FORM OF SEVERANCE AGREEMENT



                                  by and among


                    Affordable Residential Communities Inc.,


                          ARC Management Services, Inc.


                                       and


                                       [ ]








                   FORM OF SEVERANCE AND NONCOMPETE AGREEMENT

                  SEVERANCE AGREEMENT (this "Agreement") made this [__] day of
[___________], 200[_], by and among Affordable Residential Communities Inc., a
Maryland corporation (the "Company") and ARC Management Services, Inc., a
Delaware corporation ("ARC Management") and [ ] ("Executive").

                  WHEREAS, the Company, ARC Management and the Executive desire
to enter into an agreement relating to the termination of the Executive's
employment with the Company and ARC Management;

                  WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the Executive has and can continue to contribute significantly
to the growth and success of the Company and its subsidiaries (including ARC
Management) and desires to provide security for the Executive in the event of
termination of the Executive's employment under certain circumstances set forth
herein and to encourage the attention and dedication to the Company and its
subsidiaries of the Executive as a member of management, in the best interests
of the Company and its shareholders; and

                  WHEREAS, the Company and ARC Management agree to the terms
hereinafter set forth.

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the Company, ARC Management
and Executive agree as follows:

                  1. Effective Date.

                  This Agreement shall become effective only upon the
consummation of the initial underwritten public offering of shares of common
stock of the Company (the "Initial Public Offering"). In the event the Initial
Public Offering does not occur, this Agreement shall be null and void and of no
force or effect. The completion of the IPO will hereinafter be referred to as
the "Commencement Date."

                  2. Term.

                  The term of this Agreement begins on the Commencement Date and
shall continue in effect through the third anniversary of such date; provided,
that on the first anniversary of the Commencement Date and on each successive
anniversary thereafter, the term of this Agreement shall be automatically
extended for one (1) additional year unless, not later than the date which is
sixty (60) days prior to such anniversary, the Company shall have delivered to
the Executive or the Executive shall have delivered to the Company a written
notice that the term of the agreement will not be extended.

                  3. Termination of Employment. The Executive's employment with
the Company may be terminated as follows:



                  (a) Death. The Executive's employment with the Company shall
terminate upon his death.

                  (b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties for the Company for the entire period of six
(6) consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 4 hereof) is given shall not have returned to
the performance of his duties for the Company on a full-time basis, the Company
may terminate the Executive's employment for "Disability." In the event of any
dispute under this paragraph, the Executive agrees to submit to a physical or
mental examination by a licensed physician selected by the Company and to be
bound by the Company's decision based on the results thereof.

                  (c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment upon (i) the willful
and continued failure by the Executive to substantially perform the Executive's
duties with the Company (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason by the Executive pursuant to Section 3(d) hereof) that has not been cured
within thirty (30) days after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies
the manner in which the Board believes that the Executive has not substantially
performed the Executive's duties, (ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company or its
subsidiaries or affiliates, monetarily or otherwise or (iii) the Executive's
conviction of, or entry by the Executive of a guilty or no contest plea to, a
felony under any laws of the U.S. or any state thereof. For purposes of clauses
(i) and (ii) of this definition, no act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
act, or failure to act, was in the best interest of the Company.

                  (d) Good Reason. The Executive may terminate his employment
for "Good Reason." "Good Reason" for termination by the Executive of the
Executive's employment shall mean a substantial reduction in base salary or in
the aggregate opportunity of the Executive to participate in the Company's
incentive compensation and other employee welfare and benefit plans from that
provided to the Executive as of the Commencement Date.

                  The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder; provided, however, that the Executive shall
be required to provide a Notice of Termination within ninety (90) days following
the occurrence of any event alleged by the Executive to constitute Good Reason
for the termination of his employment with the Company. The Executive's right to
terminate the Executive's employment for Good Reason shall not be affected by
the Executive's incapacity due to physical or mental illness.

                                       3


                  (e) Without Cause by the Company; Without Good Reason by the
Executive. The Company may terminate the Executive's employment with the Company
at any time without Cause upon thirty (30) days prior written notice to the
Executive. The Executive may terminate the Executive's employment with the
Company voluntarily for any reason or no reason at any time by giving thirty
(30) days prior written notice to the Company.

                  (f) Change in Control. A "Change in Control" shall be deemed
to have occurred if an event set forth in any one of the following paragraphs
shall have occurred:

                      (i) any Person is or becomes the Beneficial Owner (as
               defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
               amended from time to time (the "Exchange Act")), directly or
               indirectly, of securities of the Company (not including in the
               securities beneficially owned by such Person any securities
               acquired directly from the Company or any of its Affiliates)
               representing 50% or more of the combined voting power of the
               Company's then outstanding securities; provided, however, that
               the following shall not constitute an "acquisition" by any Person
               for purposes of this Section 3(f)(i): an acquisition of the
               Company's securities by the Company which causes the Company's
               voting securities beneficially owned by a Person to represent 50%
               or more of the combined voting power of the Company's then
               outstanding securities; provided, further, however, that if a
               Person shall become the beneficial owner of 50% or more of the
               combined voting power of the Company's then outstanding
               securities by reason of share acquisitions by the Company as
               described above and shall, after such share acquisitions by the
               Company, become the beneficial owner of any additional voting
               securities of the Company, then such acquisition shall constitute
               a Change in Control; or

                      (ii) the following individuals cease for any reason to
               constitute a majority of the number of directors then serving on
               the Board: individuals who, on the date hereof, constitute the
               Board and any new director (other than a director whose initial
               assumption of office is in connection with an actual or
               threatened election contest, including but not limited to a
               consent solicitation, relating to the election of directors of
               the Company) whose appointment or election by the Board or
               nomination for election by the Company's stockholders was
               approved or recommended by a vote of at least two-thirds (2/3) of
               the directors then still in office who either were directors on
               the date hereof or whose appointment, election or nomination for
               election was previously so approved or recommended; or;

                      (iii) there is consummated a merger or consolidation of
               the Company or any direct or indirect subsidiary of the Company
               with any other corporation, other than a merger or consolidation
               immediately following which the individuals who comprise the
               Board immediately prior thereto constitute at least a majority of
               the Board, the entity surviving such merger or consolidation or,


                                       4



               if the Company or the entity surviving such merger is then a
               subsidiary, the ultimate parent thereof; or

                      (iv) the stockholders of the Company approve a plan of
               complete liquidation or dissolution of the Company or there is
               consummated an agreement for the sale or disposition by the
               Company of all or substantially all of the Company's assets,
               other than (A) a sale or disposition by the Company of all or
               substantially all of the Company's assets to an entity, at least
               60% of the combined voting power of the voting securities of
               which are owned by stockholders of the Company following the
               completion of such transaction in substantially the same
               proportions as their ownership of the Company immediately prior
               to such sale or (B) other than a sale or disposition by the
               Company of all or substantially all of the Company's assets
               immediately following which the individuals who comprise the
               Board immediately prior thereto constitute at least a majority of
               the board of directors of the entity to which such assets are
               sold or disposed or, if such entity is a subsidiary, or the
               ultimate parent thereof.

                  Notwithstanding the foregoing, a "Change in Control" shall not
be deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions. For purposes
of this Section 3(f), "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

                  4. Termination Procedure.

                     (a) Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive (other than
termination pursuant to Section 3(a) hereof) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 8(c).
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall, if applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of Termination
for Cause is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership of
the Board at a meeting of the Board which was called and held for the purpose of
considering such termination (after reasonable notice to the Executive and an
opportunity for the Executive,



                                       5





together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was engaged in the
conduct set forth in clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.

                      (b) Date of Termination. "Date of Termination" shall mean
(i) if the Executive's employment is terminated by his death, the date of his
death; (ii) if the Executive's employment is terminated for Disability pursuant
to Section 3(b), thirty (30) days after the date of delivery of Notice of
Termination (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period); (iii) if the Executive terminates his employment for any Good Reason,
the date on which a Notice of Termination is given or any later date (within
thirty (30) days following the date on which such Notice of Termination is
delivered) set forth in such Notice of Termination; and (iv) if the Executive's
employment is terminated by the Company for any reason or by the Executive
without Good Reason, the date specified in the Notice of Termination, which
shall not be earlier than thirty (30) days after the date of delivery of the
Notice of Termination.

                  5. Compensation upon Termination or During Disability. The
Executive hereby agrees that no severance compensation of any kind, nature or
amount shall be payable to the Executive except as expressly set forth in this
Section 5, and except for such payments, the Executive hereby irrevocably waives
any claim for severance compensation.

                      (a) Disability; Death. Following the termination of the
Executive's employment due to Disability or death, the Company shall:

                          (i) pay to the Executive any accrued but unused
               vacation pay;

                          (ii) pay to the Executive the Executive's then current
               base salary for a period of one (1) year following the Date of
               Termination, paid in installments at such times as Executive
               would normally receive payroll checks as though employed by the
               Company through the severance payment period; and

                          (iii) provide for the full vesting of any equity
               incentive awards then held by the Executive to the extent
               unvested as of the Date of Termination.

                      (b) Termination of Employment Prior to a Change in
Control.

                      If, prior to a Change in Control, the Executive's
employment with the Company is terminated (x) by the Company other than for
Cause or Disability or (y) by the Executive for any reason the Company shall:

                          (i) continue to pay and otherwise provide to the
               Executive, during any notice period (not to exceed thirty (30)
               days), all



                                       6




               compensation, base salary and previously accrued but unpaid
               bonuses (if any) and shall continue to allow the Executive
               to participate in any welfare benefit plans in accordance with
               the terms of such plans;

                          (ii) pay to the Executive any accrued but unused
               vacation pay; and

                          (iii) pay to the Executive the Executive's then
               current base salary for a period of one (1) year following the
               Date of Termination, paid in installments at such times as
               Executive would normally receive payroll checks as though
               employed by the Company through the severance payment period.

                      (c) Termination of Employment by the Company on or
following a Change in Control. If the Executive's employment is terminated on or
following a Change in Control (x) by the Company other than for Cause or
Disability or (y) by the Executive for Good Reason, the Company shall:

                          (i) continue to pay and otherwise provide to the
               Executive, during any notice period (not to exceed thirty (30)
               days), all compensation, base salary and previously accrued but
               unpaid bonuses (if any) and shall continue to allow the Executive
               to participate in any welfare benefit plans in accordance with
               the terms of such plans;

                          (ii) pay to the Executive any accrued but unused
               vacation pay;

                          (iii) pay to the Executive an amount equal to the sum
               of (x) the Executive's then current base salary and (y) the
               average annual cash bonus earned by the Executive pursuant to the
               Management Incentive Plan (or any successor or substitute bonus
               plan) during the three (3) fiscal years immediately prior to the
               fiscal year in which the Date of Termination occurs (or, if three
               (3) fiscal years have not elapsed from the Commencement Date
               through the Date of Termination, average annual cash bonus so
               earned by the Executive for the number of full fiscal years
               elapsed from the Commencement Date through the Date of
               Termination; or, if no full fiscal years have elapsed during such
               period, the Executive's target annual bonus for the year in which
               the Date of Termination occurs), such amount to be paid in
               installments at such times as Executive would normally receive
               payroll checks as though employed by the Company through the
               severance payment period;

                          (iv) pay to the Executive a pro rata portion to the
               Date of Termination of the value of the Executive's bonus under
               the Company's Management Incentive Plan (or any successor or
               substitute bonus plan) for the fiscal year in which the Date of
               Termination occurs, calculated by multiplying the award that the
               Executive would have earned on the last day of such fiscal year,
               assuming achievement at target level of all performance goals
               established with respect to such bonus, by a fraction, the
               numerator of which is the number of days



                                       7





               elapsed from the commencement of the fiscal year in which occurs
               the Date of Termination and the denominator of which is 365; and

                          (v) for a period of two (2) years following the Date
               of Termination, provide the Executive with an opportunity to
               elect continued coverage under the Company's group health plans
               in accordance with Section 4980B of the Internal Revenue Code of
               1986, and the Company shall bear the cost of such coverage;
               provided, however, that, in the case of Disability, benefits
               otherwise due to the Executive pursuant to this Section 5(c)(v)
               shall be reduced to the extent benefits of the same type are
               received by or made available to the Executive by a subsequent
               employer during the two (2) year period following the Date of
               Termination.

                      (d) Tax Gross-Up. If any of the payments or benefits
received or to be received by the Executive (including any payment or benefits
received in connection with a Change in Control or the Executive's termination
of employment whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement (all such payments and benefits, excluding the Gross-Up
Payment, being hereinafter referred to as the "Total Payments")) will be subject
to any excise tax imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Excise Tax"), the Company shall pay to the Executive an
additional amount (the "Gross Up Payment") such that the net amount retained by
the Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, and after taking into account the phase out of itemized
deductions and personal exemptions attributable to the Gross-Up Payment, shall
be equal to the Total Payments.

                      (e) Termination of Employment at any time by the Company
for Cause or, Following a Change in Control, by the Executive other than for
Good Reason. If the Executive's employment with the Company is terminated at any
time by the Company for Cause or, following a Change in Control, by the
Executive other than for Good Reason, then the Company shall pay the Executive
his then-current base salary through the Date of Termination, and the Company
shall have no additional obligations to the Executive under this Agreement
except as set forth in subsection (f) of this Section 5.

                      (f) Compensation Plans. Following any termination of the
Executive's employment with the Company, the Company shall pay the Executive all
accrued but unpaid amounts, if any, to which the Executive is entitled as of the
Date of Termination under any compensation plan or benefit plan or program of
the Company, at the time such payments are due, in any event, in accordance with
the terms of such plan or program.

                      (g) Termination of Company's Obligation to Pay. The
Company's obligation to provide the Executive the payments and benefits
described in this Section 5 shall cease as of the date the Executive breaches
any of the provisions of Section 7 hereof.

                                       8


                      (h) Return of Company Property. Executive agrees that
following the termination of his employment with the Company for any reason, he
shall return all property of the Company, its subsidiaries, affiliates and any
divisions thereof he may have managed which is then in or thereafter comes into
his possession, including, but not limited to, documents, contracts, agreements,
plans, photographs, books, notes, electronically stored data and all copies of
the foregoing as well as any automobile or other materials or equipment supplied
by the Company to Executive, if any.

                  6. Mitigation. The Executive shall not be required to mitigate
the amount of any payment provided for the Executive by seeking other employment
or otherwise. However, the amount of any payment or benefit provided for the
Executive hereunder shall be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits and
offset against any amount claimed to be owed by the Executive to the Company or
otherwise.

                  7. Confidential Information; Noncompetition; etc.

                     (a) Non-Competition.

                     The Executive acknowledges and agrees that the Executive's
duties to the Company qualify the Executive as "executive and management
personnel" under Colorado Revised Statute Section 8-2-113(2)(d). The Executive
further acknowledges that, during the course of the Executive's employment with
the Company, the Executive will gain knowledge of "trade secrets" - as such term
is used under Colorado Revised Statute Section 8-2-113(2)(b) - of the Company
and its subsidiaries and affiliates. Accordingly, the Executive acknowledges and
agrees that the restrictive covenants are valid under Colorado Revised Statute
Section 8-2-113, and are temporally and geographically reasonable.

                     In that regard, while the Executive remains employed by the
Company and for a period of twelve (12) months following the termination of the
Executive's employment with the Company for any reason, provided that the
Company has paid to the Executive any and all severance amounts, if any, due to
Executive under Section 5 hereof, the Executive shall not engage in Competition
(as hereinafter defined) with the Company or any of its subsidiaries or
affiliates. For purposes of this Agreement, "Competition" by the Executive shall
mean the Executive's engaging in, or otherwise directly or indirectly being
employed by or acting as a consultant to, or being a director, officer,
employee, principal, agent, stockholder, member, owner or partner of, or
permitting his name to be used in connection with the activities of any other
business or organization where any aspect of the business of the Company or any
of its subsidiaries is conducted, or planned to be conducted, as of the date of
this Agreement or as of the date of termination of the Executive's employment,
anywhere within the United States, which business activity is the same as or
competitive with the Company or any of its subsidiaries as the same may be
conducted from time to time.

                     Notwithstanding anything to the contrary contained herein,
direct or indirect "beneficial ownership" by the Executive, either individually
or as a member of


                                       9




a "group," as such terms are used in Rule 13d of the General Rules and
Regulations under the Exchange Act, as amended, of not more than five percent
(5%) of the voting stock of any publicly held corporation shall not alone
constitute a violation of this Section 7(a).

                      (b) Non-Solicitation. For a period of six (6) months prior
to and twelve (12) months following the termination of Executive's employment
for any reason prior to a Change in Control, provided that the Company has paid
to the Executive any and all severance amounts, if any, due under Section 5
hereof, Executive agrees that he will not, directly or indirectly, for his
benefit or for the benefit of any other person, firm or entity, solicit the
employment or services of, or hire or engage, any person who was known to be
employed or engaged by the Company or its subsidiaries or affiliates as of the
date of Executive's termination of employment with the Company or who was known
to be employed or engaged by the Company or its subsidiaries or affiliates
during the six (6) month period immediately preceding the Executive's
termination of employment with the Company.

                      (c) Confidentiality. Executive acknowledges that
information pertaining to the prior or current business of the Company or any of
its subsidiaries or contemplated business of the Company or any of its
subsidiaries and its customers (including without limitation information
relating to the Company's subsidiaries, affiliates and predecessors and their
respective customers and information relating to entities with which the Company
or its subsidiaries or affiliates has communicated with respect to a possible
acquisition or material investment) constitutes valuable and confidential assets
of the Company, and Executive acknowledges that the unauthorized use or
disclosure of such information would be detrimental to the business of the
Company and its subsidiaries. Without limitation of the foregoing, Executive
agrees that the following types of information are confidential:

                          (i) information pertaining to any customer of the
               Company or its subsidiaries or affiliates, including information
               relating to the prior, current or future research or development
               activities of any customer, or relating to other business
               activities of any customer;

                          (ii) information, conclusions and developments
               resulting from work performed, and all methods and procedures
               relating to work performed, or to be performed, for the Company
               or its subsidiaries or affiliates or any customer;

                          (iii) information, conclusions and developments
               resulting from, and all methods and procedures relating to prior,
               current or contemplated projects and products of the Company or
               its subsidiaries or affiliates;

                          (iv) information, conclusions and developments,
               resulting from work performed, or to be performed, pertaining to
               any entity with which the Company or its subsidiaries or
               affiliates has communicated during the Executive's employment
               with the Company concerning a possible acquisition of, or
               material investment in, such entity; and

                                       10


                          (v) information which the Executive has a reasonable
               basis to know was accepted by the Company or its subsidiaries or
               affiliates from any third party under an obligation of
               confidentiality.

                  The Executive shall, while the Executive remains employed by
the Company and thereafter, hold and preserve all confidential information of
the Company or its subsidiaries or affiliates and of its customers in trust and
confidence for the Company and for its customers, and shall not, without the
express written approval of an officer of the Company, disclose any such
confidential information to any unauthorized person or use or copy any such
confidential information for other than the Company's business, either during,
or after termination of, employment with the Company. The Executive shall not
disclose to the Company or its subsidiaries or affiliates, or induce the Company
or its subsidiaries or affiliates to use, any confidential information belonging
to others, without authorization from such other parties. Specifically excluded
from the above confidentiality provisions is any information which becomes
available to the public other than through the unauthorized disclosure by the
Executive.

                  (d) Non-Disparagement. While the Executive remains employed by
the Company and for a period of one (1) year following the termination of the
Executive's employment for any reason, the Executive will not intentionally
make, or cause to be made, any statement, observation or opinion disparaging the
business or reputation of the Company or the Company's officers, directors or
employees. Nothing contained in this Section 7(d) shall preclude the Executive
from providing truthful testimony in response to a valid subpoena, court order,
regulatory request or other legal process.

                  (e) Injunctive Relief. The Executive agrees that any breach or
threatened breach of subsections (a), (b), (c) or (d) of this Section 7 would
result in irreparable injury and damage to the Company and its subsidiaries and
affiliates for which the Company and its subsidiaries and affiliates would have
no adequate remedy at law. Executive therefore also agrees that in the event of
said breach or any reasonable threat of breach, the Company shall be entitled to
seek an immediate injunction and restraining order to prevent such breach and/or
threatened breach and/or continued breach by the Executive and/or any and all
persons and/or entities acting for and/or with the Executive. The terms of this
paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including, but not limited
to, remedies available under this Agreement and the recovery of damages. The
parties hereto further agree that the provisions of the covenant not to compete
are reasonable. Should a court or arbitrator determine, however, that any
provision of the covenant not to compete is unreasonable, either in period of
time, geographical area, or otherwise, the parties hereto agree that the
covenant shall be interpreted and enforced to the maximum extent which such
court or arbitrator deems reasonable.

               8. Successors; Notice.

                  (a) Company's Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to


                                       11





all or substantially all of the business and/or assets of the Company and/or ARC
Management to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company and/or ARC Management would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as he would be entitled to hereunder if the Company had terminated his
employment other than for Cause, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets (or, if applicable, the business and/or assets of ARC Management) as
aforesaid which executes and delivers the agreement provided for in this Section
8 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

                      (b) Executive's Successors. This Agreement and all rights
of the Executive hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate. The services to be performed by the Executive hereunder are specific to
the Executive and may not be assigned by the Executive.

                      (c) Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:

                  if to the Executive, at the Executive's most recent address
shown in the records of the Company; and

                  If to the Company or ARC Management, to:

                  Affordable Residential Communities Inc.
                  600 Grant Street
                  Suite 900
                  Denver, Colorado 80203
                  Attention:  Office of the General Counsel

or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

                                       12


                  9. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer of the Company as
may be specifically designated by its Board. No waiver by any party hereto at
any time of any breach by any party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by any party hereto which are not set forth expressly in this
Agreement. This Agreement shall be binding on all successors to the Company. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Colorado without regard to its conflicts
of law principles. All references to sections of the Exchange Act shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the Company and the Executive under this Section 9 and Sections
4, 5, 6, 7 and 8 hereof shall survive the expiration of the term of this
Agreement. The compensation and benefits payable to the Executive under this
Agreement shall be in lieu of any other severance benefits to which the
Executive may otherwise be entitled upon his termination of employment under any
severance plan, program, policy or arrangement of the Company or ARC Management.

                  10. Withholding. Any amounts payable or property transferred
pursuant to this Agreement shall be subject to applicable tax withholding, and
the Company may require a cash payment with respect to such obligations as a
condition of any such payment or transfer of property.

                  11. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.

                  12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

                  13. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.


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                  IN WITNESS WHEREOF, the parties have executed this Agreement
the date first above written.

                     AFFORDABLE RESIDENTIAL COMMUNITIES INC.

                     By: __________________________________

                     ARC MANAGEMENT SERVICES INC.

                     By: __________________________________


                     --------------------------------------
                     EXECUTIVE





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