then  applicable
to Base Rate  Loans.  Interest  shall  continue to accrue on the Notes after the
filing  by or  against  the  Borrower  of any  petition  seeking  any  relief in
bankruptcy or under any act or law  pertaining  to insolvency or debtor  relief,
whether state, federal or foreign.

     (d)  Interest Payment and Computation.  Interest  on  each  Base  Rate Loan
shall  be  payable  in  arrears on the last Business Day of each Fiscal Quarter.
Interest  on  each  LIBOR  Rate  Loan  shall  be payable on the last day of each
Interest Period  applicable thereto.   All interest rates, fees and  commissions
provided  hereunder  shall  be  computed  on  the basis  of a 360-day  year  and
assessed  for the actual number of days elapsed.

     (e)  Maximum Rate.   In  no  contingency  or  event  whatsoever  shall  the
aggregate of  all  amounts  deemed  interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this  Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court  of competent  jurisdiction   shall,  in  a  final  determination,  deem
applicable hereto.   In the event that such a court determines that the  Lenders
have charged or received interest hereunder in excess of the highest  applicable
rate, the rate in effect hereunder

                                       24

<PAGE>


shall  automatically  be reduced to the maximum rate permitted by Applicable Law
and the Lenders shall at the  Administrative  Agent's option  promptly refund to
the Borrower any  interest  received by Lenders in excess of the maximum  lawful
rate or shall apply such excess to the principal balance of the Obligations.  It
is the intent  hereof that the  Borrower  not pay or  contract to pay,  and that
neither the Administrative  Agent nor any Lender receive or contract to receive,
directly  or  indirectly  in any manner  whatsoever,  interest in excess of that
which may be paid by the Borrower under Applicable Law.


     SECTION 5.2. Fees.

     (a)  Commitment Fee.   Commencing on the Closing Date,  the Borrower  shall
pay  to  the   Administrative  Agent,   for  the  account  of  the  Lenders,   a
non-refundable  commitment  fee  at  a  rate per annum equal to 1/2 of 1% on the
average daily unused portion of the Revolving Credit Commitment.  The commitment
fee shall be payable in arrears on the last Business Day of each Fiscal  Quarter
during the term of this Agreement commencing  June 30, 1998 (on a prorated basis
through  such  date),  and  on  the  Revolving  Credit  Termination  Date.  Such
commitment fee shall be distributed by the  Administrative  Agent to the Lenders
pro rata in accordance with the Lenders' respective Revolving Credit Commitment
Percentages.

     (b)  Administrative  Agent's and Other  Fees.  In order to  compensate  the
Administrative  Agent  for  structuring  and  syndicating  the Loans and for its
obligations  hereunder,  the Borrower agrees to pay to the Administrative Agent,
for its account, the fees set forth in the Fee Letter.

     SECTION 5.3.  Notice and Manner of  Conversion  or  Continuation  of Loans.
Provided  that no Event of Default  has  occurred  and is then  continuing,  the
Borrower shall have the option to (a) (i) convert at any time all or any portion
of its  outstanding  Base  Rate  Loans  that  are  Revolving  Credit  Loans in a
principal  amount equal to $500,000 or any whole  multiple of $100,000 in excess
thereof into LIBOR Rate Loans and (ii) convert at any time all or any portion of
its  outstanding  Base Rate Loans that are Term Loans in a  principal  amount of
$5,000,000 or any whole multiple of $1,000,000 in excess thereof into LIBOR Rate
Loans, or (b) upon the expiration of any Interest Period, (i) convert all or any
part of its  outstanding  LIBOR Rate Loans that are Revolving  Credit Loans in a
principal  amount  equal to $500,000  or a whole  multiple of $100,000 in excess
thereof into Base Rate Loans,  (ii)  convert all or any part of its  outstanding
LIBOR Rate Loans that are Term Loans in a principal  amount equal to  $5,000,000
or a whole  multiple of  $1,000,000 in excess  thereof into Base Rate Loans,  or
(iii) continue such LIBOR Rate Loans as LIBOR Rate Loans.  Whenever the Borrower
desires to convert or continue Loans as provided above,  the Borrower shall give
the  Administrative  Agent a Notice of Conversion/  Continuation  not later than
11:00 a.m.  (Charlotte  time) three (3) Business  Days before the day on which a
proposed  conversion or continuation of such Loan is to be effective  specifying
(A) the Loans to be converted or  continued,  and, in the case of any LIBOR Rate
Loan or to be  converted  or  continued,  the  last day of the  Interest  Period
therefor, (B) the effective date of such conversion or continuation (which shall
be a Business  Day),  (C) the principal  amount of such Loans to be converted or
continued,  and (D) the Interest  Period to be applicable  to such  converted or
continued  LIBOR Rate Loan. The  Administrative  Agent shall promptly notify the
Lenders of such Notice of Conversion/Continuation.

                                       25

<PAGE>


     SECTION 5.4. Mandatory Prepayments of Loans.

     (a)  Change in Control; Sale of All Assets.  The Borrower  shall prepay the
entire  outstanding amount of all Extensions of Credit plus any accrued interest
thereon  upon the  earlier of (i) a Change in Control  and (ii) a sale of all or
substantially all of the assets of the Borrower.

     (b)  Debt Proceeds.   The  Borrower  shall   make  a  mandatory   principal
prepayment of the Extensions of Credit in an amount equal to one hundred percent
(100%) of  the Net Cash Proceeds from any  incurrence of Debt by the Borrower or
any  of  its  Consolidated  Subsidiaries  (other than Debt permitted pursuant to
Section 11.1).

     (c)  Equity  Proceeds.  The  Borrower  shall  make  a  mandatory  principal
prepayment of the Extensions of Credit in an amount equal to one hundred percent
(100%) of the  aggregate Net Cash Proceeds from any offering of Capital Stock or
other equity securities by the Borrower or any of its Consolidated Subsidiaries.

     (d)  Asset Sale Proceeds.  The  Borrower  shall make a mandatory  principal
prepayment of the Extensions of Credit in an amount equal to one hundred percent
(100%) of the Net Cash Proceeds from the sale or other  disposition of assets by
the  Borrower  or any of  its  Consolidated  Subsidiaries  pursuant  to  Section
11.5(f).

     (e)  Insurance  and  Condemnation  Proceeds.  The  Borrower  shall  make  a
mandatory principal prepayment of the Extensions of Credit in an amount equal to
one hundred percent (100%) of the Net Cash Proceeds  received by the Borrower or
any of its  Consolidated  Subsidiaries  from any payment  under any  property or
casualty insurance policy or from any condemnation proceeding.

     (f)  Excess Cash Flow.  Subject to Section 5.4(g)(ii),  the Borrower  shall
make a mandatory  principal  prepayment  of the Loans in an amount  equal to (i)
fifty  percent  (50%) of Excess  Cash  Flow,  if any,  of the  Borrower  and its
Consolidated  Subsidiaries  for the  period  commencing  on the July 1, 1998 and
ending on December 31, 1998 and (ii)  seventy-five  percent (75%) of Excess Cash
Flow, if any, of the Borrower and its  Consolidated  Subsidiaries for the period
commencing  on  January  1, 1999 and  ending on March 31,  1999,  for the period
commencing  on April 1,  1999  and  ending  on June  30,  1999,  for the  period
commencing  on July 1, 1999 and ending on  September  30,  1999,  for the period
commencing on October 1, 1999 and ending on December 31, 1999 and for the period
commencing on January 1, 2000 and ending on March 31, 2000. With respect to each
period described above (each a "Calculation Period"), the Borrower shall provide
the Administrative  Agent a written  calculation of Excess Cash Flow in form and
substance  satisfactory to the Administrative Agent no later than 11:00 a.m. ten
(10) days after the end of the applicable Calculation Period.

     (g)  Notice; Manner of Payment.

          (i)  Sections 5.4(a) through 5.4(e).  Upon the occurrence of any event
     triggering the  prepayment  requirement  under Sections  5.4(a) through and
     including

                                       26

<PAGE>


     5.4(e), the Borrower shall give prompt written notice of such event and the
     amount of the corresponding prepayment to the Administrative Agent and upon
     receipt of such notice, the  Administrative  Agent shall promptly so notify
     the Lenders.  Such prepayment  shall be made within three (3) Business Days
     after the date of  consummation of such  transaction  described in Sections
     5.4(a) through and including 5.4(e).  Each mandatory  prepayment under such
     Sections shall be applied as follows:  (i) first, to reduce the outstanding
     principal  balance of the Term Loans on a pro rata basis,  (ii) second,  to
     the extent of any excess,  to reduce the outstanding  principal  balance of
     the  Revolving  Credit  Loans on a pro rata basis and (iii)  third,  to the
     extent of any excess,  to the cash collateral  account described in Section
     12.2(b) hereof to the extent of any L/C Obligations then outstanding.  Each
     prepayment under this Section 5.4(g)(i) shall be accompanied by any payment
     required under Section 5.10.

          (ii) Section  5.4(f).  Each mandatory  repayment  under Section 5.4(f)
     shall  be made  within  ten  (10)  days  after  the  end of the  applicable
     Calculation Period and shall be accompanied by the calculation described in
     Section  5.4(f);  provided,  that all  Excess  Cash Flow  accruing  for the
     Calculation  Period  referred to in Section  5.4(f)(i)  prior to January 1,
     1999 shall be deposited in an  investment  account with the  Administrative
     Agent pending  payment of such amount to the Lenders on or prior to January
     10, 1999. Each mandatory repayment under Section 5.4(f) shall be applied as
     follows: (i) first, to reduce the outstanding principal balance of the Term
     Loans on a pro rata basis,  (ii)  second,  to the extent of any excess,  to
     reduce the outstanding principal balance of the Revolving Credit Loans on a
     pro rata basis and (iii)  third,  to the extent of any excess,  to the cash
     collateral account described in Section 12.2(b) hereof to the extent of any
     L/C  Obligations  then  outstanding.  Each  prepayment  under this  Section
     5.4(g)(ii) shall be accompanied by any payment required under Section 5.10.

     SECTION 5.5. Manner of Payment.  Each payment by the Borrower on account of
the  principal  of or  interest  on the  Revolving  Credit  Loans or of any fee,
commission or other amounts (including the Reimbursement  Obligation) payable to
the Lenders under this Agreement with respect to the Revolving Credit Loans, the
Letters of Credit or any Revolving Credit Note shall be made not later than 1:00
p.m.  (Charlotte time) on the date specified for payment under this Agreement to
the Administrative Agent at the Administrative Agent's Office for the account of
the Lenders  (other than as set forth below) pro rata in  accordance  with their
respective Revolving Credit Commitment  Percentages,  in Dollars, in immediately
available funds and shall be made without any set-off, counterclaim or deduction
whatsoever.  Each  payment by the  Borrower  on account of the  principal  of or
interest on the Term Loans or of any fee, commission or other amounts payable to
the Lenders under this Agreement with respect to the Term Loans or any Term Note
shall be made in like manner,  except for the account of the Lenders pro rata in
accordance with their  respective Term Loan  Percentages.  Any payment  received
after  such  time but  before  2:00 p.m.  (Charlotte  time) on such day shall be
deemed a payment  on such date for the  purposes  of Section  12.1,  but for all
other purposes shall be deemed to have been made on the next succeeding Business
Day. Any payment  received after 2:00 p.m.  (Charlotte  time) shall be deemed to
have  been  made on the next  succeeding  Business  Day for all  purposes.  Upon
receipt by the  Administrative  Agent of each such payment,  the  Administrative
Agent  shall  distribute  to each  Lender at its  address  for notices set forth
herein its pro rata share of such  payment in  accordance  with this Section 5.5
and shall wire advice

                                       27

<PAGE>


of the amount of such credit to each Lender.  Each payment to the Administrative
Agent of  Administrative  Agent's or Issuing  Lender's fees or expenses shall be
made for the account of the Administrative  Agent or Issuing Lender, as the case
may be, and any amount  payable to any Lender under  Sections 5.9,  5.10,  5.11,
5.12 or 14.2 shall be paid to the  Administrative  Agent for the  account of the
applicable Lender.

     SECTION  5.6.  Crediting of Payments  and  Proceeds.  In the event that the
Borrower shall fail to pay any of the  Obligations  when due and the Obligations
have been  accelerated  pursuant to Section 12.2,  all payments  received by the
Lenders upon the Notes and the other  Obligations  and all net proceeds from the
enforcement of the  Obligations  shall be applied first to all expenses then due
and payable by the Borrower  hereunder,  then to all indemnity  obligations then
due and payable by the Borrower  hereunder,  then to all Administrative  Agent's
and Issuing Lender's fees then due and payable, then to all commitment and other
fees and commissions  then due and payable,  then to accrued and unpaid interest
on the Notes, the Reimbursement  Obligation and any termination  payments due in
respect of a Hedging  Agreement with any Lender (which such Hedging Agreement is
permitted or required  hereunder)  (pro rata in accordance with all such amounts
due), then to the principal amount of the Notes and Reimbursement Obligation and
then to the cash collateral  account  described in Section 12.2(b) hereof to the
extent of any L/C Obligations then outstanding, in that order.

     SECTION 5.7. Adjustments. If any Lender (a "Benefited Lender") shall at any
time receive any payment of all or part of the Obligations, or interest thereon,
or if any Lender  shall at any time  receive  any  collateral  in respect to the
Obligations (whether voluntarily or involuntarily, by set-off or otherwise) in a
greater proportion than any such payment to and collateral received by any other
Lender,  if any,  in respect of such other  Lender's  Extensions  of Credit,  or
interest  thereon,  such Benefited Lender shall purchase for cash from the other
Lenders such portion of each such other Lender's  Extensions of Credit, or shall
provide  such other  Lenders with the  benefits of any such  collateral,  or the
proceeds thereof,  as shall be necessary to cause such Benefited Lender to share
the excess payment or benefits of such collateral or proceeds  ratably with each
of the Lenders;  provided,  that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefited Lender, such purchase shall
be rescinded, and the purchase price and benefits returned to the extent of such
recovery,  but  without  interest.  The  Borrower  agrees  that  each  Lender so
purchasing a portion of another  Lender's  Extensions of Credit may exercise all
rights of  payment  (including,  without  limitation,  rights of  set-off)  with
respect to such  portion as fully as if such  Lender  were the direct  holder of
such portion.

     SECTION 5.8.  Nature of  Obligations  of Lenders  Regarding  Extensions  of
Credit;  Assumption by the Administrative  Agent. The obligations of the Lenders
under this  Agreement to make the Loans and issue or  participate  in Letters of
Credit  are  several  and are  not  joint  or  joint  and  several.  Unless  the
Administrative  Agent  shall  have  received  notice  from a  Lender  prior to a
proposed  borrowing  date  that  such  Lender  will  not make  available  to the
Administrative  Agent such Lender's ratable portion of the amount to be borrowed
on such date  (which  notice  shall not release  such Lender of its  obligations
hereunder),  the Administrative  Agent may assume that such Lender has made such
portion available to the Administrative  Agent on the proposed borrowing date in
accordance  with Section  2.2(b) and 4.2, and the  Administrative  Agent may, in
reliance  upon such  assumption,  make  available to the Borrower on such date a
corresponding amount. If such amount

                                       28

<PAGE>


is made  available to the  Administrative  Agent on a date after such  borrowing
date,  such Lender  shall pay to the  Administrative  Agent on demand an amount,
until paid,  equal to the product of (a) the amount of such  borrowing  not made
available  by such Lender in  accordance  with the terms  hereof,  times (b) the
daily  average  Federal  Funds Rate  during  such  period as  determined  by the
Administrative  Agent, times (c) a fraction the numerator of which is the number
of days that elapse from and including  such borrowing date to the date on which
such amount of such  borrowing  not made  available by such Lender in accordance
with  the  terms  hereof  shall  have  become   immediately   available  to  the
Administrative  Agent and the  denominator of which is 360. A certificate of the
Administrative  Agent with respect to any amounts owing under this Section shall
be conclusive,  absent  manifest  error. If such amount is not made available to
the  Administrative  Agent by such Lender within three (3) Business Days of such
borrowing  date,  the  Administrative  Agent shall be  entitled to recover  such
amount made available by the  Administrative  Agent with interest thereon at the
rate per annum  applicable  to Base Rate Loans  hereunder,  on demand,  from the
Borrower.  The  failure of any Lender to make its  Revolving  Credit  Commitment
Percentage or Term Loan Percentage,  as applicable,  of any Loan available shall
not relieve it or any other Lender of its obligation,  if any, hereunder to make
its  Revolving  Credit  Commitment  Percentage  or  Term  Loan  Percentage,   as
applicable,  of such Loan available on such borrowing  date, but no Lender shall
be responsible for the failure of any other Lender to make its Revolving  Credit
Commitment  Percentage  or Term Loan  Percentage,  as  applicable,  of such Loan
available on the borrowing date.

     SECTION 5.9. Changed Circumstances.

     (a)  Circumstances Affecting LIBOR Rate Availability.  If  with  respect to
any Interest Period the Administrative  Agent or any Lender  (after consultation
with Administrative Agent)  shall  determine  that,  by  reason of circumstances
affecting the  foreign  exchange and  interbank markets  generally,  deposits in
eurodollars,  in  the  applicable amounts are not being quoted via Telerate Page
3750  or offered to the  Administrative  Agent or such Lender for such  Interest
Period, then the Administrative Agent shall forthwith give notice thereof to the
Borrower.  Thereafter, until the Administrative Agent notifies the Borrower that
such circumstances  no longer exist, the obligation of the Lenders to make LIBOR
Rate Loans and the right of the  Borrower to convert any Loan to or continue any
Loan  as  a  LIBOR Rate Loan shall be suspended, and the Borrower shall repay in
full (or cause to be repaid in full) the then  outstanding  principal  amount of
each such LIBOR  Rate Loans together with accrued interest thereon, on the  last
day of the  then  current  Interest Period applicable to such LIBOR Rate Loan or
convert the then outstanding principal amount of each such  LIBOR Rate Loan to a
Base Rate Loan as of the last day of such Interest Period.

     (b)  Laws Affecting LIBOR Rate Availability.   If, after  the date  hereof,
the introduction of, or any change in, any  Applicable  Law or any change in the
interpretation or administration thereof by any Governmental Authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof,  or  compliance  by any  Lender  (or any of  their  respective  Lending
Offices) with any request or directive  (whether or not having the force of law)
of any such Governmental  Authority,  central bank or comparable  agency,  shall
make  it  unlawful  or  impossible  for  any of the  Lenders  (or  any of  their
respective  Lending  Offices)  to honor  its  obligations  hereunder  to make or
maintain any LIBOR Rate Loan,  such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall

                                       29

<PAGE>


promptly give notice to the Borrower and the other  Lenders.  Thereafter,  until
the Administrative Agent notifies the Borrower that such circumstances no longer
exist, (i) the obligations of the Lenders to make LIBOR Rate Loans and the right
of the  Borrower to convert  any Loan or continue  any Loan as a LIBOR Rate Loan
shall be suspended and  thereafter  the Borrower may select only Base Rate Loans
hereunder,  and (ii) if any of the Lenders may not lawfully continue to maintain
a LIBOR  Rate Loan to the end of the then  current  Interest  Period  applicable
thereto as a LIBOR Rate Loan, the applicable  LIBOR Rate Loan shall  immediately
be converted to a Base Rate Loan for the remainder of such Interest Period.

     (c)  Increased Costs.  If, after the date hereof,  the introduction of,  or
any change in, any Applicable  Law, or in the interpretation  or  administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration  thereof,  or compliance by any of the
Lenders  (or any of  their  respective  Lending  Offices)  with any  request  or
directive  (whether  or not  having  the  force  of law)  of  such  Governmental
Authority, central bank or comparable agency:

          (i)  shall subject any  of  the  Lenders  (or  any of their respective
Lending Offices)  to  any  tax,  duty  or other charge with respect to any Note,
Letter  of  Credit  or  Application  or  shall  change  the basis of taxation of
payments  to any of the Lenders (or any of their respective  Lending Offices) of
the principal of or interest on any Note, Letter of Credit or Application or any
other amounts due under this Agreement in respect thereof (except for changes in
the rate of tax on the overall  net income of any of the Lenders or any of their
respective  Lending Offices imposed by the jurisdiction in which such Lender  is
organized or  is or should be qualified to do business or such Lending Office is
located); or

          (ii) shall  impose, modify or deem  applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal Reserve
System),  special deposit,  insurance or capital or similar  requirement against
assets of, deposits with or for the account of, or credit extended by any of the
Lenders (or any of their  respective  Lending Offices) or shall impose on any of
the Lenders (or any of their respective Lending Offices) or the foreign exchange
and interbank markets any other condition affecting any Note;

and the result of any of the  foregoing  is to increase  the costs to any of the
Lenders  of  maintaining  any LIBOR Rate Loan,  or issuing or  participating  in
Letters  of  Credit or to reduce  the  yield or  amount of any sum  received  or
receivable  by any of the  Lenders  under this  Agreement  or under the Notes in
respect  of a LIBOR  Rate Loan or Letter  of  Credit or  Application,  then such
Lender shall promptly notify the  Administrative  Agent, and the  Administrative
Agent shall  promptly  notify the Borrower of such fact and demand  compensation
therefor and,  within fifteen (15) days after such notice by the  Administrative
Agent,  the Borrower shall pay to such Lender such additional  amount or amounts
as will  compensate such Lender or Lenders for such increased cost or reduction.
The Administrative Agent will promptly notify the Borrower of any event of which
it has knowledge which will entitle such Lender to compensation pursuant to this
Section 5.9(c); provided, that the Administrative Agent shall incur no liability
whatsoever  to the  Lenders or the  Borrower in the event it fails to do so. The
amount of such  compensation  shall be determined,  in the  applicable  Lender's
reasonable  discretion,  based upon the  assumption  that such Lender funded its
Revolving Credit Commitment  Percentage or Term Loan Percentage,  as applicable,
of the LIBOR Rate Loans in the

                                       30

<PAGE>


London  interbank  market  and using any  reasonable  attribution  or  averaging
methods which such Lender deems appropriate and practical. A certificate of such
Lender setting forth the basis for determining such amount or amounts  necessary
to  compensate  such  Lender  shall be  forwarded  to the  Borrower  through the
Administrative  Agent and shall be conclusively  presumed to be correct save for
manifest error.

     SECTION  5.10.  Indemnity.  The  Borrower  hereby  indemnifies  each of the
Lenders  against any loss or expense which may arise or be  attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect,  fund or maintain  any Loan (a) as a  consequence  of any failure by the
Borrower to make any payment when due of any amount due  hereunder in connection
with a LIBOR Rate Loan,  (b) due to any  failure of the  Borrower to borrow on a
date specified  therefor in a Notice of Revolving  Credit  Borrowing,  Notice of
Term  Loan  Borrowing  or Notice  of  Continuation/Conversion  or (c) due to any
payment,  prepayment  or  conversion of any LIBOR Rate Loan on a date other than
the last day of the Interest Period therefor. The amount of such loss or expense
shall be determined,  in the applicable  Lender's reasonable  discretion,  based
upon the  assumption  that such Lender  funded its Revolving  Credit  Commitment
Percentage or Term Loan  Percentage,  as applicable,  of the LIBOR Rate Loans in
the London  interbank  market and using any reasonable  attribution or averaging
methods which such Lender deems appropriate and practical. A certificate of such
Lender setting forth the basis for determining such amount or amounts  necessary
to  compensate  such  Lender  shall be  forwarded  to the  Borrower  through the
Administrative  Agent and shall be conclusively  presumed to be correct save for
manifest error.

     SECTION 5.11. Capital  Requirements.  If either (a) the introduction of, or
any change in, or in the interpretation of, any Applicable Law or (b) compliance
with any  guideline  or request from any central  bank or  comparable  agency or
other  Governmental  Authority  (whether or not having the force of law), has or
would have the effect of  reducing  the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by, any
Lender or any corporation  controlling  such Lender as a consequence of, or with
reference to the Commitments and other  commitments of this type, below the rate
which the Lender or such other  corporation  could  have  achieved  but for such
introduction,  change or compliance (but in each case excluding taxes payable on
the net income of any Lender),  then within five (5) Business Days after written
demand by any such Lender,  the  Borrower  shall pay to such Lender from time to
time as specified by such Lender  additional  amounts  sufficient  to compensate
such Lender or other  corporation for such  reduction.  A certificate as to such
amounts submitted to the Borrower and the  Administrative  Agent by such Lender,
shall,  in the absence of manifest  error, be presumed to be correct and binding
for all purposes.

     SECTION 5.12. Taxes.

     (a)  Payments Free and Clear.   Any  and  all  payments  by  the   Borrower
hereunder or  under  the  Notes  or the Letters of Credit shall be made free and
clear of and without deduction  for any and all present or future taxes, levies,
imposts, deductions,  charges or withholding,  and all liabilities  with respect
thereto excluding, (i) in the case of each Lender and the Administrative  Agent,
income and  franchise taxes imposed by the jurisdiction  under the laws of which
such Lender or the  Administrative Agent (as the case may be) is organized or is
or should be qualified to do

                                       31

<PAGE>


business  or any  political  subdivision  thereof  and  (ii) in the case of each
Lender,  income and franchise taxes imposed by the jurisdiction of such Lender's
Lending  Office or any  political  subdivision  thereof  (all such  non-excluded
taxes, levies, imposts, deductions,  charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum  payable  hereunder  or under any
Note or Letter of Credit to any Lender or the Administrative  Agent, (A) the sum
payable shall be increased as may be necessary so that after making all required
deductions  (including  deductions  applicable to additional  sums payable under
this Section 5.12) such Lender or the Administrative  Agent (as the case may be)
receives an amount  equal to the amount such party  would have  received  had no
such deductions been made, (B) the Borrower shall make such deductions,  (C) the
Borrower shall pay the full amount deducted to the relevant taxing  authority or
other  authority in accordance  with  applicable law, and (D) the Borrower shall
deliver to the  Administrative  Agent  evidence of such  payment to the relevant
taxing authority or other authority in the manner provided in Section 5.12(d).

     (b)  Stamp and Other Taxes. In addition, the Borrower shall pay any present
or future stamp,  registration,  recordation or  documentary  taxes or any other
similar fees or charges or excise or property taxes, levies of the United States
or  any  state  or  political  subdivision  thereof  or any  applicable  foreign
jurisdiction  which arise from any payment made hereunder or from the execution,
delivery or registration  of, or otherwise with respect to, this Agreement,  the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or  security  interest  in respect  thereto  (hereinafter  referred to as
"Other Taxes").

     (c)  Indemnity.   The  Borrower   shall   indemnify  each  Lender  and  the
Administrative  Agent for the full amount of Taxes and Other  Taxes  (including,
without  limitation,  any Taxes and Other Taxes imposed by any  jurisdiction  on
amounts   payable   under  this  Section  5.12)  paid  by  such  Lender  or  the
Administrative  Agent  (as  the  case  may  be)  and  any  liability  (including
penalties,  interest and expenses)  arising  therefrom or with respect  thereto,
whether or not such Taxes or Other  Taxes were  correctly  or legally  asserted.
Such  indemnification  shall be made within  thirty (30) days from the date such
Lender or the  Administrative  Agent (as the case may be) makes  written  demand
therefor.

     (d)  Evidence  of  Payment.  Within  thirty (30) days after the date of any
payment  of  Taxes  or  Other  Taxes,   the  Borrower   shall   furnish  to  the
Administrative  Agent, at its address  referred to in Section 14.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.

     (e)  Delivery  of Tax  Forms.  Each  Lender  organized  under the laws of a
jurisdiction  other than the United States or any state thereof shall deliver to
the Borrower,  with a copy to the  Administrative  Agent, on the Closing Date or
concurrently  with the delivery of the relevant  Assignment and  Acceptance,  as
applicable,  (i) two United States Internal  Revenue Service Forms 4224 or Forms
1001, as applicable (or successor  forms)  properly  completed and certifying in
each case that such Lender is entitled to a complete  exemption from withholding
or deduction for or on account of any United States  federal  income taxes,  and
(ii) an Internal  Revenue Service Form W-8 or W-9 or successor  applicable form,
as the  case may be,  to  establish  an  exemption  from  United  States  backup
withholding  taxes.  Each such Lender further agrees to deliver to the Borrower,
with a copy to the  Administrative  Agent,  a Form  1001 or 4224 and Form W-8 or
W-9,

                                       32

<PAGE>


or successor applicable forms or manner of certification, as the case may be, on
or before the date that any such form  expires or becomes  obsolete or after the
occurrence  of any event  requiring a change in the most recent form  previously
delivered by it to the  Borrower,  certifying in the case of a Form 1001 or 4224
that such Lender is entitled to receive  payments under this  Agreement  without
deduction or  withholding  of any United States  federal income taxes (unless in
any such case an event (including  without  limitation any change in treaty, law
or  regulation)  has occurred prior to the date on which any such delivery would
otherwise be required which renders such forms  inapplicable or the exemption to
which such forms relate  unavailable  and such Lender  notifies the Borrower and
the  Administrative  Agent that it is not entitled to receive  payments  without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9,  establishing  an  exemption  from  United  States  backup
withholding tax.

     (f)  Survival.  Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 5.12 shall  survive the payment in full of the  Obligations  and
the termination of the Credit Facilities.

                                   ARTICLE VI
                                   ----------

                  CLOSING; CONDITIONS OF CLOSING AND BORROWING
                  --------------------------------------------

     SECTION  6.1.  Closing.  The  closing  shall take  place at the  offices of
Kennedy Covington  Lobdell & Hickman,  L.L.P. on June 18, 1998, or on such other
date as the parties hereto shall mutually agree.

     SECTION 6.2. Conditions to Closing and Extensions of Credit. The obligation
of the Lenders to close this Agreement and to make the initial Loan or issue the
initial Letter of Credit is subject to the satisfaction of each of the following
conditions:

     (a)  Executed Loan Documents.  The following Loan Documents shall have been
duly authorized and executed by the parties thereto,  shall be in full force and
effect and no default shall exist thereunder,  and original counterparts thereof
shall have been duly delivered to the Administrative Agent:

          (i)       this Agreement;

          (ii)      the Notes;

          (iii)     the Security Agreement; and

          (iv)      the Negative Pledge and Custodian Agreement.

                                       33

<PAGE>


     (b)  Closing Certificates; etc.

          (i)  Officers's Certificate of the Borrower.  The Administrative Agent
shall  have  received a certificate from the  chief executive  officer or  chief
financial officer of the Borrower, in form and substance   satisfactory  to  the
Administrative  Agent, to the effect that all  representations and warranties of
the Borrower and Kinder  Morgan G.P.  contained in this  Agreement and the other
Loan  Documents  are true,  correct and  complete;  that the Borrower and Kinder
Morgan G.P.  are not in  violation  of any of the  covenants  contained  in this
Agreement  and the  other  Loan  Documents;  that,  after  giving  effect to the
transactions  contemplated by this Agreement, no Default or Event of Default has
occurred and is  continuing;  and that the Borrower  has  satisfied  each of the
closing conditions in all material respects.

          (ii) Certificate  of Secretary of the Borrower and Kinder Morgan G.P..
The Administrative Agent shall have received a certificate of the  secretary  or
assistant  secretary  of the  Borrower and Kinder  Morgan G.P.  certifying  that
attached  thereto is a true and  complete  copy of the charter  documents of the
Borrower or Kinder  Morgan G.P.,  as  applicable,  and all  amendments  thereto,
certified as of a recent date by the appropriate  Governmental  Authority in its
jurisdiction of incorporation; that attached thereto is a true and complete copy
of the by-laws of the  Borrower or Kinder  Morgan  G.P.,  as  applicable,  as in
effect on the date of such  certification;  that attached  thereto is a true and
complete  copy of  resolutions  duly  adopted by the board of  directors  of the
Borrower or Kinder  Morgan  G.P.,  as  applicable,  authorizing  the  execution,
delivery and performance of the Loan Documents to which it is a party; and as to
the incumbency and  genuineness of the signature of each officer of the Borrower
or Kinder Morgan G.P. executing Loan Documents to which it is a party.

          (iii) Certificates of Good Standing.    The Administrative Agent shall
have received long-form certificates as of a recent date of the good standing of
the Borrower  and  Kinder  Morgan  G.P. under the  laws of  its  jurisdiction of
organization  and each other  jurisdiction  where the Borrower or Kinder  Morgan
G.P., as applicable, is qualified to do business.

          (iv) Opinions of Counsel. The Administrative Agent shall have received
favorable  opinions of counsel to the Borrower and Kinder Morgan G.P.  addressed
to the Administrative Agent and the Lenders with respect to the Borrower, Kinder
Morgan G.P.,  the Loan  Documents,  the Collateral and such other matters as the
Lenders shall request.

          (v)  Solvency Opinion.  The Administrative Agent shall have received a
favorable  opinion of an independent  valuation firm reasonably  satisfactory to
the Administrative Agent,  addressed to the Administrative Agent and the Lenders
in form  and  substance  satisfactory  to the  Administrative  Agent,  that  the
Borrower and each of its  Consolidated  Subsidiaries are Solvent both before and
after giving effect to the KMI Dividend.

          (vi) Tax Forms. The Administrative Agent shall have received copies of
the United  States  Internal Revenue  Service forms required by  Section 5.12(e)
hereof.

                                       34

<PAGE>


     (c)  Collateral.

          (i)    Filings and Recordings.  All filings and  recordations that are
necessary  to  perfect  the  security interests of the Lenders in the Collateral
shall have been filed or recorded in all appropriate locations.

          (ii)   Pledged Collateral.    The   Administrative  Agent  shall  have
received original stock certificates,  or such other certificates evidencing the
ownership interests  pledged pursuant to the Security  Agreement,  together with
an undated stock power for each such  certificate  duly executed in blank by the
registered owner thereof.

          (iii)  Lien Search.  The Administrative  Agent shall have received the
results of  a  Lien  search of  all filings made against the Borrower and Kinder
Morgan G.P. under the Uniform Commercial Code as in effect in any state in which
any of their chief executive offices or Collateral is located,  indicating among
other things  that their  assets  are free and clear of any Lien  except for the
Liens permitted by Section 11.2.

          (iv)   Insurance.    The  Administrative  Agent  shall  have  received
certificates  of  insurance  in  the  form  required  under  Section 9.3 and the
Security Agreement and  otherwise in  form and substance reasonably satisfactory
to the Administrative Agent.

     (d)  Consents; Defaults.

          (i)    Governmental  and  Third  Party   Approvals.    All   necessary
approvals, authorizations  and  consents, if any be  required, of any Person and
of all Governmental  Authorities  and courts  having  jurisdiction  with respect
to the transactions contemplated hereby shall have been obtained.

          (ii)   No Injunction, Etc.    No  action,  proceeding,  investigation,
regulation  or legislation  shall have been  instituted,  threatened or proposed
before any Governmental  Authority to  enjoin,  restrain,  or  prohibit,  or  to
obtain substantial  damages in respect of, or which is related to or arises  out
of  this Agreement or the other Loan Documents,  or which, in the Administrative
Agent's discretion, would make it inadvisable to consummate   the   transactions
contemplated by this Agreement and the other Loan Documents.

          (iii)  No Event of  Default.   No  Default  or  Event of Default shall
have occurred and be continuing.

     (e)  Financial Matters.

          (i)    Financial Statements.    The Administrative  Agent  shall  have
received  the  unaudited  quarterly  and  audited annual Consolidated  financial
statements of the Borrower  and its Consolidated  Subsidiaries  referred  to  in
Section 7.1(n),  all  in  form  and substance satisfactory to the Administrative
Agent.

                                       35

<PAGE>


          (ii)   Financial Condition Certificate.    The  Borrower  shall   have
delivered  to  the  Administrative  Agent a certificate,   in form and substance
satisfactory  to  the  Administrative  Agent,   and certified as accurate by the
chief  executive officer, chief financial officer or treasurer of the  Borrower,
that (A) the Borrower and each of its Consolidated Subsidiaries are Solvent, (B)
the  Borrower's  payables  are  current  and not past due except for items being
contested in good faith not to exceed  $300,000,  (C) attached  thereto is a pro
forma balance sheet of the Borrower and its  Consolidated  Subsidiaries  setting
forth on a pro forma  basis the  financial  condition  of the  Borrower  and its
Consolidated  Subsidiaries  on a  Consolidated  basis  as of the end of the most
recently completed Fiscal Quarter, reflecting on a pro forma basis the effect of
the  transactions  contemplated  hereby,  including  all  fees and  expenses  in
connection  therewith  and  evidencing  compliance on a pro forma basis with the
covenants  contained in Article X and XI hereof and (D) attached thereto are the
financial   projections   previously   delivered  to  the  Administrative  Agent
representing the good faith opinion of the senior  management of the Borrower as
to the projected results contained therein.

          (iii)  Payment at Closing; Fee  Letter.  There shall have been paid by
the Borrower  to the  Administrative  Agent  and the Lenders  the fees set forth
or referenced in the Fee  Letter  and any  other  accrued  and  unpaid  fees  or
commissions  due  hereunder  (including,  without  limitation,  legal  fees  and
expenses),  and to any  other  Person  such  amount  as  may be due  thereto  in
connection with the transactions  contemplated hereby, including all taxes, fees
and other charges in connection with the execution,  delivery, recording, filing
and registration of any of the Loan Documents.  The  Administrative  Agent shall
have received duly authorized and executed copies of the Fee Letter.

     (f)  Miscellaneous.

          (i)    Notice of Borrowing and Account Designation. The Administrative
Agent  shall  have  received  the  Notice  of Revolving Credit Borrowing and the
Notice  of Term  Loan  Borrowing  with  respect  to the  Loans to be made on the
Closing  Date;  provided  that only Base Rate Loans  shall be  available  on the
Closing  Date.  The  proceeds  of the Loans  made on the  Closing  Date shall be
utilized in accordance with the sources and uses table attached to such notices.
The Borrower shall also have delivered to the  Administrative  Agent a Notice of
Account Designation with respect to the Loans to be made on the Closing Date.

          (ii)   Proceedings and Documents.      All     documents,    opinions,
certificates  and other  instruments  and all proceedings in connection with the
transactions  contemplated hereby shall be satisfactory in form and substance to
the Lenders.

          (iii)  Due  Diligence.  The Administrative Agent and the Lenders shall
have completed to their satisfaction their due diligence reviews of the Borrower
and its Subsidiaries in connection with the transactions contemplated hereby.

     SECTION 6.3. Conditions to All Extensions of Credit. The obligations of the
Lenders  to make any Loan or issue  any  Letter  of  Credit  is  subject  to the
satisfaction of the following  conditions precedent on the relevant borrowing or
issue date, as applicable:

     (a)  Continuation of Representations and Warranties.    The representations
and  warranties  contained in Article VII shall be true and correct on and as of
such borrowing or issuance

                                       36

<PAGE>


date with the same  effect as if made on and as of such date except for any such
representations  or warranties made as of a specific date which shall be true as
of such date.

     (b)  No Existing Default.   No  Default or  Event  of  Default  shall  have
occurred and be continuing  hereunder (i) on the borrowing  date with respect to
such Loan or after giving effect to the Loans to be made on such date or (ii) or
the issue date with respect to such Letter of Credit or after  giving  affect to
such Letters of Credit on such date.

     (c)  Certificates; Additional Documents.   The  Administrative  Agent shall
have received the current Officer's Compliance Certificate,  and each additional
document,  instrument or other item of information  reasonably  requested by the
Administrative Agent in connection with the corresponding Extension of Credit.

                                   ARTICLE VII
                                   -----------

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER
                 ----------------------------------------------

     SECTION 7.1.  Representations and Warranties.  To induce the Administrative
Agent to enter into this Agreement and the Lenders to make the Loans or issue or
participate  in the  Letters of  Credit,  the  Borrower  hereby  represents  and
warrants to the Administrative Agent and Lenders that:

     (a)  Organization;  Power;  Qualification.  Each  of the  Borrower  and its
Subsidiaries is duly organized,  validly existing and in good standing under the
laws of the jurisdiction of its  incorporation  or formation,  has the power and
authority  to own its  properties  and to carry on its business as now being and
hereafter  proposed to be conducted and is duly  qualified and  authorized to do
business in each  jurisdiction  in which the character of its  properties or the
nature of its business  requires such  qualification  and  authorization  except
where the failure to be so qualified could not be reasonably  expected to have a
Material  Adverse  Effect.  The  jurisdictions  in which  the  Borrower  and its
Subsidiaries  as of the Closing Date are  organized and qualified to do business
are described on Schedule 7.1(a).

     (b)  Ownership.  Each  Subsidiary  of the  Borrower  is listed on  Schedule
7.1(b). The capitalization of the Borrower and its Consolidated  Subsidiaries as
of the Closing  Date  consists of the number of shares,  authorized,  issued and
outstanding, of such classes and series, with or without par value, described on
Schedule  7.1(b).  All outstanding  shares have been duly authorized and validly
issued  and  are  fully  paid  and   nonassessable.   The  shareholders  of  the
Consolidated Subsidiaries of the Borrower and the number of shares owned by each
as of  the  Closing  Date  are  described  on  Schedule  7.1(b).  There  are  no
outstanding  stock  purchase  warrants,   subscriptions,   options,  securities,
instruments  or  other  rights  of any  type or  nature  whatsoever,  which  are
convertible  into,  exchangeable  for or  otherwise  provide  for or permit  the
issuance of Capital Stock of the Borrower or its Consolidated Subsidiaries as of
the Closing Date, except as described on Schedule 7.1(b).

     (c)  Authorization of Agreement, Loan Documents and Borrowing. The Borrower
and its Consolidated  Subsidiaries have the right,  power and authority and have
taken all  necessary  corporate  and other  action to authorize  the  execution,
delivery and performance of this Agreement

                                       37

<PAGE>


and each of the other Loan  Documents to which it is a party in accordance  with
their respective terms. This Agreement and each of the other Loan Documents have
been duly executed and delivered by the duly authorized officers of the Borrower
and Kinder Morgan G.P., and each such document  constitutes the legal, valid and
binding  obligation  of the Borrower  and Kinder  Morgan  G.P.,  enforceable  in
accordance  with  its  terms,  except  as such  enforcement  may be  limited  by
bankruptcy, insolvency,  reorganization,  moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the  enforcement  of
creditors' rights in general and the availability of equitable remedies.

     (d)  Compliance of Agreement, Loan Documents and Borrowing with Laws,  Etc.
The execution,  delivery and  performance  by the Borrower and its  Consolidated
Subsidiaries  of the Loan  Documents  to which each such  Person is a party,  in
accordance  with  their  respective  terms,  the  borrowings  hereunder  and the
transactions  contemplated  hereby do not and will not,  by the passage of time,
the giving of notice or  otherwise,  (i)  require any  Governmental  Approval or
violate any Applicable  Law relating to the Borrower or any of its  Consolidated
Subsidiaries,  (ii) conflict with, result in a breach of or constitute a default
under the articles of incorporation, bylaws or other organizational documents of
the Borrower or any of its Subsidiaries or any material indenture,  agreement or
other  instrument  to  which  such  Person  is a party  or by  which  any of its
properties may be bound or any Governmental Approval relating to such Person, or
(iii) result in or require the creation or  imposition  of any Lien upon or with
respect to any  property  now owned or  hereafter  acquired by such Person other
than Liens arising under the Loan Documents.

     (e)  Compliance  with Law; Governmental  Approvals.  Except as set forth on
Schedule  7.1(e) and further  except for such matters as could not reasonably be
expected to have a Material Adverse Effect on the Borrower and its Subsidiaries,
each of the Borrower and its  Subsidiaries  (i) has all  Governmental  Approvals
required by any Applicable Law for it to conduct its business,  each of which is
in full force and  effect,  is final and not  subject to review on appeal and is
not the subject of any pending or, to its knowledge, threatened attack by direct
or  collateral  proceeding,  and (ii) is in  compliance  with each  Governmental
Approval  applicable  to it and in  compliance  with all other  Applicable  Laws
relating to it or any of its respective properties.

     (f)  Tax Returns and Payments.  Each of the Borrower  and its  Subsidiaries
has duly  filed or caused to be filed all  federal,  state,  local and other tax
returns  required by Applicable Law to be filed,  and has paid, or made adequate
provision  for the  payment  of,  all  federal,  state,  local and other  taxes,
assessments and governmental charges or levies upon it and its property, income,
profits and assets which are due and payable except for those being contested in
good faith.  No  Governmental  Authority  has  asserted  any Lien or other claim
against the  Borrower or any  Subsidiary  thereof  with  respect to unpaid taxes
which has not been  discharged or resolved  except for those being  contested in
good faith. The charges,  accruals and reserves on the books of the Borrower and
any of its Subsidiaries in respect of federal,  state, local and other taxes for
all Fiscal Years and portions thereof since the organization of the Borrower and
any of its  Subsidiaries are in the judgment of the Borrower  adequate,  and the
Borrower does not anticipate any  additional  material taxes or assessments  for
any of such years.

     (g)  Intellectual   Property   Matters.   Each  of  the  Borrower  and  its
Subsidiaries  owns  or  possesses  rights  to  use  all  franchises,   licenses,
copyrights, copyright applications, patents, patent

                                       38

<PAGE>


rights or licenses,  patent  applications,  trademarks,  trademark rights, trade
names,  trade name rights,  copyrights  and rights with respect to the foregoing
which are required to conduct its business except where the failure to have such
rights could not reasonably be expected to have a Material Adverse Effect on the
Borrower and its  Subsidiaries.  No event has occurred which  permits,  or after
notice or lapse of time or both would permit,  the  revocation or termination of
any such material rights, and neither the Borrower nor any Subsidiary thereof is
liable in any material amount to any Person for  infringement  under  Applicable
Law with respect to any such rights as a result of its business operations.

     (h)  Environmental  Matters.  Except as set forth on  Schedule  7.1(h)  and
further  except for such matters as could not  reasonably  be expected to have a
Material Adverse Effect on the Borrower and its Subsidiaries:

          (i)    The  properties  of  the  Borrower and  its Subsidiaries do not
contain,  and to their  knowledge have not previously  contained,  any Hazardous
Materials  in  amounts or  concentrations  which  constitute  or  constituted  a
violation of, applicable Environmental Laws;

          (ii)   Such  properties  and  all  operations  conducted in connection
therewith are in compliance,  and have been in  compliance,  with all applicable
Environmental  Laws,  and  there is no  contamination  at,  under or about  such
properties or such operations which could interfere with the continued operation
of such properties or impair the fair saleable value thereof;

          (iii)  Neither  the  Borrower  nor any Subsidiary thereof has received
any  notice  of  violation,  alleged  violation,  non-compliance,  liability  or
potential   liability  regarding   environmental   matters  or  compliance  with
Environmental  Laws with  regard to any of their  properties  or the  operations
conducted  in  connection  therewith,  nor does the  Borrower or any  Subsidiary
thereof  have  knowledge  or  reason to  believe  that any such  notice  will be
received or is being threatened;

          (iv)   Hazardous Materials have not been transported  or  disposed  of
from the  properties of the Borrower and its Subsidiaries in violation of, or in
a  manner  or  to  a  location  which  could  give  rise  to  liability   under,
Environmental  Laws, nor have any Hazardous  Materials been generated,  treated,
stored or disposed of at, on or under any of such properties in violation of, or
in  a  manner  that  could  give  rise  to  liability   under,   any  applicable
Environmental Laws;

          (v)    No  judicial  proceedings  or  governmental  or  administrative
action is pending, or, to the knowledge of the Borrower,  threatened,  under any
Environmental Law to which the Borrower or any Subsidiary  thereof is or will be
named as a party with  respect to such  properties  or  operations  conducted in
connection  therewith,  nor are  there any  consent  decrees  or other  decrees,
consent orders,  administrative  orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
such properties or such operations; and

          (vi)   There  has  been  no  release, or to the best of the Borrower's
knowledge,  the  threat  of  release,  of  Hazardous  Materials  at or from such
properties, in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.

                                       39

<PAGE>


     (i)  ERISA.

          (i)    As of the Closing  Date,   neither  the  Borrower nor any ERISA
Affiliate maintains or contributes to, or has any obligation under, any Employee
Benefit Plans other than those  identified,  as of the Closing Date, on Schedule
7.1(i);

          (ii)   The Borrower and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA and the regulations and published interpretations
thereunder  with respect to all Employee  Benefit  Plans except for any required
amendments for which the remedial  amendment period as defined in Section 401(b)
of the Code has not yet expired and except for matters that could not reasonably
be  expected  to  have a  Material  Adverse  Effect  on  the  Borrower  and  its
Subsidiaries.  Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has been  determined by the Internal  Revenue Service
to be so qualified,  and each trust related to such plan has been  determined to
be exempt  under  Section  501(a) of the Code.  No material  liability  has been
incurred by the Borrower or any ERISA  Affiliate  which remains  unsatisfied for
any  taxes  or  penalties  with  respect  to any  Employee  Benefit  Plan or any
Multiemployer Plan;

          (iii)  No Pension Plan has been terminated,  nor  has any  accumulated
funding  deficiency  (as  defined  in  Section  412 of the Code)  been  incurred
(without  regard to any waiver  granted under Section 412 of the Code),  nor has
any funding waiver from the Internal  Revenue Service been received or requested
with respect to any Pension  Plan,  nor has the Borrower or any ERISA  Affiliate
failed to make any contributions or to pay any amounts due and owing as required
by Section  412 of the Code,  Section  302 of ERISA or the terms of any  Pension
Plan prior to the due dates of such contributions  under Section 412 of the Code
or Section 302 of ERISA,  nor has there been any event  requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan
except in each case as could  not  reasonably  be  expected  to have a  Material
Adverse Effect on the Borrower and its Subsidiaries;

          (iv)   Neither the Borrower nor any ERISA Affiliate has except in each
case as could not  reasonably be expected to have a Material  Adverse  Effect on
the  Borrower  and its  Subsidiaries:  (A)  engaged  in a  nonexempt  prohibited
transaction  described  in Section 406 of the ERISA or Section 4975 of the Code,
(B) incurred any liability to the PBGC which remains  outstanding other than the
payment of premiums and there are no premium  payments which are due and unpaid,
(C) failed to make a required  contribution or payment to a Multiemployer  Plan,
or (D) failed to make a required  installment  or other  required  payment under
Section 412 of the Code;

          (v)    No Termination Event has occurred or is reasonably expected  to
occur; and

          (vi)   No proceeding, claim, lawsuit and/or investigation is  existing
or,  to the  best  knowledge  of the  Borrower  after  due  inquiry,  threatened
concerning  or involving  any (A) employee  welfare  benefit plan (as defined in
Section 3(1) of ERISA) currently maintained or contributed to by the Borrower or
any ERISA Affiliate,  (B) Pension Plan or (C) Multiemployer  Plan except in each
case as could not  reasonably be expected to have a Material  Adverse  Effect on
the Borrower and its Subsidiaries.

                                       40

<PAGE>


     (j)  Margin  Stock.  Neither the  Borrower  nor any  Subsidiary  thereof is
engaged  principally  or as one of its  activities  in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in Regulations G and U of the Board of Governors of
the  Federal  Reserve  System).  No part of the  proceeds of any of the Loans or
Letters of Credit will be used for  purchasing  or carrying  margin stock or for
any purpose which violates,  or which would be inconsistent with, the provisions
of Regulation T, U or X of such Board of Governors.

     (k)  Government Regulation.   Neither  the  Borrower  nor  any   Subsidiary
thereof is an "investment  company" or a company  "controlled" by an "investment
company" (as each such term is defined or used in the Investment  Company Act of
1940,  as amended) and neither the Borrower  nor any  Subsidiary  thereof is, or
after giving  effect to any  Extension of Credit will be,  subject to regulation
under the Public Utility Holding Company Act of 1935 or the Interstate  Commerce
Act, each as amended,  or any other  Applicable  Law which limits its ability to
incur or consummate the transactions contemplated hereby.

     (l)  Material Contracts.    Schedule 7.1(l)  sets  forth  a  complete   and
accurate  list of all Material  Contracts  of the Borrower and its  Consolidated
Subsidiaries  in effect as of the Closing Date not listed on any other  Schedule
hereto;  other than as set forth in Schedule 7.1(l), each such Material Contract
is, and after giving effect to the consummation of the transactions contemplated
by the Loan Documents  will be, in full force and effect in accordance  with the
terms thereof. The Borrower has delivered to the Administrative Agent a true and
complete  copy of each  Material  Contract  required  to be listed  on  Schedule
7.1(l).

     (m)  Employee  Relations.  Each of the Borrower and its Subsidiaries  has a
stable  work  force in place as of the  Closing  Date and is not,  except as set
forth on Schedule 7.1(m),  party to any collective  bargaining agreement nor has
any labor union been  recognized as the  representative  of its  employees.  The
Borrower knows of no pending,  threatened or contemplated strikes, work stoppage
or other  collective  labor  disputes  involving  its  employees or those of its
Subsidiaries.

     (n)  Financial  Statements.  The (i) audited Consolidated balance sheets of
the Borrower and its  Consolidated  Subsidiaries as of December 31, 1997 and the
related statements of income and retained earnings and cash flows for the Fiscal
Years then ended and (ii) unaudited  Consolidated  balance sheet of the Borrower
and its  Consolidated  Subsidiaries  as of March 31, 1998 and related  unaudited
interim statements of revenue and retained  earnings,  copies of which have been
furnished  to the  Administrative  Agent and each  Lender,  fairly  present  the
assets,  liabilities and financial position of the Borrower and its Consolidated
Subsidiaries as at such dates,  and the results of the operations and changes of
financial  position for the periods then ended subject however to the absence of
footnotes  from the  unaudited  balance sheet and  statements  and the effect of
normal period-to-period  adjustments.  All such financial statements,  including
the related  schedules and notes thereto,  have been prepared in accordance with
GAAP (except as noted).  The Borrower and its Consolidated  Subsidiaries have no
Debt (other than Debt permitted by Section 11.1(f)), obligation or other unusual
forward or long-term  commitment  which is not fairly reflected in the foregoing
financial statements or in the notes thereto.

                                       41

<PAGE>


     (o)  No Material Adverse Change.   Since December 31, 1997, there has  been
no material adverse change in the properties, business, operations, or financial
condition  of the  Borrower  and its  Subsidiaries  and no event has occurred or
condition  arisen that could  reasonably be expected to have a Material  Adverse
Effect.

     (p)  Solvency.  As of the  Closing  Date and  after  giving  effect to each
Extension of Credit made  hereunder,  the Borrower and each of its  Consolidated
Subsidiaries will be Solvent.

     (q)  Titles to  Properties.  Each of the Borrower and its Subsidiaries  has
such  title to the  real  property  owned or  leased  by it as is  necessary  or
desirable to the conduct of its business and valid and legal title to all of its
personal property and assets,  including, but not limited to, those reflected on
the balance sheets of the Borrower and its  Subsidiaries  delivered  pursuant to
Section 7.1(n),  except those which have been disposed of by the Borrower or its
Subsidiaries  subsequent  to  such  date  which  dispositions  have  been in the
ordinary course of business or as otherwise expressly permitted hereunder.

     (r)  Liens.  None of the  properties  and  assets  of the  Borrower  or any
Consolidated  Subsidiary  thereof is subject to any Lien, except Liens permitted
pursuant to Section 11.2. Except for filings pursuant to the Existing  Facility,
no  financing  statement  under the Uniform  Commercial  Code of any state which
names  the  Borrower  or any  Consolidated  Subsidiary  thereof  or any of their
respective trade names or divisions as debtor and which has not been terminated,
has been filed in any state or other  jurisdiction  and neither the Borrower nor
any Subsidiary  thereof has signed any such financing  statement or any security
agreement  authorizing  any secured party  thereunder to file any such financing
statement, except to perfect those Liens permitted by Section 11.2 hereof.

     (s)  Debt.  Schedule 7.1(s) is a complete and correct listing of  all  Debt
of the  Borrower  and its  Consolidated  Subsidiaries  as of the Closing Date in
excess of $300,000 (other than Debt permitted pursuant to Section 11.1(f)).  The
Borrower and its Consolidated  Subsidiaries have performed and are in compliance
in all material  respects with all of the terms of such Debt and all instruments
and agreements relating thereto, and no default or event of default, or event or
condition  which with  notice or lapse of time or both would  constitute  such a
default  or event of  default on the part of the  Borrower  or its  Consolidated
Subsidiaries exists with respect to any such Debt.

     (t)  Litigation.  As of the Closing  Date,  except as set forth on Schedule
7.1(t), there are no actions, suits or proceedings pending nor, to the knowledge
of the Borrower, threatened against or in any other way relating adversely to or
affecting  the  Borrower or any  Subsidiary  thereof or any of their  respective
properties in any court or before any arbitrator of any kind or before or by any
Governmental Authority except for matters which could not reasonably be expected
to have a Material Adverse Effect on the Borrower and its Subsidiaries.

     (u)  Absence of  Defaults.  No event has  occurred or is  continuing  which
constitutes  a Default or an Event of Default,  or which  constitutes,  or which
with the passage of time or giving of notice or both would constitute, a default
or event of default by the Borrower or any Consolidated Subsidiary thereof under
any Material Contract or judgment,  decree or order to which the Borrower or its
Consolidated   Subsidiaries  is  a  party  or  by  which  the  Borrower  or  its
Consolidated  Subsidiaries or any of their respective properties may be bound or
which would

                                       42

<PAGE>


require  the  Borrower  or its  Consolidated  Subsidiaries  to make any  payment
thereunder  prior to the scheduled  maturity  date  therefor  except for matters
which could not reasonably be expected to have a Material  Adverse Effect on the
Borrower and its Subsidiaries.

     (v)  Public Filings. There have been no material misstatements or omissions
in any annual report on Form 10-K, quarterly report on Form 10-Q, current report
on Form 8-K, or any  amendment to any of the  foregoing  filed by Kinder  Morgan
Energy with the SEC with  respect to the Fiscal Year ended  December 31, 1997 or
thereafter.

     (x)  Accuracy and Completeness of Other  Information.   To the   Borrower's
knowledge,  all written information,  reports and other papers and data produced
by or on behalf of the Borrower or any  Subsidiary  thereof and furnished to the
Lenders in  connection  with this  Agreement  were, at the time the same were so
furnished,  complete and correct in all respects to the extent necessary to give
the recipient a true and accurate  knowledge of the subject matter  thereof.  No
document furnished or written statement made to the Administrative  Agent or the
Lenders  by the  Borrower  or any  Subsidiary  thereof  in  connection  with the
negotiation,  preparation  or  execution  of this  Agreement  or any of the Loan
Documents  contains or will contain,  to the  Borrower's  knowledge,  any untrue
statement  of a fact  material to the  creditworthiness  of the  Borrower or its
Subsidiaries  or omits or will omit to state a fact  necessary  in order to make
the statements  contained  therein not misleading.  The Borrower is not aware of
any facts  which it has not  disclosed  in writing to the  Administrative  Agent
having a Material  Adverse  Effect,  or insofar as the Borrower can now foresee,
could reasonably be expected to have a Material Adverse Effect.

     SECTION  7.2.  Survival  of  Representations   and  Warranties,   Etc.  All
representations   and   warranties  set  forth  in  this  Article  VII  and  all
representations and warranties contained in any certificate,  or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this  Agreement.  All  representations  and warranties
made  under this  Agreement  shall be made or deemed to be made at and as of the
Closing  Date,  shall  survive the  Closing  Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders or any borrowing hereunder.

                                  ARTICLE VIII
                                  ------------

                        FINANCIAL INFORMATION AND NOTICES
                        ---------------------------------

     Until all the  Obligations  have been  paid and  satisfied  in full and the
Credit Facilities terminated, unless consent has been obtained in the manner set
forth  in  Section  14.11  hereof,  the  Borrower  will  furnish  or cause to be
furnished to the Administrative  Agent at the  Administrative  Agent's Office at
the  address  set forth in  Section  14.1  hereof  and to the  Lenders  at their
respective  addresses as set forth on Schedule 1, or such other office as may be
designated by the Administrative Agent and Lenders from time to time:

                                       43


<PAGE>


     SECTION 8.1. Financial Statements.

     (a)  Quarterly Financial Statements.   As  soon  as  practicable and in any
event within sixty (60) days after the end of each Fiscal Quarter,  an unaudited
Consolidated   and   consolidating   balance  sheet  of  the  Borrower  and  its
Consolidated  Subsidiaries  as of the close of such Fiscal Quarter and unaudited
Consolidated and consolidating  statements of income, retained earnings and cash
flows for the Fiscal Quarter then ended and that portion of the Fiscal Year then
ended,  along with the  corresponding  figures for the preceding Fiscal Year and
prepared by the Borrower in accordance with GAAP and, if applicable,  containing
disclosure of the effect on the  financial  position or results of operations of
any change in the application of accounting  principles and practices during the
period,  and certified by the chief financial officer of the Borrower to present
fairly in all material respects the financial  condition of the Borrower and its
Consolidated  Subsidiaries  as of their  respective  dates  and the  results  of
operations of the Borrower and its Consolidated  Subsidiaries for the respective
periods then ended, subject to normal year end adjustments.

     (b)  Annual Financial Statements.   As soon as practicable and in any event
within  one-hundred  twenty  (120) days after the end of each  Fiscal  Year,  an
audited  Consolidated  and  consolidating  balance sheet of the Borrower and its
Consolidated  Subsidiaries  as of the  close of such  Fiscal  Year  and  audited
Consolidated and consolidating  statements of income, retained earnings and cash
flows for the Fiscal Year then ended,  including the notes  thereto,  along with
the  corresponding  figures  for the  preceding  Fiscal  Year and  audited by an
independent  certified public  accounting firm acceptable to the  Administrative
Agent (which  acceptance shall not be unreasonably  withheld) in accordance with
GAAP and, if  applicable,  containing  disclosure of the effect on the financial
position or results of operation of any change in the  application of accounting
principles and practices during the year, and accompanied by a report thereon by
such certified  public  accountants  that is not qualified with respect to scope
limitations  imposed by the Borrower or any of its Consolidated  Subsidiaries or
with  respect to  accounting  principles  followed by the Borrower or any of its
Consolidated Subsidiaries not in accordance with GAAP.

     SECTION 8.2. Compliance Certificates. At each time financial statements are
delivered pursuant to Sections 8.1 (a) or (b), the Borrower shall deliver to the
Administrative  Agent (a) an Officer's  Compliance  Certificate duly executed by
the chief executive officer or chief financial officer of the Borrower,  and (b)
in the case of financial  statements  delivered  pursuant to Section  8.1(b),  a
certificate of the  independent  public  accountants  certifying  such financial
statements   stating  that  in  making  the   examination   necessary   for  the
certification  of such financial  statements,  they obtained no knowledge of any
Default or Event of Default, or if such is not the case, specifying such Default
or Event of Default and its nature and period of existence.

     SECTION 8.3. Other Reports.

     (a)  Promptly  upon  receipt  thereof,  copies  of  all  reports,  if  any,
submitted to the Borrower or its Board of  Directors  or any  Subsidiary  by its
independent  public  accountants  in connection  with their  auditing  function,
including,   without  limitation,  any  management  report  and  any  management
responses thereto;

                                       44

<PAGE>


     (b)  Promptly  upon  its  becoming  available,  each  financial  statement,
report,  notice  or  proxy  statement  sent  by  the  Borrower  or  any  of  its
Subsidiaries to shareholders or partners  generally and each regular or periodic
report and any final,  effective registration statement or prospectus or written
communication  (other than transmittal  letters) filed by the Borrower or any of
its Subsidiaries  with or received by the Borrower or any of its Subsidiaries in
connection  therewith from any  securities  exchange or the SEC or any successor
agency which could reasonably be expected to have a Material Adverse Effect; and

     (c)  Such other information regarding the operations,  business affairs and
financial  condition  of  the  Borrower  or  any  of  its  Subsidiaries  as  the
Administrative Agent or any Lender may reasonably request.

     SECTION 8.4.  Notice of  Litigation  and Other  Matters.  Prompt (but in no
event later than five (5) Business Days after an officer of the Borrower obtains
knowledge thereof) telephonic and written notice of:

     (a)  the  commencement of  all proceedings and investigations by or  before
any  Governmental  Authority  and all  actions and  proceedings  in any court or
before any  arbitrator  against or  involving  the  Borrower  or any  Subsidiary
thereof or any of their respective properties, assets or businesses which in any
such case could reasonably be expected to have a Material Adverse Effect;

     (b)  any notice of any violation received by the Borrower or any Subsidiary
thereof from any  Governmental  Authority  including,  without  limitation,  any
notice  of  violation  of  Environmental  Laws  which  in any  such  case  could
reasonably be expected to have a Material Adverse Effect;

     (c)  any labor controversy that has resulted in, or threatens to result in,
a strike or other work action  against the  Borrower or any  Subsidiary  thereof
which in any such case could  reasonably be expected to have a Material  Adverse
Effect;

     (d)  any  attachment, judgment,  lien,  levy or order that may be  assessed
against or threatened against the Borrower or any Subsidiary thereof which could
reasonably be expected to have a Material Adverse Effect;

     (e)  any Default or Event of  Default, or any event  which  constitutes  or
which with the  passage of time or giving of notice or both would  constitute  a
default or event of default under any Material Contract to which the Borrower or
any of its Consolidated  Subsidiaries is a party or by which the Borrower or any
Consolidated  Subsidiary  thereof or any of their  respective  properties may be
bound;

     (f)  (i) any  unfavorable  determination  letter from the Internal  Revenue
Service  regarding the  qualification  of an Employee Benefit Plan under Section
401(a) of the Code (along with a copy thereof), (ii) all notices received by the
Borrower or any ERISA  Affiliate of the PBGC's  intent to terminate  any Pension
Plan or to have a trustee  appointed to administer  any Pension Plan,  (iii) all
notices  received by the Borrower or any ERISA  Affiliate  from a  Multiemployer
Plan  sponsor  concerning  the  imposition  or  amount of  withdrawal  liability
pursuant to Section 4202 of ERISA and

                                       45

<PAGE>


(iv) the Borrower obtaining knowledge or reason to know that the Borrower or any
ERISA Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress  termination within the meaning of Section 4041(c)
of ERISA; and

     (g)  any event which makes any of the representations  set forth in Section
7.1 inaccurate in any respect.

     SECTION 8.5.  Accuracy of Information.  All written  information,  reports,
statements  and other papers and data  furnished by or on behalf of the Borrower
to the  Administrative  Agent or any Lender  (other  than  financial  forecasts)
whether  pursuant to this Article VIII or any other provision of this Agreement,
or any of  the  Security  Agreement,  shall  be,  at the  time  the  same  is so
furnished, complete and correct in all material respects to the extent necessary
to give the  Administrative  Agent or any  Lender  complete,  true and  accurate
knowledge of the subject matter based on the Borrower's knowledge thereof.

                                   ARTICLE IX
                                   ----------

                              AFFIRMATIVE COVENANTS
                              ---------------------

     Until all of the  Obligations  have been paid and satisfied in full and the
Credit  Facilities  terminated,  unless  consent has been obtained in the manner
provided  for  in  Section  14.11,   the  Borrower   hereby   covenants  to  the
Administrative Agent and Lenders that:

     SECTION 9.1.  Preservation  of  Corporate  Existence  and Related  Matters.
Except as  permitted  by  Section  11.4,  the  Borrower  will and will cause its
Consolidated  Subsidiaries  to preserve  and  maintain  its  separate  corporate
existence and all rights,  franchises,  licenses and privileges necessary to the
conduct  of  its  business,  and  qualify  and  remain  qualified  as a  foreign
corporation  and  authorized  to do business in each  jurisdiction  in which the
failure to so qualify would have a Material Adverse Effect.

     SECTION 9.2. Maintenance of Property.  The Borrower will and will cause its
Subsidiaries  to protect and preserve all  properties  useful in and material to
its  business,  including  copyrights,  patents,  trade  names  and  trademarks;
maintain in good working order and condition  (ordinary  wear and tear excepted)
all buildings,  equipment and other tangible real and personal property material
to its operations;  and from time to time make or cause to be made all renewals,
replacements  and  additions to such  property  necessary for the conduct of its
business as then  contemplated,  so that the business  carried on in  connection
therewith may be properly and advantageously conducted at all times.

     SECTION 9.3.  Insurance.  The Borrower will and will cause its Subsidiaries
to maintain insurance with financially sound and reputable  insurance  companies
against such risks and in such amounts as are customarily  maintained by similar
businesses and as may be required by Applicable Law and the Security  Agreement,
and on the  Closing  Date  and  from  time to  time  thereafter  deliver  to the
Administrative  Agent upon its request a detailed list of the insurance  then in
effect,  stating the names of the insurance companies,  the amounts and rates of
the insurance,  the dates of the expiration thereof and the properties and risks
covered thereby.

                                       46

<PAGE>


     SECTION 9.4.  Accounting Methods and Financial  Records.  The Borrower will
and will cause its  Subsidiaries  to maintain a system of  accounting,  and keep
such  books,  records  and  accounts  (which  shall be true and  complete in all
material  respects)  as may be  required  or as may be  necessary  to permit the
preparation  of financial  statements in accordance  with GAAP and in compliance
with the regulations of any Governmental  Authority having  jurisdiction over it
or any of its properties.

     SECTION 9.5. Payment and Performance of Obligations.  The Borrower will and
will  cause its  Subsidiaries  to pay and  perform  all  Obligations  under this
Agreement and the other Loan  Documents,  and, except for matters that could not
reasonably be expected to have a Material Adverse Effect, pay or perform (a) all
taxes, assessments and other governmental charges that may be levied or assessed
upon it or any of its property, and (b) all other indebtedness,  obligations and
liabilities in accordance with customary  trade  practices;  provided,  that the
Borrower or such  Subsidiary  may contest any item described in this Section 9.5
in good faith so long as adequate  reserves are maintained  with respect thereto
in accordance with GAAP.

     SECTION 9.6. Compliance With Laws and Approvals. The Borrower will and will
cause its  Subsidiaries  to observe and remain in compliance with all Applicable
Laws and maintain in full force and effect all Governmental  Approvals,  in each
case applicable to the conduct of its business except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect..

     SECTION 9.7.  Environmental  Laws. In addition to and without  limiting the
generality  of Section 9.6 and except for matters that could not  reasonably  be
expected to have a Material Adverse Effect, the Borrower will and will cause its
Subsidiaries  to (a) comply with, and ensure such  compliance by all tenants and
subtenants,  if any,  with,  all  applicable  Environmental  Laws and obtain and
comply with and maintain,  and ensure that all tenants and subtenants obtain and
comply  with  and  maintain,  any and all  licenses,  approvals,  notifications,
registrations  or permits  required  by  applicable  Environmental  Laws and (b)
conduct and complete all investigations,  studies, sampling and testing, and all
remedial,  removal and other actions  required  under  Environmental  Laws,  and
promptly  comply  with all lawful  orders  and  directives  of any  Governmental
Authority regarding Environmental Laws.

     SECTION 9.8. Compliance with ERISA. In addition to and without limiting the
generality  of Section 9.6 and except for matters that could not  reasonably  be
expected to have a Material Adverse Effect, the Borrower will and will cause its
Subsidiaries  to (a)  comply  with all  applicable  provisions  of ERISA and the
regulations  and  published  interpretations  thereunder  with  respect  to  all
Employee  Benefit  Plans,  (b) not take any  action or fail to take  action  the
result of which could be a liability to the PBGC or to a Multiemployer Plan, (c)
not  participate  in any prohibited  transaction  that could result in any civil
penalty  under ERISA or tax under the Code,  (d) operate each  Employee  Benefit
Plan in such a manner that will not incur any tax liability  under Section 4980B
of the Code or any liability to any qualified  beneficiary as defined in Section
4980B  of the  Code  and  (e)  furnish  to the  Administrative  Agent  upon  the
Administrative  Agent's request such additional  information  about any Employee
Benefit Plan as may be reasonably requested by the Administrative Agent.

                                       47

<PAGE>


     SECTION 9.9. Compliance With Agreements. Except where the failure to comply
could not reasonably be expected to have a Material Adverse Effect, the Borrower
will and will cause its  Subsidiaries  to comply in all respects with each term,
condition and provision of all leases,  agreements and other instruments entered
into in the conduct of its business including,  without limitation, any Material
Contract;  provided,  that the Borrower or such  Subsidiary may contest any such
lease,   agreement  or  other  instrument  in  good  faith  through   applicable
proceedings so long as adequate reserves are maintained in accordance with GAAP.

     SECTION  9.10.  Conduct of Business.  The Borrower  will and will cause its
Consolidated Subsidiaries to engage only in businesses in substantially the same
fields as the businesses  conducted on the Closing Date and in lines of business
reasonably  related  thereto  and in lines of business  in which  Kinder  Morgan
Energy and the KMEP Operating  Subsidiaries are engaged. The Borrower will cause
Kinder  Morgan  Energy and the KMEP  Operating  Subsidiaries  to engage  only in
activities of the type and in such amounts as will allow Kinder Morgan Energy to
continue  to qualify  for an  exception  from  treatment  of a  publicly  traded
partnership as a corporation under Section 7704 of the Code.

     SECTION  9.11.  Visits  and  Inspections.  Permit  representatives  of  the
Administrative  Agent or any  Lender,  from time to time upon  notice and during
normal  business  hours to visit and inspect  its  properties  (such  visits and
inspections to occur not more  frequently  than once per Fiscal Quarter and in a
manner to avoid any disruption of its business  activities so long as no Default
or Event of Default has  occurred  or is  continuing);  inspect,  audit and make
extracts  from its books,  records  and files,  including,  but not  limited to,
management  letters  prepared by independent  accountants;  and discuss with its
principal  officers,  and its  independent  accountants,  its business,  assets,
liabilities, financial condition, results of operations and business prospects.

     SECTION 9.12. Additional Collateral.

     (a)  Upon  the  acquisition  by  the  Borrower  of  any  property  (real or
personal) or assets,  or the formation or  acquisition  of any new  Consolidated
Subsidiary,  cause to be executed and delivered to the  Administrative  Agent, a
Security  Agreement in form and  substance  satisfactory  to the  Administrative
Agent duly executed by the Borrower in favor of the Administrative Agent for the
ratable benefit of itself and the Lenders in order to secure the Obligations and
such other documents requested by the Administrative Agent to confirm all assets
of the Borrower constitute Collateral.

     (b)  Upon the delivery of any additional Security Agreements and Collateral
pursuant to this Section 9.12,  deliver to the  Administrative  Agent  favorable
legal  opinions  addressed to the  Administrative  Agent and Lenders in form and
substance  satisfactory  thereto with  respect to such  Security  Agreement  and
additional  Collateral and such other documents and closing  certificates as may
be  reasonably  requested  by  the  Administrative  Agent  or  Required  Lenders
consistent with the terms of Article VI.

     SECTION 9.13. Kinder Morgan G. P. Security Agreement. If the Leverage Ratio
pursuant to Section 10.1 of this  Agreement as of March 31, 1999 is greater than
2.5 to 1.0 as evidenced  by the  financial  statements  delivered to the Lenders
pursuant to Section 8.1(a), then, at

                                       48

<PAGE>


the Administrative  Agent's request, the Borrower shall cause Kinder Morgan G.P.
to execute and deliver to the  Administrative  Agent no later than ten (10) days
following  the date such  financial  statements  are  delivered (or in any event
within  five (5) days  following  the date such  statements  are  required to be
delivered),  a Security  Agreement  in form and  substance  satisfactory  to the
Administrative Agent granting to the Administrative Agent, for benefit of itself
and the Lenders, a security interest in the L.P. Units owned by Kinder Morgan G.
P.

     SECTION  9.14.  Further  Assurances.  Make,  execute  and  deliver all such
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender  may  reasonably  require to  document  and  consummate  the
transactions  contemplated  hereby  and to vest  completely  in and  insure  the
Administrative  Agent  and  the  Lenders  their  respective  rights  under  this
Agreement, the Notes, the Letters of Credit and the other Loan Documents.

                                    ARTICLE X
                                    ---------

                               FINANCIAL COVENANTS
                               -------------------

     Until all of the  Obligations  have been paid and satisfied in full and the
Credit Facilities terminated, unless consent has been obtained in the manner set
forth in Section 14.11 hereof, the Borrower will not:

     SECTION 10.1.  Leverage  Ratio.  As of the end of any Fiscal Quarter during
any period set forth below, permit the ratio of (a) Debt of the Borrower and its
Consolidated Subsidiaries as of such Fiscal Quarter end to (b) KMI Cash Flow for
the period of four (4) consecutive Fiscal Quarters ending on such Fiscal Quarter
end, to exceed the corresponding ratio set forth below:

                    Period                   Ratio
                    ------                   -----

           July 1, 1998 - June 30, 1999      3.50 to 1.00

           July 1, 1999 and thereafter       3.00 to 1.00

     SECTION 10.2.  Combined Leverage Ratio. As of the end of any Fiscal Quarter
during any period set forth below,  permit the ratio of (a) Combined  Debt as of
such  Fiscal  Quarter  End to (b)  KMEP  Cash  Flow for the  period  of four (4)
consecutive  Fiscal  Quarters  ending on such Fiscal  Quarter end, to exceed the
corresponding ratio set forth below:

                    Period                   Ratio
                    ------                   ----- 

           July 1, 1998 - June 30, 1999      4.50 to 1.00

           July 1, 1999 and thereafter       4.35 to 1.00

     SECTION 10.3 Interest  Coverage  Ratio. As of the end of any Fiscal Quarter
during any period set forth below, permit the ratio of (a) KMI Cash Flow for the
period of four (4) consecutive Fiscal Quarters ending on such Fiscal Quarter end
to (b) Interest Expense of the

                                       49

<PAGE>


Borrower  and its  Consolidated  Subsidiaries  for such four (4) Fiscal  Quarter
period, to be less than the corresponding ratio set forth below:

                    Period                   Ratio
                    ------                   -----
               
           July 1, 1998 - June 30, 1999      2.50 to 1.00

           July 1, 1999 and thereafter       3.00 to 1.00

     SECTION 10.4 Combined  Interest Coverage Ratio. As of the end of any Fiscal
Quarter  during any period  set forth  below,  permit the ratio of (a) KMEP Cash
Flow for the  period  of four (4)  consecutive  Fiscal  Quarters  ending on such
Fiscal  Quarter end to (b)  Combined  Interest  Expense for such four (4) Fiscal
Quarter period, to be less than the corresponding ratio set forth below:

                    Period                   Ratio
                    ------                     -----

           July 1, 1998 - June 30, 1999      2.50 to 1.00

           July 1, 1999 and thereafter       3.00 to 1.00

     For the  purposes  of  calculating  KMI Cash  Flow and  KMEP  Cash  Flow in
Sections 10.1 through and including  10.4 with respect to (i) the Fiscal Quarter
ending  September  30,  1998,  such KMI Cash Flow and KMEP Cash Flow shall equal
such KMI Cash Flow and KMEP Cash Flow for such  Fiscal  Quarter  times four (4),
(ii) the Fiscal  Quarter ending  December 31, 1998,  such KMI Cash Flow and KMEP
Cash Flow  shall  equal  such KMI Cash Flow and KMEP Cash Flow for the period of
two (2) consecutive  Fiscal Quarters ending on such Fiscal Quarter end times two
(2) and (iii) for the Fiscal Quarter  ending March 31, 1999,  such KMI Cash Flow
and KMEP Cash  Flow  shall  equal  such KMI Cash Flow and KMEP Cash Flow for the
period of three (3)  consecutive  Fiscal  Quarters ending on such Fiscal Quarter
end times four-thirds (4/3).

                                   ARTICLE XI
                                   ----------

                               NEGATIVE COVENANTS
                               ------------------

     Until all of the  Obligations  have been paid and satisfied in full and the
Credit Facilities terminated, unless consent has been obtained in the manner set
forth in Section 14.11 hereof, the Borrower covenants and agrees that:

     SECTION  11.1.  Limitations  on Debt.  The  Borrower  will not and will not
permit any of its Consolidated  Subsidiaries to create,  incur, assume or suffer
to exist any Debt except:

     (a)  the Obligations;

     (b)  Debt of the Borrower incurred in connection with any Hedging Agreement
with a counterparty and upon terms and conditions reasonably satisfactory to the
Administrative Agent;

                                       50

<PAGE>


     (c)  Debt of the Borrower and any of its Consolidated Subsidiaries existing
on the Closing Date and not otherwise  permitted under this Section 11.1, as set
forth on Schedule 7.1(s) and the renewal and refinancing  (but not the increase)
thereof;

     (d)  Debt incurred in connection  with  Capitalized  Leases in an aggregate
amount not to exceed in the case of the  Borrower,  $50,000,  and in the case of
its Consolidated Subsidiaries $600,000, on any date of determination;

     (e)  purchase money Debt of the Borrower and its Consolidated  Subsidiaries
in an aggregate amount not to exceed in the case of the Borrower,  $50,000,  and
in  the  case  of  its  Consolidated  Subsidiaries  $600,000,  on  any  date  of
determination;

     (f)  Debt of Kinder  Morgan  G.P. arising by  operation  of law solely as a
result of Kinder Morgan G.P.  being the general  partner of Kinder Morgan Energy
and any of the KMEP Operating  Subsidiaries or any other partnership of which it
is a partner;

     (g)  other Debt not to exceed in the case of the Borrower, $50,000,  and in
the case of its  Consolidated  Subsidiaries  $600,000,  in the  aggregate at any
time; and

     (h)  Debt permitted under Section 11.3.

provided,  that none of the Debt  permitted to be incurred by this Section shall
restrict,  limit or otherwise encumber (by covenant or otherwise) the ability of
any Subsidiary of the Borrower to make any payment to the Borrower or any of its
Subsidiaries (in the form of dividends,  intercompany advances or otherwise) for
the purpose of enabling the Borrower to pay the Obligations.

     SECTION  11.2.  Limitations  on Liens.  The Borrower  will not and will not
permit  its  Consolidated  Subsidiaries  to create,  incur,  assume or suffer to
exist, any Lien on or with respect to any of its assets or properties (including
without  limitation  shares of  Capital  Stock,  L.P.  Units or other  ownership
interests), real or personal, whether now owned or hereafter acquired, except:

     (a)  Liens for taxes, assessments and other governmental  charges or levies
not yet due or as to which the period of grace, if any,  related thereto has not
expired  or  which  are  being  contested  in  good  faith  and  by  appropriate
proceedings if adequate reserves are maintained to the extent required by GAAP;

     (b)  the  claims  of  materialmen,   mechanics,   carriers,   warehousemen,
processors or landlords for labor,  materials,  supplies or rentals  incurred in
the ordinary course of business,  (i) which are not overdue for a period of more
than  thirty  (30) days or (ii) which are being  contested  in good faith and by
appropriate proceedings;

     (c)  Liens consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar legislation or obligations under
customer service contracts;

                                       51

<PAGE>


     (d)  Liens constituting encumbrances in the nature of zoning  restrictions,
easements  and  rights or  restrictions  of record on the use of real  property,
which in the  aggregate are not  substantial  in amount and which do not, in any
case,  detract from the value of such  property or impair the use thereof in the
ordinary conduct of business;

     (e)  Liens in favor of the Administrative  Agent for the ratable benefit of
the Administrative Agent and the Lenders;

     (f)  Liens not otherwise permitted by this Section 11.2 and in existence on
the  Closing  Date and  described  on  Schedule  11.2;  and the  replacement  or
extension  thereof to the extent  the  related  Debt is  permitted  pursuant  to
Section 11.1(c);

     (g)  Judgment Liens which do not create an Event of Default under  Sections
12.1(m) or (o); and

     (h)  Liens securing  Debt  permitted  under Section  11.1(d),  (e) and (g);
provided that (i) such Liens shall be created substantially  simultaneously with
the  acquisition  of the  related  asset,  (ii)  such  Liens  do not at any time
encumber any property other than the property  financed by such Debt,  (iii) the
amount of Debt secured thereby is not increased and (iv) the principal amount of
Debt secured by any such Lien shall at no time exceed one hundred percent (100%)
of the original purchase price of such property at the time it was acquired.

     SECTION 11.3. Limitations on Loans, Advances, Investments and Acquisitions.
The Borrower will not and will not permit any of its  Consolidated  Subsidiaries
to purchase,  own, invest in or otherwise acquire,  directly or indirectly,  any
Capital Stock,  interests in any partnership or joint venture (including without
limitation the creation or capitalization  of any Subsidiary),  evidence of Debt
or other obligation or security,  substantially all or a portion of the business
or assets of any other Person or any other investment or interest  whatsoever in
any other Person, or make or permit to exist, directly or indirectly, any loans,
advances or extensions of credit to, or any investment in cash or by delivery of
property in, any Person, or enter into,  directly or indirectly,  any commitment
or option in respect of the foregoing except:

     (a)  investments in Subsidiaries existing on the Closing Date, intercompany
loans and advances  between the Borrower and its  Consolidated  Subsidiaries and
the other existing loans, advances and investments described on Schedule 11.3;

     (b)  investments  in  (i)   marketable   direct   obligations   issued   or
unconditionally guaranteed by the United States of America or any agency thereof
maturing  within  one (1)  year  from  the  date of  acquisition  thereof,  (ii)
commercial  paper  maturing  no more than one (1) year from the date of creation
thereof and  currently  having one of the two highest  ratings  obtainable  from
either Standard & Poor's  Rating's Group, a Division of McGraw-Hill  Corporation
or Moody's Investors  Service,  Inc., (iii)  certificates of deposit maturing no
more than one (1) year from the date of creation  thereof  issued by  commercial
banks incorporated  under the laws of the United States of America,  each having
combined  capital,  surplus and undivided  profits of not less than $500,000,000
and having a rating of "A" or better by a nationally  recognized  rating  agency
(collectively, "Cash

                                       52

<PAGE>


Equivalents"); provided, that the aggregate amount invested in such certificates
of deposit shall not at any time exceed  $5,000,000 for any one such certificate
of deposit and $10,000,000 for any one such bank, or (iv) time deposits maturing
no more than 30 days from the date of creation  thereof with commercial banks or
savings banks or savings and loan  associations each having membership either in
the FDIC or the  deposits  of which are  insured by the FDIC and in amounts  not
exceeding the maximum amounts of insurance thereunder;

     (c)  investments by the Borrower or any Consolidated Subsidiary in the form
of  acquisitions  of all or  substantially  all of  the  business  or a line  of
business (whether by the acquisition of Capital Stock, assets or any combination
thereof) of any other Person if such acquisition has been previously approved in
writing by the Required Lenders;

     (d)  investments by the Borrower or any Consolidated Subsidiary in the form
of capital  contributions  as required by the  partnership  agreements of Kinder
Morgan Energy,  the KMEP  Operating  Subsidiaries  and any other  partnership of
which the  Borrower  or any of its  Consolidated  Subsidiaries  is or  becomes a
partner; provided, that (i) the direct ownership interest of the Borrower or any
such  Consolidated  Subsidiary in each such partnership is not greater than 2.0%
and  (ii)  the  Borrower   shall   demonstrate  to  the   satisfaction   of  the
Administrative Agent pro forma compliance with the financial covenants contained
in Article X after giving pro forma effect to such investment; and

     (e)  investments by the Borrower or any Consolidated  Subsidiary in respect
of the creation of any additional  Subsidiaries except for Subsidiaries with the
following  characteristics:  (i) the  Subsidiaries  are  Subsidiaries  of Kinder
Morgan Energy,  (ii) the Borrower is not a partner or member of such Subsidiary,
and (iii) if Kinder  Morgan G.P. is a partner or member of such  Subsidiary  its
direct ownership interest is not greater than 2.0%.

     SECTION 11.4. Limitations on Mergers and Liquidation. The Borrower will not
and will not permit any of its Consolidated  Subsidiaries to merge,  consolidate
or enter  into any  similar  combination  with any other  Person  or  liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution) except:

     (a)  any Wholly-Owned Subsidiary of the Borrower may merge with or be wound
up into the Borrower or any other  Wholly-Owned  Subsidiary  of the Borrower (as
long as the  Borrower is the  survivor  of any such  transaction  involving  the
Borrower); and

     (b)  any   Wholly-Owned   Subsidiary  may   merge  into  the  Person   such
Wholly-Owned  Subsidiary was formed to acquire in connection with an acquisition
permitted by Section 11.3(c).

     SECTION 11.5. Limitations on Sale of Assets. The Borrower will not and will
not  permit  its  Consolidated  Subsidiaries  to convey,  sell,  lease,  assign,
transfer  or  otherwise  dispose  of any of its  property,  business  or  assets
(including,  without  limitation,  the  sale of any  receivables  and  leasehold
interests and any sale-leaseback or similar  transaction),  whether now owned or
hereafter acquired except:

     (a)  the sale of Inventory in the ordinary course of business;

                                       53

<PAGE>


     (b)  the  sale  of obsolete assets no longer used or usable in the business
of the Borrower or any of its Consolidated Subsidiaries;

     (c)  the transfer of assets to the Borrower or any Wholly-Owned  Subsidiary
of the Borrower pursuant to Section 11.4(a);

     (d)  the sale or discount without recourse of accounts  receivable  arising
in the  ordinary  course  of  business  in  connection  with the  compromise  or
collection thereof;

     (e)  the  sale or  disposition  of  assets  by the  Borrower  or any of its
Consolidated  Subsidiaries  in the  ordinary  course of business in an aggregate
amount not to exceed $500,000 at any time during the term of this Agreement;

     (f)  any  other  sale  or  disposition  of  assets  by the  Borrower  or it
Consolidated Subsidiaries in the ordinary course of business, as long as the Net
Cash Proceeds are applied as set forth in Section 5.4(d); and

     (g)  the sale or disposition of assets as permitted by Section 11.6.

     SECTION 11.6. Limitations on Dividends and Distributions. The Borrower will
not and will not permit any of its  Consolidated  Subsidiaries to declare or pay
any  dividends  upon any of its  Capital  Stock;  purchase,  redeem,  retire  or
otherwise acquire,  directly or indirectly,  any shares of its Capital Stock, or
make any distribution of cash, property or assets among the holders of shares of
its  Capital  Stock,  or make any  change in its  capital  structure  that could
reasonably be expected to have a Material Adverse Effect; provided that:

     (a)  the Borrower may pay the KMI Dividend;

     (b)  the  Borrower  or  any Consolidated  Subsidiary may  pay dividends  in
shares of its own Capital Stock;

     (c)  any  Consolidated  Subsidiary  may pay cash dividends to the Borrower;
and

     (d)  the  Borrower  may  from  time  to  time  pay  cash  dividends  to its
shareholders  or redeem  shares of its Capital  Stock in an amount  equal to any
remaining  Excess Cash Flow after all mandatory  prepayments of Excess Cash Flow
then due have been made pursuant to Section 5.4(f) and Section 5.4(g)(ii).

     SECTION 11.7.  Limitations on Exchange and Issuance of Capital  Stock.  The
Borrower  will not and  will not  permit  any of its  Consolidated  Subsidiaries
hereafter  to (a)  issue,  sell or  otherwise  dispose of any class or series of
Capital  Stock that,  by its terms or by the terms of any security into which it
is convertible or exchangeable, is, or upon the happening of an event or passage
of time would be, (i) convertible or exchangeable  into Debt or (ii) required to
be redeemed or repurchased,  including at the option of the holder,  in whole or
in part,  or has,  or upon the  happening  of an event or  passage of time would
have, a redemption or similar payment due or (b)

                                       54

<PAGE>


issue any Capital Stock of a Subsidiary  (excluding Kinder Morgan Energy and its
Subsidiaries) except to the Borrower and Kinder Morgan G.P.

     SECTION 11.8. Transactions with Affiliates.  Except as provided on Schedule
11.8,  the  Borrower  will not and will not permit any  Consolidated  Subsidiary
thereof to directly or indirectly:  (a) make any loan or advance to, or purchase
or  assume  any  note or  other  obligation  to or  from,  any of its  officers,
directors,  shareholders  or other  Affiliates,  or to or from any member of the
immediate  family  of any of its  officers,  directors,  shareholders  or  other
Affiliates, or subcontract any operations to any of its Affiliates, or (b) enter
into,  or be a party to,  any  transaction  with any of its  Affiliates,  except
pursuant  to the  reasonable  requirements  of its  business  and upon  fair and
reasonable  terms  that are no less  favorable  to it than it would  obtain in a
comparable arm's length transaction with a Person not its Affiliate.

     SECTION 11.9.  Certain Accounting  Changes.  The Borrower will not and will
not permit any of its  Consolidated  Subsidiaries to change its Fiscal Year end,
or make any change in its accounting treatment and reporting practices except as
required by GAAP.

     SECTION  11.10.  Material  Amendments.  The Borrower  will not and will not
permit any of its  Consolidated  Subsidiaries to amend or modify its articles of
incorporation,   by-laws,  corporate  structure,   capitalization,   partnership
agreements or any other agreement  relating to its partnership  interests in any
way that could reasonably be expected to have a Material Adverse Effect.

     SECTION 11.11.  Operating Leases. The Borrower will not and will not permit
any of its Consolidated Subsidiaries to enter into lease agreements (whether for
real or personal property), other than Capital Leases, under which the aggregate
amount of all lease payments pursuant to such lease agreements exceed $50,000 in
the  case  of the  Borrower  and  $600,000  in  the  case  of  its  Consolidated
Subsidiaries in any period of twelve (12) consecutive calendar months.

     SECTION 11.12.  Restrictive Agreements.  The Borrower will not and will not
permit  any of its  Consolidated  Subsidiaries  to enter  into  any  Debt  which
contains  any  negative  pledge  on the  assets  of the  Borrower  or any of its
Consolidated  Subsidiaries or any covenants materially more restrictive than the
provisions  of  Articles  IX, X and XI  hereof,  or which  restricts,  limits or
otherwise  encumbers its ability to incur Liens on or with respect to any of its
assets or properties other than the assets or properties securing such Debt.

                                   ARTICLE XII
                                   -----------

                              DEFAULT AND REMEDIES
                              --------------------

     SECTION 12.1. Events of Default.  Each of the following shall constitute an
Event of  Default,  whatever  the reason for such event and  whether it shall be
voluntary or  involuntary  or be effected by operation of law or pursuant to any
judgment  or  order  of any  court  or any  order,  rule  or  regulation  of any
Governmental Authority or otherwise:

                                       55

<PAGE>


     (a)  Default   in  Payment  of   Principal  of   Loans  and   Reimbursement
Obligations. The Borrower shall default in any payment of principal of any Loan,
Note or Reimbursement Obligation when and as due (whether at maturity, by reason
of acceleration or otherwise).

     (b)  Other Payment Default.  The Borrower shall default in the payment when
and as due (whether at maturity,  by reason of  acceleration  or  otherwise)  of
interest on any Loan,  Note or  Reimbursement  Obligation  or the payment of any
other  Obligation,  and such default  shall  continue  unremedied  for three (3)
Business Days.

     (c)  Misrepresentation.   Any representation or warranty made or deemed  to
be made by the  Borrower  or any of its  Consolidated  Subsidiaries  under  this
Agreement,  any Loan Document or any amendment  hereto or thereto,  shall at any
time prove to have been  incorrect or  misleading  in any material  respect when
made or deemed made.

     (d)  Default in Performance of Certain  Covenants.    The   Borrower  shall
default in the performance or observance of any covenant or agreement  contained
in Sections 8.4(e) or Articles X or XI of this Agreement.

     (e)  Default in Performance of Other Covenants and Conditions. The Borrower
or any of its  Consolidated  Subsidiaries  shall default in the  performance  or
observance  of any term,  covenant,  condition  or  agreement  contained in this
Agreement  (other than as  specifically  provided for  otherwise in this Section
12.1) or any other Loan Document and such default shall continue for a period of
thirty (30) days after written  notice thereof has been given to the Borrower by
the Administrative Agent.

     (f)  Hedging Agreement.   Any  termination  payment  shall  be  due  by the
Borrower under any Hedging Agreement and such amount is not paid within Five (5)
Business Days of the due date thereof.

     (g)  Debt Cross-Default.     The  Borrower  or  any  of  its   Consolidated
Subsidiaries  shall (i) default in the payment of any Debt (other than the Notes
or any Reimbursement  Obligation) the aggregate outstanding amount of which Debt
is in excess of  $300,000  beyond  the period of grace if any,  provided  in the
instrument  or agreement  under which such Debt was created,  or (ii) default in
the observance or performance  of any other  agreement or condition  relating to
any Debt (other than the Notes or any  Reimbursement  Obligation)  the aggregate
outstanding  amount of which Debt is in excess of $300,000 or  contained  in any
instrument or agreement  evidencing,  securing or relating  thereto or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause,  or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause,  with the giving
of notice if required,  any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).

     (h)  Change in Control.  Any person or group of persons (within the meaning
of Section 13(d) of the Securities Exchange Act of 1934, as amended), other than
Richard D. Kinder and William V. Morgan  (directly or  indirectly)  shall obtain
ownership  or control in one or more series of  transactions  of more than fifty
percent (50%) of the common stock or fifty

                                       56

<PAGE>


percent  (50%) of the  voting  power  of the  Borrower  entitled  to vote in the
election of the board of directors of the Borrower (any such event, a "Change of
Control").

     (i)  Voluntary  Bankruptcy  Proceeding.  The Borrower  shall (i) commence a
voluntary  case  under  the  federal  bankruptcy  laws (as now or  hereafter  in
effect),  (ii) file a petition  seeking  to take  advantage  of any other  laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition  for adjustment of debts,  (iii) consent to or fail to contest
in a  timely  and  appropriate  manner  any  petition  filed  against  it  in an
involuntary  case under such  bankruptcy  laws or other laws,  (iv) apply for or
consent  to,  or fail  to  contest  in a  timely  and  appropriate  manner,  the
appointment of, or the taking of possession by, a receiver,  custodian, trustee,
or liquidator of itself or of a  substantial  part of its property,  domestic or
foreign, (v) admit in writing its inability to pay its debts as they become due,
(vi) make a general  assignment for the benefit of creditors,  or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.

     (j)  Involuntary Bankruptcy Proceeding.   A case or  other proceeding shall
be commenced against the Borrower in any court of competent jurisdiction seeking
(i) relief under the federal  bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign,  relating to bankruptcy,  insolvency,
reorganization,  winding up or adjustment of debts, or (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like for the Borrower or for all
or any  substantial  part of its assets,  domestic or foreign,  and such case or
proceeding  shall  continue  undismissed  or unstayed for a period of sixty (60)
consecutive  days,  or an order  granting  the relief  requested in such case or
proceeding  (including,  but not  limited  to, an order for  relief  under  such
federal bankruptcy laws) shall be entered.

     (k)  Failure of Agreements.   Any  provision  of  this  Agreement or of any
other Loan  Document  shall for any reason  cease to be valid and binding in all
material respects on the Borrower or Subsidiary party thereto or any such Person
shall so state in writing,  or this  Agreement or any other Loan Document  shall
for any reason cease to create a valid and perfected  first priority Lien on, or
security interest in, any of the collateral  purported to be covered thereby, in
each case other than in accordance with the express terms hereof or thereof.

     (l)  Termination Event. The occurrence of any of the following events:  (i)
the Borrower or any ERISA  Affiliate  fails to make full payment when due of all
amounts  which,  under the  provisions of any Pension Plan or Section 412 of the
Code,  the Borrower or any ERISA  Affiliate is required to pay as  contributions
thereto,  (ii) an accumulated  funding deficiency in excess of $5,000,000 occurs
or exists,  whether or not waived,  with  respect to any Pension  Plan,  (iii) a
Termination Event or (iv) the Borrower or any ERISA Affiliate as employers under
one or more  Multiemployer  Plan makes a complete or partial withdrawal from any
such  Multiemployer  Plan  and the  plan  sponsor  of such  Multiemployer  Plans
notifies such withdrawing  employer that such employer has incurred a withdrawal
liability requiring payments in an amount exceeding $5,000,000.

     (m)  Judgment.  A judgment or order for the payment  of money which  causes
the aggregate  amount of all such  judgments to exceed  $5,000,000 in any Fiscal
Year shall be entered

                                       57

<PAGE>


against the Borrower or any of its  Consolidated  Subsidiaries  by any court and
such judgment or order shall continue  undischarged,  unstayed or unbonded for a
period of thirty (30) days.

     (o)  Kinder Morgan G.P., etc.  Kinder Morgan G.P. or any other Consolidated
Subsidiary  takes,  suffers or permits to exist any of the events or  conditions
referred to in paragraphs (i), (j) or (m).

     (p)  Kinder Morgan Energy,  etc.  Kinder Morgan  Energy, the KMEP Operating
Subsidiaries or any of their respective  Subsidiaries takes,  suffers or permits
to exist any of the events or conditions  referred to in  paragraphs  (i) or (j)
hereof which would result in a Material  Adverse Effect for Kinder Morgan Energy
and its Subsidiaries taken as a whole.

     (q)  Kinder Morgan Energy, etc.  Debt Cross-Default.Kinder Morgan Energy or
any of its  Subsidiaries  shall default in the payment when due of any principal
of or  interest  on any of its Debt,  the  aggregate  amount of which  equals or
exceeds $5,000,000.

     SECTION 12.2. Remedies.  Upon the occurrence and continuance of an Event of
Default, with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders,  the Administrative Agent shall, by
notice to the Borrower:

     (a)  Acceleration; Termination of Credit Facilities.  Declare the principal
of and interest on the Loans, the Notes and the Reimbursement Obligations at the
time  outstanding,  and  all  other  amounts  owed  to  the  Lenders  and to the
Administrative  Agent under this  Agreement  or any of the other Loan  Documents
(including,  without  limitation,  all  L/C  Obligations,  whether  or  not  the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required  thereunder) and all other  Obligations,  to be forthwith due
and payable, whereupon the same shall immediately become due and payable without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
expressly waived,  anything in this Agreement or the other Loan Documents to the
contrary  notwithstanding,  and terminate the Credit Facilities;  provided, that
upon the occurrence of an Event of Default  specified in Section 12.1(i) or (j),
the Credit  Facilities  shall be  automatically  terminated and all  Obligations
shall automatically become due and payable.

     (b)  Letters of Credit.  With respect to all Letters of Credit with respect
to  which  presentment  for  honor  shall  not have  occurred  at the time of an
acceleration  pursuant to the preceding paragraph,  require the Borrower at such
time to deposit in a cash collateral account opened by the Administrative  Agent
an amount in cash equal to the aggregate  then undrawn and  unexpired  amount of
such Letters of Credit.  Amounts held in such cash  collateral  account shall be
applied by the  Administrative  Agent to the payment of drafts  drawn under such
Letters of Credit,  and the unused  portion  thereof  after all such  Letters of
Credit shall have expired or been fully drawn upon, if any,  shall be applied to
repay the other Obligations. After all such Letters of Credit shall have expired
or been fully drawn upon, the Reimbursement Obligation shall have been satisfied
and all other Obligations shall have been paid in full, the balance,  if any, in
such cash collateral account shall be returned to the Borrower.

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<PAGE>


     (c)  Rights of Collection.  Exercise  on behalf of the  Lenders  all of its
other rights and remedies  under this  Agreement,  the other Loan  Documents and
Applicable Law, in order to satisfy all of the Borrower's Obligations.

     SECTION  12.3.  Rights  and  Remedies  Cumulative;  Non-Waiver;  etc..  The
enumeration  of the  rights and  remedies  of the  Administrative  Agent and the
Lenders set forth in this  Agreement  is not intended to be  exhaustive  and the
exercise  by the  Administrative  Agent and the  Lenders  of any right or remedy
shall not preclude  the  exercise of any other rights or remedies,  all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter  exist in law
or in equity or by suit or otherwise.  No delay or failure to take action on the
part of the Administrative Agent or any Lender in exercising any right, power or
privilege  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any  such  right,  power or  privilege  preclude  other or  further
exercise thereof or the exercise of any other right, power or privilege or shall
be  construed  to be a waiver of any  Event of  Default.  No  course of  dealing
between  the  Borrower,  the  Administrative  Agent  and the  Lenders  or  their
respective agents or employees shall be effective to change, modify or discharge
any  provision  of this  Agreement  or any of the  other  Loan  Documents  or to
constitute a waiver of any Event of Default.

                                  ARTICLE XIII
                                  ------------

                            THE ADMINISTRATIVE AGENT
                            ------------------------

     SECTION  13.1.   Appointment.   Each  of  the  Lenders  hereby  irrevocably
designates and appoints First Union as Administrative Agent of such Lender under
this  Agreement and the other Loan  Documents  and each such Lender  irrevocably
authorizes  First Union as  Administrative  Agent for such Lender,  to take such
action on its behalf under the  provisions of this  Agreement and the other Loan
Documents  and to exercise  such powers and perform such duties as are expressly
delegated to the  Administrative  Agent by the terms of this  Agreement and such
other  Loan  Documents,  together  with  such  other  powers  as are  reasonably
incidental  thereto.  Notwithstanding any provision to the contrary elsewhere in
this Agreement or such other Loan Documents,  the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein,  or  any  fiduciary  relationship  with  any  Lender,  and  no  implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this  Agreement  or the other Loan  Documents  or  otherwise  exist
against the Administrative Agent.

     SECTION 13.2.  Delegation of Duties. The  Administrative  Agent may execute
any of its  respective  duties under this Agreement and the other Loan Documents
by or through  agents or  attorneys-in-fact  and shall be  entitled to advice of
counsel  concerning all matters  pertaining to such duties.  The  Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by the Administrative Agent with reasonable care.

     SECTION 13.3. Exculpatory Provisions.  Neither the Administrative Agent nor
any  of  its  officers,   directors,   employees,   agents,   attorneys-in-fact,
Subsidiaries or Affiliates  shall be (a) liable for any action lawfully taken or
omitted  to be  taken by it or such  Person  under or in  connection  with  this
Agreement or the other Loan Documents  (except for actions  occasioned solely by
its or such

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<PAGE>


Person's own gross negligence or willful misconduct),  or (b) responsible in any
manner to any of the Lenders for any recitals,  statements,  representations  or
warranties  made  by the  Borrower  or any of its  Subsidiaries  or any  officer
thereof  contained  in this  Agreement  or the other  Loan  Documents  or in any
certificate, report, statement or other document referred to or provided for in,
or  received  by the  Administrative  Agent under or in  connection  with,  this
Agreement or the other Loan Documents or for the value, validity, effectiveness,
genuineness,  enforceability  or sufficiency of this Agreement or the other Loan
Documents  or for any  failure of the  Borrower  or any of its  Subsidiaries  to
perform its obligations hereunder or thereunder.  The Administrative Agent shall
not be under any  obligation  to any Lender to ascertain or to inquire as to the
observance or performance  of any of the agreements  contained in, or conditions
of,  this  Agreement,  or to  inspect  the  properties,  books or records of the
Borrower or any of its Subsidiaries.

     SECTION 13.4.  Reliance by the  Administrative  Agent.  The  Administrative
Agent shall be entitled to rely, and shall be fully  protected in relying,  upon
any note, writing, resolution, notice, consent, certificate,  affidavit, letter,
cablegram,  telegram,  telecopy, telex or teletype message,  statement, order or
other document or  conversation  believed by it to be genuine and correct and to
have been signed,  sent or made by the proper  Person or Persons and upon advice
and statements of legal counsel (including,  without limitation,  counsel to the
Borrower),   independent   accountants   and  other  experts   selected  by  the
Administrative  Agent. The Administrative  Agent may deem and treat the payee of
any Note as the owner thereof for all purposes  unless such Note shall have been
transferred in accordance with Section 14.10 hereof.  The  Administrative  Agent
shall be fully  justified  in failing or refusing to take any action  under this
Agreement and the other Loan Documents unless it shall first receive such advice
or concurrence of the Required Lenders (or, when expressly required hereby or by
the relevant other Loan Document, all the Lenders) as it deems appropriate or it
shall first be indemnified to its  satisfaction  by the Lenders  against any and
all  liability  and  expense  which may be incurred by it by reason of taking or
continuing  to take any such  action  except  for its own  gross  negligence  or
willful  misconduct.  The  Administrative  Agent  shall  in all  cases  be fully
protected in acting, or in refraining from acting,  under this Agreement and the
Notes in accordance  with a request of the Required  Lenders (or, when expressly
required  hereby,  all the  Lenders),  and such  request and any action taken or
failure to act  pursuant  thereto  shall be binding upon all the Lenders and all
future holders of the Notes.

     SECTION  13.5.  Notice of Default.  The  Administrative  Agent shall not be
deemed to have  knowledge or notice of the occurrence of any Default or Event of
Default  hereunder  unless it has received  notice from a Lender or the Borrower
referring  to this  Agreement,  describing  such Default or Event of Default and
stating  that such  notice  is a  "notice  of  default".  In the event  that the
Administrative  Agent  receives  such a notice,  it shall  promptly  give notice
thereof to the  Lenders.  The  Administrative  Agent shall take such action with
respect to such Default or Event of Default as shall be  reasonably  directed by
the Required Lenders;  provided that unless and until the  Administrative  Agent
shall have received such directions, the Administrative Agent may (but shall not
be  obligated  to) take such action,  or refrain  from taking such action,  with
respect to such  Default or Event of Default as it shall deem  advisable  in the
best interests of the Lenders.

     SECTION 13.6.  Non-Reliance on the Administrative  Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its respective officers,  directors,  employees,  agents,  attorneys-in-fact,
Subsidiaries or Affiliates has made any

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<PAGE>


representations or warranties to it and that no act by the Administrative  Agent
hereinafter taken, including any review of the affairs of the Borrower or any of
its Subsidiaries,  shall be deemed to constitute any  representation or warranty
by the  Administrative  Agent  to any  Lender.  Each  Lender  represents  to the
Administrative  Agent that it has,  independently  and without reliance upon the
Administrative  Agent or any  other  Lender,  and  based on such  documents  and
information  as it  has  deemed  appropriate,  made  its  own  appraisal  of and
investigation  into the  business,  operations,  property,  financial  and other
condition and creditworthiness of the Borrower and its Subsidiaries and made its
own  decision  to make its Loans and  issue or  participate  in Letter of Credit
hereunder and enter into this  Agreement.  Each Lender also  represents  that it
will,  independently and without reliance upon the  Administrative  Agent or any
other  Lender,  and based on such  documents  and  information  as it shall deem
appropriate at the time,  continue to make its own credit  analysis,  appraisals
and decisions in taking or not taking action under this  Agreement and the other
Loan Documents,  and to make such  investigation as it deems necessary to inform
itself as to the business,  operations,  property, financial and other condition
and  creditworthiness of the Borrower and its Subsidiaries.  Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the  Administrative  Agent  hereunder  or  by  the  other  Loan  Documents,  the
Administrative  Agent shall not have any duty or  responsibility  to provide any
Lender with any credit or other information concerning the business, operations,
property,  financial and other condition or  creditworthiness of the Borrower or
any of its Subsidiaries which may come into the possession of the Administrative
Agent  or  any  of  its  respective  officers,  directors,   employees,  agents,
attorneys-in-fact, Subsidiaries or Affiliates.

     SECTION  13.7.   Indemnification.   The  Lenders  agree  to  indemnify  the
Administrative  Agent in its capacity as such and (to the extent not  reimbursed
by the Borrower and without  limiting the  obligation of the Borrower to do so),
ratably according to their respective Extensions of Credit, from and against any
and  all  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits, costs, expenses or disbursements of any kind whatsoever which
may at any  time  (including,  without  limitation,  at any time  following  the
payment of the Notes or any Reimbursement Obligation) be imposed on, incurred by
or asserted against the  Administrative  Agent in any way relating to or arising
out of this Agreement or the other Loan Documents, or any documents contemplated
by or referred to herein or therein or the transactions  contemplated  hereby or
thereby or any action taken or omitted by the  Administrative  Agent under or in
connection  with any of the  foregoing;  provided that no Lender shall be liable
for the  payment  of any  portion  of  such  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Administrative  Agent's bad faith, gross negligence or
willful  misconduct.  The  agreements  in this  Section  13.7 shall  survive the
payment of the Notes, any Reimbursement Obligation and all other amounts payable
hereunder and the termination of this Agreement.

     SECTION 13.8.  The  Administrative  Agent in Its Individual  Capacity.  The
Administrative  Agent and its  respective  Subsidiaries  and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrower as though the Administrative Agent were not an Administrative Agent
hereunder.  With respect to any  Extensions  of Credit made or renewed by it and
any Note issued to it, the  Administrative  Agent shall have the same rights and
powers under this  Agreement and the other Loan  Documents as any Lender and may
exercise the same as though it were not an  Administrative  Agent, and the terms
"Lender" and "Lenders" shall include the Administrative  Agent in its individual
capacity.

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<PAGE>


     SECTION  13.9.   Resignation  of  the   Administrative   Agent;   Successor
Administrative  Agent.  Subject to the appointment and acceptance of a successor
as provided  below,  the  Administrative  Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower.  Upon any such resignation,  the
Required  Lenders  shall  have the right to appoint a  successor  Administrative
Agent,  which  successor  shall have  minimum  capital  and  surplus of at least
$500,000,000.  If no successor Administrative Agent shall have been so appointed
by the Required Lenders and shall have accepted such  appointment  within thirty
(30) days after the Administrative Agent's giving of notice of resignation, then
the  Administrative  Agent may,  on behalf of the  Lenders,  appoint a successor
Administrative  Agent, which successor shall have minimum capital and surplus of
at least $500,000,000.  Upon the acceptance of any appointment as Administrative
Agent   hereunder  by  a  successor   Administrative   Agent,   such   successor
Administrative  Agent  shall  thereupon  succeed to and become  vested  with all
rights, powers,  privileges and duties of the retiring Administrative Agent, and
the  retiring  Administrative  Agent  shall be  discharged  from its  duties and
obligations  hereunder.  After any retiring  Administrative  Agent's resignation
hereunder as  Administrative  Agent,  the  provisions of this Section 13.9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.

                                   ARTICLE XIV
                                   -----------

                                  MISCELLANEOUS
                                  -------------

     SECTION 14.1. Notices.

     (a)  Method  of  Communication.   Except  as  otherwise  provided  in  this
Agreement,  all notices and communications  hereunder shall be in writing, or by
telephone  subsequently  confirmed in writing.  Any notice shall be effective if
delivered by hand delivery or sent via telecopy,  recognized  overnight  courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party  hereto (i) on the date of delivery if  delivered by hand or
sent by telecopy,  (ii) on the next Business Day if sent by recognized overnight
courier  service and (iii) on the third  Business Day following the date sent by
certified  mail,   return  receipt   requested.   A  telephonic  notice  to  the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the  controlling  and  proper  notice in the event of a  discrepancy  with or
failure to receive a confirming written notice.

     (b)  Addresses for Notices.   Notices  to any party shall be sent to it  at
the following addresses,  or any other address as to which all the other parties
are notified in writing.

     If to the Borrower:           Kinder Morgan, Inc.
                                   1301 McKinney Street
                                   Suite 3450
                                   Houston, Texas  77010
                                   Attention:  Richard D. Kinder
                                   Telephone No.(713) 844-9500
                                   Telecopy No.:(713) 844-9570

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<PAGE>


     If to First Union as          First Union National Bank
        Administrative Agent:      One First Union Center, DC-4
                                   301 South College Street
                                   Charlotte, North Carolina 28288-0608
                                   Attention:  Syndication Agency Services
                                   Telephone No.: (704) 374-2698
                                   Telecopy No.: (704) 383-0288


     If to any Lender:             To the Address set forth on
                                           Schedule 1 hereto

     (c)  Administrative   Agent's  Office.  The  Administrative   Agent  hereby
designates its office located at the address set forth above,  or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower and Lenders,  as the Administrative  Agent's Office referred to herein,
to which  payments due are to be made and at which  Extensions of Credit will be
disbursed.

     SECTION 14.2. Expenses; Indemnity. The Borrower will (a) pay all reasonable
out-of-pocket  expenses of the Administrative  Agent in connection with: (i) the
preparation,  execution  and  delivery  of this  Agreement  and each  other Loan
Document,  whenever the same shall be executed and delivered,  including without
limitation all reasonable  out-of-pocket  syndication and due diligence expenses
and reasonable fees and disbursements of counsel for the  Administrative  Agent,
(ii) the preparation, execution and delivery of any waiver, amendment or consent
by the  Administrative  Agent or the Lenders  relating to this  Agreement or any
other  Loan  Document,   including  without   limitation   reasonable  fees  and
disbursements   of  counsel   for  the   Administrative   Agent  and  (iii)  the
administration  and enforcement of any rights and remedies of the Administrative
Agent and  Lenders  under  the  Credit  Facilities,  including  consulting  with
appraisers,  accountants,  engineers, attorneys and other Persons concerning the
nature, scope or value of any right or remedy of the Administrative Agent or any
Lender  hereunder  or under any other Loan  Document or any  factual  matters in
connection  therewith,  which  expenses  shall include  without  limitation  the
reasonable fees and disbursements of such Persons, and (b) defend, indemnify and
hold harmless the  Administrative  Agent and the Lenders,  and their  respective
parents,  Subsidiaries,  Affiliates,  employees, agents, officers and directors,
from  and  against  any  losses,  penalties,  fines,  liabilities,  settlements,
damages, costs and expenses,  suffered by any such Person in connection with any
claim,  investigation,   litigation  or  other  proceeding,   including  without
limitation,  claims by a third  Person  with  respect  to the  provision  of the
financing  contemplated  hereby (whether or not the Administrative  Agent or any
Lender is a party thereto) and the prosecution and defense thereof,  arising out
of or in any way connected  with the  Agreement,  any other Loan Document or the
Loans, including without limitation reasonable attorney's and consultant's fees,
except to the extent that any of the  foregoing  directly  result from the gross
negligence or willful misconduct of the party seeking  indemnification  therefor
or arises  solely in  connection  with any claim or  dispute  among the  Lenders
regarding their respective  rights,  duties or performance  hereunder so long as
such claim or dispute does not involve any action or inaction on the part of the
Borrower or any of its Subsidiaries.

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<PAGE>


     SECTION 14.3.  Set-off.  In addition to any rights now or hereafter granted
under  Applicable Law and not by way of limitation of any such rights,  upon and
after the occurrence of any Event of Default and during the continuance thereof,
the  Lenders and any  assignee or  participant  of a Lender in  accordance  with
Section 14.10 are hereby  authorized by the Borrower at any time or from time to
time,  without  notice to the Borrower or to any other  Person,  any such notice
being hereby  expressly  waived,  to set off and to appropriate and to apply any
and all deposits (general or special, time or demand, including, but not limited
to,  indebtedness  evidenced  by  certificates  of deposit,  whether  matured or
unmatured) and any other  indebtedness at any time held or owing by the Lenders,
or any such assignee or  participant  to or for the credit or the account of the
Borrower  against and on account of the  Obligations  irrespective of whether or
not (a) the Lenders  shall have made any demand  under this  Agreement or any of
the other Loan Documents or (b) the Administrative Agent shall have declared any
or all of the Obligations to be due and payable as permitted by Section 12.2 and
although such Obligations shall be contingent or unmatured.

     SECTION 14.4.  Governing Law. This Agreement,  the Notes and the other Loan
Documents,  unless otherwise expressly set forth therein,  shall be governed by,
construed  and  enforced  in  accordance  with  the  laws of the  State of North
Carolina,  without  reference  to the  conflicts  or  choice  of law  principles
thereof.

     SECTION 14.5.  Consent to  Jurisdiction.  The Borrower  hereby  irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg  County,  North Carolina,  in any action,  claim or other proceeding
arising out of any dispute in connection with this Agreement,  the Notes and the
other Loan Documents, any rights or obligations hereunder or thereunder,  or the
performance  of such rights and  obligations.  The Borrower  hereby  irrevocably
consents  to the  service of a summons and  complaint  and other  process in any
action, claim or proceeding brought by the Administrative Agent or any Lender in
connection  with this  Agreement,  the Notes or the other  Loan  Documents,  any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations, on behalf of itself or its property, in the manner specified in
Section  14.1.  Nothing  in this  Section  14.5  shall  affect  the right of the
Administrative  Agent or any Lender to serve legal  process in any other  manner
permitted by Applicable Law or affect the right of the  Administrative  Agent or
any  Lender to bring any  action  or  proceeding  against  the  Borrower  or its
properties in the courts of any other jurisdictions.

     SECTION 14.6. Binding Arbitration; Waiver of Jury Trial.

     (a)  Binding Arbitration.  Upon demand of any party, whether made before or
after institution of any judicial proceeding,  any dispute, claim or controversy
arising  out of,  connected  with or  relating  to the Notes or any  other  Loan
Document  ("Disputes"),  between or among parties to the Notes or any other Loan
Document shall be resolved by binding  arbitration  conducted under and governed
by the Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules")
of the American Arbitration  Association (the "AAA") and the Federal Arbitration
Act.  Disputes  may include,  without  limitation,  tort claims,  counterclaims,
disputes  as to whether a matter is subject to  arbitration,  claims  brought as
class  actions,  or claims  arising  from  documents  executed in the future.  A
judgment  upon the  award  may be  entered  in any  court  having  jurisdiction.
Notwithstanding  the  foregoing,  this  arbitration  provision does not apply to
disputes under or related to swap agreements.

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<PAGE>


     All arbitration hearings shall be conducted in Charlotte, North Carolina. A
hearing  shall begin within ninety (90) days of the demand for  arbitration  and
all hearings  shall be concluded  within one hundred twenty (120) days of demand
for arbitration. These time limitations may not be extended unless a party shows
cause for  extension  and then for no more than a total of sixty (60) days.  The
expedited  procedures  set forth in Rule 51, et seq.  of the  Arbitration  Rules
shall be  applicable  to claims of less than  $1,000,000.  Arbitrators  shall be
licensed  attorneys selected from the Commercial  Financial Dispute  Arbitration
Panel of the AAA.  The  parties do not waive  Federal or state  substantive  law
except and provided herein.

     Notwithstanding the preceding binding arbitration  provisions,  the parties
agree to  preserve,  without  diminution,  certain  remedies  that any party may
exercise before or after an arbitration proceeding is brought. The parties shall
have the right to proceed in any court of proper jurisdiction or by self-help to
exercise or prosecute the following remedies,  as applicable:  (i) all rights to
foreclose  against any real or personal property or other security by exercising
a power  of sale  under  applicable  law by  judicial  foreclosure  including  a
proceeding to confirm the sale; (ii) all rights of self-help  including peaceful
occupation  of real  property and  collection  of rents,  set-off,  and peaceful
possession  of  personal  property;   (iii)  obtaining  provisions/or  ancillary
remedies including injunctive relief,  sequestration,  garnishment,  attachment,
appointment of receiver and filing an  involuntary  bankruptcy  proceeding;  and
(iv) when  applicable,  a  judgment  by  confession  of  judgment.  Any claim or
controversy  with  regard  to any  party's  entitlement  to such  remedies  is a
dispute.

     Each party  agrees  that it shall not have a remedy of  punitive  exemplary
damages against the other in any Dispute and hereby waives any right or claim to
punitive or exemplary  damages they have now or which may arise in the future in
connection  with any Dispute,  whether the Dispute is resolved by arbitration or
judicially. The parties acknowledge that by agreeing to binding arbitration they
have irrevocably waived any right they may have to a jury trial with regard to a
Dispute.

     (b)  Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE ADMINISTRATIVE  AGENT,
EACH LENDER AND THE BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL WITH RESPECT TO ANY ACTION,  CLAIM OR OTHER PROCEEDING  ARISING OUT
OF ANY DISPUTE IN CONNECTION  WITH THIS  AGREEMENT,  THE NOTES OR THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS.

     SECTION  14.7.  Reversal of Payments.  To the extent the  Borrower  makes a
payment or payments to the  Administrative  Agent for the ratable benefit of the
Lenders or the  Administrative  Agent  receives  any  payment or proceeds of the
collateral  which  payments  or proceeds  or any part  thereof are  subsequently
invalidated,  declared  to be  fraudulent  or  preferential,  set  aside  and/or
required  to be repaid to a  trustee,  receiver  or any  other  party  under any
bankruptcy  law, state or federal law, common law or equitable  cause,  then, to
the extent of such payment or proceeds  repaid,  the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such  payment or  proceeds  had not been  received  by the  Administrative
Agent.

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<PAGE>


     SECTION 14.8. Injunctive Relief.

     (a)  The Borrower  recognizes  that,  in the  event the  Borrower  fails to
perform,  observe or discharge any of its obligations or liabilities  under this
Agreement,  any remedy of law may prove to be inadequate  relief to the Lenders.
Therefore,  the Borrower agrees that the Lenders, at the Lenders' option,  shall
be  entitled  to  temporary  and  permanent  injunctive  relief in any such case
without the necessity of proving actual damages.

     (b)  The Administrative Agent, Lender and Borrower (on behalf of itself and
its  Subsidiaries)  hereby  agrees  that no such  Person  shall have a remedy of
punitive or  exemplary  damages  against any other party to a Loan  Document and
each such  Person  hereby  waives any right or claim to  punitive  or  exemplary
damages that they may now have or may arise in the future in connection with any
Dispute, whether such Dispute is resolved through arbitration or judicially.

     (c)  The parties  agree  that they shall not have a remedy of  punitive  or
exemplary  damages  against any other party in any Dispute and hereby  waive any
right or claim to punitive or exemplary damages they have now or which may arise
in the future in connection  with any Dispute whether the Dispute is resolved by
arbitration or judicially.

     SECTION  14.9.   Accounting   Matters.   All   financial   and   accounting
calculations,  measurements  and  computations  made for any purpose relating to
this Agreement,  including, without limitation, all computations utilized by the
Borrower or any  Subsidiary  thereof to determine  compliance  with any covenant
contained herein,  shall, except as otherwise  expressly  contemplated hereby or
unless there is an express  written  direction by the  Administrative  Agent and
Required  Lenders to the  contrary  agreed to by the  Borrower,  be performed in
accordance with GAAP as in effect on the Closing Date. In the event that changes
in GAAP shall be mandated by the Financial  Accounting  Standards  Board, or any
similar accounting body of comparable  standing,  or shall be recommended by the
Borrower's  certified public accountants,  to the extent that such changes would
modify such accounting terms or the interpretation or computation thereof,  such
changes shall be followed in defining such accounting  terms only from and after
the date the Borrower and the Required Lenders shall have amended this Agreement
to the extent  necessary to reflect any such changes in the financial  covenants
and other terms and conditions of this Agreement.

     SECTION 14.10. Successors and Assigns; Participations.

     (a)  Benefit of Agreement.  This Agreement shall be binding upon and  inure
to the benefit of the Borrower,  the Administrative  Agent and the Lenders,  all
future holders of the Notes, and their respective successors and assigns, except
that the Borrower  shall not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.

     (b)  Assignment  by  Lenders.  Each  Lender  may,  with the  consent of the
Administrative  Agent and, so long as no Default or Event of Default  shall have
occurred  and  be  continuing,   the  Borrower,  which  consents  shall  not  be
unreasonably withheld, assign to one or more Eligible Assignees

                                       66

<PAGE>


all or a portion of its interests,  rights and obligations  under this Agreement
(including,  without limitation, all or a portion of the Obligations at the time
owing to it and the Notes held by it); provided that:

          (i)    if less than all of the assigning Lender's Commitment  is to be
assigned,  the Commitment so assigned shall not be less than (A)  $10,000,000 if
such  assignment  is  made  by  First  Union  in  connection  with  the  initial
syndication  of the  Commitments  and (B)  $5,000,000  in  connection  with  any
assignment by a Lender thereafter;

          (ii)   the parties to each such  assignment shall execute  and deliver
to the  Administrative  Agent, for its acceptance and recording in the Register,
an  Assignment  and  Acceptance  in the form of  Exhibit G  attached  hereto (an
"Assignment  and  Acceptance"),  together with any Note or Notes subject to such
assignment;

          (iii)  such assignment shall not, without the consent of the Borrower,
require the Borrower to file a  registration  statement  with the Securities and
Exchange Commission or apply to or qualify the Loans or the Notes under the blue
sky laws of any state; and

          (iv)   the assigning Lender shall pay to the Administrative  Agent  an
assignment fee of $3,000 upon the execution by such Lender of the Assignment and
Acceptance;  provided that no such fee shall be payable upon any assignment by a
Lender to an Affiliate thereof.

Upon such  execution,  delivery,  acceptance and  recording,  from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business  Days after the execution  thereof,  (A) the
assignee  thereunder shall be a party hereto and, to the extent provided in such
Assignment and  Acceptance,  have the rights and  obligations of a Lender hereby
and (B) the Lender  thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.

     (c)  Rights and Duties Upon  Assignment.  By executing  and  delivering  an
Assignment  and  Acceptance,  the assigning  Lender  thereunder and the assignee
thereunder  confirm to and agree with each other and the other parties hereto as
set forth in such Assignment and Acceptance.

     (d)  Register.  The  Administrative  Agent  shall  maintain  a copy of each
Assignment and Acceptance  delivered to it and a register for the recordation of
the names and  addresses of the Lenders and the amount of the  Obligations  with
respect to each  Lender from time to time (the  "Register").  The entries in the
Register  shall  be  conclusive,  in the  absence  of  manifest  error,  and the
Borrower,  the Administrative  Agent and the Lenders may treat each person whose
name is recorded in the Register as a Lender  hereunder for all purposes of this
Agreement.  The Register  shall be available  for  inspection by the Borrower or
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.

     (e)  Issuance of New Notes.   Upon  its  receipt  of  an   Assignment   and
Acceptance  executed by an assigning  Lender and an Eligible  Assignee  together
with any Note or Notes  subject to such  assignment  and the written  consent to
such assignment, the Administrative Agent

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<PAGE>


shall, if such Assignment and Acceptance has been completed and is substantially
in the form of Exhibit G:

          (i)    accept such Assignment and Acceptance;

          (ii)   record the information contained therein in the Register;

          (iii)  give prompt notice thereof to the Lenders and the Borrower; and

          (iv)   promptly deliver a copy of such Assignment  and  Acceptance  to
the Borrower.

Within  five (5)  Business  Days after  receipt of notice,  the  Borrower  shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes,  a new Note or Notes to the order of such  Eligible  Assignee  in
amounts equal to the  Commitment  assumed by it pursuant to such  Assignment and
Acceptance  and a new Note or Notes to the order of the  assigning  Lender in an
amount equal to the Commitment retained by it hereunder.  Such new Note or Notes
shall be in an  aggregate  principal  amount  equal to the  aggregate  principal
amount of such surrendered  Note or Notes,  shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially  the form
of the assigned Notes delivered to the assigning  Lender.  Each surrendered Note
or Notes shall be canceled and returned to the Borrower.

     (f)  Participations.  Each  Lender may sell  participations  to one or more
banks or other entities in all or a portion of its rights and obligations  under
this  Agreement  (including,  without  limitation,  all  or  a  portion  of  its
Commitment and the Notes held by it); provided that:

          (i)    each  such  participation  shall  be in an amount not less than
$5,000,000;

          (ii)   such  Lender's  obligations  under  this Agreement  (including,
without limitation, its Commitment) shall remain unchanged;

          (iii)  such  Lender shall remain  solely  responsible  to  the   other
parties hereto for the performance of such obligations;

          (iv)   such Lender shall remain the holder of the Notes held by it for
all purposes of this Agreement;

          (v)    the  Borrower, the Administrative  Agent and the other  Lenders
shall  continue to deal solely and directly with such Lender in connection  with
such Lender's rights and obligations under this Agreement;

          (vi)   such  Lender shall not permit  such  participant  the right  to
approve any waivers,  amendments or other modifications to this Agreement or any
other Loan Document other than waivers,  amendments or modifications which would
reduce  the  principal  of or the  interest  rate on any  Loan or  Reimbursement
Obligation, extend the term or increase the amount of the Commitment, reduce the
amount of any fees to which such participant is entitled, extend any

                                       68


<PAGE>


scheduled  payment  date  for  principal  of any Loan or,  except  as  expressly
contemplated hereby or thereby, release substantially all of the Collateral; and

          (vii)  any such disposition  shall not, without the consent of the

Borrower,  require  the  Borrower  to file a  registration  statement  with  the
Securities  and Exchange  Commission  to apply to qualify the Loans or the Notes
under the blue sky law of any state.

      (g) Disclosure of Information;  Confidentiality.  The Administrative Agent
and the  Lenders  shall  hold all  non-public  information  with  respect to the
Borrower  and its  Subsidiaries  obtained  pursuant  to the  Loan  Documents  in
accordance   with  their   customary   procedures   for  handling   confidential
information;  provided,  that the Administrative  Agent may disclose information
relating  to  this  Agreement  to Gold  Sheets  and  other  similar  bank  trade
publications and provided further, that the Administrative Agent and the Lenders
may disclose any such  information to the extent such  disclosure is required by
law or requested by any regulatory authority. Any Lender may, in connection with
any assignment,  proposed  assignment,  participation or proposed  participation
pursuant to this Section 14.10, disclose to the assignee, participant,  proposed
assignee or  proposed  participant,  any  information  relating to the  Borrower
furnished to such Lender by or on behalf of the Borrower;  provided,  that prior
to any such disclosure,  each such assignee,  proposed assignee,  participant or
proposed  participant  shall agree with the  Borrower or such Lender to preserve
the  confidentiality  of any confidential  information  relating to the Borrower
received from such Lender.

     (h)  Certain Pledges or  Assignments.  Nothing  herein  shall  prohibit any
Lender  from  pledging or  assigning  any Note to any  Federal  Reserve  Bank in
accordance with Applicable Law.

     SECTION 14.11. Amendments, Waivers and Consents. Except as set forth below,
any term, covenant, agreement or condition of this Agreement or any of the other
Loan Documents may be amended or waived by the Lenders, and any consent given by
the Lenders,  if, but only if, such  amendment,  waiver or consent is in writing
signed by the Required Lenders (or by the Administrative  Agent with the consent
of the Required Lenders) and delivered to the  Administrative  Agent and, in the
case of an  amendment,  signed by the  Borrower;  provided,  that no  amendment,
waiver or consent shall:

     (a)  (i) increase  the  Revolving Credit Commitment  of  any  Lender,  (ii)
reduce the rate of  interest  or fees  payable on any  Revolving  Credit Loan or
Reimbursement Obligation, (iii) extend the originally scheduled time or times of
payment  of  the  principal  of  any  Revolving  Credit  Loan  or  Reimbursement
Obligation or the time or times of payment of interest on any  Revolving  Credit
Loan or Reimbursement  Obligation or any fee or commission with respect thereto,
(iv) permit any  subordination  of the  principal  or interest on any  Revolving
Credit Loan or Reimbursement Obligation or (v) extend the time of the obligation
of the Revolving  Commitment  Lenders to make or issue or participate in Letters
of Credit,  in any case,  without  the written  consent of each  Lender  holding
Revolving Credit Loans or a Revolving Credit Commitment,

     (b)  (i) increase the Term Loan Commitment  of any Lender,  (ii) reduce the
rate  of  interest  or  fees  payable  on  any  Term  Loan,   (iii)  permit  any
subordination of the principal or interest

                                       69

<PAGE>


on any  Term  Loan or (iv)  extend  the  originally  scheduled  time or times of
payment  of the  principal  of any Term Loan or the time or times of  payment of
interest on any Term Loan or any fee or commission with respect thereto,  in any
case, without the written consent of each Lender holding a Term Loan, or

     (c)  release  any  material  portion  of the  Collateral  or  release   the
Security  Agreement  (other than as specifically  permitted in this Agreement or
the Security  Agreement),  amend the  provisions of this Section 14.11 or, amend
the definition of Required Lenders without the written consent of each Lender.

In addition,  no amendment,  waiver or consent to the  provisions of (a) Article
XIII shall be made without the written consent of the  Administrative  Agent and
(b) Article III without the written consent of the Issuing Lender.

     SECTION 14.12. Performance of Duties. The Borrower's obligations under this
Agreement and each of the Loan  Documents  shall be performed by the Borrower at
its sole cost and expense.

     SECTION 14.13. All Powers Coupled with Interest. All powers of attorney and
other  authorizations  granted to the Lenders,  the Administrative Agent and any
Persons  designated by the  Administrative  Agent or any Lender  pursuant to any
provisions of this Agreement or any of the other Loan Documents  shall be deemed
coupled  with  an  interest  and  shall  be  irrevocable  so  long as any of the
Obligations  remain unpaid or unsatisfied or the Credit Facilities have not been
terminated.

     SECTION 14.14. Survival of Indemnities.  Notwithstanding any termination of
this  Agreement,  the  indemnities  to which  the  Administrative  Agent and the
Lenders are  entitled  under the  provisions  of this  Article XIV and any other
provision of this Agreement and the Loan Documents  shall continue in full force
and effect and shall protect the  Administrative  Agent and the Lenders  against
events arising after such termination as well as before.

     SECTION  14.15.  Titles and  Captions.  Titles and  captions  of  Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.

     SECTION 14.16. Severability of Provisions.  Any provision of this Agreement
or  any  other  Loan  Document  which  is  prohibited  or  unenforceable  in any
jurisdiction  shall, as to such jurisdiction,  be ineffective only to the extent
of such prohibition or  unenforceability  without  invalidating the remainder of
such  provision or the remaining  provisions  hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

     SECTION 14.17.  Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate  counterparts,  each
of which when so executed shall be deemed to be an original and shall be binding
upon all parties,  their successors and assigns, and all of which taken together
shall constitute one and the same agreement.

                                       70

<PAGE>


     SECTION 14.18.  Term of Agreement.  This  Agreement  shall remain in effect
from the Closing Date through and including the date upon which all  Obligations
shall have been paid and satisfied in full.  No  termination  of this  Agreement
shall affect the rights and  obligations  of the parties hereto arising prior to
such termination.















                                       71


<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed  by their duly  authorized  officers,  all as of the day and year first
written above.

[CORPORATE SEAL]              KINDER MORGAN, INC.

                              By: /s/William V. Morgan
                                  ----------------------------------
                                  Name:  William V. Morgan
                                  Title: President



                              FIRST UNION NATIONAL BANK,
                              as Administrative Agent and Lender

                              By: /s/Ted Gardner
                                  ----------------------------------
                                  Name:  Ted Gardner
                                  Title: Senior Vice President






                                       72


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                                   SCHEDULE 1

                             LENDERS AND COMMITMENTS
                             -----------------------


                         COMMITMENT
                     AND COMMITMENT
LENDER                   PERCENTAGE               ADDRESS
------                   ----------               -------

First Union              $100,000,000             One First Union Center, DC-4
  National Bank           100%                    301 South College Street
                                                  Charlotte, NC 28288-0735
                                                  Attention:  Ms. Nicole Ray
                                                  Telephone No.: 374-4909
                                                  Telecopy No.: 374-3300