Document:

EXHIBIT 10.4

                    THIRD AMENDMENT TO OFFICE LEASE AGREEMENT

         THIS THIRD AMENDMENT TO OFFICE LEASE AGREEMENT (the "Third  Amendment")
is made and entered into as of this 25th day of February,  1999,  by and between
CITADEL LAND, INC., a Maryland  corporation,  hereinafter called the "Landlord",
and WASHINGTON HOMES, INC., hereinafter called the "Tenant".

         WHEREAS,   by  OFFICE  LEASE  AGREEMENT  dated  January  1,  1997  (the
"Agreement"),  Landlord  and  Tenant  agreed  upon the lease of office  space in
"Ingle West Building I" located at 1802 Brightseat Road, Landover, Maryland, and
set forth the terms and conditions of said lease;

         WHEREAS,  Section  1(C) of the  Agreement  provides  that the  Premises
consists of a rentable area of 24,380 square feet; and

         WHEREAS,  the parties  have agreed to amend the  Agreement as set forth
below.

         NOW  THEREFORE,  for Ten Dollars  ($10.00)  and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Landlord and Tenant hereby agree as follows:

          1.   The  Agreement  is hereby  amended  to  increase  the size of the
               Premises as of March 1, 1999, from 24,380 square feet as provided
               for in Section 1(C) of the Agreement to 27,780  square feet.  The
               additional  3400  square  feet is  highlighted  on the  floorplan
               attached hereto as Exhibit A to this Amendment.

          2.   The  Agreement is hereby  amended to increase the Base Rent as of
               March 1, 1999,  from Three Hundred Ninety Thousand Eighty Dollars
               ($390,080.00)  per year or  Thirty-two  Thousand Five Hundred Six
               Dollars  and  66/100  ($32,506.66)  per  month  to  Four  Hundred
               Forty-four Thousand Four Hundred Eighty Dollars ($444,480.00) per
               year or  Thirty-seven  Thousand  Thirty-nine  Dollars  and 99/100
               ($37,040.00)

          3.   Other than the  aforementioned  amendment,  all other provisions,
               terms, and conditions of the Agreement remain unchanged.

                    Signatures appear on the following page.

<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have executed this Amendment as
of the day and year first above written.

WITNESS:                                         LANDLORD:
                                                CITADEL LAND, INC.

___________________________             By:  /s/________________________________
                                             Geaton A. DeCesaris, Jr., President

WITNESS:                                        TENANT:
                                                WASHINGTON HOMES, INC.

___________________________            By:   /s/________________________________
                                             Geaton A. DeCesaris, Jr., PresidentEXHIBIT 10.17

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement"),  is entered into this 1st day
of July 2000 by and between  GEATON A.  DECESARIS,  JR.,  residing at 5806 Sonny
Drive, Lothian,  Maryland 20711, (the "Executive") and WASHINGTON HOMES, INC., a
Maryland  corporation  with  its  principal  offices  at 1802  Brightseat  Road,
Landover, Maryland 20875-4235 (the "Company").

                                    Recitals

     WHEREAS,  the Company  desires to provide for the service and employment of
the Executive with the Company and the Executive  wishes to perform services for
the Company, all in accordance with the terms and conditions provided herein;

     NOW,  THEREFORE,  IN CONSIDERATION  of the mutual  premises,  covenants and
agreements set forth below, it is hereby agreed as follows:

                                    Agreement

1. Employment; Term.

     (a) The Company  hereby agrees to employ the  Executive,  and the Executive
hereby  accepts  employment  by the Company,  as the  Company's  Chairman of the
Board,  President and Chief Executive Officer, such employment to commence as of
July 1, 2000  (the  "Commencement  Date"),  and to  continue  until the close of
business on June 30,  2003,  subject to  extension  as provided in this  Section
l(a), unless sooner terminated in accordance  herewith (the "Initial  Employment
Period").  On each  June 30,  commencing  with  June 30,  2001,  the term of the
Executive's employment hereunder shall be automatically extended for twelve (12)
months unless  either he or the Company  shall have given written  notice to the
other that such  automatic  extension  shall not occur,  which notice shall have
been given no later than thirty (30) days prior to the  relevant  June 30th (the
Initial  Employment Period,  together with any extensions,  until termination in
accordance herewith, is referred to herein as the "Employment Period").

     (b) The Company also hereby agrees that the Executive currently serves as a
director  on the Board of  Directors  of the  Company  (the  "Board"),  and as a
director and either the  President or Chairman of the Board of Directors of each
Subsidiary(as  defined in Section 17 hereof),  and the Executive  hereby accepts
such appointments.

     (c) The  Executive  shall have the  responsibilities,  duties and authority
commensurate  with his  positions  as the Chairman of the Board,  President  and
Chief  Executive  Officer of the Company,  including,  without  limitation,  the
general  supervision  and control  over,  and  responsibility  for,  the general
management and operation of the Company and its Subsidiaries,  subject, however,
to the  supervision of the Board insofar as such  supervision is required by the
Maryland General  Corporation  Law, and the Company's  Articles of Incorporation
and By-Laws. Such  responsibilities,  duties and authority shall not be expanded
or contracted  without the express consent of the Executive.

<PAGE>

The Executive will report only to the Board.

     (d) The  Executive  will  devote his full time and his best  efforts to the
business  and affairs of the Company and its  subsidiaries;  provided,  however,
that nothing contained in this Section 1 shall be deemed to prevent or limit the
Executive's   right  to:  (i)  make   investments   in  the  securities  of  any
publicly-owned  corporation;  or (ii) make any other investments with respect to
which he is not  obligated  or  required  to,  and to which he does not in fact,
devote  substantial  managerial  efforts  which  materially  interfere  with his
fulfillment of his duties hereunder;  or (iii) to continue to serve on boards of
directors on which he currently serves and to serve in such other positions with
non-profit and for-profit  organizations  as to which the Board may from time to
time consent, which consent shall not be unreasonably withheld or delayed.

     (e) The principal  location at which the Executive  will perform his duties
will be the Company's principal offices.  The Company's principal offices may be
transferred by the Executive or by the Board, with the Executive's  consent.  In
the event of such a transfer, the Company will pay moving,  temporary living and
other reasonable expenses in connection with the Executive's relocation from his
present primary residence to a location in proximity to the Company's  principal
offices.

2. Salary; Bonuses; Expenses.

     (a) During the  Employment  Period,  the  Company  will pay a salary to the
Executive at the annual rate of Five Hundred  Thousand  Dollars  ($500,000)  per
year (the  "Base  Salary"),  payable  in  substantially  equal  installments  in
accordance  with the  Company's  existing  payroll  practices.  The Company will
increase the Executive's  Base Salary on a yearly basis,  effective as of July 1
on each  anniversary  date of this  Agreement,  by an amount equal to 10% of the
Base Salary as in effect for the prior year.

     (b) For each annual period  commencing July 1, 2000, the Executive shall be
eligible  to  receive  a cash  bonus of 50% of his Base  Salary  if the  Company
achieves a pre-tax  return-on-equity ("ROE") in any fiscal year of at least 15%.
If the Company  achieves a pre-tax ROE of 20% in any fiscal year,  the Executive
will be  entitled  to  receive  a cash  bonus  of 100% of his  Base  Salary.  In
addition, in the event that the Company's pre-tax ROE is in excess of 20% in any
fiscal year,  the Executive  will also be entitled to receive,  as an additional
cash bonus,  5% of the amount by which the Company's  pre-tax ROE exceeds 20% in
any fiscal year. The Executive's annual bonus determined in accordance with this
Section 2(b) is referred to herein as the "Annual Bonus."

     (c) The  Executive is  authorized  to incur and shall be  reimbursed by the
Company  for all  reasonable  expenses,  including,  but not  limited to travel,
lodging,  meal and other  expenses as determined by him in his sole  discretion,
incurred by him in carrying out his duties hereunder.

3. Stock Options.

     (a) The  company  hereby  grants to the  Executive,  in  accordance  with a

                                      -2-

<PAGE>

resolution  adopted by the  Compensation  Committee of the Board of Directors of
the Company at a meeting  held on June 29, 2000,  a  non-statutory  stock option
(the "Stock Option") to acquire 50,000 of the Company's common stock,  $0.01 par
value per share (the "Common Stock").  The date of the grant of the Stock Option
will be June 30,  2000.  The  exercise  price of the  Stock  Option  will be the
closing  price of the Company's  Common Stock on the New York Stock  Exchange on
the date of grant. The Stock Option will be exercisable  immediately on the date
of grant and will  remain  exercisable  for a period of ten (10)  years from the
date of grant.  The Executive will be vested with respect to the Stock Option in
accordance with the following vesting schedule

    Amount Vested            Date of Vesting
    -------------            ---------------
    25%                      Date of Grant
    25%                      First Anniversary from Date of Grant
    25%                      Second Anniversary from Date of Grant
    25% (fully vested)       Third Anniversary from Date of Grant

The Stock Option has been granted pursuant to a resolution  adopted by the Board
of Directors of the Company at a meeting held on June 29, 2000 and pursuant to a
nonstatutory   stock  option  agreement   attached  hereto  as  Exhibit  B.  The
Executive's  aggregate  annual bonus  determined in accordance with this Section
3(a) is referred to herein as the "Stock Option Grant."

     (b) The Company agrees that it will use its best efforts to comply with the
requirements of Rule 16b-3 promulgated  pursuant to the Securities  Exchange Act
of 1934, as amended (the "1934 Act"),  as such rule shall be in effect from time
to time, or with any successor provision to said rule (Rule 16b-3") such that in
the event the  Executive  shall  become  subject to  Section 16 (or a  successor
provision)  of the 1934 Act with  respect  to  shares of the  Company's  capital
stock,  the Executive  shall be afforded the benefits of Rule 16b-3 with respect
to such  options,  including  without  limitation  providing  for the  grant  of
restricted stock or options pursuant to stock plans which comply with Rule 16b-3
and permit the terms of options contemplated by this Agreement.

4. Benefit  Plans;  Vacations.  In connection  with the  Executive's  employment
hereunder,  he shall be entitled during the Employment Period (and thereafter to
the  extent  provided  in  Section  5(f)  hereof)  to the  following  additional
benefits:

     (a) At the Company's  expense,  such fringe  benefits,  including,  without
limitation,  group  medical and  dental,  life,  executive  life,  accident  and
disability insurance and retirement plans and supplemental and excess retirement
benefits,  as the  Company  may  provide  from  time  to  time  for  its  senior
management.

     (b) The Executive  shall be entitled to no less than the number of vacation
days in each calendar year determined in accordance with the Company's  vacation
policy as in effect from time to time, but not

                                      -3-

<PAGE>

less than four (4) weeks in any calendar  year  (prorated  in any calendar  year
during  which  he is  employed  hereunder  for  less  than  the  entire  year in
accordance  with  the  number  of days in such  calendar  year in which he is so
employed).  The  Executive  shall  also be  entitled  to all paid  holidays  and
personal days given by the Company to its executives.

     (c) The Company shall lease an automobile  for the Executive  substantially
similar to the automobile  currently  leased for the Executive and shall pay all
expenses,  including  but not  limited to  insurance,  repair  and  maintenance,
incurred by the Executive in connection  with the use of the  automobile  during
the Employment Term.

     (d) Nothing herein contained shall preclude the Executive, to the extent he
is otherwise  eligible,  from  participation in all group insurance  programs or
other fringe  benefit  plans which the Company may from time to time in its sole
and  absolute  discretion  make  available  generally to its  personnel,  or for
personnel similarly situated, but the Company shall not be required to establish
or  maintain  any such  program  or plan  except as may be  otherwise  expressly
provided herein.

     (e) The  Executive  shall be entitled to  participate  in all other Company
benefit plans, as well as any  supplemental  benefit or perquisite  plans as the
Company  may  provide  from time to time for its senior  executives,  on a basis
commensurate with his position.

5. Termination, Change in Control and Reassignment of Duties.

     (a)  Termination By Company.  The Company shall have the right to terminate
the Executive's  employment under this Agreement for Cause (as defined below) at
any time  without  obligation  to make any  further  payments  to the  Executive
hereunder.  The  Company  shall  have the  right to  terminate  the  Executive's
employment  for any reason  other than for Cause only upon at least  ninety (90)
days prior written notice to him, except as otherwise  provided in Section 5(b),
which Section shall apply in the event the Executive  becomes  unable to perform
his  obligations  hereunder by reason of Disability (as defined  below).  In the
event the Company terminates the Executive's employment hereunder for any reason
other  than for  Cause  or  Disability,  then for the  purpose  of  effecting  a
transition  during the ninety (90) day notice  period of the  management  of the
Company from the Executive to another person or persons,  during such period the
Company may reassign the Executive's duties hereunder to another person or other
persons.  Such reassignment shall not reduce the Company's obligations hereunder
to make salary,  bonus and other  payments to the Executive and to provide other
benefits  to him  during the  remainder  of his  employment  and  following  the
termination of employment,  including  without  limitation the use of his office
and secretarial services during the remainder of his employment.

     As used in this Agreement, the term "Cause" shall mean: (i) the willful and
continued failure by the Executive to substantially perform his duties hereunder
(other  than  (A) any such  willful  or  continued  failure  resulting  from his
incapacity due to physical or mental illness or physical  injury or (B) any such
actual or  anticipated  failure after the issuance of a notice of termination by
the Executive for Good Reason (as defined below)),  after demand for

                                      -4-

<PAGE>

substantial  performance  is  delivered  by the  Company to the  Executive  that
specifically  identifies the manner in which the Company  believes the Executive
has not substantially  performed his duties; or (ii) the willful engaging by the
Executive in misconduct which is materially injurious to the Company, monetarily
or  otherwise;  or (iii)  the  conviction  of a felony  by a court of  competent
jurisdiction.  For purposes of this paragraph, no act, or failure to act, on the
part of the Executive shall be considered "willful" unless done or omitted to be
done by him in bad  faith  and  without  reasonable  belief  that his  action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
the Executive's employment shall not be deemed to have been terminated for Cause
unless (A)  reasonable  notice  shall have been  given to him  setting  forth in
detail the reasons for the Company's  intention to terminate  for Cause,  and if
such  termination  is pursuant to clause (i) or (ii) above and any damage to the
Company is curable,  only if  Executive  has been  provided a period of ten (10)
business days from receipt of such notice to cease the actions or inactions, and
he has not  done  so;  (B) an  opportunity  shall  have  been  provided  for the
Executive,  together with his counsel,  to be heard before the Board; and (C) if
such  termination  is pursuant to clause (i) or (ii) above,  delivery shall have
been made to the  Executive of a notice of  termination  from the Board  finding
that in the good  faith  opinion  of a  majority  of the  Board  (excluding  the
Executive)  he was guilty of conduct set forth in clause (i) or (ii) above,  and
specifying the particulars thereof in detail.

     (b) Termination upon Disability and Temporary Reassignment of Duties Due to
Disability.

          (i) If the Executive  becomes totally and permanently  disabled during
     the  Employment  Period  so that he is unable to  perform  his  obligations
     hereunder  by reasons  involving  physical  or mental  illness or  physical
     injury  (A) for a period of ninety  (90)  consecutive  days,  or (B) for an
     aggregate of ninety (90) days during any period of twelve (12)  consecutive
     months  ("Disability"),   then  the  term  of  the  Executive's  employment
     hereunder  may be  terminated by the Board within sixty (60) days after the
     expiration of said ninety (90) day period  (whether  consecutive  or in the
     aggregate,  as the case may be), said  termination to be effective ten (10)
     days after written notice to the Executive.  In the event the Company shall
     give a notice of termination  under this Section 5(b)(i),  then the Company
     may reassign the  Executive's  duties  hereunder to another person or other
     persons.  Such  reassignment  shall not  reduce the  Company's  obligations
     hereunder to make salary,  bonus and other payments to the Executive and to
     provide other  benefits to him,  during the remainder of his employment and
     following the termination of employment.

          (ii) During any period that the  Executive  is totally  disabled  such
     that he is unable to perform his obligations  hereunder by reason involving
     physical or mental illness or physical injury, as determined by a physician
     chosen by the Company and  reasonably  acceptable  to the Executive (or his
     legal  representative),  the Company may  reassign the  Executive's  duties
     hereunder to another  person or other  persons,  provided if the  Executive
     shall again be able to perform his obligations  hereunder,  all such duties
     shall again be the

                                      -5-

<PAGE>

Executive's duties. The cost of any examination by such physician shall be borne
by the Company.  Notwithstanding the foregoing, if the Executive has been unable
to perform his obligations  hereunder for reasons  involving  physical or mental
illness or physical  injury for a period of ninety (90)  consecutive  days or an
aggregate  of ninety  (90) days  during  any period of twelve  (12)  consecutive
months,  then a determination  by a physician of disability will not be required
prior to any such reassignment. Any such reassignment shall not be a termination
of  employment  and in no event  shall such  reassignment  reduce the  Company's
obligations  to make salary,  bonus and other  payments to the  Executive and to
provide other benefits to him under this Agreement  during his employment or, if
applicable, following a termination of employment.

     (c) Termination by Executive.  The Executive's employment may be terminated
by him by giving  written  notice to the Company as follows:  (i) at any time by
notice of at least  thirty  (30)  days;  (ii) at any time by  notice  for a Good
Reason,  effective  upon giving such  notice;  (iii) at any time,  if his health
should  become  impaired,  provided he has obtained a written  statement  from a
qualified doctor to such effect,  effective upon giving such notice;  or (iv) at
any time following but prior to the first anniversary of a Change in Control (as
defined below), effective upon giving such notice. In the event of a termination
by the  Executive of his  employment,  the Company may reassign the  Executive's
duties hereunder to another person or other persons.

     As used herein, a "Good Reason" shall mean any of the following:

          (A) Failure to be  nominated by the Board for election to the Board at
     any time such  nominations are made, or failure of the  stockholders of the
     Company to elect the  Executive  to the  Board,  or failure of the Board to
     elect the Executive as Chairman of the Board, President and Chief Executive
     Officer  of the  Company,  or  failure  to be  nominated  by the  Board  of
     Directors of any  Subsidiary for election to such Board of Directors at any
     time such  nominations  are made,  or  failure of the  stockholders  of any
     Subsidiary  to  elect  the  Executive  to the  Board of  Directors  of such
     Subsidiary, or failure of the Board of Directors of any Subsidiary to elect
     the Executive as President or Chairman of the  Subsidiary,  or removal from
     the Board, the Board of Directors of a Subsidiary or any such office of the
     Company or of a Subsidiary, provided that such failure or removal is not in
     connection with a termination of the Executive's  employment  hereunder for
     Cause in accordance with Section 5(a) and provided  further that any notice
     of termination hereunder shall be given by the Executive within ninety (90)
     days of such failure or removal;

          (B)  Material  change by the  Company  in the  Executive's  authority,
     functions,  duties or responsibilities as Chairman of the Board,  President
     and Chief Executive Officer of the Company (including,  without limitation,
     material  changes in the control or structure  of the Company)  which would
     cause his  position  with the  Company  to  become of less  responsibility,
     importance, scope

                                      -6-

<PAGE>

     or dignity than his position as of the Commencement Date, provided that (I)
     such material change is not in connection with a termination of Executive's
     employment  hereunder for Cause in accordance  with Section 5(a), (II) such
     material  change is not made in  accordance  with Section 5(a)  following a
     termination of  Executive's  employment by the Company other than for Cause
     or Disability,  (III) such material  change is not made in accordance  with
     Section 5(b)  pertaining to disability,  including  without  limitation the
     time  period  restrictions  applicable  thereunder,  and (IV) any notice of
     termination hereunder shall be given by him within ninety (90) days of when
     he becomes aware of such change; or

          (C) Failure by the Company to comply with any  provision of Section 1,
     2, 3, 4 or 8 of this  Agreement,  which has not been cured  within  fifteen
     (15)  days  after  notice  of such  noncompliance  has  been  given  by the
     Executive to the  Company,  provided  any notice of  termination  hereunder
     shall be given by the  Executive  within  ninety (90) days after the end of
     such fifteen (15) day period;

          (D) Failure by the Company to obtain an assumption  of this  Agreement
     by a successor in  accordance  with Section 14 unless  payment or provision
     for  continuation  of  benefits  under this  Agreement  have been made in a
     manner permitted by Section 5; and

          (E)  Any  purported  termination  by the  Company  of the  Executive's
     employment  which is not  effected  in  accordance  with the  terms of this
     Agreement, including without limitation pursuant to a notice of termination
     not satisfying the  requirements set forth herein (and for purposes of this
     Agreement no such purported termination by the Company shall be effective),
     which  has not  been  cured  within  ten (10)  days  after  notice  of such
     nonconformance has been given by the Executive to the Company, provided any
     notice of  termination  hereunder  shall be given by the  Executive  within
     thirty (30) days of receipt of notice of such purported termination.

          (F) The Company  giving to the  Executive the notice  contemplated  by
     Section 1(a) of this Agreement.

     For purpose of this  Agreement,  a "Change in Control" of the Company shall
have the same meaning as set forth in Exhibit A hereto.

     (d) Severance Compensation.

          (i)  Termination for Good Reason or Other than for Cause. In the event
     the Executive's  employment hereunder is terminated (A) by the Executive or
     by the Company (or its successors) following a Change in Control, or (B) by
     the  Executive for a Good Reason or (C) by the Company other than for Cause
     (including  without  limitation in the event the Company elects at any time
     not to automatically  extend the Executive's  employment hereunder pursuant
     to the second  sentence of Section 1(a)  hereof),  the  Executive  shall be
     entitled,  in  addition  to the  other  compensation  and  benefits  herein
     provided  for, to severance  compensation  in an aggregate  amount equal to
     three times the sum of the Final  Average Base Salary and the Final Average
     Annual Bonus where

                                      -7-

<PAGE>

     (A) the "Final  Average Base Salary"  means the average of the  Executive's
     Annual Base Salary as in effect for each of the three years  preceding  the
     date of  termination  and  commencing  no earlier than July 1, 2000 (or, if
     shorter,  the number of years from July 1, 2000 to the date of termination)
     and (B) the "Final  Average  Bonus" means the average of the annual bonuses
     awarded to the Executive  pursuant to Section 2(b) of this  Agreement  with
     respect to the three years preceding the date of termination and commencing
     no earlier than July 1, 2000 (or, if shorter, the number of years from July
     1,  2000  to the  date of  termination;  provided  that if the  Executive's
     employment is terminated  prior to his  eligibility to earn an Annual Bonus
     for the period July 1, 2000 to June 30,  2001,  then for purposes of making
     the  aforementioned  computation  he shall be  deemed  to have  earned  the
     maximum  Annual  Bonus to which he would have been  entitled  assuming  the
     attainment by the Executive of the specified  performance and other targets
     related  to  designated   performance  and  other  goals  selected  by  the
     Compensation Committee under the Performance Compensation Plan), payable in
     a lump sum at the end of the calendar month in which the  termination  date
     occurs; provided, however, that if the Executive's employment is terminated
     following a Change in Control or is  terminated  by the Company  other than
     for  Cause  in  anticipation  of  a  Change  in  Control,   such  severance
     compensation shall be paid in one lump sum on the date of such termination.

          (ii) Termination  Following  Disability.  In the event the Executive's
     employment should be terminated by the Company as a result of Disability in
     accordance with Section 5(b) hereof,  then the Executive shall be entitled,
     in addition to the other  compensation and benefits herein provided for, to
     severance  compensation in an aggregate amount equal to three times the sum
     of the Final Average Base Salary as defined in Section  5(d)(i)above,  plus
     the Final  Average  Bonus as defined in Section  5(d)(i) above payable in a
     lump sum at the end of the  calendar  month in which the  termination  date
     occurs, reduced by the amount of any disability insurance proceeds actually
     paid to the Executive or for his benefit during the said time period.

     (e) Effect of Termination or Change in Control upon Equity Compensation.

          (i) In the event the Executive's employment hereunder is terminated by
     the  Company  for any  reason  other  than  for  Cause  (including  without
     limitation  an  election by the  Company  not to  automatically  extend the
     Executive's employment hereunder pursuant to the second sentence of Section
     l(a) hereof), or in the event the Executive should terminate his employment
     for Good Reason,  then any unexpired  options held by the Executive (or his
     assignee)  entitling the Executive (or his assignee) to purchase securities
     of  the  Company  shall,  notwithstanding  any  contrary  provision  in the
     agreement or plan pursuant to which such options were granted,  vest and/or
     be exercisable for the remainder of the original term of such option as set
     forth in the pertinent option agreement.

          (ii) In the event the Executive's  employment  hereunder is terminated
     by the  Company  for  Cause or the  Executive  voluntarily  terminates  his
     employment  (other than for "Good  Reason,"  death or  "Disability"),  then
     effective  upon the date such  termination  is  effective,  any options not
     previously  vested  shall be  forfeited,

                                      -8-

<PAGE>

     unless  there  shall  be a  contrary  provision  in the  agreement  or plan
     pursuant to which such options were granted.

          (iii) In the event of the  Executive's  death while employed or in the
     event  the  Executive's   employment   should  terminate  as  a  result  of
     Disability,  then,  any  unexpired  options held by the  Executive  (or his
     assignee)  entitling the Executive (or his assignee) to purchase securities
     of  the  Company  shall,  notwithstanding  any  contrary  provision  in the
     agreement or plan  pursuant to which such options were  granted,  be vested
     and/or be exercisable for the remainder of the original term of such option
     as set forth in the pertinent option agreement.

          (iv) In the  event of a Change  in  Control  while  the  Executive  is
     employed,  then as of the date immediately prior to the date such Change in
     Control  shall occur,  any options held by the  Executive (or his assignee)
     entitling the  Executive  (or his  assignee) to purchase  securities of the
     Company,  which restricted stock or options are subject to vesting,  shall,
     notwithstanding any contrary provision in the agreement or plan pursuant to
     which such options were  granted,  become fully vested and any such options
     shall  become  exercisable  as of such  date and shall  remain  exercisable
     during the  respective  terms of such options as set forth in the pertinent
     option agreement.

     (f) Continuation of Benefits, etc.

          (i) Subject to the Sections 5(f)(ii) and 5(f)(iii) below, in the event
     the Executive's  employment  hereunder is terminated by the Executive for a
     Good Reason or by the Company  other than for "Cause"  (including,  without
     limitation, death or "Disability" or in the event the Company elects not to
     automatically  extend the Executive's  employment hereunder pursuant to the
     second sentence of Section l(a) hereof):

               (A) The Executive  shall  continue to be entitled to the benefits
          that the  Executive  was  receiving  or to  which  the  Executive  was
          entitled,   as  of  the  date  immediately  preceding  the  applicable
          termination  date,  pursuant  to  Section  4 hereof  at the  Company's
          expense for a period of time following the termination  date ending on
          the first to occur of (I) the  third  anniversary  of the  termination
          date or (II) the  date on  which  the  Executive  commences  full-time
          employment  by  another  employer,  but only if and to the  extent the
          Executive is eligible to receive through such other employer  benefits
          which are at least  equivalent on an aggregate basis to those benefits
          the  Executive  was  receiving or to which the  Executive was entitled
          under  Section 4 hereof as of  immediately  preceding  the  applicable
          termination date. If because of limitations  required by third parties
          or imposed by law,  the  Executive  cannot be provided  such  benefits
          through  the  Company's  plans,  then the  Company  will  provide  the
          Executive  with  substantially  equivalent  benefits,  on an aggregate
          basis, at the Company's expense.  For purposes of the determination of
          any benefits  which  require a particular  period of employment by the
          Company  and/or the  attainment of a particular  age while employed by
          the Company in order to be payable,  the Executive shall be treated as
          having  continued in the  employment of the Company

                                      -9-

<PAGE>

          during  such  period of time as the  Executive  is entitled to receive
          benefits  under this Section  5(f).  At such time as the Company is no
          longer  required to provide the Executive with life and/or  disability
          insurance,  as the case may be, the Executive shall be entitled at the
          Executive's expense to convert such life and disability insurance,  as
          the case may be,  except if and to the extent such  conversion  is not
          available from the provider of such insurance.

          (ii) In the event the Executive's employment is terminated following a
     Change in Control or is  terminated  by the Company other than for Cause in
     anticipation  of a  Change  in  Control,  the  Company  shall  pay  to  the
     Executive,  in lieu of  providing  the  benefits  contemplated  by  Section
     5(f)(i) above, an amount in cash equal to the aggregate reasonable expenses
     that the Company  would  incur if it were to provide  such  benefits  for a
     period  of  time  following  the  termination  date  ending  on  the  third
     anniversary of the termination date, which amount shall be paid in one lump
     sum on the date of such termination.

          (iii) With respect to any  termination of the  Executive's  employment
     (other than by the Company  for "Cause" or a voluntary  termination  by the
     Executive)  as  described  in sections  5(f)(i)  and  5(f)(ii)  above,  the
     Executive shall be entitled to receive continued  participation in medical,
     dental  and  life  insurance  coverage  until  (A) the  Executive  receives
     equivalent  coverage  and  benefits  under  the  plans  and  programs  of a
     subsequent  employer  (such  coverage  and benefits to be  determined  on a
     coverage-by-coverage   or  benefit-by-benefit   basis)  or  (B)  the  third
     anniversary from the date of the Executive's termination; provided that (I)
     if the Executive is precluded  from  continuing  his  participation  in any
     applicable  Executive  benefit  plan or program as  described  above and in
     Section 4, he shall be provided with the after-tax  economic  equivalent of
     the  benefits  provided  under the plan or  program  in which he is able to
     participate for the period specified above, (II) the economic equivalent of
     any  benefit  forgone  shall be deemed to be the lowest  cost that would be
     incurred  by  the  Executive  in  obtaining  such  benefit  himself  on  an
     individual basis, and (III) payment of such after-tax  economic  equivalent
     shall be made quarterly in advance.

               (g) Accrued Compensation.  In the event of any termination of the
          Executive's  employment for any reason,  the Executive (or his estate)
          shall be paid such  portion of his Base  Salary and  bonuses as he has
          accrued  (including without limitation as provided below) by virtue of
          his employment  during the period prior to termination and has not yet
          been paid,  together  with any amounts for expense  reimbursement  and
          similar items which have been properly incurred in accordance with the
          provisions  hereof  prior to  termination  and have not yet been paid.
          Such  amounts  shall be paid  within ten (10) days of the  termination
          date.  The  amount due to the  Executive  (or his  estate)  under this
          Section  5(g) in  payment  of any  bonus  or stock  option,  including
          without  limitation  the Annual Bonus  and/or the Stock Option  Grant,
          shall be a  proportionate  amount  of the bonus or stock  option  that
          would next be payable (or vested) to him and would otherwise have been
          due (or vested) to the Executive if such  termination had not occurred
          and such bonus or stock  option had been fully  earned or vested,  and
          which  proportion  shall be based on the number of elapsed

                                      -10-

<PAGE>

          days in the applicable  bonus period prior to the termination date and
          in which the termination date occurs.

               (h) Resignation. If the Executive's employment hereunder shall be
          terminated by him or by the Company in  accordance  with the terms set
          forth  herein,  then  effective  upon the  date  such  termination  is
          effective, he will be deemed to have resigned from all positions as an
          officer and  Director  of the Company and of any of its  Subsidiaries,
          except as the parties (or with respect to positions with a Subsidiary,
          the Executive and the Subsidiary) may otherwise agree.

               (i)  Certain  Tax  Consequences.  Whether  or not  the  Executive
          becomes  entitled  to the  payments  and  benefits  described  in this
          Section  5,  if any of the  payments  or  benefits  received  or to be
          received by the Executive in connection  with a change in ownership or
          control of the Company (a "Statutory  Change in Control"),  as defined
          in section 280G of the Internal  Revenue Code of 1986, as amended (the
          "Code"),  or  the  Executive's   termination  of  employment  (whether
          pursuant to the terms of this Agreement or any other plan, arrangement
          or agreement  with the Company,  any person whose actions  result in a
          Statutory Change in Control or any person  affiliated with the Company
          or such  person)  (collectively,  the  "Severance  Benefits")  will be
          subject to any excise tax (the "Excise  Tax")  imposed  under  section
          4999 of the Internal  Revenue Code of 1986,  as amended (the  "Code"),
          the Company shall pay to the  Executive an additional  amount equal to
          the Excise Tax, plus any additional  taxes  resulting from the payment
          to the  Executive  by the Company for such Excise Tax (the "Excise Tax
          Payment").

     For purposes of determining  whether any of the Severance  Benefits will be
subject to the Excise Tax and the amount of such Excise Tax:

          (i) all of the  Severance  Benefits  shall be  treated  as  "parachute
     payments"  within the meaning of Code section  280G(b)(2),  and all "excess
     parachute  payments" within the meaning of Code section 280G(b)(1) shall be
     treated as subject to the Excise Tax, unless, in the opinion of tax counsel
     selected by the Company and reasonably  acceptable to the  Executive,  such
     other  payments  or  benefits  (in  whole  or in  part)  do not  constitute
     parachute payments,  including by reason of Code section 280G(b)(4)(A),  or
     such excess parachute  payments (in whole or in part) represent  reasonable
     compensation  for services  actually  rendered,  within the meaning of Code
     section  280G(b)(4)(B),  in excess of the "Base  Amount" as defined in Code
     section  280G(b)(3)  allocable  to  such  reasonable  compensation,  or are
     otherwise not subject to the Excise Tax; and

          (ii) the value of any  non-cash  benefits or any  deferred  payment or
     benefit shall be determined by a certified public accountant as is selected
     by the Company and is reasonably acceptable to the Executive, in accordance
     with the principles of Code section 280G(d)(3) and (4).

     In the event that the Excise Tax is subsequently determined to be less than
the amount  taken  into  account  hereunder  at the time of  termination  of the
Executive's  employment,  the Executive shall repay to the Company,  at the time
that the  amount of such  reduction  in

                                      -11-

<PAGE>

Excise Tax is finally  determined (the "Reduced Excise Tax"),  the difference of
the Excise Tax Payment and the Reduced  Excise Tax,  plus an  additional  amount
representing the difference  between (A) the amount of any additional taxes paid
by the  Company to the  Executive  for such Excise Tax and (B) the amount of any
additional  taxes which  should have been paid to the  Executive  by the Company
with  respect to such  Reduced  Excise  Tax. In the event that the Excise Tax is
determined to exceed the amount taken into account  hereunder at the time of the
termination of the  Executive's  employment  (including by reason of any payment
the  existence  or amount of which  could not be  determined  at the time of the
Excise Tax Payment),  the Company shall make an additional Excise Tax payment in
respect of such excess (plus any interest or penalties  payable by the Executive
with  respect  to such  excess)  at the time that the  amount of such  excess if
finally determined,  plus any additional taxes resulting from the payment to the
Executive by the Company for such excess and the interest and penalties thereon.
The Executive and the Company shall each reasonably  cooperate with the other in
connection  with any  administrative  or  judicial  proceedings  concerning  the
existence  or amount of liability  for Excise Tax with respect to the  Severance
Benefits.

6. Confidential Information; Non-Solicitation; Non-Competition;
   Restrictions on Dispositions of Equity Securities.

     (a) The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret, confidential information,  knowledge or data relating to the
Company or any of its affiliated  companies,  and their  respective  businesses,
which  shall  have  been  obtained  by  the  Executive  during  the  Executive's
employment by the Company or any of its affiliated  companies and that shall not
have been or now or hereafter have become public  knowledge  (other than by acts
by the  Executive  or  representatives  of the  Executive  in  violation of this
Agreement).  During  the  Employment  Period  and  for  a  period  of  one  year
thereafter,  the Executive  shall not,  without the prior written consent of the
Company or as may otherwise be required by law or legal process,  communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.

     (b) The Executive  shall not, at any time during the Employment  Period and
for a period of one year  thereafter  (x)  attempt to bid in  opposition  to the
Company or otherwise  interfere with any prospective  land  acquisition or other
business opportunity which the Company has under contract,  or is negotiating or
evaluating or (y) recruit,  solicit for employment,  hire or engage any employee
or  consultant of the Company or any person who was an employee or consultant of
the Company within one (1) year prior to the date of termination.  The Executive
acknowledges that these provisions (I) have been  specifically  bargained for by
the Company and are supported by separate and specific consideration provided to
him by the Company and (II) are necessary for the Company's  protection  and are
not  unreasonable.  The  duration  and the  scope of these  restrictions  on the
Executive's activities are divisible, so that if any provision of this paragraph
is held or deemed to be invalid, that provision shall be automatically  modified
to the extent  necessary  to make it valid.  The  provisions  contained  in this
paragraph  of Section  6(b) of this  Agreement  shall not be  applicable  to the
Executive in the event that

                                      -12-

<PAGE>

his employment is terminated as a result of or in  anticipation  of a "Change in
Control."

     (c)  Executive  agrees that any breach of the  covenants  contained in this
Section 6 would irreparably  injure the Company.  Accordingly,  Executive agrees
that the Company may, in addition to pursuing any other  remedies it may have in
law or in equity,  withhold  payment of any amounts due  hereunder and obtain an
injunction against Executive from any court having  jurisdiction over the matter
restraining any further violation of this Agreement by Executive.

7. Enforceability. If any provision of this Agreement shall be deemed invalid or
unenforceable  as written,  this Agreement  shall be construed,  to the greatest
extent possible,  or modified, to the extent allowable by law, in a manner which
shall  render  it valid  and  enforceable  and any  limitation  on the  scope or
duration of any such provision  necessary to make it valid and enforceable shall
be  deemed  to be a part  thereof.  No  invalidity  or  unenforceability  of any
provision  contained  herein  shall affect any other  portion of this  Agreement
unless the  provision  deemed to be so invalid  or  unenforceable  is a material
element of this Agreement, taken as a whole.

8. Legal  Expenses.  The Company shall pay the  Executive's  reasonable fees for
legal and other related expenses  associated with any disputes arising hereunder
or under the stock option agreements  referred to herein if a court of competent
jurisdiction  shall render a final  judgement  in favor of the  Executive on the
issues in such dispute,  from which there is no further  right of appeal.  If it
shall  be  determined  in such  judicial  adjudication  that  the  Executive  is
successful  on some of the  issues  in such  dispute,  but  not  all,  then  the
Executive  shall be  entitled  to receive a portion of such legal fees and other
expenses as shall be appropriately prorated.

9.  Notices.  All notices  which the Company is required or permitted to give to
the  Executive  shall be given by  registered  or  certified  mail or  overnight
courier,  with a receipt  obtained,  addressed  to the  Executive at the address
referred to above, or at such other place as the Executive may from time to time
designate in writing, or by personal delivery,  and to counsel for the Executive
as may be requested in writing by the Executive  from time to time.  All notices
which the  Executive is required or  permitted  to give to the Company  shall be
given by  registered  or  certified  mail or overnight  courier,  with a receipt
obtained,  addressed to the Company at the address set forth  above,  or at such
other address as the Company may from time to time  designate in writing,  or by
personal delivery, and to counsel for the Company as may be requested in writing
by the  Company.  A notice  will be deemed  given  upon the  mailing  thereof or
delivery to an overnight  courier for delivery the next business day, except for
a notice of a change of address,  which will not be effective until receipt, and
except as otherwise provided in Section 5(a).

10. Waivers.  No waiver by either party of any breach or  nonperformance  of any
provision or obligation of this Agreement  shall be deemed to be a waiver of any
preceding  or  succeeding  breach  of the same or any  other  provision  of this
Agreement.

11. Headings;  Other Language.  The headings contained in this Agreement are for
reference purposes only and shall in no way affect

                                      -13-

<PAGE>

the meaning or  interpretation  of this  Agreement.  In this  Agreement,  as the
context may require,  the singular  includes  the plural and the  singular,  the
masculine gender includes both male and female reference,  the word "or" is used
in the inclusive  sense and the words  "including,"  "includes,"  and "included"
shall not be limiting.

12. Counterparts. This Agreement may be executed in duplicate counterparts, each
of which shall be deemed to be an  original  and all of which,  taken  together,
shall constitute one agreement.

13.  Agreement  Complete;  Amendments.  This Agreement,  together with the stock
option  agreement  pertaining  to the stock  option  referred to in Section 3(a)
hereof,  is the entire  agreement  of the  parties  with  respect to the subject
matter hereof and supersedes all prior agreements, written or oral, with respect
thereto. This Agreement may not be amended, supplemented, canceled or discharged
except by a written instrument executed by both of the parties hereto, provided,
however,  that the  immediately  foregoing  provision  shall  not  prohibit  the
termination of rights and obligations  under this Agreement which termination is
made in accordance with the terms of this Agreement.

14. Benefit and Binding Nature/Nonassignability. This Agreement shall be binding
upon and inure to the benefit of the  successors  and  permitted  assigns of the
respective  parties  hereto.  This  Agreement  and the  rights  and  obligations
hereunder are personal to the Company and the  Executive and are not  assignable
or transferable to any other person,  firm or corporation without the consent of
the other party, except as contemplated hereby; provided,  however, in the event
of the merger or consolidation of the Company, whether or not the Company is the
surviving or resulting corporation,  the transfer of all or substantially all of
the assets of the Company,  or the voluntary or  involuntary  dissolution of the
Company,  then the  surviving  or resulting  corporation  or the  transferee  or
transferees  of the  Company's  assets shall be bound by this  Agreement and the
Company  shall  take all  actions  necessary  to insure  that such  corporation,
transferee or  transferees  are bound by the provisions of this  Agreement,  and
provided,  further, this Agreement shall inure to the benefit of the Executive's
estate, heirs,  executors,  administrators,  personal and legal representatives,
distributees,  devisees, and legatees.  Notwithstanding the foregoing provisions
of this  Section  14, the  Company  shall not be  required  to take all  actions
necessary to insure that a transferee or transferees of the Company's assets are
bound by the provisions of this Agreement and such  transferee or transferees of
the Company's  shall not be bound by the  obligations  of the Company under this
Agreement if the Company shall have (a) paid to the Executive or made  provision
satisfactory to the Executive for payment to him of all amounts which are or may
become payable to him hereunder in accordance with the terms hereof and (b) made
provision  satisfactory  to the  Executive for the  continuance  of all benefits
required to be provided to him in accordance with the terms hereof.

15.  Governing  Law. This Agreement will be governed and construed in accordance
with the law of  Maryland  applicable  to  agreements  made and to be  performed
entirely  within such state,  without  giving  effect to

                                      -14-

<PAGE>

the conflicts of laws principles thereof.

16.  Survival.  The provisions of Sections 3, 5(d),  (e), (f), (g) and (h), 6, 7
and 8 hereof,  and any stock  option  agreement  entered into as described in or
pursuant  to Section 3 hereof or during  the  Executive's  employment  hereunder
shall survive the  termination of the  Executive's  employment as continuing and
separate agreements between the parties.

17.  Subsidiaries.  As used  herein,  the  term  "Subsidiaries"  shall  mean all
corporations  a majority  of the  capital  stock of which  entitling  the holder
thereof to vote is owned by the Company or a Subsidiary.

18.  Interpretation.  The Company and the Executive each  acknowledge  and agree
that this  Agreement has been  reviewed and  negotiated by such party and its or
his  counsel,  who have  contributed  to its  revision,  and the normal  rule of
construction,  to the effect  that any  ambiguities  are  resolved  against  the
drafting party, shall not be employed in the interpretation of it.

                           [SIGNATURE PAGE TO FOLLOW]

                                      -15-

<PAGE>

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

                                   WASHINGTON HOMES, INC.

                                   BY:  /s/  Christopher Spendley
                                        ----------------------------------------
                                        Christopher Spendley
                                        Senior Vice President and
                                        Secretary

                                    EXECUTIVE

                                        /s/  Geaton A. DeCesaris, Jr.
                                        ----------------------------------------
                                        Geaton A. DeCesaris, Jr.

                                      -16-

<PAGE>

                                                                       EXHIBIT A

                         Definition of Change in Control

For purposes of this  Agreement,  a "Change in Control" of the Company  shall be
deemed to have occurred:

         (a) If any  person (as  defined in Section  3(a)(9) of the 1934 Act (or
any successor provision)),  other than the Company, becomes the beneficial owner
directly  or  indirectly  of more than fifty  percent  (50%) of the  outstanding
Common Stock of the Company,  determined in accordance with Rule 13d-3 under the
1934 Act (or any successor  provision),  or otherwise  becomes  entitled to vote
more  than  fifty  percent  (50%) of the  voting  power  entitled  to be cast at
elections for directors  ("Voting  Power") of the Company,  or in any event such
lower percentage as may at any time be provided for in any similar provision for
any  director  or officer of the  Company or of any  subsidiary  approved by the
Board;  provided,  however,  that  for  purposes  of this  subsection  (a),  the
following  acquisitions  shall  not  constitute  a Change  in  Control:  (i) any
acquisition  directly  from the  Company,  (ii) any  acquisition  by  Geaton  A.
DeCesaris,  Sr., or Geaton A. DeCesaris, Jr. or members of their family or (iii)
any acquisition in which Geaton A. DeCesaris,  Sr., or Geaton A. DeCesaris,  Jr.
and  members  of  their  family  control  the  acquiring  entity  following  the
acquisition  of the  Company  or hold  forty  percent  (40%) of the seats on the
acquiring entity's Board of Directors;

         (b) If the Company is subject to the reporting  requirements of Section
13 or 15(d) (or any  successor  provision)  of the 1934 Act,  and any person (as
defined in Section 3(a)(9) of the 1934 Act),  other than the Company,  purchases
shares  pursuant to a tender offer or exchange  offer to acquire Common Stock of
the Company (or securities  convertible  into or exchangeable for or exercisable
for Common  Stock) for cash,  securities  or any other  consideration,  if after
consummation  of the offer,  the person in  question  is the  beneficial  owner,
directly or  indirectly,  of more than fifty  percent  (50%) of the  outstanding
Common Stock of the Company,  determined in accordance with Rule 13d-3 under the
1934 Act (or any successor  provision) or such lower  percentages  as may at any
time be provided for in any similar provision for any director or officer of the
Company or of any Subsidiary approved by the Board; provided,  however, that for
purposes of this subsection (b), the following acquisitions shall not constitute
a Change in Control:  (i) any acquisition by Geaton A. DeCesaris,  Sr. or Geaton
A.  DeCesaris,  Jr. or members of their family or (ii) any  acquisition in which
Geaton A. DeCesaris, Sr. or Geaton A. DeCesaris, Jr. and members of their family
control the acquiring  entity  following the  acquisition of the Company or hold
forty percent (40%) of the seats on the acquiring entity's Board of Directors;

         (c) If the  stockholders  or the Board  approve  any  consolidation  or

<PAGE>

merger  of the  Company  (i) in  which  the  Company  is not the  continuing  or
surviving  corporation  unless such merger is with a Subsidiary  at least eighty
percent  (80%) of the  voting  power of  which  is held by the  Company  or (ii)
pursuant  to  which  the  holders  of  the  Company's  shares  of  Common  Stock
immediately  prior to such  merger or  consolidation  would  not be the  holders
immediately  after such  merger or  consolidation  of at least a majority of the
voting  power of the  Company  or such  lower  percentage  as may at any time be
provided for in any similar provision for any director or officer of the Company
or of any Subsidiary approved by the Board;  provided,  however, that any merger
or consolidation in which Geaton A. DeCesaris,  Sr. or Geaton A. DeCesaris,  Jr.
or members of their family  control the  acquiring or resulting  entity or forty
percent  (40%) of the seats on such  entity's  Board of  Directors  shall not be
deemed a "Change in Control";

         (d) The stockholders or the Board shall have approved any sale,  lease,
exchange or other transfer (in one transaction or a series of  transactions)  of
all or substantially all of the assets of the Company; or

         (e) Upon the election of one or more new  directors  of the Company,  a
majority of the directors holding office, including the newly elected directors,
were not  nominated  as  candidates  by a majority  of the  directors  in office
immediately before such election.

         As used in this definition of "Change in Control", "Common Stock" means
the Common Stock, or if changed, the capital stock of the Company as it shall be
constituted  from time to time entitling the holders  thereof to share generally
in the  distribution of all assets  available for  distribution to the Company's
stockholders  after the  distribution  to any  holders  of  capital  stock  with
preferential rights.

         As used in this definition of "Change in Control",  "Subsidiary"  means
any  corporation  (whether  now  or  hereafter  existing)  which  constitutes  a
"subsidiary" of the Company, as defined in Section 424(f) of the Code.

                                      -2-

<PAGE>

                                                                       EXHIBIT B

                             WASHINGTON HOMES, INC.

                            NONSTATUTORY STOCK OPTION

                       Optionee: Geaton A. DeCesaris, Jr.

         1. Grant of Stock Option.  As of the Grant Date  (identified in Section
18 below) Washington Homes, Inc. a Maryland corporation (the "Company"),  hereby
grants a Nonstatutory  Stock Option (the  "Option") to the Optionee  (identified
above),  an  employee  of the  Company to  purchase  the number of shares of the
Company's  common  stock  $0.01  par  value  per  share  (the  "Common  Stock"),
identified  in  Section  18 below  (the  "Shares"),  subject  to the  terms  and
conditions  of this  agreement  (the  "Agreement").  The Shares,  when issued to
Optionee upon the exercise of the Option, shall be fully paid and nonassessable,
The Option is not an  "incentive  stock option" as defined in Section 422 of the
Internal Revenue Code.

         2.  Definitions.  All  capitalized  terms  used  herein  shall have the
meanings set forth in Exhibit A hereto unless otherwise provided herein. Section
18  below  sets  forth  meanings  for  various  capitalized  terms  used in this
Agreement.

         3. Option Term. The Option shall commence on the Grant Date (identified
in Section 18 below) and  terminate on the date  immediately  prior to the tenth
(10th)  anniversary  of the Grant Date. The period during which the Option is in
effect and may be exercised is referred to herein as the "Option Period".

         4. Option Price. The Option price per Share is identified in Section 18
below.

         5.  Vesting.  The total  number of shares  subject to this Option shall
vest in accordance with the Vesting  Schedule  (identified in Section 18 below).
The Shares may be purchased at any time after they become vested, in whole or in
part,  during  the  Option  Period;  provided,  however,  the Option may only be
exercisable to acquire whole Shares. The right of exercise provided herein shall
be  cumulative  so that if the Option is not  exercised  to the  maximum  extent
permissible   after  vesting,   the  vested  portion  of  the  Option  shall  be
exercisable, in whole or in part, at any time during the Option Period.

         6.  Method of  Exercise.  The Option is  exercisable  by  delivery of a
written notice to the Company, signed by the Optionee,  specifying the number of
Shares to be acquire don, and the effective date of, such exercise. the Optionee
may withdraw notice of exercise of this Option at any time prior to the close of
business on the business day preceding the proposed exercise date.

         7.  Method of  Payment.  The Option  Price upon  exercise of the Option
shall be payable to the Company in full either:  (i) in cash or its  equivalent,
or (ii) subject to prior approval

<PAGE>

by  the  Compensation  Committee  in its  discretion,  by  tendering  previously
acquired  shares having an aggregate  Fair Market Value (as defined in Exhibit A
hereto) at the time of exercise  equal to the total Option Price  (provided that
the Shares must have been held for at least six (6) months prior to their tender
to  satisfy  the  Option  Price),  or (iii)  subject  to prior  approval  by the
Compensation Committee in its discretion,  by withholding shares which otherwise
would be acquired on exercise  having an aggregate Fair Market Value at the time
of exercise  equal to the total Option price,  or (iv) subject to prior approval
by the Compensation Committee in its discretion,  by a combination of (i), (ii),
and (iii) above.  Any payment in shares of common stock shall be effected by the
delivery of such shares to the Secretary of the company,  duly endorsed in blank
or accompanied  by stock powers duly executed in blank,  together with any other
documents as the  Secretary  may require.  if the payment of the Option price is
remitted partly in shares,  the balance of the payment of the Option price shall
be paid in either  cash,  certified  check,  bank  cashiers'  check,  or by wire
transfer.

         The  Compensation  Committee,  in  its  discretion,  may  allow  (i)  a
"cashless  exercise" as permitted under Federal Reserve Board's regulation T, 12
CFR Part 220 (or its  successor),  and  subject  to  applicable  securities  law
restrictions and tax withholdings, or (ii) any other means of exercise which the
Compensation Committee, in its discretion,  determines to be consistent with the
Plan's purpose and applicable law.

         As soon as  practicable  after  receipt  of a written  notification  of
exercise  and full  payment,  the company  shall  deliver to or on behalf of the
Optionee,  in the name of the  Optionee or other  appropriate  recipient,  Share
certificates for the number of shares purchased under the Option.  Such delivery
shall be effected for all purposes  when a stock  transfer  agent of the Company
shall have deposited such  certificates in the United States mail,  addressed to
Optionee or other appropriate recipient.

         8.  Restriction  on  Exercise.  The Option may not be  exercised if the
issuance of such Shares or the method of payment of the  consideration  for such
Shares  would  constitute  a  violation  of  any  applicable  federal  or  state
securities  or other laws or  regulations,  including any rule under part 207 of
Title 12 of the Code of Federal  Regulations  ("Regulation G") as promulgated by
the Federal  Reserve board, or any rules or regulations of any stock exchange on
which the Common Stock may be listed.

         9. Termination of employment.  Voluntary or involuntary  termination of
employment  and the death or  Disability  of Optionee  shall  affect  Optionee's
rights under the Option as follows:

          (a) Termination for Cause.  The vested and non-vested  portions of the
     Option shall  terminate  immediately  and shall not be  exercisable  to any
     extent if Optionee's  employment  with the company is terminated  for Cause
     (as defined in Exhibit A hereto at the time of such termination).

          (b)  Other  Involuntary  Termination  or  voluntary  Termination.   If
     Optionee's  employment  with the Company is terminated for any reason other
     than for Cause,  death

                                      -2-

<PAGE>

     or Disability (as defined in Exhibit A hereto at the time of  termination),
     then (i) the Option will immediately terminate to the extent it is unvested
     and (ii) the vested  portion of the Option will terminate to the extent not
     exercised within 180 calendar days after the date of such  termination.  In
     no event may the Option be exercised by anyone after the earlier of (i) the
     expiration of the Option Period or (ii) 180 calendar days after termination
     of employment.

          (c) Death or Disability.  If Optionee's employment with the Company is
     terminated  by death or  disability,  then (i) the Option will  immediately
     terminate to the extent it is unvested  and (ii) the vested  portion of the
     Option will terminate 180 calendar days after the date of such  termination
     to the extent not  exercised by Optionee  or, in the case of death,  by the
     person or persons to whom Optionee's rights under the Option have passed by
     will  or by the  laws  of  descent  and  distribution  or,  in the  case of
     Disability, by Optionee's legal representative.  In no event may the Option
     be  exercised  by anyone  after the  earlier of (i) the  expiration  of the
     Option Period or (ii) 180 days after the Optionee's death or termination of
     employment due to disability.

         10.  Independent Legal and Tax Advice.  Optionee  acknowledges that the
Company  has  advised  Optionee  to  obtain  independent  legal  and tax  advice
regarding the grant and exercise of the Option and the disposition of any Shares
acquired thereby.

         11.  Reorganization  of Company.  The existence of the Option shall not
affect in any way the right or power of the Company or its  stockholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes  in  company's  capital  structure  or its  business,  or any  merger or
consolidation of the Company,  or any issue of bonds,  debentures,  preferred or
prior  preference  stock ahead of or affecting the Shares or the rights thereof,
or the dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.

         In the event of a "Change in  Control"  of the  Company  (as defined in
Exhibit A hereto at the time of such event),  all of the Option then outstanding
shall become 100% vested and immediately and fully exercisable.

         12. Adjustment of Shares. In the event of stock dividends, spin-offs of
assets or other extraordinary dividends,  stock splits,  combinations of shares,
recapitalizations,  mergers,  consolidations,   reorganizations,   liquidations,
issuances of rights or warrants  and similar  transactions  or events  involving
company,  appropriate  adjustments  shall be made to the terms and provisions of
this Option as provided in the Plan.

         13. No Rights in Shares. Optionee shall have no rights as a stockholder
in respect of the Shares  until the Optionee  becomes the record  holder of such
Shares.

         14.  Investment  Representation.  Optionee will enter into such written
representation,  warranties and agreements as Company may reasonably  request in
order to comply with any federal or state  securities law.  Moreover,  any stock
certificate  for any Shares

                                      -3-

<PAGE>

issued  to  Optionee   hereunder   may  contain  a  legend   restricting   their
transferability as determined by the Company in its discretion.  Optionee agrees
that Company shall not be obligated to take any  affirmative  action in order to
cause the issuance or transfer of Shares  hereunder to comply with any law, rule
or regulation that applies to the Shares subject to the Option.

         15. No  Guarantee  of  Employment.  The Option  shall not  confer  upon
Optionee any right to continued employment with the Company.

         16.  Withholding of Taxes. The Company shall have the right to (a) make
deductions from the number of Shares otherwise  deliverable upon exercise of the
Option in an amount sufficient to satisfy  withholding of any federal,  state or
local taxes  required by law, or (b) take such other  action as may be necessary
or appropriate to satisfy any such tax withholding obligations.

         17. General.

          (a)  Notices.  All  notices  under this  Agreement  shall be mailed or
     delivered by hand to the parties at their  respective  addresses  set forth
     beneath their signatures below or at such other address as may be designate
     din  writing by either of the  parties  to one  another.  notices  shall be
     effective upon receipt.

          (b) Shares Reserved.  The Company shall at all times during the Option
     period reserve and keep  available  under the Plan such number of shares as
     shall be sufficient to satisfy the requirements of this Option.

          (c)  Nontransferability of Option. The Option granted pursuant to this
     Agreement is not  transferable  other than by will, the laws of descent and
     distribution  or by a  qualified  domestic  relations  order (as defined in
     Section  414(p)  of  the  Internal   Revenue  Code).  The  Option  will  be
     exercisable  during  Optionee's  lifetime only by Optionee or by Optionee's
     legal  representative  in the event of Optionee's  Disability.  no right or
     benefit  hereunder  shall in any  manner be liable  for or  subject  to any
     debts, contracts, liabilities, obligations or torts of Optionee.

          (d)  Amendment  and   Termination.   No  amendment,   modification  or
     termination  of the  Option  or this  Agreement  shall  be made at any time
     without the written consent of Optionee and Company.

          (e) No Guarantee of Tax  Consequences.  the Company and the  Committee
     make no  commitment  or guarantee  that any federal or state tax  treatment
     will apply or be  available to any person  eligible for benefits  under the
     Option.  the Optionee has been advised and been provided the opportunity to
     obtain independent legal and tax advice regarding the grant and exercise of
     the Option and the disposition of any Shares acquired thereby.

          (f)  Severability.  In the event that any provision of this  Agreement
     shall be held  illegal,  invalid,  or  unenforceable  for any reason,  such
     provision  shall be fully

                                      -4-

<PAGE>

     severable,  but shall not affect the remaining provisions of the Agreement,
     and the  Agreement  shall be  construed  and  enforced  as if the  illegal,
     invalid, or unenforceable provision had not been included herein.

          (g) Supersedes  Prior  Agreements.  This Agreement shall supersede and
     replace all prior agreements and understandings,  oral or written,  between
     the Company and the  Optionee  regarding  the grant of the Options  covered
     hereby.

          (h) Governing  Law. The Option shall be construed in  accordance  with
     the laws of the State of  Maryland  without  regard to its  conflict of law
     provision,  to the  extent  federal  law does  not  supersede  and  preempt
     Maryland law.

         18. Definitions and Other Terms. The following  capitalized terms shall
have those meanings set forth opposite them:

               (a)  Optionee: Geaton A. DeCesaris, Jr.

               (b)  Grant Date: June 30, 2000

               (c)  Shares:  Fifty  Thousand  (50,000)  Shares of the  Company's
                    Common Stock

               (d)  Option Price: Six dollars ($6.00) per Share

               (e)  Option  Period:  June 30, 2000  through  June 30, 2010 until
                    11:59 p.m.

               (f)  Vesting  Schedule:  Options  for 12,500 of the Shares  shall
                    vest  on the  Grant  Date,  and  Options  for an  additional
                    one-third  of the  Shares  shall  vest  on  each  subsequent
                    anniversary  of  the  Grant  Date  until  fully  vested,  as
                    follows:

                    Date                                Options Vesting
                    ----                                ---------------
                    June 30, 2001                              12,500
                    June 30, 2002                              12,500
                    June 30, 2003                              12,500
                            Total                              50,000
                                                               ======

         IN WITNESS WHEREOF,  the Company has, as of June 30, 2000,  caused this
Agreement  to be  executed  on its  behalf by its duly  authorized  officer  and
Optionee has hereunto set his hand as of the same date.

                                      -5-

<PAGE>

                                    WASHINGTON HOMES, INC.

                                    By:     /s/ Christopher Spendley
                                            ------------------------------------
                                            Christopher Spendley, Senior Vice
                                            President and Secretary

                                    Washington Homes, Inc.
                                    1802 Brightseat Road
                                    Landover, MD  20785-4235

                                    Attention:  Christopher Spendley, Senior
                                                Vice president and Secretary

                                    OPTIONEE

                                             /s/ Geaton A. DeCesaris, Jr.
                                             -----------------------------------
                                             Geaton A. DeCesaris, Jr.

                                    Address:

                                    5806 Sonny Drive
                                    Lothian, MD   20711

                                      -6-

<PAGE>

                                    Exhibit A

               Definitions for Nonstatutory Stock Option Agreement
                            for Geaton DeCesaris, Jr.

         (a) Cause.  When used in connection with the termination of a Grantee's
Employment,  Cause shall mean the termination of the Grantee's Employment by the
Company by reason of (i) the  conviction  of the Grantee by a court of competent
jurisdiction  as to which no further  appeal  can be taken of a crime  involving
moral turpitude or a felony; (ii) the proven commission by the Grantee of an act
of fraud upon the Company;  (iii) the willful and proven theft,  embezzlement or
other  misappropriation  of any funds or property of the Company by the Grantee;
(iv) the willful and  continued  failure by the Grantee to perform the  material
duties assigned to him; (v) the knowing engagement by the Grantee in any direct,
material  conflict of  interest  with the Company  without  compliance  with the
Company's conflict of interest policy, if any, then in effect;  (vi) the knowing
engagement  by the Grantee,  without the written  approval of the Board,  in any
activity  which  competes with the business of the Company or which would result
in a material  injury to the  business,  reputation  or goodwill of the Company;
(vii) the unauthorized disclosure of trade secrets or proprietary information of
the  Company  or of a third  party who has  entrusted  such  information  to the
Company,  (viii) the knowing and  intentional  engagement in any activity  which
would  constitute  a  material  violation  of the  provisions  of the  Company's
policies and procedures  manual,  if any, then in effect;  or (ix) a termination
for cause as defined in any employment  agreement with the Grantee. For purposes
of this definition of "Cause", the term "Company" shall also refer to any Parent
or Subsidiary.

         (b)  Disability.  As  determined by the  Compensation  Committee in its
discretion  exercised  in good  faith,  a physical  or mental  condition  of the
Employee that would entitle him to payment of disability  income  payments under
the Company's long term disability  insurance  policy or plan for employees,  as
then  effective,  if any; or in the event that the Grantee is not  covered,  for
whatever reason,  under the Company's long-term  disability  insurance policy or
plan,  "Disability" means a permanent and total disability as defined in Section
22(e)(3) of the Code. A  determination  of Disability may be made by a physician
selected or approved by the  Compensation  Committee  and, in this respect,  the
Grantee shall submit to an examination by such physician upon request.

         (c) Fair Market  Value.  The fair  market  value of one share of Common
Stock on the date in question, which is deemed to be (i) the closing sales price
on the immediately preceding business day of a share of Common Stock as reported
on the principal securities exchange on which Shares are then listed or admitted
to trading, or (ii) if not so reported, the average of the closing bid and asked
prices for a Share on the  immediately  preceding  business  day as quoted n the
National   Association  of  Securities   Dealers   Automated   Quotation  System
("NASDAQ"), or (iii) if not quoted on NASDAQ, the average of the closing bid and
asked  prices for a Share as quoted by the  National  Quotation  Bureau's  "Pink
Sheets" or the National  Association  of Securities  Dealers' OTC Bulletin Board
System.

         If the Common Stock is not traded in accordance  with clauses (i), (ii)
or (iii) of the  preceding  paragraph  at the time a  determination  of its Fair
Market Value is required to be made hereunder,  the

<PAGE>

determination of Fair Market Value for purposes of the Plan shall be made by the
Compensation  Committee  in its  discretion  exercised  in good  faith.  In this
respect, the Compensation  Committee may rely on such financial data, valuations
or experts as it deems advisable under the circumstances.

         (d) For purposes of this Nonstatutory Stock Option Agreement, a "Change
in Control": of the Company shall be deemed to have occurred:

               (i) If any person (as defined in Section  3(a)(9) of the Exchange
          Act (or any successor provision)), other than the Company, becomes the
          beneficial  owner  directly or  indirectly  of more than fifty percent
          (50%) of the  outstanding  common Stock of the Company,  determined in
          accordance  with Rule 13d-3 under the Exchange  Act (or any  successor
          provision),  or  otherwise  becomes  entitled  to vote more than fifty
          percent (505) of the voting power entitled to be cast at elections for
          directors ("Voting Power") of the company,  or in any event such lower
          percentage as may at any time be provided for in any similar provision
          for any  director  or  officer  of the  company  or of any  Subsidiary
          approved by the Board;  provided,  however,  that for purposes of this
          subsection  (i), the  following  acquisitions  shall not  constitute a
          Change in Control:  (A) any acquisition directly from the Company, (B)
          any acquisition by Geaton A.  DeCesaris,  Sr., or Geaton A. DeCesaris,
          Jr. or members of their family or (C) any  acquisition in which Geaton
          A. DeCesaris,  Sr., or Geaton A.  DeCesaris,  Jr. and members of their
          family control the acquiring  entity  following the acquisition of the
          Company  or hold  forty  percent  (40%) of the seats on the  acquiring
          entity's Board of Directors;

               (ii) If the Company is subject to the reporting  requirements  of
          Section 13 or 15(d) (or any successor  provision) of the Exchange Act,
          and any person (as defined in section  3(a)(9) of the  Exchange  Act),
          other than the Company, purchases shares pursuant to a tender offer or
          exchange  offer to acquire  common Stock of the company (or securities
          convertible  into or exchangeable for or exercisable for Common Stock)
          for cash, securities or any other consideration, if after consummation
          of the offer, the person in question is the beneficial owner, directly
          or  indirectly,  of more than fifty percent  (50%) of the  outstanding
          Common Stock of the company,  determined in accordance with Rule 13d-3
          under the  Exchange  Act (or any  successor  provision)  or such lower
          percentages  as  may at  any  time  be  provided  for  in any  similar
          provision  for  any  director  or  officer  of the  company  or of any
          subsidiary approved by the Board; provided, however, that for purposes
          of  this  subsection  (ii),  the  following   acquisitions  shall  not
          constitute  a Change  in  Control:  (A) any  acquisition  by Geaton A.
          DeCesaris,  Sr. or Geaton A. DeCesaris, Jr. or members of their family
          or (B) any acquisition in which Geaton A. DeCesaris,  Sr. or Geaton A.
          DeCesaris,  Jr. and  members of their  family  control  the  acquiring
          entity  following the acquisition of the Company or hold forty percent
          (40%) of the seats on the acquiring entity's Board of Directors;

               (iii) If the stockholders or the Board approve any  consolidation
          or  merger  of the  Company  (i)  in  which  the  Company  is not  the
          continuing  or  surviving  corporation  unless  such  merger is with a
          Subsidiary at least eighty  percent (80%) of the voting power of which
          is held by the  Company or (ii)  pursuant  to which the holders of the
          Company's shares of Common Stock  immediately  prior to such merger or
          consolidation  would not be the holders

                                      -2-

<PAGE>

          immediately  after such merger or consolidation of at least a majority
          of the voting power of the Company or such lower  percentage as may at
          any time be provided for in any similar  provision for any director or
          officer of the  Company or of any  Subsidiary  approved  by the Board;
          provided, however, that any merger or consolidation in which Geaton A.
          DeCesaris,  Sr. or Geaton A. De  Cassowaries,  Jr. or members of their
          family  control the  acquiring  or resulting  entity or forty  percent
          (40%) of the seats on such  entity's  Board of Directors  shall not be
          deemed a "Change in Control";

               (iv) The  stockholders or the Board shall have approved any sale,
          lease,  exchange or other transfer (in one  transaction or a series of
          transactions)  of  all or  substantially  all  of  the  assets  of the
          Company; or

               (v)  Upon  the  election  of one or  more  new  directors  of the
          Company,  a majority of the directors  holding  office,  including the
          newly  elected  directors,  were  not  nominated  as  candidates  by a
          majority of the directors in office immediately before such election.

         As used in this definition of "Change in Control", "Common Stock" means
the Common Stock, or if changed, the capital stock of the Company as it shall be
constituted  from time to time entitling the holders  thereof to share generally
in the  distribution of all assets  available for  distribution to the Company's
stockholders  after the  distribution  to any  holders  of  capital  stock  with
preferential rights.

         (e)  Subsidiary.  Any corporation  (whether now or hereafter  existing)
which constitutes a "subsidiary" of the Company, as defined in Section 424(f) of
the Internal Revenue Code.

                                      -3-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00016-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00016-of-00352.parquet"}]]