Document:

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                                                                    EXHIBIT 10.1

                          TAX INDEMNIFICATION AGREEMENT

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

                                    PREAMBLE

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

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

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

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

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

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

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

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

                                    AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

         "IRS" means the United States Internal Revenue Service.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                  (a) It will treat Management as a corporation.

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

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

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

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

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

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

         3. Indemnification and Reimbursements.

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

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

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

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

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

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

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

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

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

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

         4. Computational Assumptions.

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

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

         5. Contests; Records.

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

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

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

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

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

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

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

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

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

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

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

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

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

                  (h) Records and Participation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         15. Miscellaneous.

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

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

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

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

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

         [The remainder of this page has been left intentionally blank]

                                      -12-
<PAGE>   13

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

                                       KINDER MORGAN, INC.

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

                                       KINDER MORGAN MANAGEMENT, LLC

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

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

                                       KINDER MORGAN ENERGY PARTNERS, L.P.

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

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

                [SIGNATURE PAGE TO TAX INDEMNIFICATION AGREEMENT]

                                      -13-<PAGE>   1
                                                                    EXHIBIT 10.2

                         DELEGATION OF CONTROL AGREEMENT
                                      AMONG
                            KINDER MORGAN G.P., INC.
                          KINDER MORGAN MANAGEMENT, LLC
                       KINDER MORGAN ENERGY PARTNERS, L.P.
                        KINDER MORGAN OPERATING L.P. "A"
                        KINDER MORGAN OPERATING L.P. "B"
                        KINDER MORGAN OPERATING L.P. "C"
                        KINDER MORGAN OPERATING L.P. "D"
                                       AND
                         KINDER MORGAN CO2 COMPANY, L.P.

         This Delegation of Control Agreement (the "AGREEMENT") dated
_____________________, 2001 (the "EFFECTIVE DATE"), is among Kinder Morgan G.P.,
Inc., a Delaware corporation (the "GENERAL PARTNER"), Kinder Morgan Management,
LLC, a Delaware limited liability company ("MANAGEMENT"), Kinder Morgan Energy
Partners, L.P., a Delaware limited partnership (the "MASTER PARTNERSHIP"),
Kinder Morgan Operating L.P. "A", a Delaware limited partnership ("OLP "A""),
Kinder Morgan Operating L.P. "B", a Delaware limited partnership ("OLP "B""),
Kinder Morgan L.P. "C", a Delaware limited partnership ("OLP "C""), Kinder
Morgan L.P. "D", a Delaware limited partnership ("OLP "D""), Kinder Morgan CO2
Company, L.P., a Texas limited partnership ("CO2" and together with OLP "A," OLP
"B," OLP "C," and OLP "D," the "OPERATING PARTNERSHIPS," and, together with the
Master Partnership, the "PARTNERSHIPS"). The General Partner is the sole general
partner of the Partnerships.

         Capitalized terms used but not defined in this Agreement shall have the
meanings given to them in the Master Partnership's Third Amended and Restated
Agreement of Limited Partnership (the "MASTER PARTNERSHIP AGREEMENT").
References herein to the Master Partnership Agreement or any limited partnership
agreement of an Operating Partnership (an "OPERATING PARTNERSHIP AGREEMENT") in
a context that contemplates a future time shall mean the Master Partnership
Agreement or an Operating Partnership Agreement (collectively, the "PARTNERSHIP
AGREEMENTS") as amended or restated at the applicable time. Management is an
"INDEMNITEE" and an "AFFILIATE" of the Partnerships and the General Partner, as
each of those terms is defined in Article II of the Master Partnership Agreement
and in each of the Operating Partnership Agreements.

                                    RECITALS:

         The Partnerships and the General Partner wish to delegate to Management
all the General Partner's power and authority to manage and control the business
and affairs of the Partnerships to the fullest extent permitted under the
Partnership Agreements and Delaware law, subject to the terms and conditions of
this Agreement, and Management wishes to accept such delegation.

<PAGE>   2
         Section 6.6(c) of the Master Partnership Agreement and Section __ of
each of the Operating Partnership Agreements permit the General Partner to enter
into an agreement with Management to render services to the Partnerships and the
General Partner in the discharge of the General Partner's duties as general
partner to the Partnerships.

         Concurrently with the execution of this Agreement, Management is
issuing and selling in an initial public offering (the "OFFERING") its shares
representing limited liability company interests in Management (the "LISTED
SHARES"), and the Master Partnership is issuing to Management its i-units
representing limited partner interests in the Master Partnership.

         Each of the Partnerships wishes to confirm hereby its agreement with
the terms of this Agreement relating to the management and control of the
Partnership's and the Operating Partnerships' business and affairs and certain
other agreements for the benefit of the General Partner, Management, their
Affiliates and certain Indemnitees and Indemnified Parties.

         NOW, THEREFORE, the parties hereto agree as follows:

         1. Delegation and Related Matters.

                  1.1. Delegation by General Partner to Management. The General
         Partner hereby irrevocably delegates to Management, to the fullest
         extent permitted under the Partnership Agreements and Delaware law, all
         of the General Partner's power and authority to manage and control the
         business and affairs of the Partnerships (the "MAXIMUM PERMITTED
         DELEGATION"), subject to termination only in accordance with Section 9
         hereof; and all provisions in this Agreement are qualified to the
         extent required in order for all such provisions to be consistent, now
         and in the future, with the Maximum Permitted Delegation. The power and
         authority of the General Partner are set forth in the Partnership
         Agreements (in particular, in Section 6.1 of each of the Partnership
         Agreements) and are provided by Delaware law. If the General Partner's
         power and authority as general partner of any Partnership(s) are
         modified pursuant to a subsequent amendment or restatement of any of
         the Partnership Agreements or changes in Delaware law, then the power
         and authority delegated to Management with respect to such
         Partnership(s) shall be modified on the same basis.

                  Notwithstanding the foregoing, the General Partner is not
         hereby withdrawing from the Partnerships as a general partner or
         otherwise; and the General Partner is retaining all of its Partnership
         Interests, its Percentage Interests and its rights to profits, losses
         and distributions from the Partnerships, and none of these are hereby
         being assigned or transferred by the General Partner to Management.

                  1.2. Continued Responsibility of General Partner.
         Notwithstanding the General Partner's making the Maximum Permitted
         Delegation to Management, the General Partner shall remain responsible
         to the Partnerships for actions taken or omitted by Management within
         the scope of such delegation as if the General Partner had itself

                                       2
<PAGE>   3
         taken or omitted to take any such actions. The General Partner's
         responsibility to each of the Partnerships is not expanded or limited
         by this Agreement and shall be in effect to the same extent and on the
         same terms and conditions as specified in the applicable Partnership
         Agreement or under Delaware law. Pursuant to Section 6.8(b) of each of
         the Partnership Agreements, in each case as amended as of the Effective
         Date, the General Partner is responsible for the misconduct or
         negligence of Management in performing the Maximum Permitted Delegation
         but is not responsible for any misconduct or negligence of other agents
         appointed by the General Partner in good faith. The General Partner
         shall be entitled to monitor Management's performance under this
         Agreement. The General Partner shall have the right and power to direct
         Management to take, or to cease from taking, any action that would
         constitute a breach of any Partnership Agreement. The General Partner
         shall have access to the books, records and documents of the
         Partnerships and Management and to their officers, directors and
         employees to monitor Management's performance under this Agreement.

                  1.3. Acceptance of Delegation by Management. Management hereby
         accepts the Maximum Permitted Delegation and agrees to perform the
         Maximum Permitted Delegation according to the standards specified in
         Section 2 hereto.

                  1.4. Approval by General Partner. Without expanding or
         limiting the definition of Maximum Permitted Delegation, the taking by
         Management of the actions specified in Schedule 1.4 hereto shall be
         subject to the approval of the General Partner.

                  1.5. Use of Affiliates by Management. The Partnerships and the
         General Partner agree that Management may perform the Maximum Permitted
         Delegation either directly or through one or more Affiliates. If
         Management performs through any Affiliate, (i) Management shall remain
         fully responsible for actions taken or omitted by the Affiliate and
         (ii) for purposes of Sections 1, 2, 3, 4, 5, 6, 7 and 8 hereof,
         Management and all such Affiliates shall be taken together and treated
         as Management.

         2. Standards of Performance. In performing the Maximum Permitted
Delegation, Management shall be responsible to the Partnerships and the General
Partner to the same extent and according to the same standards as would have
been applicable to the General Partner in favor of the Partnerships had the
General Partner continued to exercise the delegated power and authority
directly. Among other provisions of the Partnership Agreements that are
applicable to the duties and standards of performance assumed by Management, but
without limiting the generality of other provisions in this Agreement, the
following Sections of each of the Partnership Agreements, in each case as
amended, shall be applicable to Management's performance of the Maximum
Permitted Delegation: Sections 6.8, 6.9 and 6.10.

         3. Conflicts of Interest. All potential and actual conflicts of
interest that exist or arise between the General Partner, Management and each of
their Affiliates, on the one hand, and the Partnerships, any subsidiary of the
Partnerships, any Partner or any Assignee, on the other hand, shall be subject
to Section 6.9 of each of the Partnership Agreements, in each case as amended as
of the Effective Date. Among other possible courses of action under these
Sections that are available to resolve conflicts of interest, the General
Partner and Management have

                                        3
<PAGE>   4
reserved the right granted under these Sections to seek Special Approval of the
General Partner's Conflicts and Audit Committee with respect to any such
conflict.

         4. Reliance on Counsel, etc. Pursuant to Section 6.10 of each of the
Partnership Agreements, in each case as amended, Management shall have the
benefit of all of the provisions of these Sections to the same extent as the
General Partner.

         5. Reliance by Third Parties. Pursuant to Section 6.14 of the Master
Partnership Agreement and Section 6.12 of each of the Operating Partnership
Agreements, in each case as amended, third parties dealing with the Partnerships
shall be entitled to assume that Management has the full power and authority of
the General Partner in acting for the Partnerships.

         6. Indemnity. Management and its officers and directors and all other
persons covered within the definition of Indemnitee shall be entitled to
mandatory indemnity and shall be entitled to be held harmless by the
Partnerships to the extent and subject to the conditions provided in Section 6.7
of each of the Partnership Agreements, in each case as amended, with the General
Partner hereby deeming it advisable that such indemnification and holding
harmless shall (rather than may) be done and provided by the Partnerships to the
fullest extent and subject to the conditions provided therein.

         The General Partner and the other parties specified in Section 6.7 of
each of the Partnership Agreements, in each case as amended, shall continue to
be entitled to the benefits of said Sections.

         7. Damage Limitations. Since each of Management and certain other
parties specified in the Partnership Agreements who are associated with
Management are Indemnitees, the provisions of Section 6.8 in the Master
Partnership Agreement and Section 6.4(b) of each of the Operating Partnership
Agreements, in each case as amended, regarding the limitation on an Indemnitee's
liability for monetary damages shall be applicable to all such Indemnitees.

         The General Partner and other Indemnitees shall continue to be entitled
to the limitation on liability for monetary damages set forth in Section 6.8
of each of the Partnership Agreements, in each case as amended as of the
Effective Date.

         8. Reimbursement. Management shall be entitled to be reimbursed by the
Partnerships for direct, indirect, necessary or appropriate expenses it incurs
or payments it makes on behalf of the Partnerships, or which are allocable to or
otherwise reasonably incurred by the General Partner or Management, to the
fullest extent contemplated in both Section 6.4(b) and Section 6.6(c) of the
Master Partnership Agreement and in both Section 6.4(b) and Section 6.6(b) of
each of the Operating Partnership Agreements, in each case as amended. It is
understood and agreed that Management shall be entitled to reimbursement under
such Sections for all fees and expenses incurred in connection with the
performance of its obligations under the Securities Act of 1933, as amended, the
Securities Act of 1934, as amended, and any other federal and state laws
applicable to Management, including, without limitation, fees and expenses of
legal counsel, accountants and financial advisors.

                                       4
<PAGE>   5
         The General Partner shall continue to be entitled to be reimbursed as
provided in these Sections of the Partnership Agreements.

         9. Termination of Delegation. The Maximum Permitted Delegation under
this Agreement commences on the Effective Date and shall continue in effect
until the occurrence of the earliest of any of the following, at which time the
delegation of power and authority by the General Partner to Management shall
cease and terminate as provided below:

                  9.1. All outstanding Listed Shares shall become owned by the
         General Partner or its Affiliates (including, without limitation,
         Kinder Morgan, Inc. ("KMI") or its Affiliates) and such termination of
         delegated power and authority shall have been approved by the General
         Partner and Management at which time the delegation shall cease as to
         all Partnerships; or

                  9.2. The General Partner shall withdraw or shall be removed as
         general partner of any of the Partnerships, at which time the
         delegation shall cease as to those Partnerships from which the General
         Partner shall have withdrawn or shall have been removed; or

                  9.3. Such termination of delegated power and authority shall
         have been approved by (i) the General Partner, (ii) Management and
         (iii) holders (other than the General Partner and its Affiliates,
         including KMI and its Affiliates) of a majority of the outstanding
         Listed Shares (excluding any Listed Shares owned by the General Partner
         and its Affiliates, including KMI).

         The General Partner hereby covenants and agrees that it shall not
withdraw as general partner of any of the Partnerships so long as any of the
Listed Shares are owned by any persons other than KMI or its Affiliates.

         10. Miscellaneous.

                  10.1. References. Except as specifically provided otherwise,
         references to "Articles" and "Sections" are to Articles and Sections of
         this Agreement.

                  10.2. Pronouns and Plurals. Whenever the context may require,
         any pronoun used in this Agreement shall include the corresponding
         masculine, feminine or neuter forms, and the singular form of nouns,
         pronouns and verbs shall include the plural and vice versa.

                  10.3. Further Action. The parties shall execute and deliver
         all documents, provide all information and take or refrain from taking
         actions as may be necessary or appropriate to achieve the purposes of
         this Agreement.

                  10.4. Binding Effect; Assignment. This Agreement shall be
         binding upon and inure to the benefit of the parties hereto and their
         successors and permitted assigns. This Agreement may not be assigned,
         in whole or in part, by any party to this Agreement without the written
         consent of the other parties to this Agreement.

                                       5
<PAGE>   6
                  10.5. Integration. This Agreement and the other instruments
         and agreements specifically referenced herein constitute the entire
         agreement among parties hereto.

                  10.6. Creditors. None of the provisions of this Agreement
         shall be for the benefit of, or shall be enforceable by, any creditor
         of the Partnerships, the General Partner or Management.

                  10.7. Waiver. No failure by any party to insist upon the
         strict performance of any covenant, duty, agreement or condition of
         this Agreement or to exercise any right or remedy consequent upon a
         breach thereof shall constitute waiver of any such breach or any other
         covenant, duty, agreement or condition.

                  10.8. Counterparts. This Agreement may be executed in
         counterparts, all of which together shall constitute an agreement
         binding on all parties hereto, notwithstanding that all such parties
         are not signatories to the original or the same counterpart.

                  10.9. Applicable Law. This Agreement shall be construed in
         accordance with and governed by the laws of the State of Delaware,
         without regard to the principles of conflicts of law.

                  10.10. Invalidity of Provisions. If any provision of this
         Agreement is or becomes invalid, illegal or unenforceable in any
         respect, the validity, legality and enforceability of the remaining
         provisions contained herein shall not be affected thereby.

                  10.11. Amendments. This Agreement may be amended by an
         agreement in writing signed by Management, the General Partner and the
         Partnerships without the vote, approval or consent of the holders of
         Listed Shares (as such term is defined in the Amended and Restated
         Limited Liability Company Agreement of Management, as amended, restated
         or supplemented (the "LLC AGREEMENT")), unless such amendment would, as
         determined in the sole discretion of the board of directors of
         Management, materially adversely affect the rights or preferences of
         such holders of Listed Shares or would reduce the time for any notice
         to which such holders of Listed Shares may be entitled, in which case
         such amendment shall require the affirmative vote or consent of the
         holders of at least a majority of the Listed Shares then Outstanding
         (as that term is defined under the LLC Agreement).

                                       6
<PAGE>   7
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.

                                          "General Partner"
                                          KINDER MORGAN G.P., INC.

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

                                          "Management"
                                          KINDER MORGAN MANAGEMENT, LLC

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

                                          "Master Partnership"
                                          KINDER MORGAN ENERGY PARTNERS, L.P.
                                          By:  Kinder Morgan G.P., Inc.

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

                                          OLP "A"

                                          KINDER MORGAN OPERATING L.P.  "A"
                                          By:  Kinder Morgan G.P., Inc.

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

                                       7
<PAGE>   8
                                          OLP "B"

                                          KINDER MORGAN OPERATING L.P. "B"
                                          By:  Kinder Morgan G.P., Inc.

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

                                          OLP "C"

                                          KINDER MORGAN OPERATING L.P. "C"
                                          By:  Kinder Morgan G.P., Inc.

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

                                          OLP "D"

                                          KINDER MORGAN OPERATING L.P. "D"
                                          By:  Kinder Morgan G.P., Inc.

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

                                          CO2

                                          KINDER MORGAN CO2 COMPANY, L.P.
                                          By:  Kinder Morgan G.P., Inc.

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

                                       8
<PAGE>   9
                                  SCHEDULE 1.4
                 Actions Subject to Approval by General Partner

     -    amend or propose an amendment to the Master Partnership Agreement, or

     -    change the amount of the distribution made on the Master Partnership
          common units, or

     -    allow a merger or consolidation involving the Master Partnership, or

     -    allow a sale or exchange of all or substantially all of the assets of
          the Master Partnership, or

     -    dissolve or liquidate the Master Partnership, or

     -    take any action requiring approval of any class of units of the
          Master Partnership, or

     -    call any meetings of the common unitholders of the Master Partnership,
          or

     -    take any action that, under the terms of the Master Partnership
          Agreement, must or should receive a special approval of the Conflicts
          and Audit Committee of the General Partner, or

     -    take any action that, under the terms of the Master Partnership
          Agreement, cannot be taken by the General Partner without the approval
          of all outstanding units of the Master Partnership, or

     -    settle or compromise any claim, dispute or litigation directly against
          or otherwise relating to indemnification of Management, the General
          Partner, Affiliates of the General Partner or Management, or any of
          their officers, directors, managers or members, or

     -    settle or compromise any claim, dispute or litigation relating to the
          i-units, the Listed Shares or the Offering, or

     -    settle or compromise any claim, dispute or litigation involving tax
          matters, or

                                       9
<PAGE>   10
     -    allow the Master Partnership to incur indebtedness exceeding 50% of
          the market value of all of the then outstanding units of the Master
          Partnership, or

     -    allow the Master Partnership to issue units in one transaction, or in
          a series of related transactions, having a market value in excess of
          20% of the market value of then outstanding units of the Master
          Partnership, or

                                       10

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