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Exhibit 10.1




STOCK APPRECIATION RIGHTS AGREEMENT




     This STOCK APPRECIATION RIGHTS AGREEMENT (“Agreement”) is entered into effective as of the ___
day of ___, 20___(the “Date of Grant”), between TARRAGON CORPORATION, a Nevada corporation (the
“Company”), and ___, an individual (the “Grantee”).



     WHEREAS, the Company has adopted, with the approval of its stockholders, the Tarragon
Corporation Omnibus Plan (such Plan, as same may hereinafter be amended, is referred to as the
“Plan”), a copy of which will be provided to Grantee upon request; and



     WHEREAS, in order to achieve the objectives of the Plan, and to secure the continuing services
of Grantee, the Company wishes to grant to Grantee Stock Appreciation Rights (or an “SAR” as that
term is defined in the Plan) which confer on Grantee the right to receive, upon exercise, the
difference between the grant price of the shares of Tarragon common stock, $.01 par value (the
“Shares”) covered by the SAR, and the market value of the Shares on the date of exercise, not to
exceed $15.00 per Share (the “Appreciation”), payable in Shares and cash, upon the terms
hereinafter set out.



     ACCORDINGLY, in consideration of the foregoing premises, the mutual promises hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and Grantee agree as follows:


1. Grant of SAR. Subject to the terms of this Agreement and the Plan, which is
incorporated herein by reference, the Company hereby grants to Grantee an SAR covering ?? Shares of
the Company, at a grant price of $______ per Share.



2. Term of Agreement; Vesting and Exercise. Except as otherwise provided herein, the
Grantee shall have the right to exercise the SAR and acquire Shares under this Agreement beginning
one full year and one day after the Date of Grant, but only to the extent of the number of Shares
covered by the SAR, multiplied by thirty three and one third percent (33.33%) and by the number of
full years which have elapsed since the Date of Grant, until the third anniversary of the Date of
Grant, and thereafter to the extent of the full SAR covered by this Agreement. The date a written
notice of exercise is received by the Secretary or Treasurer of the Company shall be the exercise
date. Upon exercise, the Grantee is entitled to the Appreciation in the number of whole Shares
covered by the SAR being exercised, after deducting therefrom an amount sufficient to satisfy all
federal, state and local withholding tax requirements. Payment will be made in the form of whole
Shares equal in market value to the Appreciation less an amount sufficient to satisfy all federal,
state and local withholding tax requirements, plus cash in lieu of any partial or fractional
Shares. No fractional Shares will be issued. Notwithstanding any other provision of this
Agreement or the Plan, the total amount of Appreciation that Grantee may receive under this
Agreement is limited to $15.00 per Share, multiplied by the number of Shares covered by this SAR.



3. Condition Precedent. As a condition precedent to the right to exercise the SAR, Grantee
agrees to use or continue to use his or her best lawful efforts for the benefit of the Company and
its subsidiaries during the term of this Agreement. However, the grant of the SAR pursuant to this
Agreement shall not be deemed to be an obligation of the Company to continue Grantee’s employment
with the Company for any period or time.




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4. Limitation on Transferability. The SAR granted hereunder is personal to Grantee, and
may not be sold, transferred, assigned, pledged, hypothecated or otherwise disposed of in any way
(whether by operation of law or otherwise) except as otherwise provided by the laws of descent and
distribution. Any attempt to sell, transfer, assign, pledge or hypothecate or otherwise dispose of
the SAR contrary to the provisions of this Agreement and the Plan, or upon levy or any attachment
or similar process upon this Agreement or Grantee’s rights hereunder, this Agreement and such
rights shall immediately become null, void and of no further force or effect.



5. Termination Date. This Agreement and all rights granted hereunder, to the extent those
rights have not been exercised, will terminate and become null and void at 5:00 p.m., local central
time, on the date ten (10) calendar years following the Date of Grant (the “Termination Date”) or
sooner if the relationship of Grantee to the Company ceases for any reason (including discharge by
the Company). In the event of termination of Grantee’s relationship to the Company for any reason
other than Grantee’s death, Grantee may exercise the SAR at any time within ninety (90) calendar
days following the date of such termination, to the same extent the SAR was exercisable by Grantee
on the date of termination, but not otherwise. If Grantee dies while employed by the Company or
one of its subsidiaries or within the ninety (90) calendar day period following termination of such
relationship, the person or persons to whom his or her rights under this Agreement shall pass,
whether by will or by the applicable laws of descent and distribution, may exercise such rights, to
the extent Grantee was entitled to exercise them on the date of his death, for a period of one
hundred eighty (180) calendar days following Grantee’s date of death. Notwithstanding anything in
this Agreement to the contrary, this Agreement and all rights granted hereunder shall in all events
terminate and become null and void on the Termination Date.



6. Securities Laws. By executing this Agreement, Grantee acknowledges that (a) upon
exercise of the SAR, Grantee may receive “restricted” securities of the Company; (b) that the
Company may register shares of common stock under the Plan, but is under no obligation to do so;
and (c) that at the time of exercise of the SAR, in whole or in part, Grantee may be required to
execute an Investment Representation Letter or such other written representations concerning his or
her intentions for the retention or disposition of the Shares of the Company being acquired by the
exercise, as, in the opinion of counsel to the Company, shall be necessary or advisable to insure
that any disposition of the Shares acquired through the exercise will not involve the violation of
the Securities Act of 1933, as amended, any applicable state securities or blue sky laws, any
similar or superseding statute or statutes, or any applicable federal or state statute or
regulation, as then in effect.



7. Adjustment of Number of Shares. The number of Shares subject hereto and the Exercise
Price per Share shall be proportionately adjusted for any increase or decrease in the number of
issued Shares of the Company resulting from the subdivision or consolidation of Shares, or the
payment of stock dividends after the Date of Grant, or other increases or decreases in the number
of Shares outstanding effected without receipt of consideration by the Company; provided, however,
that any adjustment resulting in fractional Shares shall be rounded down to the next whole Share.
The issuance by the Company of any Shares of any class, or any securities convertible into Shares
of any class, for cash or property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants subscribed therefor, or upon conversion of Shares or obligations of
the Company convertible into such Shares or other securities, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number of Shares of the Company subject to
this Agreement.



8. Merger and Consolidation. Upon any merger or consolidation where the Company is the
surviving entity, this Agreement shall continue in accordance with its terms except that, upon any
exercise of the SAR (or any substitute rights), Grantee shall be entitled to receive, in lieu of
payment in Shares of the Company, the amount of securities or other consideration received in the
merger or consolidation by holders of the same number and class of Shares of the Company as Grantee
would have been entitled to under this Agreement.




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9. Change of Control. In the event of a Change in Control, as hereinafter defined, of the
Company, this Agreement shall become immediately exercisable as of the date of such Change in
Control, and shall remain exercisable through the Termination Date. For purposes of this
Agreement, a “Change in Control” shall be deemed to occur: (i) upon the approval by the Board of
Directors of the Company (or if approval of the Board is not required as a matter of law, the
stockholders of the Company) of (A) any consolidation or merger of the Company in which the Company
is not the continuing or surviving entity or pursuant to which the Shares would be converted into
cash, securities or other property other than a merger in which the holders of the Shares
immediately prior to the merger will have the same proportionate ownership of the shares of the
surviving entity immediately after the merger, (B) any sale, lease, exchange, or other transfer (in
one transaction or a series of related transactions) of all or substantially all the assets of the
Company, or (C) adoption of any plan or proposal for the liquidation or dissolution of the Company;
or (ii) when any “person” (as defined in Section 13(d) of the Exchange Act), other than the
Company or any Subsidiary or employee benefit plan or trust maintained by the Company, shall become
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of more than 40% of the Shares outstanding at the time, without the prior approval of the Board; or
(iii) at any time during a period of two consecutive years, individuals who at the beginning of
such period constituted the Board shall cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for election by the stockholders of each new
director during such two-year period was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such two-year period.



10. Rights of Grantee. The Grantee shall not be deemed for any purpose to be a stockholder
of the Company with respect to any of the Shares available to be acquired through the exercise of
any SAR, except to the extent that the SAR shall have been exercised with respect thereto. Except
as provided in paragraph 7 above, no adjustment shall be made for dividends or other rights for
which the record date is prior to the date a Share certificate is issued to Grantee pursuant to an
exercise of the SAR. The existence of this Agreement shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure, or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference
securities ahead of or affecting the Shares of the Company or the rights thereof or the dissolution
or liquidation of the Company or any sale or transfer of all or any part of its assets or business,
or other act or proceeding, whether of a similar character or otherwise.



11. Determination of Board of Directors. This Agreement is subject to all the terms and
conditions of the Plan, and specifically to the power of the Executive Compensation Committee (the
“Committee”) appointed by the Board of Director’s of the Company to administer and interpret the
Plan and all rights granted thereunder. In the event of any conflict between the Plan and this
Agreement, the provisions of the Plan shall control. Grantee agrees that any dispute or
disagreement which shall arise under or as a result of or pursuant to this Agreement or the Plan
shall be determined by the Committee in its reasonable discretion, and that any good faith
determination, interpretation or other action by the Committee, or in its absence, by the Board of
Directors of the Company, relating to this Agreement or the Plan shall be final, binding and
conclusive for all purposes and upon all parties, including Grantee.



12. Defined Terms. Terms utilized in this Agreement that are not otherwise defined herein
have the same meaning as set forth in the Plan.




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13. Notices. Any notices required or permitted to be given pursuant to this Agreement must
be given in writing and mailed by first class mail or be hand delivered. All notices to the Company
shall be effective only upon receipt by an officer of the Company and any notices given by the
Company shall be deemed to be received by Grantee on the third day after the date of such notice.



14. Parties Bound. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, and all references herein to either the
Company or the Grantee shall be deemed to include any successor or successors, whether immediate or
remote.



15. Governing Law and Enforcement. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the United States of America and the State of Texas.



16. Captions. The headings or captions of this Agreement and the Plan have been included
for ease of reference only and are not to be considered in the construction or interpretation of
this Agreement or the Plan or any section or clause contained herein or therein.



17. Separate Agreement. Any and all SAR or other rights granted to Grantee hereunder shall
be deemed to be in addition to and separate and apart from any SAR or other rights granted to
Grantee under any separately existing or other like agreement.




     IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date and year
first above written.



	 	 	 	 	 
	TARRAGON CORPORATION,	 	 
	a Nevada corporation	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	GRANTEE:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 






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