CONSULTING AGREEMENT
 
THIS CONSULTING AGREEMENT (“Agreement”) is made and entered into this 2nd day of
December 2008, by and between American Rental Management Company, a Delaware
corporation (the “Company”), and Edwin L. Kelly (the “Consultant”).
RECITALS
 
WHEREAS, the Company is a wholly-owned subsidiary of American Community
Properties Trust (“ACPT”) and provides management and other services to ACPT;
WHEREAS, the Consultant has been an executive officer of the Company for
numerous years and therefore possesses unique and valuable experience and
expertise relating to the Company;
WHEREAS, in order to provide continuity of management and to take advantage of
the Consultant’s expertise, ACPT, through the Company, wishes to secure the
services of the Consultant, and the Consultant wishes to provide such services,
in accordance with the terms and subject to the conditions provided herein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree to be bound by the following terms and conditions:
 
I. POSITION
A.           The Company hereby engages the Consultant, and the Consultant
hereby agrees, to serve as principal business consultant to ACPT and the
Company, and shall be available to provide consulting services as requested from
time to time by the Board of Trustees of ACPT (the “Board”) or the Chief
Executive Officer.  The Consultant shall report directly to the Chief Executive
Officer and shall render such services to ACPT as are customarily rendered by a
consultant, including, but not limited to, advising ACPT on general business
strategies, strategic opportunities, and other matters related to the business
of ACPT and its affiliates.
B.           The Consultant shall not be required to provide more than 250 hours
of services during each year that this Agreement is in effect.
 
II. TERM
The term of this Agreement (the “Term”) shall commence on the date hereof, shall
continue for a term of one year (“Term”), and shall renew automatically on a
year to year basis unless Consultant or the Company gives the other notice of
his/its intent not to renew this Agreement at least thirty (30) days prior to
the date on which employment would otherwise renew for a successive one year
period under this Agreement.  Notwithstanding the preceding, the Agreement may
be terminated as set forth herein:
A.   If the Consultant dies, the Consultant’s engagement and this Agreement
shall terminate automatically upon such date of death and the Company shall have
no further obligations hereunder, subject to Section IV.B.
B.   In the event that the Consultant becomes Disabled during the Term, the
Company at its option may terminate Consultant’s engagement and this Agreement,
in which case the Company shall have no further obligations hereunder.  For
purposes of this Agreement, the Consultant shall become “Disabled” at such time
as the Consultant has a physical or mental condition, verified by a physician
designated by the Company, which in the judgment of the Board prevents the
Consultant from carrying out one or more of the material aspects of his assigned
duties for at least 120 consecutive days or for more than one hundred twenty
(120) cumulative days in any 12 month period.  The Consultant agrees, upon
request of the Board, at a time convenient to the Consultant during a 30-day
period designated by the Board, to submit to any medically reasonable
examination by a physician designated by the Company.
C.   The Company may, at its election, terminate the Consultant’s engagement and
this Agreement for cause.  For purposes of this Agreement, “cause” shall be
defined as (1) Consultant’s conviction of, or plea of nolo contendere to, a
felony or any crime involving dishonesty, disloyalty, fraud, or moral turpitude;
(2) Consultant’s material breach of any material obligation in this Agreement;
(3) Consultant’s engaging in conduct constituting a material breach of any
fiduciary duty to the Company or ACPT; or (4) any act of dishonesty, fraud,
theft, misrepresentation, or embezzlement by Consultant that harms or injures
the Company or ACPT;  In the event the Company elects to terminate the
Consultant’s engagement for cause, such termination may be made effective
immediately, and no advance notice shall be required.  The decision to terminate
the Consultant’s engagement for cause must be approved by the Board.
D.   Either the Company or the Consultant may elect to terminate this Agreement
without cause.  In such a case, advance written notice of termination shall be
delivered by the terminating party to the non-terminating party at least thirty
(30) days prior to the end of the Term.  In addition, if the Company terminates
the engagement without cause or the Consultant terminates the engagement for
“Good Reason,” the Company agrees to pay the Consultant the remaining fee
payments due hereunder for the balance of the Term.  The decision to terminate
the Consultant’s engagement without cause must be approved by the Board.
       For purposes of this Agreement, the Consultant shall have terminated the
Agreement for a Good Reason if the Consultant terminates the Agreement within 30
days of prior written notice to the Company following the occurrence of (1) the
Company instructing the Consultant, despite his written objection delivered to
the Board, to take any action which is in violation of any law, ordinance or
regulation or would require any act of dishonesty or moral turpitude; or (2) the
Company committing a material breach of any of the provisions of this Agreement,
provided that the Company fails to remedy those circumstances within thirty (30)
days of its receipt of notice.
E.   In the event that ACPT sells all, or substantially all, of its assets, this
Agreement shall terminate automatically upon the date of such sale, and neither
party shall have any further obligations hereunder, subject to Section IV.B.
 
III. DUTIES AND RESPONSIBILITIES
A.   During the period of his engagement hereunder, the Consultant shall not,
without the written consent of the Board or a person authorized by the Board,
disclose to any person other than as required by law or court order, or other
than to an authorized employee of the Company or its affiliates, or to a person
to whom disclosure is necessary or appropriate in connection with the
performance by the Consultant of his duties as an Consultant of ACPT and the
Company any Confidential Information obtained by him while serving as a
consultant to the Company with respect to any of ACPT’s or its affiliates’
products, services, customers, suppliers, marketing techniques, methods or
future plans.  For purposes of this Agreement, “Confidential Information” means
information that is not generally known or available to the public and which is
used, developed or obtained by ACPT and its affiliates, including the Company,
relating to its business and the businesses of its clients, vendors, agents,
brokers or customers, including, but not limited to: business and marketing
strategies; distribution channels; products or services; fees, costs and pricing
structures; marketing information; advertising and pricing strategies; analyses;
reports; computer software, including operating systems, applications and
program listings; flow charts; manuals and documentation; data bases; accounting
and business methods; inventions and new developments and methods, whether
patentable or unpatentable and whether or not reduced to practice; all
copyrightable works; information relating to the Company’s existing and
prospective clients, vendors, agents, brokers or customers and their
confidential information; existing and prospective client, vendor, agent, broker
or customer lists and other data related thereto; information relating to the
Company’s employees; all trade secret information protected by the federal
Economic Espionage Act of 1996, 18 U.S.C. §1831 et seq.; and all similar and
related information in whatever form.  Confidential Information shall not
include any information that has been published in a form generally available to
the public (through no wrong doing of Executive or anyone else) prior to the
date upon which Executive proposes to disclose such information.  The Consultant
shall be allowed to disclose Confidential Information to his attorney solely for
the purpose of ascertaining whether such information is confidential within the
intent of this Agreement; provided, however, that the Consultant (a) discloses
to his attorney the provisions of this subsection A and (b) agrees not to waive
the attorney-client privilege with respect thereto.
B.   Nothing in this Agreement shall be deemed to restrict the Consultant from
pursuing or engaging in other business activities provided that such activities
do not unreasonably interfere with the performance of his responsibilities
hereunder.
C.   Consultant agrees that any ideas, inventions and materials created by him
in connection with this Agreement will be the property of the Company  All works
of authorship prepared by the Consultant under this Agreement will be “works
made for hire” for the Company and will be deemed the sole author thereof,
automatically upon their creation, as contemplated by Section 101 of the United
States Copyright Act of 1976 as amended.  In the event that any such work is not
a work made for hire, Consultant hereby irrevocably transfers and assigns to the
Company in perpetuity throughout the world and in all media channels of
distribution now or hereafter known, any and all rights, title and interests,
including but not limited to the copyright and other proprietary rights,
effective automatically as of the creation thereof.  In addition, Consultant
irrevocably transfers and assigns to the Company in perpetuity throughout the
world any and all rights, title and interests, including but not limited to
copyrights, patent rights, trade secrets, trademarks and other proprietary
rights, in and to all ideas, inventions and materials created by him in
connection with or arising out of this Agreement, effective automatically as of
the creation thereof.
 
IV. COMPENSATION
A.   The Company shall pay the Consultant an annual fee of One Hundred Twenty
Thousand Dollars (US $120,000) for each Term that this Agreement is in
place.  In the event that the Consultant is engaged under this Agreement for any
portion of a year, the Consultant shall be entitled to receive a pro rata amount
of the applicable annual fee.  The Consultant’s fee shall be paid in
semi-monthly installments on the fifteenth (15th) day and last day of each
calendar month.
B.   The Company shall promptly reimburse Consultant for the cost of all
expenses reasonably incurred by him in rendering services hereunder; provided,
however, that Consultant is expected to use his own equipment, supplies and
tools unless specifically agreed otherwise with the Company.  If any costs and
expenses are to be paid by the Company, Consultant must present valid receipts
satisfactory to the Company.  The compensation provided for herein constitutes
full consideration for the services set forth herein.
 
V. INDEPENDENT CONTRACTOR
A.           Consultant is retained by the Company solely for the purposes set
forth herein.  Consultant shall not have the power to bind ACPT or the Company
nor shall he make any such representation.  Consultant’s relation to Company
shall be that of an independent contractor.
B.           Consultant understands and agrees that in the performance of this
Agreement he is acting as an independent contractor and is not, and will not
hold himself out to be, an agent or employee of the Company by virtue of this
Agreement.  Consultant will perform the services outlined in this Agreement
under the general direction of the Company, but Consultant will determine, in
his reasonable discretion, the manner and means by which the services are
accomplished, subject to the requirement that Consultant shall at all times
comply with applicable law and proper business practices and meet accepted
professional and industry standards.
C.           As an independent contractor, Consultant has the responsibility and
agrees to file all returns required by law and at all times to abide by
applicable federal, state, and local law requirements, assuming sole liability
for all self-employment and income taxes due on income earned pursuant to this
Agreement.  The Company will not treat Consultant as an employee, with respect
to performance under this Agreement, for federal, state or local tax purposes or
otherwise.  The Company will not be responsible for payment of workers’
compensation insurance or unemployment compensation or disability insurance, or
for withholding or paying employment-related taxes based on services Consultant
provides under this Agreement.  Consultant acknowledges, pursuant to this
Agreement, that he is not entitled to any rights or benefits (including, but not
limited to, vacation and insurance) to which the Company employees may be
entitled.  Consultant agrees to indemnify and hold the Company harmless from any
liabilities, claims or actions relating to employment taxes or benefits
 
VI. ARBITRATION
A.   Any dispute or controversy arising between the Consultant and the Company
relating to this Agreement shall be submitted to private, binding arbitration,
upon the written request of either the Consultant or the Company, before a panel
of three arbitrators, under the administration of and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (“AAA”),
such arbitration to be held in Washington, D.C., or as otherwise determined by
the arbitrators.  In the event of such dispute or controversy, the Company and
the Consultant shall independently and simultaneously select and identify one
arbitrator each, both of whom must have no past or present familial or business
relationships with the parties and must possess expertise in the area of
compensation of senior management employees in the real estate industry.  In the
event that a party has not selected its arbitrator within 60 days of initiation
of the arbitration, the AAA shall select such arbitrator.  These two arbitrators
shall jointly agree upon and select a third arbitrator who also possesses such
credentials.  These three arbitrators shall hear and decide the dispute or
controversy by majority vote, and their decision and award shall be final and
conclusive upon the parties, and their heirs, administrators, executors,
successors, and assigns.  The arbitrators shall have no power or authority to
add to, subtract from, or otherwise modify the terms of this
Agreement.  Wherever the Commercial Arbitration Rules of the AAA conflict with
the procedures set forth in this section, the terms of this section shall
govern.  The Consultant and the Company agree that the arbitration must be
initiated by personally delivering a statement of claim to the AAA and to the
party against whom the claim is asserted no later than ninety (90) days after
the basis of the claim becomes known, or reasonably should have been known or
discovered, by the party asserting the claim.  In the event arbitration is not
initiated within such ninety (90) day period, such claim, dispute, or
controversy shall be irrevocably time-barred.  A judgment based upon such
arbitration award may be entered in any court having jurisdiction thereof.
B.   Notwithstanding the foregoing, any action brought by the Company seeking a
temporary restraining order, temporary and/or permanent injunction, and/or a
decree of specific performance of the terms of this Agreement may be brought in
a court of competent jurisdiction without the obligation to proceed first to
arbitration.
 
VII. ASSIGNABILITY AND BINDING EFFECT
The Consultant may not assign this Agreement, or any obligation or rights
hereunder, to any other person or entity without the consent of the
Company.  This Agreement shall be binding upon the Consultant and his heirs,
executors, administrators, and successors.
 
VIII. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Delaware (excluding
the choice-of-law rules thereof).
 
IX. CAPTIONS
All captions contained in this Agreement are for convenience only and in no way
define or describe the intent of the parties or specific terms hereof
 
X. SEVERABILITY
If any provision of this Agreement shall to any extent be held invalid or
unenforceable, the remaining terms and provisions shall not be affected thereby.
 
XI. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties relating to the
subject matter hereof.  All prior negotiations or stipulations concerning any
matter which preceded or accompanied the execution hereof are conclusively
deemed to be superseded hereby.
No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the
Consultant and such officer or director as may be specifically designated by the
Board.  The failure of either party to enforce any provision of this Agreement
shall not be construed as a waiver or limitation of that party's right to
subsequently enforce and compel strict compliance with every provision of this
Agreement.
 
XII. NOTICES; MISCELLANEOUS
For purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be duly given when delivered
by hand or facsimile transmission or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company:
American Rental Management Company
 
222 Smallwood Village Center
 
St. Charles, Maryland 20602
 
Attention:  President
 
If to the Consultant:
Mr. Edwin I. Kelly
6150 Simms Drive
LaPlata,  Md 20646

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

Upon expiration or termination of this Agreement, Consultant shall deliver to
the Company all records, notes, data, memoranda, models or other materials in
any form that relate to the provision of services hereunder, any ideas,
inventions, materials and works of authorship created hereunder to which the
Company or ACPT has ownership rights and any Confidential Information, including
all copies and evidence of the foregoing in any form.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first set forth above.

AMERICAN RENTAL MANAGEMENT COMPANY
 
                                                            
 Date: December 2, 2008
By:

 
 
President

                                                              
 Date: December 2, 2008 
Edwin L. Kelly