Exhibit 10.1


AFFORDABLE
RESIDENTIAL COMMUNITIES INC.


2003
EQUITY INCENTIVE PLAN


NON-QUALIFIED
STOCK OPTION AGREEMENT


THIS NONQUALIFIED
STOCK OPTION AGREEMENT (the “Agreement”), dated as of                     ,
2006, is made by and between Affordable Residential Communities Inc., a
Maryland corporation (the “Company”), and                        
(the “Optionee”).


WHEREAS, the
Company has adopted the Affordable Residential Communities Inc. Inc., 2003
Equity Incentive Plan (the “Plan”), pursuant to which options may be granted to
purchase Common Stock;


WHEREAS, the
Company desires to grant to the Optionee a nonqualified stock option to
purchase the number of shares of Common Stock provided for herein;


NOW, THEREFORE, in
consideration of the recitals and the mutual agreements herein contained, the
parties hereto agree as follows:


Section
1.               Grant of Option


(a)
          Grant
of Option.  The Company hereby
grants to the Optionee an Option to purchase        
shares of Common Stock on the terms and conditions set forth in this Agreement
and as otherwise provided in the Plan. 
The Option is not intended
to be treated, and shall not be construed, as an Incentive Stock Option.


(b)           Incorporation
of Plan.  The provisions of
the Plan are hereby incorporated herein by reference.  Except as otherwise expressly set forth
herein, this Agreement shall be construed in accordance with the provisions of
the Plan and any capitalized terms not otherwise defined in this Agreement
shall have the definitions set forth in the Plan.  The Committee shall have final authority to
interpret and construe the Plan and this Agreement and to make any and all
determinations under them, and its decision shall be binding and conclusive
upon the Optionee and his/her legal representative in respect of any questions
arising under the Plan or this Agreement.


Section
2.               Terms and Conditions of Option


(a)           Exercise Price.  The price at which the Optionee shall be
entitled to purchase shares of Stock upon the exercise of all or any portion of
the Option shall be $          
per share.









 



 


(b)           Expiration Date.  The Option shall expire at the close of
business on the tenth anniversary of the date of this Agreement.


(c)
          Exercisability
of Option.


(i)   Subject to the other terms of this Agreement
regarding the vesting and exercisability of the Option, the Option shall become
vested and exercisable as of the dates set forth below for the cumulative
percentages of shares of Common Stock set forth below, provided the Optionee is
employed by the Company or an Affiliate as of each such date:




	
  Date

  	
   

  	
  Percentage of
  Shares

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  






 


The Committee may, but
shall not be required to, provide at any time for the acceleration of the
schedule set forth above.


(ii)   Notwithstanding clause (i) above, in the
event that the Optionee’s employment with the Company and its Affiliates is
terminated  because of the Optionee’s
death the Option shall become fully vested and exercisable as of the effective
date of such termination.


(iii)   Notwithstanding any other provision of this
Agreement, the Option shall become fully vested and exercisable as of a Change
in Control.


(d)           Method of Exercise.  The Option may be exercised only by written
notice in such form as the Company may adopt from time to time, delivered in
person or by mail in accordance with Section 3(a) and accompanied by payment
therefor or pursuant to such other procedure as the Company may adopt from time
to time.  The purchase price of the
shares of Common Stock shall be paid to the Company (i) in cash or its
equivalent, (ii) by tendering to the Company shares of Common Stock already
owned by the Optionee having a total Fair Market Value less than or equal to
the aggregate purchase price, (iii) to the extent permitted by law, by a “broker
cashless exercise” procedure approved by the Committee, or (iv) by a
combination of the foregoing methods.  If
requested by the Committee, the Optionee shall deliver this Agreement
evidencing the Option to the Secretary of the Company who shall endorse thereon
a notation of such exercise and return such Agreement to the Optionee.  A minimum of 100 shares of Common Stock must
be purchased upon the exercise of the Option unless a lesser number of shares of
Common



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Stock so purchased constitutes the total number
of shares of Common Stock then purchasable under the Option.


(e)           Exercise Following Termination of Employment.   In the event that the Optionee ceases to be
employed by the Company or an Affiliate, that portion of the Option that is not
or does not become then exercisable shall immediately terminate and that
portion of the Option that is or becomes exercisable at the time of the
Optionee’s termination of employment shall terminate as follows:


(i)            If the Optionee’s termination of
employment is due to his/her death or disability (within the meaning of the
Company’s long-term disability plan), the Option (to the extent exercisable at
the time of the Optionee’s termination of employment) shall be exercisable for
a period of twelve months following such termination of employment, and shall
thereafter terminate;


(ii)           If the Optionee’s termination of
employment is by the Company or an Affiliate for Cause, the Option shall
terminate on the date of the Optionee’s termination of employment;


(iii)
         If the Optionee voluntarily
terminates his/her employment with the Company and its Affiliates, the Option
(to the extent exercisable at the time of the Optionee’s termination) shall be
exercisable for a period of 60 days follow­ing such termination of employment,
and shall thereafter terminate; and


(iv)          If the Optionee’s termination of
employment is for any other reason, the Option (to the extent exercisable at
the time of the Optionee’s termination of employment) shall be exercisable for
a period of 60 days following such termination of employ­ment, and shall
thereafter terminate.


Notwithstanding
the foregoing, no provision in this Section 2(e) shall extend the exercise
period of an Option beyond its original term set forth in Section 2(b).


(f)
           Nontransferability. 
The Option shall not be transferable by the Optionee other than by will
or the laws of descent and distribution.


(g)           Rights as a Stockholder.  The Optionee shall not be deemed for any
purpose to be the owner of any shares of Stock subject to the Option unless,
until and to the extent that (i) the Option shall have been exercised pursuant
to its terms, (ii) the Company shall have issued and delivered to the Optionee
the shares of Stock for which the Option shall have been exercised, and (iii)
the Optionee’s name shall have been entered as a stockholder of record with
respect to such shares of Stock on the books of the Company.


(i)            Income
Taxes.  The Company may, in
its discretion, require that the Optionee pay to the Company at or after (as
determined by the Committee) the time of



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exercise
of any portion of the Option any such additional amount as the Company deems
necessary to satisfy its liability to withhold federal, state or local income
tax or any other taxes incurred by reason of the exercise or the transfer of
shares of Common Stock thereupon.  The
Optionee may elect to satisfy part of this obligation by requesting that the
Company withhold a portion of the shares of Common Stock to be received upon
the exercise of the Option having a Fair Market Value equal to the minimum
amount required to be withheld.  For
purposes of this Agreement, the Fair Market Value of the shares of Common Stock
to be so withheld shall be calculated on the date on which the amount of tax to
be withheld is determined.


Section
3.               Miscellaneous


(a)           Notices.
 Unless otherwise determined
by the Committee, any and all notices, designations, consents, offers,
acceptances and any other communications provided for herein shall be given in
writing and shall be delivered either personally or by registered or certified
mail, postage prepaid, which shall be addressed, in the case of the Company to
the General Counsel of the Company at the principal office of the Company and,
in the case of the Optionee, to Optionee’s address appearing on the books of
the Company or to Optionee’s residence or to such other address as may be
designated in writing by the Optionee.


(b)           No
Right to Continued Employment.  Nothing in the Plan or in this Agreement shall
confer upon the Optionee any right to continue in the employ of the Company or
any Affiliate or shall interfere with or restrict in any way the right of the
Company and its Affiliates, which are hereby expressly reserved, to remove,
terminate or discharge the Optionee at any time for any reason whatsoever, with
or without Cause.


(c)           Bound
by Plan.  By signing this
Agreement, the Optionee acknowledges that he/she has received a copy of the
Plan and has had an opportunity to review the Plan and agrees to be bound by
all the terms and provisions of the Plan.


(d)           Successors.
 The terms of this Agreement
shall be binding upon and inure to the benefit of the Company, its successors
and assigns, and of the Optionee and the beneficiaries, executors,
administrators, heirs and successors of the Optionee.


(e)
          Validity/Invalidity.  The invalidity or unenforceability of any
particular provision hereof shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision had been omitted.


(f)            Modifications.  No adverse change or modification of any
provision of this Agreement shall be valid, and no waiver of any provision of
this Agreement shall be valid, unless the same be in writing and signed by the
parties hereto.


(g)           Entire Agreement.  This Agreement and the Plan contain the entire
agreement and understanding of the parties hereto with respect to the subject
matter



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contained
herein and therein and supersede all prior communications, representations and
negotiations in respect thereto.


(h)           Governing
Law.  This Agreement and the
rights of the Optionee hereunder shall be construed and determined in
accordance with the laws of the State of Maryland.


(i)            Headings.  The headings of the Sections hereof are
provided for convenience only and are not to serve as a basis for
interpretation or construction, and shall not constitute a part, of this
Agreement.


(j)            Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.



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IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the parties
hereto on the         day of                ,
20  .


	
   

  	
  AFFORDABLE RESIDENTIAL

  
	
   

  	
   COMMUNITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [OPTIONEE]

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Printed Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							



 


 



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