Exhibit 10.6


 


ATLANTIC POWER HOLDINGS, LLC

SECOND AMENDED AND RESTATED

LONG-TERM INCENTIVE PLAN


 


1 .                              PURPOSE


 


The purpose of the Plan is
to align the interests of Eligible Persons with those of the holders of income
participating securities (“IPSs”) of Atlantic Power Corporation (the “Issuer”), to assist in
attracting, retaining and motivating  key employees of the Manager (as
defined herein) by making a significant portion of the incentive compensation
of key employees directly dependent upon the achievement of key strategic,
financial and operational objectives that are critical to ongoing, growth and
profitability and that result in the Issuer exceeding, its per IPS distribution
targets.


 


2.                                  DEFI N I TIONS


 


In this Plan:


 


“Administrators” refers to the Independent Directors or such committee of the Issuer’s
board of directors or Person(s) to whom the Independent Directors delegate
their powers hereunder;


 


“Affiliate” of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling”, “controlled by” and “under
common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting, securities, by agreement or otherwise;


 


“Associate” has the meaning ascribed by the Securities Act (Ontario);


 


“Atlantic Holdings” means Atlantic Power Holdings, LLC, a Delaware limited liability
company;


 


“Base Salary” means the base salary paid by the Manager to a Participant for his or
her services, as the same may be amended from time to time;


 


“Cause” means cause as such term is interpreted from time to time by the courts
of Delaware or, where cause is defined in the employment agreement of an
Eligible Person, as defined therein;


 


“Change of Control” means the occurrence of any of the following:


 


(a) the acquisition
directly or indirectly (in one or more related transactions), by any Person or
two or more Persons acting as a group, of beneficial ownership (as that term is
defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of
more than 50% of the outstanding voting stock of the Manager or the Issuer (“Voting Stock”),


 

















 


(b)                                 the merger or consolidation of the Manager or the Issuer with one or
more other Persons as a result of which the holders of the outstanding Voting
Stock of the Manager or the Issuer, as applicable, immediately before the
merger hold less than 50% of the Voting Stock (or equivalent thereof) of the
surviving or resulting Person,


 


(c)                                  the sale to any Person of all or
substantially all of the assets of the Manager or the Issuer or its
subsidiaries taken as a whole, or


 


(d)                                 the Manager or the Issuer or any of their shareholders enters into any
agreement providing for any of the foregoing and the transaction contemplated
thereby is ultimately consummated,


 


provided,
however, that for the purposes of this Plan, the sale of any Voting Stock (or
equivalent thereof) of the Manager or the Issuer (or any successor Person
thereto) pursuant to a public offering shall not constitute a Change of Control;


 


“Deferred
Redemption Date” means
the date of redemption of vested Notional Units as deferred by a Participant
pursuant to Section 8(b) herein;


 


“Determination
Date” means, for a Performance
Period, the date that the board of directors of the Issuer approves the audited
financial statements of the Issuer for the Performance Period;


 


“Disability” means an illness, disease, injury, mental or physical disability or
similar mental or physical state of a Participant that causes the Participant
to be unable to fulfil his or her obligations as a manager, officer or other
employee of the Manager for a period of 90 consecutive days, or for an
aggregate of 180 days in any 365 day period;


 


“Eligible
Person” means a
manager, officer or other employee of the Manager;


 


“Good
Reason” means the
occurrence of any one or more of the following events:


 


(a)                             the assignment to the Participant of any duties inconsistent in any
material respect with the Participant’s then position of employment (including
status, offices, titles and reporting relationships), authority, duties or
responsibilities, or any other action that when taken as a whole results in a
diminution in the Participant’s position, authority, duties or
responsibilities, excluding for this purpose any isolated, immaterial and
inadvertent action not taken in bad faith and which is remedied within seven
business days after receipt of notice thereof given by the Participant,


 


(b)                                 a reduction in the Participant’s Base Salary without the consent of
such Participant or the failure to continue in effect any material benefit or
compensation plan, life insurance plan, health and accident plan or disability
plan in existence as of the date of this Plan (or a replacement or substitute
plan providing the Participant with substantially similar benefits) in which
the Participant is participating or the material reduction of the Participant’s
benefits under any of such plans (or replacement or substitute plans), or


 


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(c)              requiring the Participant
to be based at any location other than Boston, Massachusetts except for
requirements of travel in the ordinary course of the Participant’s duties;


 


“Incentive
Amount” has the meaning set forth in
Section 6(b) hereof;


 


“Independent
Directors” means those members of the
board of directors of the Issuer who are not members of the management of the
Manager;


 


“Insider
Participant” means a Participant who is (a) an
insider of the Issuer or its subsidiaries as defined in the Securities Act (Ontario), and (b) an
Associate of any person who is an insider by virtue of (a);


 


“IPS”  means an income participating security of the Issuer;


 


“IPS
Compensation Arrangement” means an IPS
option, IPS option plan, employee IPS purchase plan or any other compensation
or incentive mechanism involving the issuance or potential issuance of IPSs to
directors, managers, officers and employees of the Issuer or its subsidiaries
or the Manager including an IPS purchase from treasury which is financially
assisted by the Issuer by way of a loan, guarantee or otherwise;


 


“IPS
Ineligible Participant” means a
Participant that does not qualify under applicable exemptions from the
requirement to file a prospectus or registration statement in order to issue
IPSs to the Participant on a redemption of Notional Units under this Plan;


 


“Issuer”
means Atlantic Power
Corporation, a corporation continued under the laws of the Province of British
Columbia;


 


“LTIP
Award Percentages” means the
percentages to be established by the Administrators, in their discretion, for
each Eligible Person that the Administrators determine may participate in the
Plan, which will determine the amount that an Eligible Person is entitled to
receive under the Plan if certain levels of Target Project Cash Flow are
achieved during the applicable Performance Period;


 


“Manager”
means, Atlantic Power
Management, LLC and its Affiliates (or any successor Person(s) thereto);


 


“Market
Price per IPS” means the
weighted average closing price of IPSs on the Toronto Stock Exchange for the
five days immediately preceding the applicable day;


 


“Net
Project Cash Flow” means, for a
Performance Period, an amount equal to the Project Cash Flow less the Project
Cash Flow Adjustments;


 


“Notional
Units” has the meaning set forth in
Section 7(a) hereof;


 


“Notional
Unit Account” means an
account that shall be maintained by Atlantic Holdings for each Participant that
will show the Notional Units credited to a Participant from time to time;


 


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“Participant” means an Eligible Person who receives a grant of Notional Units
pursuant to Section 7;


 


“Performance Period” means each fiscal year of the Issuer;


 


“Person” means any individual, issuer, partnership, business trust, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity;


 


“Plan” means this Long-Term Incentive Plan;


 


“Project Cash Flow” means, for a Performance Period, the total cash flow generated by the
assets owned, directly or indirectly, by Atlantic Holdings during the
Performance Period, such amount to be determined by the Administrators from
time to time;


 


“Project Cash Flow Adjustments” means, for a Performance Period, such adjustments to the Project Cash
Flow agreed by the Administrators to be appropriate including, without
limitation, management fees, administration expenses, bachelor bond interest
expense, net interest expenses, financing costs, taxes and the impact of
acquisition(s) or disposition(s) that occur during the Performance
Period;


 


“Retirement” means the retirement or resignation of a manager, officer or other
employee of the Manager from that capacity upon attaining 65 years of age;


 


“Target Project Cash Flow” means, for a Performance Period, the target Net Project Cash Flow
established by the Administrators; and


 


“Vesting Date” means the date upon which Notional Units vest to a Participant pursuant
to Section 8(a) herein.


 


3.                                 General


 


The Plan shall be
administered by the Administrators, who will have the sole and complete
authority to interpret the Plan and to adopt, amend and rescind any
administrative guidelines, to make all other determinations and to take all
actions necessary or advisable for the implementation and administration of the
Plan, subject to Sections 13(a) and 18. All decisions and determinations
of the Administrators respecting the Plan shall be binding and conclusive
on the Plan and the Participants.


 


4.                                 Participation
in the Plan


 


(a)                                       Participation Right


 


No person shall be entitled
as of right to participate in the Plan and the decision as to who will have the
opportunity to participate in the Plan and the extent of such participation
shall be made by the Administrators in their sole and absolute discretion.


 


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(b)                                 Participation Agreement and Confirmation


 


Participation in the Plan by
each Participant is conditional on the Participant signing a Participation
Agreement and Confirmation in the form attached hereto as Schedule “A”.


 


5.                           Establishment of the Target Project Cash Flow


 


(a)                                  Target Project Cash Flow


 


Prior to the commencement of
each Performance Period, the Administrators shall establish the Target Project
Cash Flow that will apply in respect of that Performance Period as they, in
their sole discretion, determine, based on the recommendations of the Chief
Executive Officer of the Manager.


 


(b)                                  Adjustment


 


The Administrators may
review the Target Project Cash Flow, from time to time and may make such
adjustments as the Administrators deem appropriate in their sole and absolute
discretion.


 


6.                          INCENTIVE AMOUNT


 


(a)                                  LTIP Award Percentages


 


Prior to the commencement of
each Performance Period, the Administrators shall establish the LTIP Award
Percentages to be applied in respect of that Performance Period.


 


(b)                                  Calculation of Incentive Amount


 


On the Determination Date,
the incentive amount (the “Incentive Amount”),
to be applied to each Participant in respect of a Performance
Period, shall be calculated by the Administrators as follows:


 


	
  Incentive Amount

  	
  =

  	
  LTIP Award

  Percentage Achieved

  	
  x

  	
  Participant Base
  Salary

  



 


provided that the
Administrators may, for Participants selected to participate in the Plan after
the commencement of a Performance Period, at the time of calculation of the
Incentive Amount, decrease the Incentive Amount, provide for only a portion of
the Incentive Amount in respect of a Performance Period or make such other
changes as they determine are appropriate.


 


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7.                                  Grant of Notional Units


 


(a)                                  Notional Units


 


On the Determination Date,
notional units (the “Notional Units”) shall
be credited to the Participant’s Notional Unit Account. The number of Notional
Units (including fractional Notional Units) to be credited to a Participant in
respect of a Performance Period shall be determined by dividing the dollar
amount of the Participant’s Incentive Amount by the Market Price per IPS as at
the Determination Date.


 


(b)                                  No Entitlement to Future Grants


 


A Notional Unit granted to
an Eligible Person in respect of a Performance Period shall not entitle the
Eligible Person to any Notional Units in respect of any future Performance
Periods.


 


(c)                                       Entitlement to Distributions


 


Each Notional Unit shall
receive distributions equal to the distributions on an IPS. Such distributions
shall be credited to a Participant’s Notional Unit Account in the form of
additional Notional Units immediately following, any distribution on the IPSs.
The number of Notional Units to be credited for each distribution will be equal
to the amount of the distribution divided by the Market Price per IPS
determined on the payment date for the distribution.


 


8.                                 Vesting of Notional Units


 


(a)                                  General


 


Except as otherwise
specified herein, one-third of the Notional Units in a Participant’s Notional
Unit Account for a Performance Period will vest on the 13th month following the
Determination Date for such Performance Period, 50% of the Notional Units
remaining in a Participant’s Notional Unit Account for a Performance Period
will vest on the second anniversary of the Determination Date for such
Performance Period, and all remaining Notional Units in a Participant’s
Notional Unit Account for a Performance Period will vest on the third
anniversary of the Determination Date for such Performance Period.


 


(b)                                       Deferral of Redemption


 


Subject to compliance with
applicable U.S. law, a Participant may, at his or her option, irrevocably elect
to defer the redemption of Notional Units for additional one-year periods to a
maximum of three years from each Vesting Date for such Notional Units, provided
that the Participant provides written notice of the election within 30 days of
the Determination Date.


 


(c)                                       Performance-Based Forfeiture


 


Notwithstanding, anything to
the contrary herein, if the Net Project Cash Flow achieved in a Performance
Period is less than 80% of the Target Project Cash Flow established by the
Administrators for that Performance Period (“Minimum
Performance Threshold”), all Notional Units having a Vesting, Date
established pursuant to Section 8(a) in the next Performance Period
shall be cancelled, shall no longer be redeemable for IPSs and the Participant
shall forfeit all rights, title and interest with respect to such Notional
Units, unless otherwise expressly determined by the Administrators.


 


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(d)                                  Termination of Employment —
Death or Retirement


 


If
the employment of a Participant is terminated by the death or Retirement of the
Participant prior to the Vesting Date, all Notional Units credited to the
Participant’s Notional Unit Account shall vest or be deemed to have vested
effective the date immediately prior to the date of the Participant’s death or
Retirement. If the employment of a Participant is terminated by the death or
Retirement of the Participant prior to the Deferred Redemption Date, all
Notional Units subject to such deferral shall be redeemed or deemed to have
been redeemed effective the date immediately prior to the date of the
Participant’s death or Retirement.


 


(e)                                  Termination of Employment —
Disability


 


If
the employment of a Participant is terminated due to the Disability of the
Participant prior to the Vesting Date, all Notional Units credited to the
Participant’s Notional Unit Account shall vest on the Vesting Date as if the
Participant continued to be actively employed until the Vesting Date. If the
employment of a Participant is terminated due to the Disability of the
Participant prior to the Deferred Redemption Date, all Notional Units subject
to such deferral shall be redeemed or deemed to have been redeemed as if the
Participant continued to be actively employed until the Deferred Redemption
Date.


 


(f)                                    Termination of Employment —
Change of Control


 


If
the employment of a Participant is terminated following a Change of Control by
the Participant for Good Reason or by the Manager or Atlantic Holdings without
Cause prior to the Vesting Date, all Notional Units credited to the Participant’s
Notional Unit Account shall vest effective the date immediately prior to the
date of such termination of the Participant’s employment. If the employment of
a Participant is terminated following a Change of Control by the Participant
for Good Reason or by the Manager or Atlantic Holdings without Cause prior to
the Deferred Redemption Date, all Notional Units subject to such deferral shall
be redeemed or deemed to have been redeemed effective the date immediately
prior to the date of such termination of the Participant’s employment.


 


(g)                                 Termination of Employment —
Other than Death, Retirement, Disability or Change of Control in Section 8(f)


 


If
the employment of a Participant is terminated for any reason other than death,
Retirement, Disability or upon a Change of Control as set forth in Section 8(f) prior
to the Vesting Date the Participant shall, unless otherwise expressly
determined by the Administrators in writing, forfeit all rights, title and
interest with respect to Notional Units which have not vested on or prior to a
Participant’s termination date. Notional Units that have vested prior to
termination, but for which redemption was deferred by the Participant pursuant
to Section 8(b), will not be forfeited by the Participant unless the
Administrators, in their sole discretion, determine that such termination of
the Participant’s employment was due (in whole or part) to fraud or negligence
on the part of the Participant. A Participant’s termination date shall be the
Participant’s last day at work and shall not include any period of statutory or
common law notice of termination of


 


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employment or period of
salary continuation following a Participant’s termination date for vesting or
any other purpose under this Plan.


 


(h)                                     Termination of Employment — Employment Agreement


 


Notwithstanding any
provision to the contrary herein, if a Participant has entered into an
employment agreement with the Manager or Atlantic Holdings, all Notional Units
credited to the Participant’s Notional Unit Account shall vest subject to any
vesting provisions set forth in such employment agreement. For certainty, to
the extent there is any conflict or inconsistency between the vesting
provisions set out in a Participant’s employment agreement and the vesting
provisions set out in this Plan, the vesting provisions of such Participant’s
employment agreement shall govern.


 


9.                                 Redemption of
Vested Notional Units


 


(a)                                      General


 


Unless a Participant has
elected to defer redemption pursuant to Section 8(b), in which case the
redemption shall be completed in accordance with the deferral, effective as of
the Vesting Date, or, in the Administrators’ absolute discretion, prior to the
Vesting Date, Atlantic Holdings shall, subject to Section 9(b), redeem the
vested portion of each Participant’s Notional Units (including fractional
Notional Units) by:


 


(i)                                     making a lump sum cash payment (net of any
applicable withholdings) to each Participant or the Participant’s legal
representative, if applicable, in respect of one-third of the Notional Units to
be redeemed; and


 


(ii)                                  exchanging two-thirds of the Notional Units
to be redeemed for IPSs pursuant to Section 9(0.


 


(b)                                     Payment of 100% Cash


 


Notwithstanding Section 9(a),
if a Participant has not elected to defer redemption pursuant to Section 8(b),
in which case the redemption shall be completed in accordance with the deferral, effective as of the Vesting Date, or, in the Administrators’
absolute discretion, prior to the Vesting Date, Atlantic Holdings may elect to
redeem the vested portion of each Participant’s Notional Units (including
fractional Notional Units) by making a lump sum payment (net of any applicable
withholdings) to each Participant or the Participant’s legal representative, if
applicable, in respect of the Notional Units to be redeemed.


 


(c)                                      Election for 100% of IPSs


 


Notwithstanding Section 9(a),
a Participant may elect to redeem vested Notional Units for 100% IPSs, provided
that the Participant provides written notice of such election at least 30 days
prior to the date of such redemption.


 


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(d)                                     Redemption from IPS Ineligible Participants


 


Notwithstanding Sections 9(a) and (b), effective as of the Vesting
Date, or, in the Administrators’ absolute discretion, prior to the Vesting
Date, Atlantic Holdings shall redeem the vested portion of each IPS Ineligible
Participant’s Notional Units (including fractional Notional Units) by making a
lump sum cash payment (net of any applicable withholdings) to each IPS
Ineligible Participant or the Participant’s legal representative, if
applicable, in respect of 100% of the Notional Units to be redeemed.


 


(e)                                       Delivery of IPSs on a
Redemption


 


To satisfy its obligation to deliver IPSs on a redemption of vested
Notional Units, Atlantic Holdings shall, at its option, elect to acquire IPSs
either:


 


(i)                                     from the Issuer at the Market Price per IPS;
or


 


(ii)                                  on the Toronto Stock Exchange.


 


(f)                                         Acquisition of IPSs from the
Issuer


 


If Atlantic Holdings elects to acquire IPSs from the Issuer under Section 9(e)(i),
the following provisions shall apply:


 


(i)                                          Upon actual receipt by the Issuer of written notice and payment for the
aggregate purchase price for the IPSs from Atlantic Holdings, subject to
payment of all applicable security transfer, income, withholding or other taxes
or other governmental charges and compliance with all applicable securities
laws, the Issuer shall issue to Atlantic Holdings the applicable number of IPSs
and Atlantic Holdings will use such IPSs to satisfy the redemption.


 


(ii)                                       The Issuer shall not be required to issue, and Atlantic Holdings shall
not be required to cause the issuance of, fractional IPSs upon the acquisition
of IPSs pursuant to Section 9(e)(i). If any fractional interest in an IPS
would be deliverable upon the acquisition of IPSs pursuant to Section 9(e)(i),
Atlantic Holdings shall, in lieu of delivering, or causing the delivery of, any
certificate representing such fractional interest, make a cash payment to the
Participant of an amount equal to the fractional interest which would have been
issuable multiplied by the Market Price per IPS, less applicable withholding taxes,
if any.


 


(iii)                                    The Issuer covenants with Atlantic Holdings that it will at all times
reserve and keep available out of its authorized IPSs (if the number thereof is
or becomes limited), solely for the purpose of issuing such IPSs to Atlantic
Holdings in connection with a redemption under this Plan, such number of IPSs
as shall then be deliverable by Atlantic Holdings under the Plan, to enable and
permit Atlantic Holdings to perform its obligation hereunder to deliver the
requisite number of IPSs to Participants. The Issuer covenants with Atlantic
Holdings that all IPSs, which shall be so issuable, shall be duly and validly
issued as fully-paid and non-assessable upon receipt by


 


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the Issuer of fair value consideration for such IPSs
from Atlantic Holdings in the form of a cash payment. The Issuer further
covenants with Atlantic Holdings that it shall take all actions and do all
things necessary or desirable to enable and permit Atlantic Holdings, in
accordance with applicable law, to perform all of its obligations hereunder.


 


(iv) Immediately
following the acquisition of IPSs from the Issuer by Atlantic Holdings to
satisfy a redemption of Notional Units pursuant to Section 9(e)(i), the
Issuer shall, at its option, using the proceeds of the issuance of IPSs,
either: (A) acquire from Atlantic Holdings common membership interests and
Class A preferred membership interests or (B) acquire IPSs on the
Toronto Stock Exchange, such acquisition in (A) or (B) shall be
equivalent in number to the number of IPSs acquired by


 


Atlantic Holdings pursuant to this Section 9(f).
Atlantic Holdings covenants with the Issuer that it will at all times reserve
and keep available out of its authorized common membership interests and Class A
preferred membership interests a sufficient number of such membership interests
to be issued from treasury to satisfy the acquisition by the Issuer pursuant to
this Section 9(f)(iv).


 


(g)                                 Effect of Redemption of Notional Units


 


A Participant shall have no
further rights respecting any Notional Unit, which has been redeemed.


 


(h)                                 Calculation of Cash Payments


 


Lump sum cash payments made
by Atlantic Holdings to a Participant or a Participant’s legal representative,
if applicable, in respect of Notional Units to be redeemed shall be calculated
by multiplying the number of Notional Units to be redeemed by the Market Price
per IPS as at the Vesting Date.


 


10.                          IPSs SUBJECT TO ISSUANCE UNDER THE
PLAN


 


The aggregate number of IPSs
that may be issued under the Plan upon the redemption of Notional Units is
1,000,000 IPSs subject to increase or decrease by reason of amalgamation,
rights offerings, reclassifications, consolidations or subdivisions, or as may
otherwise be permitted by applicable law and the Toronto Stock Exchange.


 


11.                          LIMIT ON ISSUANCE OF IPSs


 


Except with the approval of
the shareholders of the Issuer given by the affirmative vote of a majority of
the votes cast at a meeting of the shareholders of the Issuer, excluding the
votes attaching to IPSs beneficially owned by Insider Participants to whom
IPSs may be issued pursuant to this Plan and their Associates, no Notional
Units shall be credited to any Participant if such credit could result, at any
time, in:


 


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(a)                                  the number of IPSs reserved for issuance to Participants pursuant to
the redemption of Notional Units together with any other IPS Compensation
Arrangement exceeding 10% of IPSs then issued and outstanding;


 


(b)                                 the number of IPSs issuable to Insider Participants, at any time under
this Plan pursuant to the redemption of Notional Units and any other IPS Compensation
Arrangements, exceeding 10% of IPSs then issued and outstanding; or


 


(c)                                  the number of IPSs issued to Insider Participants, within any one-year
period, under this Plan pursuant to the redemption of Notional Units and any
other IPS Compensation Arrangements, exceeding 10% of IPSs then issued and
outstanding.


 


In the event that the Issuer
or any of its subsidiaries purchases IPSs for cancellation or if IPSs are
separated pursuant to their terms, the Issuer shall be deemed to be in
compliance with the foregoing maximum limits, if immediately prior to such
purchase, expiration, separation or other extinguishment, the Issuer was in
compliance with such limit.


 


12.                            UNFUNDED PLAN


 


Unless otherwise determined
by the Administrators, the Plan shall be unfunded. To the extent a Participant
holds any rights by virtue of participation in the Plan, such rights (unless
otherwise determined by the Administrators) shall be no greater than the rights
of an unsecured general creditor of Atlantic Holdings.


 


13.                            AMENDMENT


 


(a)                                  The Administrators may amend the Plan or any grant of Notional Units at
any time without the consent of Participants provided that such amendment
shall:


 


(i)            not operate to materially affect any rights
already acquired by a Participant under the Plan;


 


(ii)           be subject to any regulatory approvals
including, where required, the approval of the TSX; and


 


(iii) be subject to
approval of the Issuer’s shareholders, where required, by law or the
requirements of the TSX, provided that such shareholder approval shall not be
required for the following amendments:


 


(A)        amendments to remove any conflicts or inconsistencies in the Plan or to
make minor changes or corrections, including the correction or rectification of
any ambiguities, defective provisions, errors, mistakes or omissions, which
are, in the opinion of the Administrators, necessary or desirable and not
prejudicial to the Participants or the Issuer’s shareholders;


 


(B)         a change to the vesting provisions of any Notional Units;


 


(C)         a change to the termination provisions of any Notional Units that


 


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does not entail an extension beyond the original
expiration date; and


 


(D)                          a change to the Eligible Persons.


 


(b)                                 Without amending the Plan, the Administrators may, with the
consent of the Participant, approve any variation in terms, including the
acceleration of the redemption of Notional Units held in the Notional Unit
Accounts of Participants, which have not vested.


 


(c)                                  The cost of the operation of the Plan shall be borne by Atlantic
Holdings.


 


(d)                                 All notices under the Plan shall be in writing and if to Atlantic
Holdings shall be delivered to Atlantic Holdings by first class post to its
head office, and if to a Participant, shall be delivered personally or sent by
first class post to the Participant at the address which the Participant shall
give for the purpose, or failing any such address to the Participant’s
last known place of residence. If a notice is sent by post, service thereof
shall be deemed to be effected by properly addressing, prepaying and posting a
letter containing the same to such address and shall be deemed to be served 48
hours after such posting.


 


14.                          Withholding


 


The Administrators may adopt and apply rules that
will ensure that Atlantic Holdings and any other person complies with all
federal, provincial, foreign, state or local laws relating to the withholding
of tax or other levies on employment compensation in relation to payments and
distributions contemplated in this Plan. Such parties may withhold from amounts
payable to a Participant, under the Plan or otherwise, and shall have the
absolute right to satisfy such withholding obligation by retaining and selling
IPSs that would otherwise have been issued to a Participant upon a redemption
or by accepting a sum sufficient from a Participant to indemnify Atlantic
Holdings and any other person for any liability to withhold hereunder.


 


15.                          Interpretation


 


In this Plan, unless the context otherwise requires,
words importing the singular include the plural and vice versa and words
importing gender include all genders.


 


16.                            No RIGHT OF
EMPLOYMENT


 


Neither participation in the Plan nor any action
under the Plan shall be construed so as to give any Participant a right to
continue as a manager, officer or senior management employee of the Manager.


 


17.                          Non-Transferability


 


A Participant shall not be entitled to transfer,
assign, charge, pledge or hypothecate, or otherwise alienate, whether by
operation of law or otherwise, the Participant’s Notional Units or any rights
the Participant has in the Plan.


 


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18.                          Termination


 


The Administrators may at any time terminate the
Plan provided that such termination shall not affect any rights of Participants
to receive Notional Units for any Performance Period or partial Performance
Period prior to the effective date of such termination.


 


19.                            CHOICE OF LAWS


 


This Plan shall be governed by the laws of the State
of Delaware.


 


20.                          ADOPTION OF THE PLAN


 


This Plan is adopted the 4th day of June, 2008.


 


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SCHEDULE A


 


SECOND
AMENDED AND RESTATED

LONG-TERM INCENTIVE PLAN


 


PARTICIPATION
AGREEMENT AND CONFIRMATION


 


[Name of Employee] (“Participant”)


 


Pursuant
to the Second Amended and Restated Long-Term Incentive Plan (the “Plan”) of Atlantic Power Holdings, LLC (“Atlantic Holdings”) dated June 4,
2008 and in consideration of services provided to the Manager by the
Participant in respect of the 20               
year, Atlantic Holdings hereby grants to the Participant             Notional
Units under the Plan.


 


Capitalized terms not
defined in this agreement have the meanings given in the Plan.


 


Atlantic Holdings and the Participant understand and agree that the
granting of these Notional Units is subject to the terms and conditions of the
Plan (as the Plan may be amended or amended and restated from time to time),
all of which are incorporated into and form a part of this agreement.


 


	
  DATED

  	
  ,20

  	
   

  
	
   

  	
   

  
	
   

  	
  ATLANTIC POWER HOLDINGS, LLC, by 

  
	
   

  	
  its manager, ATLANTIC POWER

  
	
   

  	
  MANAGEMENT, LLC

  
	
   

  	
   

  
	
   

  	
  Per:

  
	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


I agree to the terms and conditions set out herein and confirm and
acknowledge that I have not been induced to enter into this agreement or
acquire any Notional Units or any other interest in the Plan or the Issuer by
expectation of employment or continued employment with the Manager.


 


 


	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name (please print)