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