Exhibit 10.2
DCP MIDSTREAM PARTNERS, LP
LONG-TERM INCENTIVE PLAN
     SECTION 1. Purpose of the Plan.
     The DCP Midstream Partners, LP Long-Term Incentive Plan (the “Plan”) has
been adopted by DCP Midstream GP, LLC, a Delaware limited liability company (the
“Company”), the general partner of DCP Midstream GP, LP, a Delaware limited
partnership (the “General Partner”) which is the general partner of DCP
Midstream Partners, LP, a Delaware limited partnership (the “Partnership”), and
is intended to promote the interests of the Partnership and the Company by
providing to Employees, Consultants and Directors incentive compensation awards
for superior performance that are based on Units. The Plan is also contemplated
to enhance the ability of the Company, the Partnership and their Affiliates to
attract and retain the services of individuals who are essential for the growth
and profitability of the Partnership and to encourage them to devote their best
efforts to advancing the business of the Partnership.
     SECTION 2. Definitions.
     As used in the Plan, the following terms shall have the meanings set forth
below:
     “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term “control” means the possession, direct or indirect, of the
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.
     “Award” means an Option, Restricted Unit, Phantom Unit, Substitute Award or
DERs granted under the Plan.
     “Award Agreement” means the written or electronic agreement by which an
Award shall be evidenced.
     “Board” means the Board of Directors of the Company.
     “Committee” means the Board, the Compensation Committee of the Board or
such other committee as may be appointed by the Board to administer the Plan.
     “Consultant” means an individual, other than an Employee or a Director, who
provides services to the Company, the Partnership or an Affiliate.
     “DER” means a contingent right to receive an amount in cash equal to the
cash distributions made by the Partnership with respect to a Unit during the
period such Award is outstanding.
     “Director” means a member of the Board who is not an Employee or a
Consultant.

 

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     “Employee” means an employee of the Company or an Affiliate.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Fair Market Value” means the closing sales price of a Unit on the
applicable date (or if there is no trading in the Units on such date, on the
next preceding date on which there was trading) as reported in The Wall Street
Journal (or other reporting service approved by the Committee). In the event
Units are not traded on a national securities market at the time a determination
of fair market value is required to be made hereunder, the determination of fair
market value shall be made in good faith by the Committee.
     “Option” means an option to purchase Units granted under the Plan.
     “Participant” means an Employee, Consultant or Director granted an Award
under the Plan.
     “Partnership Agreement” means the Amended and Restated Agreement of Limited
Partnership of DCP Midstream Partners, LP, as it may be amended or amended and
restated from time to time.
     “Person” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
     “Phantom Unit” means a phantom (notional) Unit granted under the Plan which
upon vesting entitles the Participant to receive a Unit or an amount of cash
equal to the Fair Market Value of a Unit, as determined by the Committee in its
discretion.
     “Restricted Period” means the period established by the Committee with
respect to an Award during which the Award remains subject to forfeiture and is
either not exercisable by or payable to the Participant, as the case may be.
     “Restricted Unit” means a Unit granted under the Plan that is subject to a
Restricted Period.
     “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation thereto as in effect from time to time.
     “SEC” means the Securities and Exchange Commission, or any successor
thereto.
     “Substitute Award” means an award granted pursuant to Section 6(d)(viii) of
the Plan.
     “UDR” means a distribution made by the Partnership with respect to a
Restricted Unit.
     “Unit” means a Common Unit of the Partnership.

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     SECTION 3. Administration.
     The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum, and the acts of the members of the
Committee who are present at any meeting thereof at which a quorum is present,
or acts unanimously approved by the members of the Committee in writing, shall
be the acts of the Committee. Subject to the following and applicable law, the
Committee, in its sole discretion, may delegate any or all of its powers and
duties under the Plan, including the power to grant Awards under the Plan, to
the Chief Executive Officer of the Company, subject to such limitations on such
delegated powers and duties as the Committee may impose, if any. Upon any such
delegation all references in the Plan to the “Committee”, other than in
Section 7, shall be deemed to include the Chief Executive Officer; provided,
however, that such delegation shall not limit the Chief Executive Officer’s
right to receive Awards under the Plan. Notwithstanding the foregoing, the Chief
Executive Officer may not grant Awards to, or take any action with respect to
any Award previously granted to, a person who is an officer subject to
Rule 16b-3 or a member of the Board. Subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to a Participant; (iii) determine the number of Units to be
covered by Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled, exercised, canceled, or forfeited; (vi) interpret and administer the
Plan and any instrument or agreement relating to an Award made under the Plan;
(vii) establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or an Award Agreement in such manner and extent the
Committee deems necessary or appropriate. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive, and binding upon all Persons, including the Company, the
Partnership, any Affiliate, any Participant, and any beneficiary of any Award.
     SECTION 4. Units.
     (a) Limits on Units Deliverable. Subject to adjustment as provided in
Section 4(c), the number of Units that may be delivered with respect to Awards
under the Plan is 850,000. Units withheld from an Award to satisfy the Company’s
minimum tax withholding obligations with respect to the Award shall not be
considered to be Units delivered under the Plan for this purpose. If any Award
is forfeited, cancelled, exercised or otherwise terminates or expires without
the actual delivery of Units pursuant or with respect to such Award, the Units
subject to such Award shall again be available for Awards under the Plan. There
shall not be any limitation on the number of Awards that may be granted and paid
in cash.
     (b) Sources of Units Deliverable Under Awards. Any Units delivered pursuant
to an Award shall consist, in whole or in part, of Units acquired in the open
market, from any Affiliate,

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the Partnership or any other Person, or any combination of the foregoing, as
determined by the Committee in its discretion.
     (c) Adjustments. In the event of any distribution (whether in the form of
cash, Units, other securities, or other property), recapitalization, split,
reverse split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Units or other securities of the
Partnership, issuance of warrants or other rights to purchase Units or other
securities of the Partnership, or other similar transaction or event, the
Committee shall, in such manner as it may deem equitable, adjust the number and
type of Units (or other securities or property) with respect to which Awards may
be granted.
     SECTION 5. Eligibility.
     Any Employee, Consultant or Director shall be eligible to be designated a
Participant and receive an Award under the Plan.
     SECTION 6. Awards.
     (a) Options. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Options shall be granted, the
number of Units to be covered by each Option, the purchase price therefor and
the Restricted Period and other conditions and limitations applicable to the
exercise of the Option, including the following terms and conditions and such
additional terms and conditions, as the Committee shall determine, that are not
inconsistent with the provisions of the Plan.
     (i) Exercise Price. The exercise price per Unit purchasable under an Option
shall be determined by the Committee at the time the Option is granted but,
except with respect to a Substitute Award, may not be less than its Fair Market
Value as of the date of grant.
     (ii) Time and Method of Exercise. The Committee shall determine the
Restricted Period with respect to an Option grant, which may include, without
limitation, the provision for accelerated vesting upon the achievement of
specified performance goals or other events, and the method or methods by which
payment of the exercise price with respect thereto may be made or deemed to have
been made, which may include, without limitation, cash, check acceptable to the
Company, a “cashless-broker” exercise through procedures, including limitations,
approved by the Company, withholding Units from the Award upon exercise, or any
combination of methods, having a Fair Market Value on the exercise date equal to
the relevant exercise price.
     (iii) Forfeitures. Except as otherwise provided in the terms of the Option
grant, upon termination of a Participant’s employment with or consulting
services to the Company and its Affiliates or membership on the Board, whichever
is applicable, for any reason during the applicable Restricted Period, all
Options shall be forfeited by the Participant. The Committee may, in its
discretion, waive in whole or in part such forfeiture with respect to a
Participant’s Options.

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     (b) Restricted Units and Phantom Units. The Committee shall have the
authority to determine the Employees, Consultants and Directors to whom
Restricted Units or Phantom Units shall be granted, the number of Restricted
Units or Phantom Units to be granted to each such Participant, the Restricted
Period, the conditions under which the Restricted Units or Phantom Units may
become vested or forfeited and such other terms and conditions as the Committee
may establish with respect to such Awards.
     (i) UDRs. To the extent provided by the Committee, in its discretion, a
grant of Restricted Units may provide that distributions made by the Partnership
with respect to the Restricted Units shall be subject to the same forfeiture and
other restrictions as the Restricted Unit and, if restricted, such distributions
shall be held, without interest, until the Restricted Unit vests or is forfeited
with the UDR being paid or forfeited at the same time, as the case may be.
Absent such a restriction on the UDRs in the grant agreement, UDRs shall be paid
to the holder of the Restricted Unit without restriction.
     (ii) Forfeitures. Except as otherwise provided in the terms of the
Restricted Units or Phantom Units grant, upon termination of a Participant’s
employment with or consulting services to the Company and its Affiliates or
membership on the Board, whichever is applicable, for any reason during the
applicable Restricted Period, all outstanding Restricted Units and Phantom Units
awarded the Participant shall be automatically forfeited on such termination.
The Committee may, in its discretion, waive in whole or in part such forfeiture
with respect to a Participant’s Restricted Units and/or Phantom Units.
     (iii) Lapse of Restrictions.
     (A) Phantom Units. Upon or as soon as reasonably practical following the
vesting of each Phantom Unit, subject to the provisions of Section 8(b), the
Participant shall be entitled to receive from the Company one Unit or cash equal
to the Fair Market Value of a Unit, as determined by the Committee in its
discretion.
     (B) Restricted Units. Upon or as soon as reasonably practical following the
vesting of each Restricted Unit, subject to satisfying the tax withholding
obligations of Section 8(b), the Participant shall be entitled to have the
restrictions removed from his or her Unit certificate so that the Participant
then holds an unrestricted Unit.
     (c) DERs. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom DERs are granted, whether such DERs
are tandem or separate Awards, whether the DERs shall be paid directly to the
Participant, be credited to a bookkeeping account (with or without interest in
the discretion of the Committee) the vesting restrictions applicable to the
Award, and such other provisions or restrictions as determined by the Committee
in its discretion.

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     (d) General.
     (i) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award granted under the Plan or
any award granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards or awards granted under
any other plan of the Company or any Affiliate may be granted either at the same
time as or at a different time from the grant of such other Awards or awards.
     (ii) Limits on Transfer of Awards.
     (A) Except as provided in Paragraph (C) below, each Option shall be
exercisable only by the Participant during the Participant’s lifetime, or by the
person to whom the Participant’s rights shall pass by will or the laws of
descent and distribution.
     (B) Except as provided in Paragraph (C) below, no Award and no right under
any such Award may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company, the Partnership or any Affiliate.
     (C) To the extent specifically provided by the Committee with respect to an
Option, an Option may be transferred by a Participant without consideration to
immediate family members or related family trusts, limited partnerships or
similar entities or on such terms and conditions as the Committee may from time
to time establish.
     (iii) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee.
     (iv) Unit Certificates. All certificates for Units or other securities of
the Partnership delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the SEC, any stock exchange upon which such Units or other
securities are then listed, and any applicable federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
     (v) Consideration for Grants. Awards may be granted for such consideration,
including services, as the Committee determines.
     (vi) Delivery of Units or other Securities and Payment by Participant of
Consideration. Notwithstanding anything in the Plan or any grant agreement to
the contrary, delivery of Units pursuant to the exercise or vesting of an Award
may be deferred for any period during which, in the good faith determination of
the Committee, the Company is not reasonably able to obtain Units to deliver
pursuant to such Award

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without violating the rules or regulations of any applicable law or securities
exchange. No Units or other securities shall be delivered pursuant to any Award
until payment in full of any amount required to be paid pursuant to the Plan or
the applicable Award grant agreement (including, without limitation, any
exercise price or tax withholding) is received by the Company.
     (vii) Substitute Awards. Awards may be granted under the Plan in
substitution of similar awards held by individuals who become Employees,
Consultants or Directors as a result of a merger, consolidation or acquisition
by the Company or an Affiliate of another entity or the assets of another
entity. Such Substitute Awards that are Options may have exercise prices less
than the Fair Market Value of a Unit on the date of such substitution.
     SECTION 7. Amendment and Termination.
     Except to the extent prohibited by applicable law:
     (a) Amendments to the Plan. Except as required by the rules of the
principal securities exchange on which the Units are traded and subject to
Section 7(b) below, the Board may amend, alter, suspend, discontinue, or
terminate the Plan in any manner, including increasing the number of Units
available for Awards under the Plan, without the consent of any partner,
Participant, other holder or beneficiary of an Award, or any other Person.
     (b) Amendments to Awards. Subject to Section 7(a), the Committee may waive
any conditions or rights under, amend any terms of, or alter any Award
theretofore granted, provided no change, other than pursuant to Section 7(c), in
any Award shall materially reduce the benefit to Participant without the consent
of such Participant.
     (c) Actions Upon the Occurrence of Certain Events. In connection with any
event described in Section 4(c) of the Plan, or a Change of Control, any changes
in applicable laws, regulations, or accounting principles affecting the
financial statements of the Partnership, the Committee, in its sole discretion
and on such terms and conditions as it deems appropriate, may take any one or
more of the following actions in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
an outstanding Award:
     (A) provide for either (i) the termination of any Award in exchange for an
amount of cash, if any, equal to the amount that would have been attained upon
the exercise of such Award or realization of the Participant’s rights (and, for
the avoidance of doubt, if as of the date of the occurrence of such transaction
or event the Committee determines in good faith that no amount would have been
attained upon the exercise of such Award or realization of the Participant’s
rights, then such Award may be terminated by the Company without payment) or
(ii) the replacement of such Award with other rights or property selected by the
Committee in its sole discretion;

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     (B) provide that such Award be assumed by the successor or survivor entity,
or a parent or subsidiary thereof, or be substituted for by similar options,
rights or awards covering the equity of the successor or survivor, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of
equity interests and prices;
     (C) make adjustments in the number and type of Units (or other securities
or property) subject to outstanding Awards, and in the number and kind of
outstanding Awards and/or in the terms and conditions of (including the exercise
price), and the vesting/performance criteria included in, outstanding Awards;
     (D) provide that such Award shall be exercisable or payable,
notwithstanding anything to the contrary in the Plan or the applicable Award
Agreement; and
     (E) provide that the Award cannot be exercised or become payable after such
event, i.e., shall terminate upon such event.
     SECTION 8. General Provisions.
     (a) No Rights to Award. No Person shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment of
Participants. The terms and conditions of Awards need not be the same with
respect to each recipient.
     (b) Tax Withholding. Unless other arrangements have been made that are
acceptable to the Company, the Company or any Affiliate is authorized to
withhold from any Award, from any payment due or transfer made under any Award
or from any compensation or other amount owing to a Participant the amount (in
cash, Units, Units that would otherwise be issued pursuant to such Award or
other property) of any applicable taxes payable in respect of the grant of an
Award, its exercise, the lapse of restrictions thereon, or any payment or
transfer under an Award or under the Plan and to take such other action as may
be necessary in the opinion of the Company to satisfy its withholding
obligations for the payment of such taxes.
     (c) No Right to Employment or Services. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate, continue consulting services or to remain on the
Board, as applicable. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment or consulting free from any liability or
any claim under the Plan, unless otherwise expressly provided in the Plan, any
Award agreement or other agreement.
     (d) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware without regard to its conflict of laws
principles.
     (e) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the

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Compensation Committee, such provision shall be construed or deemed amended to
conform to the applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, person or award and the remainder of the Plan and any such Award
shall remain in full force and effect.
     (f) Other Laws. The Committee may refuse to issue or transfer any Units or
other consideration under an Award if, in its sole discretion, it determines
that the issuance or transfer of such Units or such other consideration might
violate any applicable law or regulation, the rules of the principal securities
exchange on which the Units are then traded, or entitle the Partnership or an
Affiliate to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary.
     (g) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any participating Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any participating Affiliate pursuant to
an Award, such right shall be no greater than the right of any general unsecured
creditor of the Company or any participating Affiliate.
     (h) No Fractional Units. No fractional Units shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Units or whether such fractional Units or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
     (i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
     (j) Facility Payment. Any amounts payable hereunder to any person under
legal disability or who, in the judgment of the Committee, is unable to properly
manage his financial affairs, may be paid to the legal representative of such
person, or may be applied for the benefit of such person in any manner which the
Committee may select, and the Company shall be relieved of any further liability
for payment of such amounts.
     (k) Participation by Affiliates. In making Awards to Employees employed by
an entity other than by the Company, the Committee shall be acting on behalf of
the Affiliate, and to the extent the Partnership has an obligation to reimburse
the Company for compensation paid for services rendered for the benefit of the
Partnership, such payments or reimbursement payments may be made by the
Partnership directly to the Affiliate, and, if made to the Company, shall be
received by the Company as agent for the Affiliate.
     (l) Gender and Number. Words in the masculine gender shall include the
feminine gender, the plural shall include the singular and the singular shall
include the plural.

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     (m) Compliance with Section 409A. Nothing in the Plan or any Award
Agreement shall operate or be construed to cause the Plan or an Award to fail to
comply with the requirements of Section 409A of the Internal Revenue Code. The
applicable provisions of Section 409A and the regulations thereunder are hereby
incorporated by reference and shall control over any Plan or Award Agreement
provision in conflict therewith.
     SECTION 9. Term of the Plan.
     The Plan shall be effective on the date of its approval by the Board and
shall continue until the earliest of (i) the date terminated by the Board,
(ii) all Units available under the Plan have been paid to Participants, or
(iii) the 10th anniversary of the date the Plan is approved by the unitholders
of the Company. However, unless otherwise expressly provided in the Plan or in
an applicable Award Agreement, any Award granted prior to such termination, and
the authority of the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under such Award,
shall extend beyond such termination date.

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