ATLAS PIPELINE HOLDINGS

LONG-TERM INCENTIVE PLAN

NONQUALIFIED OPTION GRANT

This NONQUALIFIED OPTION GRANT, dated as of _________________ (the "Date of
Grant"), is delivered by Atlas Pipeline Holdings, L.P., a Delaware limited
partnership (the "Partnership") to _______________ (the "Participant").

RECITALS

A. The Atlas Pipeline Holdings Long-Term Incentive Plan (the "Plan") provides
for the grant of options to purchase common units of limited partner interest of
the Partnership.

B. The Committee (as defined in the Plan) has decided to make an option grant as
an inducement for the Participant to promote the best interests of the
Partnership and its equity holders. The Participant may receive a copy of the
Plan by contacting __________ at ________.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound
hereby, agree as follows:

Grant of Option
. Subject to the terms and conditions set forth in this Agreement and in the
Plan, the Partnership hereby grants to the Participant a nonqualified option
(the "
Option
") to purchase ___________ common units of limited partner interest of the
Partnership ("
Units
") at an exercise price of $_________ per Unit. The Option shall become
exercisable according to Paragraph 2 below.

Exercisability of Option
.
 a. Except as provided in subparagraphs (b) and (c) below, the Option shall
    become exercisable on the following dates, if the Participant does not incur
    a termination of employment or service as an Employee (as defined in the
    Plan) with Atlas Pipeline Holdings GP, LLC (the "Company") or its Affiliates
    (as defined in the Plan) (the Company and Affiliates are hereinafter
    collectively referred to as the "Employer") or as a Manager (as defined in
    the Plan) prior to the applicable vesting date (the "Vesting Date"):

    Vesting Date Units for Which the Option is Exercisable

    Third anniversary of the Date of Grant

    
    Fourth anniversary of the Date of Grant
    The exercisability of the Option is cumulative, but shall not exceed 100% of
    the Units subject to the Option. If the foregoing schedule would produce
    fractional Units, the number of Units for which the Option becomes
    exercisable shall be rounded down to the nearest whole Unit.

 b. If the Participant terminates employment or service with the Employer as an
    Employee or as a Manager prior to the Vesting Date for any portion of the
    Option, the portion of the Option that has not vested as of such Vesting
    Date shall terminate; provided, however, that if the Participant terminates
    employment or service with the Employer as an Employee or as a Manager on
    account of death, Disability (as defined in the Plan) or Retirement (as
    defined below), the unvested portion of the Option shall become vested as of
    the date of the Participant's termination of employment or service. For
    purposes of this Agreement, the term "Retirement" shall mean as such term is
    defined in the Participant's employment agreement, if any, as of the date of
    grant; provided, however, if the Participant does not have an employment
    agreement defining the term Retirement as of the Date of Grant, the
    provisions applicable to the term Retirement in this Agreement shall not
    apply.
 c. If a Change in Control (as defined in the Plan) occurs while the Participant
    is employed, or providing service, to the Employer as an Employee or as a
    Manager, but prior to the Vesting Date for any portion of the Option, the
    portion of the Option that has not vested prior to the consummation of the
    Change in Control shall become vested as of the date of the Change in
    Control.

Term of Option
.
 a. The Option shall have a term of ten years from the Date of Grant and shall
    terminate at the expiration of that period, unless it is terminated at an
    earlier date pursuant to the provisions of this Agreement or the Plan.
 b. The Option shall automatically terminate upon the happening of the first of
    the following events:
     i.   The expiration of the 90-day period after the Participant ceases to be
          employed by, or provide service to, the Employer as an Employee or
          Manager, if the termination is for any reason other than Disability,
          death or Cause (as defined below).
     ii.  The expiration of the one-year period after the Participant ceases to
          be employed by, or provide service to, the Employer as an Employee or
          Manager on account of the Participant's Disability or Retirement.
     iii. The expiration of the one-year period after the Participant ceases to
          be employed by, or provide service to, the Employer as an Employee or
          Manager, if the Participant dies while employed by, or providing
          service to, the Employer as an Employee or Manager, or within 90 days
          after the Participant ceases to be so employed or provide such
          services on account of a termination described in subparagraph (i)
          above.
     iv.  The date on which the Participant ceases to be employed by, or provide
          service to, the Employer as an Employee or Manager for Cause. In
          addition, notwithstanding the prior provisions of this Paragraph 3, if
          the Participant engages in conduct that constitutes Cause after the
          Participant's employment or service terminates, the Option shall
          immediately terminate. For purposes of this Agreement, the term
          "Cause" shall mean, as determined by the Committee its sole
          discretion, the Participant has (A) committed an act of malfeasance or
          wrongdoing affecting the Partnership or any Employer, (B) breached any
          covenant not to compete, or employment contract, with the Partnership
          or the Employer; or (C) otherwise engaged in conduct that would
          warrant the Participant's discharge from employment or service from
          the Employer as an Employee or Manager for cause.

Notwithstanding the foregoing, in no event may the Option be exercised after the
date that is immediately before the tenth anniversary of the Date of Grant. Any
portion of the Option that is not exercisable at the time the Participant ceases
to be employed by, or provide service to, the Employer as an Employee or Manager
shall immediately terminate.

Exercise Procedures
.
 a. Subject to the provisions of Paragraphs 2 and 3 above, the Participant may
    exercise part or all of the exercisable Option by giving the Partnership
    written notice of intent to exercise in the manner provided in this
    Agreement, specifying the number of Units as to which the Option is to be
    exercised and the method of payment. Payment of the exercise price shall be
    made in accordance with procedures established by the Committee from time to
    time based on the type of payment being made but, in any event, prior to
    issuance of the Units. The Participant shall pay the exercise price (i) in
    cash, (ii) by check, (iii) with the approval of the Committee, by delivering
    Units, which shall be valued at their fair market value on the date of
    delivery, or by attestation (on a form prescribed by the Committee) to
    ownership of Units having a fair market value on the date of exercise equal
    to the exercise price, (iv) by payment through a broker in accordance with
    procedures permitted by Regulation T of the Federal Reserve Board, or (v) by
    such other method as the Committee may approve.
 b. The obligation of the Partnership to deliver Units upon exercise of the
    Option shall be subject to the condition that if at any time the Committee
    shall determine in its discretion that the listing, registration or
    qualification of the Units upon any securities exchange or under any state
    or federal law, or the consent or approval of any governmental regulatory
    body is necessary or desirable as a condition of, or in connection with, the
    issuance of the Units, the Units may not be issued in whole or in part
    unless such listing, registration, qualification, consent or approval shall
    have been effected or obtained free of any conditions not acceptable to the
    Committee. In the event an exemption from registration under the Securities
    Act of 1933 (the "Securities Act") is available, the Participant (or the
    Participant's estate or personal representative in the event of the
    Participant's death or incapacity), if requested by the Partnership to do
    so, will execute and deliver to the Partnership in writing an agreement
    containing such provisions as the Partnership may require to assure
    compliance with applicable securities laws. No sale or disposition of Units
    acquired pursuant to this grant by the Participant shall be made in the
    absence of an effective registration statement under the Securities Act with
    respect to such Units unless an opinion of counsel satisfactory to the
    Partnership is provided that such sale or disposition will not constitute a
    violation of the Securities Act or any other applicable securities laws is
    first obtained.
 c. The Participant understands and agrees that the sale of any Units received
    by the Participant pursuant to this grant will be subject to, and must
    comply with, the Partnership's and the Employer's Insider Trading Policy.
 d. As soon as reasonably practicable after the exercise of the Option, the
    Partnership shall deliver to the Participant a certificate or certificates
    for the Units that represent the portion of the Option exercised by the
    Participant.
 e. The Employer is authorized to take any actions it deems necessary and
    appropriate to satisfy its withholding obligations that result from the
    Participant's exercise of the Option and may withhold from any compensation
    or other amount owing to the Participant an amount necessary to satisfy such
    obligations. The Participant is solely responsible for the payment of any
    taxes that result from the grant of the Option, the Participant's exercise
    of the Option and the selling of any Units received upon the exercise of the
    Option.

Change in Control
. The provisions of the Plan applicable to a Change in Control shall apply to
the Option, and, in the event of a Change in Control, the Committee may take
such actions as it deems appropriate pursuant to the Plan.
Restrictions on Exercise
. Except as the Committee may otherwise permit pursuant to the Plan, only the
Participant may exercise the Option during the Participant's lifetime and, after
the Participant's death, the Option shall be exercisable (subject to the
limitations specified in the Plan) solely by the legal representatives of the
Participant, or by the person who acquires the right to exercise the Option by
will or by the laws of descent and distribution, to the extent that the Option
is exercisable pursuant to this Agreement.
Grant Subject to Plan Provisions
. This grant is made pursuant to the Plan, the terms of which are incorporated
herein by reference, and in all respects shall be interpreted in accordance with
the Plan. In the event of any contradiction, distinction or difference between
this Agreement and the terms of the Plan, the terms of the Plan will control.
The grant and exercise of the Option are subject to interpretations, regulations
and determinations concerning the Plan established from time to time by the
Committee in accordance with the provisions of the Plan, including, but not
limited to, provisions pertaining to (a) rights and obligations with respect to
withholding taxes, (b) the registration, qualification or listing of the Units,
(c) changes in capitalization of the Partnership, and (d) other requirements of
applicable law. The Committee shall have the authority to interpret and construe
the Option pursuant to the terms of the Plan, and its decisions shall be
conclusive as to any questions arising hereunder. By receiving this grant, the
Participant hereby agrees to be bound by the terms and conditions of the Plan
and this Agreement. The Participant further agrees to be bound by the
determinations and decisions of the Committee with respect to this Agreement and
the Plan and the Participant's rights to benefits under this Agreement and the
Plan and agrees that all such determinations and decisions of the Committee
shall be binding on the Participant, his or her beneficiaries and any other
person having or claiming an interest under this Agreement and the Plan on
behalf of the Participant.
No Employment or Other Rights
. The grant of the Option shall not confer upon the Participant any right to be
retained by or in the employ or service of the Employer and shall not interfere
in any way with the right of the Employer to terminate the Participant's
employment or service at any time. The right of the Employer to terminate at
will the Participant's employment or service at any time for any reason is
specifically reserved.
No Rights as Unitholder
. Neither the Participant, nor any person entitled to exercise the Participant's
rights in the event of the Participant's death, shall have any of the rights and
privileges of a unitholder with respect to the Units subject to the Option,
until certificates for Units have been issued upon the exercise of the Option.
Assignment and Transfers
. Except as the Committee may otherwise permit pursuant to the Plan, the rights
and interests of the Participant under this Agreement may not be sold, assigned,
encumbered or otherwise transferred except, in the event of the death of the
Participant, by will or by the laws of descent and distribution. In the event of
any attempt by the Participant to alienate, assign, pledge, hypothecate, or
otherwise dispose of the Option or any right hereunder, except as provided for
in this Agreement, or in the event of the levy or any attachment, execution or
similar process upon the rights or interests hereby conferred, the Partnership
may terminate the Option by notice to the Participant, and the Option and all
rights hereunder shall thereupon become null and void. The rights and
protections of the Partnership hereunder shall extend to any successors or
assigns of the Partnership and to the Partnership's parents, subsidiaries, and
affiliates. This Agreement may be assigned by the Partnership without the
Participant's consent.
Amendments.
The Partnership may waive any conditions or rights under and amend any terms of
this Agreement, provided that no change shall materially reduce the benefit to
the Participant without the consent of the Participant, except as necessary to
comply with the requirements of Paragraph 14 below.
Governing Law
. The validity, construction, interpretation and effect of this Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to the conflict of laws provisions thereof, and
applicable federal law.
Notice
. Any notice to the Partnership provided for in this Agreement shall be
addressed to the Partnership in care of Chief Legal Officer at the principal
office of the Partnership, and any notice to the Participant shall be addressed
to such Participant at the current address shown in the records of the Employer,
or to such other address as the Participant may designate to the Employer in
writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in
a properly sealed envelope addressed as stated above, registered and deposited,
postage prepaid, in a post office regularly maintained by the United States
Postal Service.
Section 409A of the Code
. This Option is not intended to be deemed as deferred compensation subject to
the requirements of section 409A of the Internal Revenue Code of 1986, as
amended (the "
Code
"). However, it is currently uncertain whether this Option will be deemed as
deferred compensation subject to such requirements. As a result, notwithstanding
anything in the Plan or this Agreement to the contrary, to the extent it is
subsequently determined that this Option is subject to the requirements of
section 409A of the Code, the Committee may, without the Participant's consent,
amend this Agreement to comply with the requirements of section 409A of the Code
and any corresponding guidance and regulations issued under section 409A of the
Code. No additional consideration is required to be provided to the Participant
as a result of an amendment of this Agreement to comply with the requirements of
section 409A of the Code.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, this Agreement has been duly executed as of the Date of
Grant.

WITNESS ATLAS PIPELINE HOLDINGS, L.P.

By: Atlas Pipeline Holdings GP, LLC, its general partner

By:

Name:

Title:

 

I hereby accept the Option described in this Agreement, and I agree to be bound
by the terms of the Plan and this Agreement. I hereby further agree that all of
the decisions and determinations of the Committee with respect to this Agreement
and the Plan shall be final and binding.

 

Participant: