Document:

MERRILL LYNCH MORTGAGE CAPITAL INC.
                            4 WORLD FINANCIAL CENTER
                                   10TH FLOOR
                            NEW YORK, NEW YORK 10080

                                December 1, 2003

Enspire Finance, LLC
600 Grant Street
Suite 900
Denver, Colorado 80203

ARC Dealership, Inc.
600 Grant Street
Suite 900
Denver, Colorado 80203

Attention: Scott D. Jackson

Re: Transactions with Enspire Finance, LLC and ARC Dealership, Inc.

Gentlemen:

     This Commitment Letter is intended to set forth the results of discussions
among Merrill Lynch Mortgage Capital Inc. ("MLMCI"), Enspire Finance, LLC
("SELLER") and ARC Dealership, Inc. ("BORROWER" together with Seller the
"TRANSACTION PARTIES") relating to the proposed repurchase transactions and
financing transactions (the "TRANSACTIONS") of certain manufactured housing
contracts and manufactured homes (the "ASSETS") owned by the Transaction
Parties, as applicable. Subject to the satisfaction of the conditions set forth
in this Commitment Letter, MLMCI commits, either through itself or through an
affiliate, to (i) make certain loans (the "LOANS") contemplated hereby to the
Borrower and the Borrower commits to borrow such Loans and (ii) enter into
transactions (the "REPURCHASE TRANSACTIONS") contemplated hereby with the Seller
and the Seller commits to enter into such Repurchase Transactions.

     1. MAXIMUM AMOUNT. Subject to the terms and conditions of the documents
relating to the Transactions:

     (a) The aggregate outstanding amount of Repurchase Transactions shall at no
time exceed (i) prior to the date of the successful completion of an initial
public offering of the shares of Affordable Residential Communities Inc. (the
"IPO") $45,000,000 and (ii) on an after the date of the IPO $225,000,000.

                                       1

     (b) The aggregate outstanding amount of Loans shall at no time exceed (i)
prior to the date of the IPO $5,000,000; and (ii) on and after the date of the
IPO $25,000,000.

     2. PRINCIPAL TERMS AND CONDITIONS. The principal terms of the Transactions
are set forth in the "SUMMARY OF TERMS AND CONDITIONS" attached hereto. The
Summary of Terms and Conditions are incorporated by reference herein for all
purposes and deemed part of this Commitment Letter.

     3. GENERAL UNDERSTANDING. The Transaction Parties and MLMCI each covenants
to act in good faith to do all things reasonably required to consummate the
closing of the Transactions. The Transaction Parties will cooperate and use best
efforts to prepare or cause to be prepared documents relating to the
Transactions. The Transaction Parties acknowledge that MLMCI has set forth in
this Commitment Letter the terms and conditions upon which it is willing to
provide the Transactions based upon each Transaction Party's oral or written
representations regarding itself and the Assets, as applicable. MLMCI's
commitment is subject to (a) the negotiation, execution and delivery prior to
the Commitment Expiration Date (as defined below) of the documentation relating
to the Transactions satisfactory in form and substance to MLMCI and its counsel
in their good faith; (b) MLMCI's good faith determination that no material
adverse change has occurred in the condition of the Assets or any Transaction
Party's financial condition, prospectus or operations since the date of this
Commitment Letter; and (c) the value and condition of the Assets, the financial
statements of the Transaction Parties and all other features of the Transactions
shall be as represented in the documents and communications presented to MLMCI
in order to induce MLMCI to enter into the Commitment Letter.

     4. EXPIRATION DATE. If the Transactions do not close on or prior to
February 15, 2004 (as such date may be extended, the "COMMITMENT EXPIRATION
DATE"), this Commitment Letter will be deemed terminated and MLMCI shall have no
further obligations hereunder unless MLMCI otherwise elects in writing to extend
the Commitment Expiration Date.

     5. EXCLUSIVITY. Prior to the Commitment Expiration Date, the Transaction
Parties will not, and will cause its affiliates not to, obtain or in any way
attempt to obtain the Transactions or any other debt financing with respect to
the Assets with any party other than MLMCI. The Transaction Parties acknowledge
that MLMCI is devoting time and resources to the Transactions that it otherwise
could be devoting to other projects. Therefore, if any Transaction Party
breaches their obligations pursuant to this paragraph, the Transaction Parties
agrees to pay MLMCI, in addition to its obligations to pay Expenses as described
below, the Commitment Fee, which it is hereby authorized to retain in such
event. Receipt of such payment by MLMCI shall not constitute a waiver or
limitation of any rights or remedies MLMCI may have either at law or equity.

     6. CONFIDENTIALITY. Except to the extent required by law and disclosure
requirements associated with the IPO, each Transaction Party agrees not to
disclose, and to cause its officers, directors, employees and agents not to
disclose, this Commitment Letter, any of the terms, conditions, or other facts
relating to the Transactions, including the status thereof, or the fact that
discussions or negotiations are taking place concerning the Transactions, to any
person other than its attorneys and other advisors who need to know such
information for the purpose of causing the consummation of the Transactions,
provided that any such parties will be informed of the confidential nature of
such information and directed to keep such information in the strictest
confidence. The terms set forth herein are proprietary to MLMCI and are made
available to the Transaction Parties solely for the evaluation of the
Transactions. Oral or written disclosure of this Commitment Letter to any
competitor of MLMCI shall be detrimental to MLMCI and shall be an explicit
violation of this paragraph. The obligations of each Transaction Party under
this paragraph shall survive the Commitment Expiration Date. Notwithstanding the
foregoing or

                                       2

anything to the contrary contained herein, the parties hereto may disclose to
any and all persons, without limitation of any kind, the U.S. federal income tax
treatment of the Transactions, any fact that may be relevant to the
understanding the U.S. federal tax treatment of the Transactions, and all
materials of any kind (including opinions or other tax analyses) relating to
such U.S. federal income tax treatment; provided that the Transaction Parties
may not disclose the name of or identifying information with respect to MLMCI or
any pricing terms or other nonpublic business or financial information
(including any sublimits and financial covenants) that is unrelated to the
purported or claimed U.S. federal income tax treatment of the Transactions to
the taxpayer and is not relevant to understanding the purported or claimed U.S.
federal income tax treatment of the Transactions, without the prior written
consent of MLMCI.

     7. BROKERAGE. Each Transaction Party represents and warrants to MLMCI that
no broker(s), agent(s) or finder(s) brought about the Transactions or were
otherwise involved in any manner in the Transactions or any aspect thereof. Each
Transaction Party hereby agrees to indemnify and hold harmless MLMCI and its
affiliates against any and all loss, cost, damage, liability or expense incurred
by MLMCI or its affiliates arising out of, or in connection with, a breach of
the representations and warranties set forth in this paragraph.

     8. EXPENSES. Each Transaction Party hereby agrees to pay or to reimburse
MLMCI, upon demand, whether or not the Transactions are consummated, the
reasonable out-of-pocket expenses (collectively, the "EXPENSES") incurred by
MLMCI in connection with the preparation of the Transactions, as more
particularly described in the Summary of Terms and Conditions.

     9. INDEMNIFICATION. Each Transaction Party agrees to indemnify and hold
harmless MLMCI and each director, officer, employee, affiliate and agent thereof
(each, an "indemnified person") against, and to reimburse each indemnified
person, upon its demand, for, any losses, claims, damages, liabilities or other
expenses ("Losses") to which such indemnified person may become subject insofar
as such Losses arise out of or in any way relate to or result from this letter
or the Transactions contemplated hereby, including, without limitation, Losses
consisting of legal or other expenses incurred in connection with investigating,
defending or participating in any legal proceeding relating to any of the
foregoing (whether or not such indemnified person is a party thereto); provided
that the foregoing will not apply to any Losses to the extent they result are
found by a final decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such indemnified person. Each
Transaction Party's obligations under this paragraph shall remain effective
whether or not definitive Transaction documentation is executed and
notwithstanding any termination of this letter. Neither MLMCI nor any other
indemnified person shall be responsible or liable to any other person for
consequential damages which may be alleged as a result of this letter or the
Transactions contemplated hereby.

     10. MISCELLANEOUS. (a) By each Transaction Party's execution and delivery
below, each Transaction Party hereby represents, warrants, covenants and agrees
that: (i) it has the power and authority to enter into this Commitment Letter;
(ii) the Transactions described herein are not the subject of a commitment from
another lender; (iii) no other party has a right of refusal or other option
which could cause the Transactions not to be consummated; (iv) neither
Transaction Party nor any of their affiliates or principals have been a party to
any bankruptcy, insolvency or similar proceedings; (v) it has been advised by
counsel in the negotiation, execution and delivery of this Commitment Letter;
and (vi) MLMCI has not acted, and is not acting, as an advisor to the
Transaction Party.

     (b) the Transaction Parties will have no right to assign this Commitment
Letter or any of its rights or obligations hereunder.

                                       3

     (c) This Commitment Letter shall be governed by and construed and
interpreted in accordance with the internal laws of the State of New York. Each
party hereto hereby submits to the exclusive jurisdiction of the courts of the
State of New York for any legal action or proceeding resulting from the
transaction contemplated herein.

     (d) EACH OF THE TRANSACTION PARTIES AND MLMCI (AND, TO THE EXTENT PERMITTED
BY LAW, ON BEHALF OF THEIR RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN RESPECT OF ANY CLAIM BASED UPON OR ARISING OUT OF OR IN CONNECTION WITH THIS
COMMITMENT LETTER OR THE TRANSACTIONS.

     (e) This Commitment Letter is intended for the benefit of the parties
hereto and their respective affiliates and not for the benefit of any third
parties.

     (f) No amendment or modification to this Commitment Letter will be
effective unless evidenced by a writing executed by all the parties hereto.

     (g) This Commitment Letter may be executed in counterparts which, taken
together, shall constitute an original.

     (h) This Commitment Letter contains the entire agreement of the parties
hereto in respect of the transactions contemplated hereby and all prior
agreements, understandings and negotiations among or between such parties,
whether oral or written, are superseded by the terms of this Commitment Letter.

                    [SIGNATURES COMMENCE ON FOLLOWING PAGE]

                                       4

     Please indicate your agreement to the above by executing a copy of this
Commitment Letter in the place provided below and returning a fully executed
copy to the undersigned. This Commitment Letter shall not be effective unless
executed by MLMCI and each Transaction party on or prior to December 29, 2003
unless extended in writing by MLMCI in its sole discretion.

                                        Very truly yours,

                                        MERRILL LYNCH MORTGAGE CAPITAL INC.

                                        By: /s/   James Cason
                                           -----------------------------------
                                           Name:  James Cason
                                           Title: Director

Agreed and Accepted as of this
24th day of December, 2003:

ENSPIRE FINANCE, LLC

By: /s/ Scott Jackson
   --------------------------------
   Name: Scott Jackson
   Title: Chief Executive Officer

ARC DEALERSHIP, INC.

By: /s/ Scott Jackson
   --------------------------------
   Name: Scott Jackson
   Title: Chief Executive Officer

                                       5

                          MERRILL LYNCH FUNDING PROGRAM

                AFFORDABLE RESIDENTIAL COMMUNITIES SUBSIDIARY TBN
                                 OCTOBER 6, 2003

                         SUMMARY OF TERMS AND CONDITIONS

Merrill Lynch Commercial Finance Corp. or an affiliate thereof ("Merrill Lynch"
or the "Buyer") is pleased to provide this summary of indicative terms and
conditions. This summary of terms is not a commitment by Merrill Lynch to
provide the Facility (as defined below). Any Facility documentation may contain
further terms, depending on the outcome of due diligence, the credit review
process and negotiations with Seller (as defined below). Subject to, among other
things, satisfactory due diligence, credit approval, documents, filings and
opinions acceptable to counsel, Merrill Lynch would be prepared to consider
providing the Facility on the indicative terms set forth herein.

TRANSACTION                        Merrill Lynch Mortgage Capital Inc. or an affiliate ("Merrill Lynch" or the
                                   "Buyer") shall finance on a secured basis (the "Facility") pursuant to a Reverse
                                   Repurchase Agreement (the "Master Repurchase Agreement") and a Custody Agreement
                                   (the "Tri-Party Custody Agreement") certain Manufactured Housing Conditional
                                   Sales Contracts and Manufactured Homes (as defined below) originated or
                                   purchased by Affordable Residential Communities Subsidiary To Be Named ("ARCsub"
                                   or the "Seller").

GUARANTOR                          Affordable Residential Communities ("ARC")

SUB-SERVICER                       Vanderbilt Mortgage or such other sub-Servicer at all times subject to the
                                   approval of Buyer in its sole discretion

ELIGIBLE ASSETS                    The assets eligible for purchase by Merrill Lynch under the Master Repurchase
                                   Agreement (the "Eligible Assets") shall consist of Manufactured Housing
                                   Conditional Sales Contracts ("Contracts" or "Chattel Paper") and Manufactured
                                   Homes ("MH"), described as follows:

                                   Manufactured Housing Conditional Sales Contracts: which shall refer to a first
                                   lien, fixed rate manufactured housing conditional sales contract, the ownership
                                   of which is evidenced by a Trust Receipt. All such Chattel paper shall conform
                                   to the eligibility characteristics as described in Exhibit I.

                                   Manufactured Homes: shall refer to Manufactured Homes which meet the eligibility
                                   criteria as described in Exhibit I.

                                   Such Contracts at all times will be underwritten, originated and serviced in
                                   accordance with standards previously reviewed by and acceptable to Merrill
                                   Lynch. Such Contracts will be underwritten in accordance with the Seller's
                                   standard underwriting guidelines as detailed in its Underwriting Guide. No
                                   material amendments are to be made to the Underwriting Guide without the express
                                   consent of Merrill Lynch.

PROGRAM SIZE
AND CONDITIONS                     Subject to final approval by the Corporate Credit Department of Merrill Lynch,
                                   the aggregate purchase price paid by Merrill Lynch for Contracts and
                                   Manufactured Homes under the Master Repurchase Agreement as of any date shall
                                   not exceed $250,000,000 (the "Committed Amount")

                                   subject to the following limitations:

                                   (i)   The aggregate outstanding purchase price for all Contracts shall not
                                         exceed $225,000,000 (the "Warehouse Facility");

                                   (ii)  The aggregate outstanding purchase price for all Contracts 30 days past
                                         their payment date but not more than 59 days past their payment date shall
                                         not exceed $10,000,000 (the "Delinquent Loan Sublimit");

                                   (iii) The aggregate outstanding purchase price for all Manufactured Homes shall
                                         not exceed $25,000,000 (the "Floorplan Facility");

                                   The Market Value of all Eligible Assets shall be determined by Merrill Lynch in
                                   its sole discretion. Except as otherwise agreed to, a Market Value of zero shall
                                   be assigned to any Eligible Asset which: (i) is more than thirty days past its
                                   due date with the exception of those loans eligible for financing under the
                                   Delinquent Loan Sublimit; (ii) is more than sixty (60) days past its due date
                                   (ii) contains a material breach of a representation or warranty made by Seller
                                   in the Master Repurchase Agreement or the Custodial Agreement and which breach
                                   has not been cured, (iii) includes any single premium credit life or accident
                                   and health insurance or disability insurance; (iv) is subject to Section 226.32
                                   of Regulation Z or any similar state law (relating to high interest rate
                                   credit/lending transactions); (v) is classified as a "threshold" or "high cost"
                                   loan or can be construed as being "predatory" in nature.

TERM OF THE FACILITY               The Warehouse Facility shall have a maximum term of forty eight months. The
                                   Floorplan Facility shall have a maximum term of one year.

PRICING                            Unless otherwise agreed at the time of the transaction, advances made in reverse
                                   repurchase transactions against Contracts would bear interest at a rate of 300
                                   basis points in excess of the prevailing one-month London Inter-Bank Offered
                                   Rate ("LIBOR") for United States Dollar deposits as set forth on page BTMM of
                                   Bloomberg as of 8:00 a.m. New York City time on the date of determination, which
                                   date shall be two business days prior to the date on which an advance under the
                                   Master Repurchase Agreement is made. Advances made in reverse repurchase
                                   transactions against Contracts thirty days past their payment date but not more
                                   than 59 days past their payment date would bear interest at a rate of 400 basis
                                   points in excess of the prevailing one-month LIBOR rate. Advances made in
                                   reverse repurchase transactions against Manufactured Homes would bear interest
                                   at a rate of 350 basis points in excess of the prevailing one-month LIBOR rate.
                                   To the extent the term of any advance must be less than or greater than one
                                   month, the LIBOR rate shall correspond as closely as reasonably possible to the
                                   relevant period as set forth in a mutually agreed upon source as of 8:00 am New
                                   York City time on the date of each Loan. Agreement to set the term of any
                                   advance to a period greater than or less than one month shall be at the sole
                                   discretion of Merrill Lynch. All calculations would be made on the basis of a
                                   360-day year and the actual number of days elapsed. Interest shall only be paid
                                   on the amount of financing provided by the Warehouse Facility and the Floorplan
                                   Facility, respectively, not to include any Margin capital provided by Seller.

MARGIN REQUIREMENTS                With respect to Manufactured Homes, the Seller will be required to maintain as
                                   margin cash, such that the aggregate purchase price for all

                                      -2-

                                   outstanding transactions plus the accrued price differential does not exceed 75%
                                   of Seller's acquisition cost, as evidenced by a Bill of Sale, for the
                                   Manufactured Home as determined by Merrill Lynch in its sole discretion. With
                                   respect to Contracts, the Seller will be required to maintain as margin cash,
                                   such that the aggregate purchase price for all outstanding transactions plus the
                                   accrued price differential does not exceed 75% of the lower of the par or market
                                   value (as defined below) of the Contracts as determined by Merrill Lynch in its
                                   sole discretion.

                                   Subsequent to two asset backed securities transactions sold through a public
                                   offering, whereby (i) each transaction totals at least $200,000,000, (ii)
                                   Contracts comprise at least 50% of the assets comprising such collateral; and
                                   (iii) the transactions settle within 12 months of each other, the amount of
                                   margin the Seller shall be required to maintain for Contracts shall be reduced
                                   to such amount equaling the subordination level required to achieve a AA level
                                   of risk in a securitization of the Contracts as determined by either Standard &
                                   Poor's or Moodys.

                                   With respect to Contracts which have missed their payment date by more than 30
                                   days but not more than 59 days ("Delinquent Contracts"), the Seller will be
                                   required to maintain as margin cash, such that the aggregate purchase price for
                                   all outstanding transactions plus the accrued price differential does not exceed
                                   60% of the lower of the par or market value as determined by Merrill Lynch in
                                   its sole discretion.

                                   With respect to each Contract, the related Contract loan file will have been
                                   delivered to and reviewed by the Custodian (as defined below) as of the Purchase
                                   Date. A Trust Receipt signed by the Custodian and in form and substance
                                   satisfactory to Merrill Lynch shall constitute irrefutable evidence of such
                                   delivery to, and receipt and review by, the Custodian.

COMMITMENT FEE                     Seller shall pay to Merrill Lynch a one-time Commitment Fee in the amount of 100
                                   basis points (1.00%) on the Committed Amount payable at closing ("Inception
                                   Date"); a fee equal to 75 basis points on the first anniversary of the Inception
                                   Date; a fee equal to 50 basis points on the second anniversary of the Inception
                                   Date; and a fee of 25 basis points on the third anniversary of the Inception
                                   Date.

NON-USAGE FEE                      In the event Merrill Lynch agrees to provide this facility, the Seller would be
                                   required to pay Merrill Lynch a fee (the "Unused Fee"), quarterly in arrears,
                                   equal to the product of (i) the average quarterly unused amount of the Maximum
                                   Committed Amount and (ii) a per annum rate ("the Per Annum Rate"). In the event
                                   the quarterly average amount outstanding is less than $100,000,000, the Per
                                   Annum rate shall be equal to 10 basis points. In the event the average quarterly
                                   outstanding balance is equal to or greater than $100,000,000, no Non-Usage Fee
                                   shall be due for the applicable quarterly period.

EXIT FEE                           Merrill Lynch shall be entitled to an exit fee of 10 basis points of the value
                                   of the Contracts less Margin capital upon the disposition of the Contracts if
                                   Merrill is not the purchaser of the Contracts in a whole loan transaction, or
                                   Merrill is not the lead underwriter in a securitization transaction. Such fee
                                   shall not be based on Contracts that are refinanced away from ARCsub or prepay
                                   prior to their respective maturities on an

                                      -3-

                                   individual Contract basis.

COVENANTS                          Required covenants to be made in the Master Repurchase Agreement will be
                                   determined by Merrill Lynch's Corporate Credit Department, and will include, BUT
                                   NOT BE LIMITED TO, the following: (i) minimum GAAP tangible net worth; (ii)
                                   maximum leverage (Total Liabilities/ Shareholder's Equity); (iii) Seller will
                                   provide servicing reports on a monthly basis, or with such greater frequency as
                                   may be requested by Merrill Lynch, reflecting Contract level detail in a format
                                   acceptable to Merrill Lynch; (iv) Merrill Lynch will have the right, without
                                   payment of any termination fee or any other amount, to terminate the Servicer of
                                   the Contracts if an Event of Default occurs; and (v) Seller shall provide at the
                                   request of Merrill Lynch its underwriting analysis of the community in which the
                                   home is located and the dealer originating the chattel paper asset.

                                   The agreement of Merrill Lynch to lend under the Master Repurchase Agreement
                                   shall immediately terminate at the option of Merrill Lynch upon the occurrence
                                   of, BUT NOT LIMITED TO, any of the following:

                                   (a) a change of control of the Seller;

                                   (b) At the option of Buyer, exercised by written notice to Seller, the
                                   Repurchase Date for some or all of the Transactions under the Agreement shall be
                                   deemed to immediately occur in the event that the senior debt obligations or
                                   short-term debt obligations of Merrill Lynch & Co., Inc. shall be rated below
                                   the four highest generic grades (without regard to any pluses or minuses
                                   reflecting gradations within such generic grades) by any nationally-recognized
                                   statistical rating organization.

CROSS DEFAULT/CROSS
COLLATERALIZATION                  The Master Repurchase Agreement will be Cross Defaulted and Cross Collateralized
                                   with any other Agreement in place between the Seller and Merrill Lynch, or any
                                   of its affiliates, excluding any syndicated facility that Buyer, or one of its
                                   affiliates participates in with Seller, or one of its affiliates, and excluding
                                   any Trust or Special Purpose Vehicle established by or for the Seller or
                                   Guarantor in connection with a commercial mortgage backed security transaction.
                                   An Event of Default under any of the Seller's loan agreements constitutes an
                                   Event of Default under the Master Repurchase Agreement.

YIELD PROTECTION                   The Master Repurchase Agreement shall contain provisions satisfactory to Merrill
                                   Lynch in its sole discretion indemnifying Merrill Lynch in the event that a
                                   change in applicable law or regulations results in an increase in transaction
                                   costs or the imposition of withholding or other taxes. In the event Merrill
                                   Lynch's cost of funds increases with respect to raising cash with third party
                                   investors specifically with respect to this paragraph or otherwise, Merrill
                                   Lynch reserves the right to increase pricing on advances made in reverse
                                   repurchase transactions as contemplated herein.

PAYMENTS ON
ELIGIBLE ASSETS                    Should there be an Event of Default, Buyer shall have the right, but not the
                                   obligation, to direct all payments made on the Contracts to be deposited
                                   directly into an account (the "Collection Account") at a bank satisfactory to
                                   Merrill Lynch. The Collection Account shall be held for

                                      -4-

                                   the benefit, and subject to the sole direction of Merrill Lynch. Unless
                                   otherwise directed by Merrill Lynch, funds on deposit in the Collection Account
                                   shall be paid to the Seller.

DOCUMENTATION                      The Seller and Merrill Lynch shall enter into a Master Repurchase Agreement and
                                   Tri-Party Custody Agreement in form and substance acceptable to the parties. All
                                   Transactions shall be entered into subject to the terms of such Master
                                   Repurchase Agreement and Tri-Party Custody Agreement. In addition, the Seller
                                   shall provide certain other documentation as may be required by Merrill Lynch,
                                   including without limitation, the Pooling & Servicing Agreement, and monthly
                                   financial statements. The Guarantor shall provide annual audited financials,
                                   quarterly financial statements and, at the written request of the Buyer, which
                                   may include email, monthly financial statements of the Guarantor.

CUSTODIAN                          The custodian under the Tri-Party Custody Agreement (the "Custodian") will
                                   continue to be a document custodian, acceptable to Merrill Lynch, that is not an
                                   affiliate of the Seller or any entity that controls the Seller. The Seller will
                                   be solely responsible for the payment of custodial fees and will pay such fees
                                   directly to the Custodian. The Seller will cause certain documents specified in
                                   the Tri-Party Custody Agreement (e.g., installment sales contract, assignment in
                                   blank, etc.) to be delivered to the Custodian with respect to each Transaction
                                   under the Master Repurchase Agreement.

EXPENSES                           The Seller will pay all expenses of Merrill Lynch (including, without
                                   limitation, the fees and expenses of Merrill Lynch's outside legal counsel) in
                                   connection with the transaction contemplated hereby, regardless of whether the
                                   Master Repurchase Agreement, Tri-Party Custodial Agreement or any other document
                                   is executed by Buyer or Seller. Seller will reimburse MLCFC for any and all
                                   out-of-pocket costs and expenses as incurred by MLCFC in connection with
                                   third-party due diligence and loan level file reviews up to a maximum of $50,000
                                   during any single calendar year.

CONFIDENTIALITY                    Each of the Parties hereby acknowledges, by receipt and retention of this
                                   summary of terms, that the Master Repurchase Agreement, the Tri-Party Custody
                                   Agreement and this summary of terms (including all drafts and final versions
                                   thereof) are confidential in nature, and the Seller, as of the date of initial
                                   receipt hereof, agrees that, unless otherwise directed by a court of competent
                                   jurisdiction, it will limit the distribution of such documents to only its
                                   officers, employees, attorneys, accountants and agents as required in order to
                                   conduct its business as contemplated thereby.

                                   Notwithstanding anything to the contrary contained herein or in the definitive
                                   Repurchase documentation, all persons may disclose to any and all persons,
                                   without limitation of any kind, the federal income tax treatment of the
                                   Transactions, any fact relevant to understanding the federal tax treatment of
                                   the Transactions, and all materials of any kind (including opinions or other tax
                                   analyses) relating to such federal income tax treatment; provided, that no
                                   person may disclose the name of or identifying information with respect to any
                                   party identified herein or in the definitive Repurchase documentation or any
                                   pricing terms

                                      -5-

                                   (including the Pricing Rate and Purchase Price) or other nonpublic business or
                                   financial information (including Sublimits and Financial Covenants) that is
                                   unrelated to the purported or claimed federal income tax treatment of the
                                   transaction, is not relevant to understanding the purported or claimed federal
                                   income tax treatment of the transaction, without the prior consent of Merrill
                                   Lynch, and is otherwise required disclosure pursuant to securities law.

GOVERNING LAW                      State of New York

ACCEPTED AND AGREED

AFFORDABLE RESIDENTIAL COMMUNITIES                 MERRILL LYNCH COMMERCIAL FINANCE CORP.

By:    /s/ Scott D. Jackson                        By:    /s/ James Cason

       ---------------------------------------            ------------------------------------------------

Name:  Scott D. Jackson                            Name:  James Cason

       ---------------------------------------            ------------------------------------------------

Title: CEO                                         Title: Vice President

       ---------------------------------------            ------------------------------------------------

Date:  10/9/2003                                   Date:  10/8/03

       ---------------------------------------            ------------------------------------------------

                                      -6-

                                                                       EXHIBIT I

CHATTEL PAPER

     o    To be serviced by a servicer approved by the Buyer.

     o    Contracts must be purchased by Buyer within 30 days from the purchase
          date.

     o    Origination Agent shall be an ARC-approved retailer, community owner
          or broker.

     o    Financing provided only on homes located in an ARC community.

     o    Underwriting Guidelines and minimum credit scores as outlined in
          Exhibit II.

     o    Maximum DTI of 45%.

     o    Loan to value not to exceed 90% of loan amount.

     o    No state concentration shall be greater than 20%.

     o    Loan term not to exceed 12 years for single section homes and 15 years
          for multi section.

MANUFACTURED HOME

     o    No home shall be older than 10 years.

     o    Must be located in an ARC community.

     o    Must be sold by an ARC-approved Origination Agent.

     o    Advance rate based on the lesser of (i) ARC's purchase price plus
          refurbishments costs plus set-up costs less transportation costs; and
          (ii) the NADA value, including invoice/wholesale price, actual
          refurbishment costs, skirting, steps, AC, but excluding cost of
          transportation.

                                      -7-

                        SUMMARY UNDERWRITING GUIDELINES

--------------------------------------------------------------------------------
                                    STANDARD
--------------------------------------------------------------------------------

                                  Credit Score
                         ------------------------------
Down Payment             FICO      or        VMF               Coupon
------------             ----               -----              ------
[ ] 10.0%                650+                225+      ....    11.000%

[ ] 10.0%               600-649            200 - 224   ....    12.000%

[ ] 10.0%               585-599            185 - 199   ....    13.000%

[ ] 15.0%               575-584            175 - 184   ....    14.000%

--------------------------------------------------------------------------------
                                 CREDIT BUILDER
--------------------------------------------------------------------------------

[ ] 1-2 valid forms of picture ID

[ ] Social Security # or Tax ID #

[ ] W-2 statement - 2 years

[ ] Work information - 2 years

[ ] Pay stubs - 4 most recent

[ ] Proof of prior payment history - 2 yesrs:

    - Rent

    - Utility bill

    - Phone bill

    - Car payments

[ ] Down Payment: 15%

[ ] Coupon:       13.000%

--------------------------------------------------------------------------------
                                  EQUITY BUYER
--------------------------------------------------------------------------------

[ ] 1-2 valid forms of picture ID

[ ] Social Security # or Tax ID #

[ ] W-2 statement - 2 years

[ ] Work information - 2 years

[ ] Pay stubs - 4 most recent

[ ] Maximum All-In Home Price not to exceed $25,000.

[ ] Down Payment: 30%

[ ] Coupon:       14.000%

--------------------------------------------------------------------------------

If the application scores per the chart above, the applicant may be declined for
one of the following reasons:

[ ] Not approved by park as a resident under park application process

[ ] Total Debt Ratio (greater than) 45% and fails disposable income analysis

[ ] Total Housing Ratio (greater than) 35% ([lot rent + house payment]/monthly
    income)

[ ] Home repossessed / foreclosed within the last 48 months

[ ] Bankruptcy within the last 48 months and no re-established credit

[ ] Any outstanding judgments greater than (greater than) $2,500

[ ] Written concurrence of a VMF Senior Credit Management and Enspire Finance
    officer obtained prior to setting status to decline.

--------------------------------------------------------------------------------[MERRILL LYNCH LETTERHEAD]

                                                   December 23, 2003

AFFORDABLE RESIDENTIAL COMMUNITIES, L.P.
600 Grant Street, Suite 900
Denver, Colorado  80203
Attention: John Sprengle
           Vice Chairman and Chief Financial Officer

              $125,000,000 Senior Secured Revolving Credit Facility

                                COMMITMENT LETTER

Ladies and Gentlemen:

         Merrill Lynch Mortgage Capital Inc. ("Merrill Lynch") or an affiliate,
its successors, transferees and assigns, is pleased to inform Affordable
Residential Communities, L.P. (the "Company") of its commitment to provide the
Company with up to $50,000,000 of a $125,000,000 3-year Senior Secured Revolving
Credit Facility (the "Facility"), subject to the terms and conditions of this
letter and the attached Annex I (collectively, the "Commitment Letter").
Further, an affiliate of Merrill Lynch Mortgage Capital is pleased to inform the
Company of its commitment to act as Joint Lead Arranger and Joint Book Running
Manager, and in such capacity to use its best efforts to arrange a syndicate of
lenders (the "Lenders") for the Facility, subject to the terms and conditions of
this Commitment Letter (it being understood and agreed that, except with respect
to the $50,000,000 commitment of Merrill Lynch described above, neither Merrill
Lynch nor any of its affiliates is agreeing to underwrite such syndication). The
proceeds of the Facility will be used for acquisitions of mobile home
communities and mobile homes, to repay certain existing indebtedness, to buy
back certain preferred equity, for capital expenditures and for general
corporate purposes.

         Section 1. Conditions Precedent. Merrill Lynch's commitment hereunder
is subject to: (i) the preparation, execution and delivery of mutually
acceptable loan documentation incorporating substantially the terms and
conditions outlined in this Commitment Letter (the "Operative Documents"); (ii)
the absence of (A) any material adverse change in the business, condition
(financial or otherwise), operations, performance, properties or prospects of
the Company or the Company and its subsidiaries, taken as a whole or any of its
operating subsidiaries since December 31, 2002, and (B) any circumstance, change
or condition in the loan syndication, financial or capital markets generally
that, in the judgment of Merrill Lynch, could reasonably be expected to
materially impair syndication of the Facility; (iii) the accuracy and
completeness of all representations that the Company makes to Merrill Lynch and
all information that the Company furnishes to Merrill Lynch; (iv) the Company's
compliance with the terms of this Commitment Letter, including, without
limitation, the payment in full of all fees, expenses and other amounts payable
under this Commitment Letter; (v) satisfactory completion of legal and financial
due diligence by Merrill Lynch, including, without limitation, delivery of Phase
I (and, if necessary, Phase II) environmental reports, engineering reports and
FIRREA appraisals, in each case acceptable to Merrill Lynch; and (vi) receipt of
commitments for the Facility from other Lenders of not less than $75,000,000 in
the aggregate, subject to the terms and conditions of this Commitment Letter.

         Section 2. Commitment Termination. Merrill Lynch's commitment hereunder
will terminate on the earlier of (a) the date the Operative Documents become
effective, and (b) January 31, 2004. Before such date, Merrill Lynch may
terminate its commitment hereunder if any event occurs or information becomes
available that, in its judgment, results or is likely to result in the failure
to satisfy any condition set forth in Section 1.

         Section 3. Indemnification. The Company shall indemnify and hold
harmless Merrill Lynch, each Lender and each of their respective affiliates and
each of their respective officers, directors, employees, agents, advisors and
representatives (each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, fees and disbursements of counsel), joint or several, that may be
incurred by or asserted or awarded against any Indemnified Party (including,
without limitation, in connection with any investigation, litigation or
proceeding or the preparation of a defense in connection therewith), in each
case arising out of or in connection with or by reason of this Commitment Letter
or the Operative Documents or the transactions contemplated hereby or thereby or
any actual or proposed use of the proceeds of the Facility, except to the extent
such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
primarily from such Indemnified Party's gross negligence or willful misconduct.
In the case of an investigation, litigation or other proceeding to which the
indemnity in this paragraph applies, such indemnity shall be effective whether
or not such investigation, litigation or proceeding is brought by the Company,
any of its directors, security holders or creditors, an Indemnified Party or any
other person or an Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated.

         No Indemnified Party shall have any liability (whether in contract,
tort or otherwise) to the Company or any of its security holders or creditors
for or in connection with the transactions contemplated hereby, except to the
extent such liability is determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted primarily from such Indemnified
Party's gross negligence or willful misconduct. In no event, however, shall any
Indemnified Party be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including, without limitation, any
loss of profits, business or anticipated savings).

         Section 4. Costs and Expenses. The Company shall pay, or reimburse
Merrill Lynch on demand for, all out-of-pocket costs and expenses incurred by
Merrill Lynch (whether incurred before or after the date hereof) in connection
with the Facility and the preparation, negotiation, execution and delivery of
this Commitment Letter, including the reasonable fees and expenses of counsel,
regardless of whether any of the transactions contemplated hereby are
consummated. The Company shall also pay all costs and expenses of Merrill Lynch
(including, without limitation, the reasonable fees and disbursements of
counsel) incurred in connection with the enforcement of any of its rights and
remedies hereunder.

         Section 5. Confidentiality. By accepting delivery of this Commitment
Letter, the Company agrees that this Commitment Letter is for the Company's
confidential use only and that neither its existence nor the terms hereof will
be disclosed by the Company to any person other than the Company's officers,
directors, employees, accountants, attorneys and other advisors, agents and
representatives (the "Company Representatives"), and then only on a confidential
and "need to know" basis in connection with the transactions contemplated
hereby; provided, however, that the Company may make such other public
disclosures of the terms and conditions hereof as the Company is required by
law, in the opinion of the Company's counsel, to make. Notwithstanding any other
provision in this letter, the Company and Merrill Lynch hereby agree that each
of the Company and Merrill Lynch (and each Company Representative and each of
the officers, directors, employees, accountants, attorneys and other advisors,
agents and representatives of Merrill Lynch) may disclose to any and all
persons, without limitation of any kind, the U.S. tax treatment and U.S. tax
structure of the transactions contemplated hereby and all materials of any kind
(including opinions and other tax analyses) that are provided to any of them
relating to such U.S. tax treatment and U.S. tax structure.

         Section 6. Representations and Warranties of the Company. The Company
represents and warrants that (i) all information that has been or will hereafter
be made available to Merrill Lynch, any Lender or any potential Lender by the
Company or any of its representatives in connection with the transactions
contemplated hereby is and will be complete and correct in all material respects
and does not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which such
statements were or are made and (ii) all financial projections, if any, that
have been or will be prepared by the Company and made available to Merrill
Lynch, any Lender or any potential Lender have been or will be prepared in good
faith based upon reasonable assumptions (it being understood that such
projections are subject to significant uncertainties and contingencies, many of
which are beyond the Company's control, and that no assurance

                                       2

can be given that the projections will be realized). The Company agrees to
supplement the information and projections from time to time until the Operative
Documents become effective so that the representations and warranties contained
in this paragraph remain correct.

         In providing this Commitment Letter, Merrill Lynch is relying on the
accuracy of the information furnished to it by or on behalf of the Company and
its affiliates without independent verification thereof.

         Section 7. No Third Party Reliance, Etc. The agreements of Merrill
Lynch hereunder and of any Lender that issues a commitment to provide financing
under the Facility are made solely for the benefit of the Company and may not be
relied upon or enforced by any other person. Please note that those matters that
are not covered or made clear herein are subject to mutual agreement of the
parties. The Company may not assign or delegate any of its rights or obligations
hereunder without Merrill Lynch's prior written consent. This Commitment Letter
may not be amended or modified, or any provisions hereof waived, except by a
written agreement signed by all parties hereto. This Commitment Letter is not
intended to create a fiduciary relationship among the parties hereto.

         The Company acknowledges that Merrill Lynch and/or one or more of its
affiliates may provide financing, equity capital, financial advisory and/or
other services to parties whose interests may conflict with the Company's
interests. Consistent with Merrill Lynch's policy to hold in confidence the
affairs of its customers, neither Merrill Lynch nor any of its affiliates will
furnish confidential information obtained from the Company to any of Merrill
Lynch's other customers. Furthermore, neither Merrill Lynch nor any of its
affiliates will make available to the Company confidential information that
Merrill Lynch obtained or may obtain from any other person.

         Section 8. Governing Law, Etc. This Commitment Letter shall be governed
by, and construed in accordance with, the law of the State of New York. This
Commitment Letter sets forth the entire agreement between the parties with
respect to the matters addressed herein and supersedes all prior communications,
written or oral, with respect hereto. This Commitment Letter may be executed in
any number of counterparts, each of which, when so executed, shall be deemed to
be an original and all of which, taken together, shall constitute one and the
same Commitment Letter. Delivery of an executed counterpart of a signature page
to this Commitment Letter by telecopier shall be as effective as delivery of an
original executed counterpart of this Commitment Letter. Sections 3 through 6, 8
and 9 hereof shall survive the termination of Merrill Lynch's commitment
hereunder. The Company acknowledges that information and documents relating to
the Facility may be transmitted through Intralinks, the internet or similar
electronic transmission systems.

         Section 9. Waiver of Jury Trial. Each party hereto irrevocably waives
all right to trial by jury in any action, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating to this
Commitment Letter or the transactions contemplated hereby or the actions of the
parties hereto in the negotiation, performance or enforcement hereof.

                   [Balance of Page Intentionally Left Blank.]

                                       3

         Please indicate the Company's acceptance of the provisions hereof by
signing the enclosed copy of this Commitment Letter and returning them to Steve
Glassman, Director, Merrill Lynch, Four World Financial Center, New York, New
York 10080 (fax: (212) 738-1013) at or before 5:00 p.m. (New York City time) on
December 29, 2003, the time at which Merrill Lynch's commitment hereunder (if
not so accepted prior thereto) will terminate. If the Company elects to deliver
this Commitment Letter by telecopier, please arrange for the executed original
to follow by next-day courier.

                                Very truly yours,

                                MERRILL LYNCH MORTGAGE CAPITAL INC.

                                By /s/ Sheri Horowitz
                                   ---------------------------
                                   Name: Sheri Horowitz
                                   Title: Vice President

ACCEPTED AND AGREED
on December 29, 2003:

AFFORDABLE RESIDENTIAL COMMUNITIES, L.P.

By AFFORDABLE RESIDENTIAL COMMUNITIES INC.,
   its General Partner

   By /s/ John Sprengle
     --------------------------------------
     Name: John Sprengle
     Title: Vice Chairman

                                       4

                                     ANNEX I

                          SUMMARY OF TERMS AND CONDITIONS

                     AFFORDABLE RESIDENTIAL COMMUNITIES INC.
                         SUMMARY OF TERMS AND CONDITIONS
              $125 MILLION SENIOR SECURED REVOLVING CREDIT FACILITY

BORROWER:                        Affordable Residential Communities LP (the "Borrower").

FACILITY AMOUNT:                 $125,000,000.

TYPE OF FACILITY:                Senior Secured Revolving Credit Facility (the "Facility"). The Facility will
                                 include Letter of Credit and Swingline subfacilities, subject to sublimits to be
                                 agreed.

PURPOSE:                         Acquisitions,  repayment of indebtedness, capital expenditures, and general corporate
                                 purposes.

MATURITY:                        Three years from the Closing Date.

AVAILABILITY:                    The Borrower may borrow, repay, and reborrow.

ADMINISTRATIVE AGENT AND         Citicorp North America, Inc. (the "Administration Agent").
COLLATERAL AGENT:

SYNDICATION AGENT:               Merrill Lynch & Co. (the "Syndication Agent").

JOINT LEAD ARRANGERS AND JOINT   Citigroup Global Markets Inc. and Merrill Lynch & Co. (collectively the "Arrangers").
BOOK RUNNING MANAGERS:

LENDERS:                         Citicorp  North  America,  Inc. and other  financial  institutions  acceptable to the
                                 Borrower and the Agent.

CLOSING DATE:                    [      ], or such other date as may be agreed upon by the Borrower and the Agent.

AMORTIZATION:                    None.

GUARANTORS:                      All obligations of the Borrower under the Facility and under any interest  protection
                                 or other hedging arrangements entered into with a Lender (or any affiliate
                                 thereof) will be unconditionally guaranteed (the "Guaranty") by Affordable
                                 Residential Communities Inc. (the "Company") and each existing and subsequently
                                 acquired subsidiary of the Borrower unless prohibited by an existing financing
                                 agreement.

FEES:                            As set forth in Exhibit 1 hereto.

INTEREST RATES:                  As set forth in Exhibit 1 hereto.

COLLATERAL:                      With respect to the Borrowing Base Assets, collateral shall consist of:

                                 1)   Communities: A perfected first-priority mortgage lien on the Properties
                                      (which mortgage documentation will include an assignment of leases and
                                      rents, and an assignment of contracts, licenses and permits), title
                                      insurance in amounts acceptable to the Agent, ALTA land surveys certified
                                      to the Agent and opinions of local counsel with respect to the
                                      enforceability and perfection of the mortgages.

                                 2)   Rental Units: UCC personal property and fixture filings on Rental Units and
                                      all Equipment related thereto, all service contracts, and warranty claims,
                                      pledge of ownership interests in ARC Housing, LLC. In addition, all
                                      certificates of title pertaining to the Rental Units will be held by an
                                      independent Collateral Subagent mutually satisfactory to the Agent and the
                                      Borrower. Such certificates of title will be subject to a springing first
                                      priority security interest under applicable local certificate of title
                                      statutes, that the Agent will be entitled to direct the Collateral Subagent
                                      to perfect upon the first to occur of (i) Company and Borrower Debt Service
                                      Coverage Ratio of less than or equal to 1.25x or (ii) any Event of Default
                                      (the first to occur of (i) or (ii), a "Collateral Trigger Event"). At
                                      closing, ARC Housing, LLC will grant the Collateral Subagent a power of
                                      attorney authorizing it to execute and file all documents necessary to
                                      create such first priority security interest. All income and revenue from
                                      the Rental Units will be deposited into an account pledged to the Agent.
                                      Upon the occurrence of a Collateral Trigger Event, the Lenders will have
                                      the right to implement a lockbox into which tenants of the Rental Units
                                      will be required to make payments directly.

OPTIONAL PREPAYMENT:             Prepayable in whole or in part at any time at par without penalty or premium,
                                 other than customary LIBOR breakage costs.

MANDATORY PREPAYMENT:            None, other than  acceleration upon an Event of Default pursuant to customary
                                 default remedy provisions.

CONDITIONS PRECEDENT TO          Customary for facilities of this nature, applicable to the Borrower and the
CLOSING:                         Guarantors, including but not limited to:

                                 1)   Board resolutions.

                                 2)   Incumbency/specimen signature certificate.

                                 3)   Favorable legal opinion from counsel for the Borrower and the Guarantors.

                                 4)   Favorable legal opinion from counsel for the Agent.

                                 5)   Accuracy of representations and warranties.

                                 6)   The Borrower shall enter into interest rate protection agreements, in an
                                      amount, and pursuant to documentation reasonably satisfactory to the Agent.

                                 7)   Completion of the Initial Public Offering by the Company in an amount of at
                                      least $350,000,000 and Recapitalization.

                                 8)   For the Communities, receipt of appraisals, engineering and environmental
                                      reports, satisfactory to the Agent.

                                       2

CONDITIONS PRECEDENT TO ALL      Customary for facilities of this nature, applicable to the Borrower and the
ADVANCES AND TO FACILITY         Guarantors, including but not limited to:
EXTENSION:

                                 1)   All representations and warranties are true and correct in all material
                                      respects on and as of the date of the Borrowing, before and after giving
                                      effect to such Borrowing and to the application of the proceeds therefrom,
                                      as though made on and as of such date.

                                 2)   No Event of Default or event which, with the giving of notice or passage of
                                      time or both, would be an Event of Default, has occurred and is continuing,
                                      or would result from such Borrowing.

REPRESENTATIONS AND WARRANTIES:  Customary for facilities of this nature, applicable to the Borrower and the
                                 Guarantors, including but not limited to:

                                 1)   Confirmation of corporate status and authority.

                                 2)   Due authorization of the loan documents.

                                 3)   Execution, delivery, and performance of loan documents do not violate law
                                      or existing material agreements.

                                 4)   No governmental or regulatory approvals required that have not been
                                      obtained except where the failure to do so would not result in a material
                                      adverse effect on (i) the business, condition (financial or otherwise),
                                      operations or prospects of the Borrower and the Guarantors, taken as a
                                      whole, (ii) the rights and remedies of the Agent or any Lender under any
                                      Loan Document, (iii) the ability of the Borrower or any Guarantor to
                                      perform its obligations under any Loan Document, or (iv) the value of the
                                      Collateral (any such effect, a "Material Adverse Effect").

                                 5)   No litigation which would have a Material Adverse Effect.

                                 6)   No material adverse change in the business, condition (financial or
                                      otherwise), results of operations or prospects of the Borrower and the
                                      Guarantors, taken as a whole, since December 31, 2002.

                                 7)   Accuracy of information, financial statements.

                                 8)   Material compliance with laws and regulations, including ERISA and all
                                      applicable environmental laws and regulations.

                                 9)   Legality, validity, binding effect and enforceability of the loan
                                      documents.

                                 10)  Margin regulations.

                                 11)  Not an investment company.

                                       3

                                 12)  Solvency.

                                 13)  Advances not to exceed the Borrowing Base.

                                 14)  No unpermitted liens on Borrowing Base Assets.

AFFIRMATIVE COVENANTS:           Customary for facilities of this nature, applicable to the Borrower and the
                                 Guarantors, including but not limited to:

                                 1)   Preservation and maintenance of corporate existence.

                                 2)   Material compliance with laws (including ERISA and applicable environmental
                                      laws).

                                 3)   Payment of taxes.

                                 4)   Payment of material obligations.

                                 5)   Delivery of audited annual consolidated financial statements and unaudited
                                      quarterly consolidated financial statements of the Company, monthly
                                      financial reporting on the Borrowing Base Assets, together with other
                                      financial information as the Agent may reasonably request.

                                 6)   Other reporting requirements and notices of default, material litigation,
                                      material claims affecting Borrowing Base Assets and material environmental
                                      events.

                                 7)   Visitation and inspection rights.

                                 8)   Maintenance of books and records.

                                 9)   Maintenance of properties.

                                 10)  Maintenance of insurance.

                                 11)  Use of proceeds.

                                 12)  Upon the occurrence of a Collateral Trigger Event, first priority perfected
                                      liens on the Rental Unit Collateral under applicable certificate of title
                                      statutes.

NEGATIVE COVENANTS:              Customary for facilities of this nature, applicable to the Borrower and the
                                 Guarantors, including but not limited to:

                                 1)   Maximum Permitted Investments.

                                 2)   Limitations on guarantees.

                                 3)   Prohibition on recourse debt, excluding (i) debt in the amount of
                                      $225,000,000 to support the Borrower's in-park consumer finance program,
                                      and (ii) certain other exceptions to be agreed.

                                       4

                                 4)   Limitation on liens.

                                 5)   Prohibition on agreements prohibiting liens on or transfers of Borrowing
                                      Base Assets.

                                 6)   Limitations on secured debt.

                                 7)   Limitations on debt.

                                 8)   Limitations on mergers, consolidations, acquisitions, asset dispositions
                                      and sale/leaseback transactions.

                                 9)   Limitations on transactions with affiliates.

                                 10)  Limitations on changes in business.

                                 11)  Appraisals on Communities to be performed at the request of the Agent, but
                                      not more frequently than annually.

BORROWING BASE:                  Availability will be subject to a Borrowing Base:

                                 1)   Communities: maximum debt equal to the lesser of 60% of Appraised Value or
                                      75% of Capitalized Real Estate Value. The approval of Required Lenders will
                                      be required to release or add Communities to the Borrowing Base.

                                 2)   Rental Units: maximum debt equal to the lesser of: (i) 45% of Capitalized
                                      Purchase Price, (ii) 70% of depreciated book value per GAAP, or (iii) a
                                      multiple of EBITDA that varies based upon the age of the Rental Unit as
                                      follows:

                                      (less than or equal to) 6 years:                   3.5x

                                      (greater than) 6 (less than or equal to) 10 years: 3.0x

                                      (greater than) 10 years:                           no Borrowing Base credit

                                 3)   Minimum Debt Service Coverage Ratio of 2.0x, calculated using an interest
                                      rate equal to the Applicable Margin for Eurodollar Rate Advances under the
                                      Facility plus the greater of 3.0% and the 3-year swap rate.

                                 4)   Borrowings Base Availability allocated to Communities (greater than or equal to)
                                      65% of total Advances and Letters of Credit under the Facility.

                                 For purposes of calculating Capitalized Real Estate Value, the Borrowing Base
                                 Cap Rate will be applied to Adjusted NOI. Adjusted NOI will include a deduction
                                 for management fees equal to the greater of actual or 5% of revenues and a
                                 reserve for capital expenditures equal to $100/pad. The "Borrowing Base Cap
                                 Rate" will initially equal 8.5%. However, if the ten-year treasury rate
                                 (calculated as an average of the five preceding closing date values) at any time
                                 exceeds 5.5%, then the Borrowing Base Cap Rate will increase by 50% of such
                                 excess (rounded downward, as necessary, to the nearest 1/4 of 1%), to a maximum
                                 of 9.5%. (As an example, an increase in the 5-day average 10-year treasury to
                                 6.5% will increase the Borrowing Base Cap Rate by 50 bps to 9.0%.)

                                       5

FINANCIAL COVENANTS:             Usual and customary for facilities of this nature, including but not limited to:

                                 1)   Debt to Total Asset Value (less than) 75.0% through 12/30/04, 70.0% through
                                      12/30/05, 65.0% through 6/29/06, and 60.0% thereafter

                                 2)   Debt Service Coverage (greater than) 1.50x through 12/30/04, 1.75x through
                                      6/29/06, 2.0x thereafter

                                 3)   Fixed Charge Coverage (greater than) 1.25x through 12/30/04, 1.5x through
                                      6/29/06, and 1.75x thereafter

                                 4)   Limitations on Dividends

                                 5)   Minimum Tangible Net Worth

                                 6)   Rental Unit NOI (less than) 20% of Total NOI

                                 For purposes of calculating Total Asset Value, an 8.5% cap rate will be applied
                                 to Adjusted EBITDA. Adjusted EBITDA will include a reserve for capital
                                 expenditures equal to $100/pad.

EVENTS OF DEFAULT:               Customary for facilities of this nature, applicable to the Borrower and Guarantors,
                                 including, but not limited to:

                                 1)   Failure to pay principal when due and failure to pay interest, fees and
                                      other amounts within 3 business days of when due.

                                 2)   Representations or warranties materially incorrect.

                                 3)   Failure to comply with covenants (with notice and cure periods as
                                      applicable).

                                 4)   Cross-default (i) to payment defaults on debt aggregating $10,000,000 or
                                      more, or (ii) to other events if the effect is (A) to permit acceleration
                                      of such debt and such event is not cured within a cure period to be agreed,
                                      or (B) to accelerate such debt.

                                 5)   Unsatisfied judgment or order in excess of $10,000,000, subject to
                                      exceptions permitting appeal and a grace period to be agreed.

                                 6)   Bankruptcy/insolvency.

                                 7)   ERISA

                                 8)   Change of control or ownership.

                                 9)   Failure to have a first priority perfected lien on the Collateral
                                      (including, following a Collateral Trigger Event, a first priority
                                      perfected lien under applicable certificate of title statutes on Collateral
                                      comprised of Rental Units).

OTHER:                           Loan documentation will include:

                                 1)   Indemnification of the Agent and Lenders and their respective affiliates,
                                      officers, directors, employees, agents and advisors for any liabilities and
                                      expenses arising out of the Facility or the use or proposed use of proceeds
                                      except in cases of gross negligence and willful misconduct.

                                       6

                                 2)   Normal agency, set-off and sharing language.

                                 3)   Majority Lenders defined as those holding greater than 50% of commitments.
                                      The consent of all the Lenders will be required to increase the size of the
                                      Facility, to extend the maturity or to decrease interest rates or fees.

ASSIGNMENTS AND PARTICIPATIONS:  Each Lender will have the right to assign to one or more eligible assignees all
                                 or a portion of its rights and obligations under the loan documents, with the
                                 consent, not to be unreasonably withheld, of the Agent and, so long as no
                                 default shall then exist, the Borrower. Minimum aggregate assignment level of
                                 $5,000,000 and increments of $1,000,000 in excess thereof. The parties to the
                                 assignment (other than the Borrower) will pay to the Agent an administrative fee
                                 of $3,500.

                                 Each Lender will also have the right, without the consent of the Borrower or the
                                 Agent, to assign (i) as security, all or part of its rights under the loan
                                 documents to any Federal Reserve Bank and (ii) with notice to the Borrower and
                                 the Agent, all or part of its rights and obligations under the loan documents to
                                 any of its affiliates.

                                 Each Lender will have the right to sell participations in its rights and
                                 obligations under the loan documents, subject to customary restrictions on the
                                 participants' voting rights.

YIELD PROTECTION, TAXES, AND     The loan documents will contain yield protection provisions, customary for
OTHER DEDUCTIONS:                facilities of this nature, protecting the Lenders in the event of unavailability
                                 of funding, funding losses, and reserve and capital adequacy requirements.

                                 All payments to be free and clear of any present or future taxes, withholdings or
                                 other deductions whatsoever (other than franchise taxes and income taxes in the
                                 jurisdiction of the Lender's applicable lending office). The loan documents will
                                 contain customary provisions requiring the Lenders to use reasonable efforts to
                                 minimize to the extent possible any applicable taxes, withholdings or deductions,
                                 and the Borrower will indemnify the Lenders and the Agent for such items paid by
                                 the Lenders or the Agent. Foreign Lenders will furnish appropriate certificates
                                 or other evidence of exemption from U.S. federal tax withholding.

GOVERNING LAW:                   State of New York.

COUNSEL TO THE AGENT:            Shearman & Sterling LLP.

EXPENSES:                        The Borrower will reimburse the Arrangers and the Agent for all reasonable
                                 out-of-pocket expenses (including reasonable fees and expenses of counsel to the
                                 Agent, it being understood that the Arrangers and the Agent will use only one
                                 legal counsel) incurred by them in the negotiation, syndication and execution of
                                 the Facility. Such expenses will be reimbursed by the Borrower upon presentation
                                 of a statement of account, regardless of whether the transaction contemplated is
                                 actually completed or the loan documents are signed.

                                       7

                                    EXHIBIT 1
                         FEE SCHEDULE AND INTEREST RATES

INTEREST RATES AND INTEREST PERIODS:  At the Borrower's option, any Advance that is made to it will be available at
                                      the rates and for the Interest Periods stated below:

                                      1)   Base Rate: a fluctuating rate equal to Citibank's Base Rate plus the
                                           Applicable Margin.

                                      2)   Eurodollar Rate: a periodic fixed rate equal to LIBOR plus the Applicable
                                           Margin.

                                      The Eurodollar Rate will be fixed for Interest Periods of 1, 2, 3, or 6 months.

                                      Upon the occurrence and during the continuance of any Event of Default, each
                                      Eurodollar Rate Advance will convert to a Base Rate Advance at the end of the
                                      Interest Period then in effect for such Eurodollar Rate Advance.

APPLICABLE MARGIN:                    The Applicable Margin means:

                                      1)   for Base Rate Advances, an amount which will vary as per the Pricing Grid,
                                           based on the Company's Leverage Ratio (Debt to Total Asset Value).

                                      2)   for Eurodollar Rate Advances, an amount which will vary as per the Pricing
                                           Grid, based on the Company's Leverage Ratio.

                                      Upon the occurrence and during the continuance of any Event of Default, the
                                      Applicable Margin will increase by 200 bps.

                                      -------------------------- -------------------------- --------------------------
                                                                   APPLICABLE MARGIN FOR      APPLICABLE MARGIN FOR
                                                                 EURODOLLAR RATE ADVANCES      BASE RATE ADVANCES
                                           LEVERAGE RATIO                  (BPS)                      (BPS)
                                      -------------------------- -------------------------- --------------------------
                                          (greater than or
                                            equal to) 70%                      350.0                      250.0

                                           (less than) 70%
                                            (greater than
                                           or equal to) 60%                    312.5                      212.5

                                           (less than) 60%
                                            (greater than
                                           or equal to) 50%                    275.0                      175.0

                                            (less than) 50%                    237.5                      137.5

UNUSED FEE:                           50 bps, payable on the average unused commitment.

LETTER OF CREDIT FEES:                Fronting and usage fees to be agreed upon and specified in the final loan
                                      documentation.

                                       8

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