Document:

employment_agreementelk.htm

    
      

    

    EXECUTIVE
      RETENTION AGREEMENT

     

    

     

    THIS
      EXECUTIVE RETENTION AGREEMENT (the “Agreement”), made and entered into as of the
      1st day of July, 2007, by and between American Community Properties Trust,
      a
      Maryland real estate investment trust (together with its subsidiaries, the
      “Company”), American Rental Management Company, a Delaware corporation (“ARMC”),
      and Edwin L. Kelly (the “Executive”), a resident of Maryland.

    WHEREAS,
      ARMC is a wholly owned subsidiary of the Company, and provides management and
      other services to the Company and its other subsidiaries;

    WHEREAS,
      Executive has been a senior executive officer of the Company and its affiliates,
      including ARMC, for many years and therefore possesses unique and valuable
      experience and expertise relating to the Company;

    WHEREAS,
      Executive has served as President of the Company pursuant to an employment
      agreement dated August 25, 1998 (the “Executive Employment
      Agreement”);

    WHEREAS,
      in order to provide continuity of management and to take advantage of
      Executive’s expertise, the Company wishes to secure the services of Executive as
      a Vice-Chair of the Company (“Vice Chair”) and continue his service as
      President and Chief Operating Officer (“COO”), and Executive wishes to provide
      such services, in accordance with the terms and subject to the considerations
      provided herein; and

    WHEREAS,
      the parties desire to amend and restate the Executive Employment
      Agreement.

    NOW,
      THEREFORE, in consideration of the promises and mutual covenants contained
      herein, and each intending to be legally bound hereby, the parties agree as
      follows:

    1.  Employment.  Executive
      shall serve as Vice Chair, President and COO of the Company and, in that
      capacity, shall have primary responsibility for managing the combined operations
      and day-to-day affairs of the Company and its consolidated subsidiaries
      (including ARMC).  In addition, Executive shall have such other powers
      and duties as may from time to time be prescribed by the Company’s Board of
      Trustees (the “Board”).  Executive shall report to the Chairman of the
      Board.  Executive shall devote substantially all of his working time
      and efforts to the business and affairs of the Company and its subsidiaries
      (including ARMC) and the advancement of the business and the affairs of the
      Company and its subsidiaries (including ARMC).  Except in connection
      with the outside activities disclosed in writing to the Board prior to the
      execution of this Agreement, Executive further agrees not to engage in any
      outside for-profit business, employment or commercial activity without first
      obtaining approval in writing from the Chairman of the Board, and to observe
      and
      comply with the policies and rules of the Company, unless such compliance is
      inconsistent with the terms of the Agreement.

    2.  Term.  Executive’s
      employment under this Agreement shall continue until December 31, 2010, unless
      sooner terminated in accordance with the terms of this
      Agreement.  Executive’s employment under this Agreement shall
      thereafter automatically renew for successive one year periods unless Executive
      or the Company gives the other notice of his/its intent not to renew employment
      at least ninety (90) days prior to the date on which employment would otherwise
      renew for a successive one year period under this Agreement.

    3.  Compensation.  The
      Company agrees to pay Executive, and Executive agrees to accept from the
      Company, in full payment for Executive’s services, compensation consisting of
      the following:

    (a)  Base
      Salary.  A minimum base salary at an annual rate of $500,000,
      payable on a semi-monthly basis or on such other basis the Company may adopt
      as
      its regular payroll practice.  Executive will receive annual cost of
      living salary increases, as determined by the Board, and Executive may receive
      salary increases at the discretion of the Board.  All payments shall
      be less applicable withholding and deductions, as determined by the
      Company;

    (b)  Benefits.  The
      standard benefits the Company makes available from time to time to its senior
      executive employees, including eligibility for bonuses and other incentive
      awards as may be determined in the discretion of the Board or the compensation
      committee thereof, on the same terms as may be applicable to such other senior
      executive officers and to the extent Executive is eligible under the terms
      of
      the applicable plans, programs or policies;

    (c)  Vacation.  Executive
      is entitled to the number of paid vacation days determined by the Company
      generally for its senior executive officers, but not less than twenty-five
      (25)
      days per year.  Executive is also entitled to all paid holidays given
      to the Company’s senior executive officers; and

    (d)  Certain
      Specified Benefits.  In addition to the benefits for which
      Executive is eligible under subparagraph 2(b), during the term of his
      employment, the Company shall provide Executive with an appropriate car, the
      Company shall pay Executive’s membership fees and dues in the country club of
      his choice, and the Company shall pay membership dues and semiannual meeting
      expenses for Executive’s participation in the Urban Land Institute.

    4.  Expenses.  The
      Company will reimburse Executive for such of his out-of-pocket expenses as
      are
      reasonably necessary in connection with services rendered by Executive pursuant
      to this Agreement, as provided in the business expense policies adopted by
      the
      Company from time to time.

    5.  Termination.  Executive’s
      employment may be terminated before the end of the term of this Agreement or
      at
      the end of the term of this Agreement as follows:

    (a)  By
      the
      Company, at any time, for Cause after providing Executive with at least four
      (4)
      weeks written notice that specifies the circumstance amounting to Cause and,
      if
      requested by Executive, providing an opportunity for Executive and his counsel
      to appear before the Board to address such circumstances.  “Cause”
means (1) Executive’s conviction of, or plea of nolo contendere to, a
      felony involving dishonesty, disloyalty, fraud, or moral turpitude; (2)
      Executive’s material breach of any material obligation in this Agreement; or (3)
      Executive’s engaging in conduct constituting a material breach of any fiduciary
      duty to the Company;

    (b)  Automatically
      on the date of Executive’s death;

    (c)  Automatically
      if Executive becomes disabled or otherwise incapacitated so that Executive
      cannot perform the essential functions of his job with or without reasonable
      accommodation for a continuous period of more one hundred twenty (120) days
      or
      for more than one hundred twenty (120) cumulative days in any one (1) year
      period (“Permanent Disability”).  Any question as to the existence of
      Permanent Disability upon which Executive and the Company cannot agree shall
      be
      determined by a qualified independent physician selected by Executive (or,
      if
      Executive is unable to make such selection, such selection shall be made by
      any
      adult member of Executive’s immediate family or Executive’s legal
      representative) and approved by the Company, with approval not to be
      unreasonably withheld.  The determination of such physician shall be
      communicated in writing to the Company and to Executive and shall be final
      and
      conclusive for all purposes of this Agreement.  Until the date of
      termination by reason of Permanent Disability, Executive shall continue to
      receive the compensation and benefits as set forth in paragraph 3 of this
      Agreement.  No termination of employment for Permanent Disability
      shall impair any rights of Executive to collect benefits according to the terms
      of any disability policy maintained by the Company for that Permanent
      Disability;

    (d)  By
      the
      Company, at any time, for other than Cause upon thirty (30) days written notice
      to Executive;

    (e)  By
      Executive’s voluntary resignation (before the end of the term) for other than
      Good Reason upon not less than thirty (30) days prior written notice to the
      Company;

    (f)  By
      Executive’s voluntary resignation upon thirty (30) days prior written notice to
      the Company for Good Reason.  “Good Reason” means:  (1) a
      material diminution in any of Executive’s base compensation, authority (which
      includes but is not limited to a change in the reporting structure identified
      in
      paragraph 1), duties or responsibilities without his agreement; (2) Executive
      being required to relocate his office to executive offices outside of an area
      within a fifty (50) mile radius of the Company’s existing executive offices; (3)
      there being a material reduction in the overall value of the employee benefits
      being provided to Executive, unless the reduction is effective for all senior
      executive employees; or (4) a material breach by the Company of any of its
      obligations to Executive under this Agreement, and in each case, so long as
      Executive gives such notice within sixty (60) days of the circumstances believed
      by Executive to constitute Good Reason and the Company fails to remedy those
      circumstances within thirty (30) days of its receipt of such
      notice;

    (g)  By
      Executive’s voluntary resignation following a Change of Control of the Company,
      upon not less than thirty (30) days prior written notice to the
      Company.  For purposes of this Agreement, a “Change of Control” shall
      mean any one or more of the following:

    (1)  The
      consummation by any individual, entity or group (within the meaning of Section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
      “Exchange Act”)) (a “Person”) of a transaction or series of transactions as a
      result of which (i) a Person acquires beneficial ownership (within the meaning
      of Rule 13d-3 promulgated under the Exchange Act) of not less than 50% of the
      then-outstanding common shares or other voting securities of the Company or
      any
      successor (collectively, “Voting Securities”)

    (2)  The
      consummation by any Person of a transaction or series of transactions as a
      result of which (i) a Person either (a) acquires beneficial ownership (within
      the meaning of Rule 13d-3 promulgated under the Exchange Act) of not less than
      65% of the then-outstanding common shares or other voting securities of the
      Company or any successor (collectively, “Voting Securities”) not beneficially
      owned by J. Michael Wilson and his affiliates and family members (“Wilson Family
      Shares”), and (ii) (ii) such Voting Securities shall cease to be registered
      under Section 12 of the Exchange Act and be delisted from the American Stock
      Exchange (“AMEX”) or any such other national securities exchange, automated
      quotation system or over-the-counter bulletin board as such securities were
      listed for trading or included immediately prior to consummation of such
      transaction or transactions; provided, however, that in the absence of any
      other
      transaction relating to the acquisition by a Person of Voting Securities other
      than Wilson Family Shares, neither (x) the mere act of filing a Form 15 and
      taking actions to delist ACPT’s common shares from the AMEX or such other
      national securities exchange, automated quotation system or over-the-counter
      bulletin board as such securities were listed for trading or included, nor
      (y) a
      reverse stock split shall constitute a Change of Control under this subparagraph
      (1); or

    (3)  Individuals
      who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
      for any reason to constitute at least a majority of the Board; provided,
      however, that any individual becoming a trustee subsequent to the date hereof
      whose election, or nomination for election by the Company’s shareholders, was
      approved by a vote of at least a majority of the disinterested, non-employee
      trustees then comprising the Incumbent Board shall be considered as though
      such
      individual were a member of the Incumbent Board, but excluding, for this
      purpose, any such individual whose initial assumption of office occurs as a
      result of either an actual or threatened election contest (as such terms are
      used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
      other actual or threatened solicitation of proxies or consents by or on behalf
      of a Person other than the Incumbent Board; or

    (4)  Approval
      by the holders of a majority of the Voting Securities of a reorganization,
      merger or consolidation involving the Company, in each case, unless, following
      such reorganization, merger or consolidation, (i) more than 75% of,
      respectively, the then outstanding shares of Voting Securities or interests
      of
      the corporation, trust or other entity resulting from such reorganization,
      merger or consolidation and the combined voting power of the then outstanding
      voting securities of such corporation, trust or other entity entitled to vote
      generally in the election of directors, trustees or other managers is then
      beneficially owned, directly or indirectly, by all or substantially all of
      the
      individuals and entities who were the beneficial owners, respectively, of the
      outstanding Voting Securities immediately prior to such reorganization, merger
      or consolidation in substantially the same proportions as their ownership,
      immediately prior to such reorganization, merger or consolidation, of the
      outstanding Voting Securities, as the case may be, (ii) no Person (excluding
      the
      Company and its affiliates, any employee benefit plan (or related trust) of
      the
      Company or such corporation resulting from such reorganization, merger or
      consolidation and any Person beneficially owning, immediately prior to such
      reorganization, merger or consolidation, directly or indirectly, 20% or more
      of
      the outstanding Voting Securities, as the case may be) beneficially owns,
      directly or indirectly, 20% or more of, respectively, the then outstanding
      shares of voting securities of the corporation, trust or other entity resulting
      from such reorganization, merger or consolidation entitled to vote generally
      in
      the election of directors, trustees or other managers, and (iii) at least a
      majority of the members of the board of directors, trustees or other managers
      of
      the corporation, trust or other entity resulting from such reorganization,
      merger or consolidation were members of the Incumbent Board at the time of
      the
      execution of the initial agreement providing for such reorganization, merger
      or
      consolidation; or

    (5)           Approval
      by the holders of Voting Securities of (i) a complete liquidation or dissolution
      of the Company or (ii) the sale or other disposition of all or substantially
      all
      of the consolidated assets of the Company, other than to a corporation, trust
      or
      other entity with respect to which, following such sale or other disposition,
      (I) more than 60% of, respectively, the then outstanding voting securities
      of
      such corporation, trust or other entity entitled to vote generally in the
      election of directors, trustees or other managers is then beneficially owned,
      directly or indirectly, by all or substantially all of the individuals and
      entities who were the beneficial owners, respectively, of the outstanding Voting
      Securities immediately prior to such sale or other disposition in substantially
      the same proportion as their ownership, immediately prior to such sale or other
      disposition, of the outstanding Voting Securities, as the case may be, (II)
      no
      Person (excluding the Company and its affiliates, any employee benefit plan
      (or
      related trust) of the Company or such corporation resulting from such
      reorganization, merger or consolidation and any Person beneficially owning,
      immediately prior to such reorganization, merger or consolidation, directly
      or
      indirectly, 20% or more of the outstanding Voting Securities, as the case may
      be) beneficially owns, directly or indirectly, 20% or more of, respectively,
      the
      then outstanding shares of voting securities of the corporation, trust or other
      entity resulting from such reorganization, merger or consolidation entitled
      to
      vote generally in the election of directors, trustees or other managers, and
      (III) at least a majority of the members of the board of directors, trustees
      or
      other managers of the corporation, trust or other entity were members of the
      Incumbent Board at the time of the execution of the initial agreement or action
      of the Board providing for such sale or other disposition of
      assets;

    (h)  By
      the
      Company or Executive giving notice pursuant to paragraph 2 of its intent not
      to
      renew employment pursuant to the Agreement at least ninety (90) days prior
      to
      the date on which employment would have otherwise renewed pursuant to the
      Agreement.

    6.  Incidents
      of Termination.

    (a)  If
      Executive’s employment is terminated under subparagraph 5(a), (b), (c), or
      (e), then the Company shall have no further obligation under this Agreement,
      except as provided under paragraph 13 and except the obligation to: (1) pay
      Executive an amount equal to the portion of his compensation and out-of-pocket
      business expenses, as defined in paragraph 4, as may be accrued and unpaid
      on
      the date of termination, minus any appropriate withholding and deductions,
      as
      determined by the Company, and (2) provide all benefits set forth pursuant
      to the benefit, medical, pension or other plans and programs provided by the
      Company for which Executive qualifies as are due under the terms of the benefits
      plans and programs, recognizing that Executive’s employment has
      terminated.  In the event of Executive’s death, any sums and benefits
      due to Executive under any provision of this Agreement shall be paid to his
      estate or heirs, as applicable.

    (b)  If
      Executive’s employment is terminated under subparagraph 5(d) or (f) , then the
      Company will provide the payments and benefits set forth in subparagraphs
      6(b)(1) and 6(b)(2), subject to subparagraph 6(b)(3).

    (1)  The
      Company will, in addition to providing the payments and benefits set forth
      in
      subparagraph 6(a), pay Executive an amount as provided in the following
      schedule, minus any appropriate withholding and deductions, as determined by
      the
      Company, without regard to whether Executive obtains another position with
      a new
      employer:

    

    Termination
      prior to the 1st
      anniversary of the
      Agreement:                                                                                                                                48
      months Base Salary;

    Termination
      prior to the 2nd anniversary of the
      Agreement:                                                                                                                               36
      months Base Salary;

    Termination
      prior to the 3rd anniversary of the
      Agreement:                                                                                                                                30
      months Base Salary; or

    Termination
      at any time
      thereafter:                                                                                                           24
      months Base Salary.

    

    These
      severance payments will be made in one lump sum payment within thirty (30)
      days
      of the date Executive’s employment terminates.

    (2)  Further,
      if Executive elects to continue his health insurance benefits under COBRA,
      the
      Company will continue to pay the same monthly subsidy of the premiums for such
      insurance as was being paid by the Company as of the date Executive’s employment
      terminated through the earlier of eighteen (18) months or the date Executive
      obtains alternative health insurance coverage.  It is intended that
      this provision of continuation health coverage shall run concurrently with
      any
      period of continuation coverage required under COBRA.

    (3)  The
      Company’s obligation to provide the severance pay and benefits provided in
      subparagraphs 6(b)(1) and 6(b)(2) is conditioned upon Executive’s signing and
      not revoking a valid general release agreement in the form attached hereto
      as
Exhibit A, and is further conditioned upon Executive’s continued
      compliance with his obligations in this Agreement, including those obligations
      set forth in paragraphs 8 through 11.

    (c)  If
      Executive’s employment is terminated under subparagraph 5(h), then the Company
      will provide the payments and benefits set forth in subparagraphs 6(c)(1) and
      6(c)(2), subject to subparagraph 6(c)(3).

    (1)  The
      Company will, in addition to providing the payments and benefits set forth
      in
      subparagraph 6(a), pay Executive an amount equal to twenty-four (24) months
      of
      Base Salary, minus any appropriate withholding and deductions, as determined
      by
      the Company, without regard to whether Executive obtains another position with
      a
      new employer.  The severance payment will be made in one lump sum
      payment within thirty (30) days of the date Executive’s employment
      terminates.

    (2)  Further,
      if Executive elects to continue his health insurance benefits under COBRA,
      the
      Company will continue to pay the same monthly subsidy of the premiums for such
      insurance as was being paid by the Company as of the date Executive’s employment
      terminated through the earlier of eighteen (18) months or the date Executive
      obtains alternative health insurance coverage.  It is intended that
      this provision of continuation health coverage shall run concurrently with
      any
      period of continuation coverage required under COBRA.

    (3)  The
      Company’s obligation to provide the severance pay and benefits provided in
      subparagraphs 6(c)1 and 6(c)(2) is conditioned upon Executive signing and not
      revoking a valid general release agreement in the form attached hereto as
      Exhibit A, and is further conditioned upon Executive’s continued
      compliance with his obligations in this Agreement, including those obligations
      set forth in paragraphs 8 through 11.

    (d)  Upon
      any
      termination of employment, Executive shall be deemed to have automatically
      resigned from the Board and as an officer of the Company and each of its
      affiliates, including ARMC.

    (e)           Anything
      in this Agreement to the contrary notwithstanding, if on the date of the
      termination of Executive's employment with the Company (1) any of the Company’s
      stock is publicly traded on an established securities market or otherwise
      (within the meaning of section 409A(a)(2)(B)(i) of the Internal Revenue Code,
      as
      amended (the “Code”)) and (2) Executive is a “specified employee” within the
      meaning of Code section 409A(a)(2)(B)(i), then payments to be made in accordance
      with subparagraphs 6(b) and 6(c) shall be paid on the date which is six (6)
      months after the date Executive’s employment terminates.

    (f)           If
      Executive terminates his employment under subparagraph 5(g), then the Company
      will provide the payments and benefits set forth in subparagraphs 6(f)(1) and
      6(f)(2), subject to subparagraph 6(f)(3).

    (1)  If
      Executive terminates his employment under subparagraph 5(g) prior to the first
      anniversary of the applicable Change of Control, the Company will provide the
      payments and benefits set forth in subparagraph 6(a).  If Executive
      terminates his employment under subparagraph 5(g) on the first anniversary
      of
      the applicable Change of Control by giving notice of intent to terminate his
      employment due to a Change of Control at least 30 days prior to the first
      anniversary date of a Change of Control, the Company will, in addition to
      providing the payments and benefits set forth in subparagraph 6(a), pay
      Executive an amount equal to forty-eight (48) months of Base Salary, minus
      any
      appropriate withholding and deductions, as determined by the Company, without
      regard to whether Executive obtains another position with a new
      employer.  The severance payment will be made in one lump sum payment
      within thirty (30) days of the date Executive’s employment
      terminates.

    (2)  Further,
      if Executive terminates his employment under subparagraph 5(g) on the first
      anniversary of the applicable Change of Control and if Executive elects to
      continue his health insurance benefits under COBRA, the Company will continue
      to
      pay the same monthly subsidy of the premiums for such insurance as was being
      paid by the Company as of the date Executive’s employment terminated through the
      earlier of eighteen (18) months or the date Executive obtains alternative health
      insurance coverage.  It is intended that this provision of
      continuation health coverage shall run concurrently with any period of
      continuation coverage required under COBRA.

    (3)           The
      Company’s obligation to provide the severance pay and benefits provided in
      subparagraphs 6(f)1 and 6(f)(2) is conditioned upon Executive signing and not
      revoking a valid general release agreement in the form attached hereto as
      Exhibit A, and is further conditioned upon Executive’s continued
      compliance with his obligations in this Agreement, including those obligations
      set forth in paragraphs 8 through 11.

    7.  Excise
      Taxes.  If the value of any compensation (in whatever form)
      provided pursuant to this Agreement is counted as a “parachute payment” within
      the meaning of Code section 280G, and the value of all such parachute payments
      would be subject to the excise tax imposed by section 4999 of the Code (the
      “4999 Excise Tax”) (the “Penalties”), then Executive shall be entitled to
      receive from the Company an additional payment (a “Gross-Up Payment”) in an
      amount such that after payment by Executive of all taxes (but not including
      any
      interest or penalties imposed with respect to such taxes), including any Penalty
      imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
      Payment equal to the Penalties imposed upon such payment.  The
      Gross-Up Payment shall be paid to Executive by the end of the calendar year
      in
      which the 4999 Excise Tax would be incurred.

    8.  Trade
      Secrets and Confidential Information.  Executive shall not
      disclose or use at any time, either during or after his employment hereunder
      (regardless of how employment ends), any Confidential Information (as defined
      below) of which he becomes aware, whether or not any such information is
      developed by him, except to the extent that such disclosure or use during
      employment is required or appropriate in the performance of the duties assigned
      to him by the Company or if Executive is required to testify under subpoena
      or
      court order after Executive gives sufficient advance written notice of such
      requirement to the Company so that it may seek to limit or otherwise protect
      such testimony from public disclosure.  Executive shall follow all
      procedures established by the Company to safeguard Confidential Information
      and
      to protect it against disclosure, misuse, espionage, loss or
      theft.  “Confidential Information” means information that is not
      generally known or available to the public, which is used, developed or obtained
      by the Company and its affiliates, including ARMC, 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.

    9.  Creative
      Works and Other Property.

    (a)  Executive
      will promptly disclose to the Company all inventions, concepts, processes,
      improvements, methodologies and other creative works, including without
      limitation, insurance products, whether or not they can be patented or
      copyrighted, that during his employment were or were caused to be conceived
      or
      developed by him, either solely or jointly with others, relating to the business
      of the Company and its affiliates, including ARMC business (collectively
“Creative Works”), and Executive agrees that all Creative Works are the sole
      property of the Company.  Upon the request and at the expense of the
      Company, Executive will at any time (whether during his employment or after
      its
      termination for any reason) assist the Company and fully cooperate with it
      to
      protect the Company’s interest in Creative Works and to obtain, for the
      Company’s benefit, patents or copyrights for any Creative Works in the United
      States and in any foreign countries.  This subparagraph does not apply
      to any Creative Work that Executive develops entirely on his own time and for
      which no equipment, supplies, facility or Confidential Information of the
      Company was used, unless:  (1) the Creative Work relates to the
      Company’s business or to the actual or anticipated research or development
      activities of the Company; or (2) the Creative Work results from any work
      Executive performs for the Company.

    (b)  Upon
      the
      termination of Executive’s employment for the Company for any reason or at any
      other time upon request by the Company, Executive shall immediately, and without
      request, deliver to the Company all copies and embodiments, in whatever form,
      of
      all Confidential Information and all other documents, materials or property
      belonging to the Company even if they do not contain Confidential Information,
      including, but not limited to:  written records, notes, photographs,
      manuals, computers and computer equipment, cell phones, notebooks, reports,
      keys, credit cards, documentation, flow charts and all magnetic media such
      as
      tapes, disks or diskettes, wherever located, and, if requested by the Company,
      Executive shall provide the Company with written confirmation that all such
      materials have been returned.  Executive has no claim or right to the
      continued use, possession or custody of such information, documents, materials
      or property following the termination of his employment with the
      Company.

    10.  Noncompetition
      and Nonsolicitation.

    (a)  Noncompetition
      and NonSolicitation.  During Executive’s employment hereunder and
      for one year thereafter (the “Restriction Period”) regardless of how Executive’s
      employment ends, Executive will not, directly or indirectly (whether as an
      officer, director, employee, consultant, agent, advisor, stockholder, partner,
      joint venturer, proprietor or otherwise): (1) engage or otherwise become
      interested (in a capacity that is the same as or similar to any of his
      capacities for the Company while employed by it) in any business or activity
      that directly competes in a significant and material manner with any business
      of
      the Company (or any of its successors) at any location within any Standard
      Metropolitan Statistical Area (as determined by the Census Bureau, Department
      of
      Commerce, United States Government) in which is located any office of the
      Company and ARMC, as
      conducted during his last three years of employment with the Company, except
      that notwithstanding any of the terms of this paragraph, Executive may continue
      to engage in any outside for-profit business, employment or commercial activity
      similar in scope, size and nature to any activity disclosed to the Company
      under
      the terms of paragraph 1 of this agreement; (2) solicit for employment, hire
      as
      an employee, consultant or independent contractor or induce the termination
      of
      employment of, any employee or other personnel who is, or was, within the six
      month period prior to the date of such solicitation, hiring or inducement,
      providing service to the Company, or (3) take any action intended to cause
      any
      vendor, customer or business associate of the Company or to terminate, sever,
      reduce or otherwise adversely alter its relationship with the
      Company.

    (b)  Reasonable
      and Necessary Restrictions.  Executive acknowledges that the
      restrictions, prohibitions and other provisions hereof, including, without
      limitation, the Restriction Period, are reasonable, fair and equitable in terms
      of duration, scope and geographic area; are necessary to protect the legitimate
      business interests of the Company; and are a material inducement to the Company
      to enter into this Agreement.

    (c)  Forfeiture
      of Severance Payments.  In the event Executive breaches any
      provision of this paragraph 10, as determined in any arbitration or court of
      competent jurisdiction, in addition to any other remedies that the Company
      may
      have at law or in equity, Executive shall promptly reimburse the Company for
      any
      severance payments received from, or payable by, the Company, provided that
      Company has provided written notice to Executive that it believes that he is
      in
      breach of the provisions of this paragraph and has provided him with at least
      a
      thirty (30) day period to cure such breach.

    (d)  Enforcement.  Executive
      acknowledges that in the event of any breach or threatened breach by Executive
      of any of the covenants in paragraphs 8 through 11, the business interests
      of
      the Company will be irreparably injured, the full extent of the damages to
      the
      Company will be impossible to ascertain, monetary damages may not be an adequate
      remedy for the Company, and the Company will be entitled to enforce such
      covenants by temporary, preliminary, or permanent injunctive relief or other
      equitable relief.

    (e)  Modification;
      Severability.  If any of the restrictions contained in paragraphs
      8 through 11 are determined by any court of competent jurisdiction or other
      adjudicator to be unenforceable by reason of their extending for too great
      a
      period of time or over too great a geographical area or by reason of their
      being
      too extensive in any other respect, then the court or adjudicator shall
      interpret and modify such restriction(s) to be effective for the maximum period
      of time for which it/they may be enforceable and over the maximum geographical
      area as to which it/they may be enforceable and to the maximum extent in all
      other respects as to which it/they may be enforceable.  Such modified
      restriction(s) shall be enforced by the court or adjudicator.  In the
      event that modification is not possible, then, because each of Executive’s
      obligations in paragraphs 8 through 11 is a separate and independent covenant,
      any unenforceable obligation shall be severed and all remaining obligations
      shall be enforced.

    11.  Cooperation.  At
      all times during the term of this Agreement and for a period of three (3) years
      thereafter (regardless of how employment ends), Executive will reasonably
      cooperate with the Company in any litigation or administrative proceedings
      involving any matters with which Executive was involved during his employment
      by
      the Company; provided that, following the term of this Agreement, such
      activities will be scheduled at such times and locations as the Company and
      Executive may mutually agree.  The Company will reimburse Executive
      for his reasonable out-of-pocket expenses, if any, incurred in providing such
      assistance.  In addition, if such assistance is provided by Executive
      after his employment has terminated and at a time when he is not receiving
      severance payments from the Company and not providing consulting services to
      the
      Company or ARMC, he shall be paid $350 per hour for his assistance.

    12.  Assignment.  Neither
      the Company nor Executive shall have the right to assign this Agreement or
      any
      obligation hereunder without the written consent of the other, except that,
      subject to Executive’s rights under paragraph 5(g) above, if there is a Change
      of Control, the Company may assign this Agreement to a successor or assignee
      in
      connection with a merger, consolidation, sale or transfer of assets of the
      Company; provided, however, that such successor or assignee expressly assumes
      all obligations of the Company under this Agreement.

    13.  Indemnification.  The
      Company shall indemnify Executive or his estate to the full extent provided
      in
      its articles of incorporation and/or its bylaws as of the date of this
      Agreement.

    14.  No
      Mitigation.  Executive shall not be required to mitigate the
      amount of any payment or benefit provided for in this Agreement or the Company’s
      benefits plans by seeking other employment or otherwise, nor shall the amount
      of
      any payment or benefit provided for in this Agreement or the Company’s benefits
      plans be reduced by any compensation or benefits earned by Executive either
      as a
      result of his engaging in business or his employment by another employer, or
      by
      retirement benefits payable after the termination of this
      Agreement.

    15.  Indulgences.  The
      failure of the Company or Executive at any time or times to enforce its or
      his
      rights under this Agreement strictly in accordance with the same shall not
      be
      construed as having created a custom in any way or manner contrary to the
      specific provisions of this Agreement or as having in any way or manner modified
      or waived the same.

    16.  Notices.  Any
      notice required or permitted to be given by this Agreement shall be in writing
      and shall be sufficiently given to the parties if delivered in person or sent
      by
      United States registered or certified mail or nationally recognized overnight
      courier (return receipt requested) or by telefax (with evidence of successful
      transmission) addressed to the respective parties at the following addresses
      or
      at such other addresses as may from time to time

    be
      designated in writing by the parties:

    

    
      	
              If
                to the Company:

              American
                Rental Management Company

              222
                Smallwood Village Center

              St.
                Charles Maryland 20602

              If
                to the Executive:

              Mr.
                Edwin L. Kelly

              c/o
                American Rental Management Company

              222
                Smallwood Village Center

              St.
                Charles, Maryland 20602

               

            

    

    17.  Entire
      Agreement.  This Agreement, together with the attachments hereto,
      sets forth the entire agreement between the parties with respect to the matters
      covered herein, and supersedes all other agreements and
      understandings.  No waiver or amendment to this Agreement shall be
      effective unless reduced to writing and executed by the parties
      hereto.

    18.  Arbitration.  All
      disputes between Executive and the Company (except those relating to
      unemployment compensation and workers’ compensation and except for disputes
      arising under paragraphs 8 through 11 of this Agreement) arising out of
      Executive’s employment or concerning the interpretation or application of this
      Agreement or its subject matter (including without limitation those relating
      to
      any claimed violation of any federal, state or local law, regulation or
      ordinance, such as Title VII of the Civil Rights Act, the Age Discrimination
      in
      Employment Act, the Americans with Disabilities Act and their state and local
      counterparts, if any) shall be resolved exclusively by binding arbitration
      in
      Washington, D.C. pursuant to the National Rules for the Resolution of Employment
      Disputes of the American Arbitration Association.  Each party shall
      bear its own attorneys’ fees and costs; provided, however, that the arbitrator
      may award reasonable attorneys’ fees and costs to the prevailing
      party.  Any award of attorney’s fees and costs to Executive shall be
      paid in a manner that does not violate section 409A of the
      Code. The parties expressly waive their rights to have any
      such claims resolved by jury trial.  The arbitration opinion and award
      shall be final, binding and enforceable by any court under the Federal
      Arbitration Act.

    19.  Controlling
      Law and Dispute Resolution.  This Agreement shall be construed and
      applied in accordance with the laws of Maryland without giving effect to the
      principles of conflicts of law under Maryland law.  The parties agree
      to submit to the jurisdiction and venue of the state and federal courts located
      in Maryland in the event that there is any claim that this Agreement has been
      breached and that any such claim is not subject to arbitration as provided
      in
      paragraph 18 of this Agreement.

    20.  Code
      Section 409A.  It is the intention of the parties that payments or
      benefits payable under this Agreement not be subject to the additional tax
      imposed pursuant to Code Section 409A.  To the extent such potential
      payments or benefits could become subject to Code Section 409A, the parties
      shall cooperate to amend this Agreement with the goal of giving Executive the
      economic benefits described herein in a manner that does not result in such
      tax
      being imposed.

    IN
      WITNESS WHEREOF, this Agreement has been duly executed by and on behalf of
      the
      parties hereto as of the day and year first above written.

    

    AMERICAN
      RENTAL MANAGEMENT COMPANY

     

    
      	
               

            	
              By:

            	
              /s/
                J. Michael Wilson        

            	 

    

    
      	
               

            	
              Name:

            	
              J.
                Michael Wilson

            

    

    
      	
               

            	
              Title:

            	
              Chairman

            

    

    
      	
               

            	
              Dated:

            	
              July
                30, 2007

            

    

     

    AMERICAN
      COMMUNITY PROPERTIES TRUST

     

    
      	
               

            	
              By:

            	
              /s/
                J. Michael Wilson        

            	 

    

    
      	
               

            	
              Name:

            	
              J.
                Michael Wilson

            

    

    
      	
               

            	
              Title:

            	
              Chairman

            

    

    
      	
               

            	
              Dated:

            	
              July
                30, 2007

            

    

     

    EDWIN
      L.
      KELLY

     

    By:           /s/
      Edwin L. Kelly        

    Edwin
      L. Kelly

    Dated:  August
      6,
      2007

    

    
      
              

                  DMEAST
            -
            #9782859-v7      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      

    

    EXHIBIT
      A

     

    General
      Release Agreement

    

    THIS
      GENERAL RELEASE AGREEMENT (the “Release”) is made and entered into as of this
      ____ day of _______________, 20__, by and among American Community Properties
      Trust, a Maryland real estate investment trust (together with its subsidiaries,
      the “Company”) and American Rental Management Company (“ARMC”), on the one hand,
      and Edwin L. Kelly (the “Executive”) on the other hand.

    WHEREAS,
      the Company, ARMC and Executive entered into the Amended and Restated Executive
      Employment Agreement (the “Employment Agreement”) effective as of June ____,
      2007;

    WHEREAS,
      under the terms of the Employment Agreement, Executive is entitled to severance
      payments as provided therein; and

    WHEREAS,
      the Employment Agreement conditions receipt of the severance payments upon
      Executive’s signing and not revoking a valid General Release
      Agreement.

    NOW,
      THEREFORE, intending to be legally bound hereby and in consideration of receipt
      of the severance payments provided for in the Employment Agreement and for
      other
      good and valuable consideration, Executive, for himself, and his executors,
      administrators, heirs and assigns, agrees as follows:

    1.           Executive
      fully waives, releases, and forever discharges the Company and each and all
      of
      its past and present subsidiaries, parent and related corporations, companies
      and divisions, and their past and present respective officers, directors,
      shareholders, trustees, employees, attorneys, agents and affiliates, and their
      predecessors, successors and assigns (collectively, the “Releasees”) of and from
      any and all rights, debts, claims, actions, liabilities, agreements, damages,
      or
      causes of action (collectively, the “claims”), of whatever kind or nature,
      whether in law or equity, whether known or unknown, that Executive ever had
      or
      now has in any capacity, either individually, or on behalf of another person
      or
      entity against any or all of the Releasees, for, upon, or by reason of any
      cause, matter, thing or event whatsoever occurring at any time up to and
      including the date Executive signs this Release.  Executive
      acknowledges and understands that the claims and rights being released in this
      paragraph include, but are not limited to, all claims and rights arising from
      or
      in connection with any agreement of any kind Executive may have had with any
      of
      the Releasees, or in connection with Executive’s employment or termination of
      employment, all claims and rights for wrongful discharge, breach of contract,
      either express or implied, interference with contract, emotional distress,
      back
      pay, front pay, benefits, fraud, misrepresentation, defamation, claims and
      rights arising under the Civil Rights Acts of 1964 and 1991, as amended (which
      prohibit discrimination in employment based on race, color, national origin,
      religion or sex), the Americans with Disabilities Act (ADA), as amended (which
      prohibits discrimination in employment based on disability), the Age
      Discrimination in Employment Act (ADEA), as amended (which prohibits age
      discrimination in employment), Worker Adjustment and Retraining Notification
      Act
      (WARN), the National Labor Relations Act, the Fair Labor Standards Act, the
      Employee Retirement Income Security Act of 1974 (ERISA), as amended, the Family
      and Medical Leave Act (FMLA), as amended, the Health Insurance Portability
      and
      Accountability Act (HIPPA), Article 49B of the Maryland Code, and any and all
      other claims or rights, whether arising under federal, state, or local law,
      rule, regulation, constitution, ordinance or public policy.  Executive
      agrees that he will not initiate any civil complaint or institute any civil
      lawsuit or file any arbitration against Releasees, or any one of them, based
      on
      any fact, action, event or circumstance occurring up to and including the date
      of the execution by Executive of this Release.  This Release and the
      foregoing covenant not to sue do not cover claims relating to: (i) Executive’s
      right to indemnification under paragraph 13 of the Employment Agreement, or
      pursuant to the Company’s articles of incorporation or bylaws as they may exist
      from time to time, or pursuant to applicable law; (ii) Executive’s right to
      benefits under the Company’s benefits plans due after termination of employment;
      (iii) Executive’s right to payments under the Employment Agreement due after
      termination of employment; or (iv) the validity or enforcement of this
      Release.

    2.           Executive
      waives any provision of state or federal law that explicitly or implicitly
      would
      prevent the application of this Release to claims of which Executive does not
      know or expects to exist in Executive’s favor at the time of executing this
      Release.  In addition, Executive waives any provisions of state or
      federal law which might require a more detailed specification of the claims
      being released pursuant to the provisions of this Release.

    3.           Executive
      acknowledges that he has carefully read and understands the provisions of this
      Release, that he has had twenty-one (21) days from the date he received a copy
      of this Release to consider entering into this Release and accepting the
      severance payments set forth in the Employment Agreement, that if he signs
      and
      returns this Release before the end of the 21-day period, he will have
      voluntarily waived his right to consider this Release for the full twenty-one
      (21) days and that he has executed this Release voluntarily and with full
      knowledge of its significance, meaning and binding effect.  Executive
      also acknowledges that the Company has advised him in writing to consult with
      an
      attorney of his own choosing with regard to entering into this Release and
      accepting the severance payments set forth in the Employment
      Agreement.  Finally, Executive acknowledges that his decision to sign
      this Release has not been influenced in any way by fraud, duress, coercion,
      mistake or misleading information and that he has not relied on any information
      except what is set forth in this Release and the Employment
      Agreement.

    4.           Executive
      acknowledges that he may revoke this Release within seven (7) days of his
      execution of this document by submitting written notice of his revocation to
      ___________________________________________.  Executive also
      understands that this Release shall not become effective or enforceable until
      the expiration of that 7-day period.

    5.           Executive
      agrees that if any provision of this Release is declared invalid or
      unenforceable by a court of competent jurisdiction, then such provision will
      be
      modified only to the extent necessary to cure such invalidity and with a view to
      enforcing the parties’ intention as set forth in this Release to the extent
      permissible and the remaining provisions of this Release shall not be affected
      thereby and shall remain in full force and effect.

    

    

    Dated:                      ________________                                         EDWIN
      L.
      KELLY                          ____________________________________employment_agreementclh.htm

    
      

    

    EXECUTIVE
      RETENTION AGREEMENT

     

    

     

    THIS
      EXECUTIVE RETENTION AGREEMENT (the “Agreement”), is effective July 1, 2007, by
      and between American Community Properties Trust, a Maryland real estate
      investment trust (together with its subsidiaries, the “Company”), American
      Rental Management Company, a Delaware corporation (“ARMC”) and Cynthia Hedrick
      (the “Executive”), a resident of Maryland.

    WHEREAS,
      ARMC is a wholly owned subsidiary of the Company, and provides management and
      other services to the Company and its other subsidiaries;

    WHEREAS,
      Executive has been a senior executive officer of the Company and its affiliates
      including ARMC, for many 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
      Executive’s expertise, the Company wishes to secure the services of the
      Executive as an Executive Vice President, Chief Financial Officer of the Company
      (“CFO”), and the Executive wishes to provide such services, in accordance with
      the terms and subject to the considerations provided herein;

    NOW,
      THEREFORE, in consideration of the promises and mutual covenants contained
      herein, and each intending to be legally bound hereby, the parties agree as
      follows:

    1.  Employment.  Executive
      shall serve as Executive Vice President and CFO of the Company and in that
      capacity shall have primary responsibility for the overall financial management
      of the Company; duties to include participation as a key member of strategic
      planning team, investor relations, financial reporting, SEC, IRS regulatory
      compliance, treasury, acquisition of financings, risk management and corporate
      secrets.  Executive shall report directly to the Vice Chair, President
      and Chief Operating Officer of Company.  Executive further agrees not
      to engage in any outside for-profit business, employment or commercial activity,
      without first obtaining approval in writing from the Chairman of the Board,
      and
      to observe and comply with the policies and rules of the Company, unless such
      compliance is inconsistent with the terms of the Agreement.

    2.  Term.  Executive’s
      employment under this Agreement shall continue until June 30, 2009 unless sooner
      terminated in accordance with the terms of this
      Agreement.  Executive’s employment under this Agreement shall
      thereafter automatically renew for successive one year periods unless Executive
      or the Company gives the other notice of her/its intent not to renew employment
      at least ninety (90) days prior to the date on which employment would otherwise
      renew for successive one year period under this Agreement.

    3.  Compensation.  The
      Company agrees to pay Executive, and Executive agrees to accept from the
      Company, in full payment for Executive’s services, compensation consisting of
      the following:

    (a)  Base
      Salary.  A minimum base salary at an annual rate of $275,000,
      payable on a semi-monthly basis or on such other basis the Company may adopt
      as
      its regular payroll practice.  Executive will receive annual cost of
      living salary increases as determined by the Board and Executive may receive
      salary increases at the discretion of the Board.  All payments shall
      be less applicable withholding and deductions as determined by the
      Company;

    (b)  Benefits.  The
      standard benefits the Company makes available from time to time to its senior
      executive employees, including eligibility for bonuses and other incentive
      awards as may be determined in the discretion of the Board or the compensation
      committee thereof, on the same terms as may be applicable to such other senior
      executive officers and to the extent Executive is eligible under the terms
      of
      the applicable plans, programs, or policies;

    (c)  Vacation.  Executive
      is entitled to the number of paid vacation days determined by the Company
      generally for its senior executive officers, but not less than twenty-five
      (25)
      days per year.  Executive is also entitled to all paid holidays given
      to the Company’s senior executive officers; and

    (d)           Certain
      Specified Benefits.  In addition to the benefits for which
      Executive is eligible under subparagraph 2 (b), during the term of her
      employment, the Company shall provide a car allowance of no less than $500
      per
      month, and shall pay Executive’s membership fees and dues in the Hawthorne
      Country Club.

    4.  Expenses.  The
      Company will reimburse Executive for such of her out-of-pocket expenses as
      are
      reasonably necessary in connection with services rendered by Executive pursuant
      to this Agreement, as provided in the business expense policies adopted by
      the
      Company from time to time.

    5.  Termination.  Executive’s
      employment may be terminated before the end of the term of this Agreement or
      at
      the end of the term of this Agreement as follows:

    (a)  By
      the
      Company, at any time, for Cause after providing Executive with at least four
      (4)
      weeks written notice that specifies the circumstance amounting to Cause and,
      if
      requested by Executive, providing an opportunity for Executive and his counsel
      to appear before the Board to address such circumstances.  “Cause”
means (1) Executive’s conviction of, or plea of nolo contendere to, a
      felony involving dishonesty, disloyalty, fraud, or moral turpitude; (2)
      Executive’s material breach of any material obligation in this Agreement; or (3)
      Executive’s engaging in conduct constituting a material breach of any fiduciary
      duty to the Company;

    (b)  Automatically
      on the date of Executive’s death;

    (c)  Automatically
      if Executive becomes disabled or otherwise incapacitated so that Executive
      cannot perform the essential functions of his job with or without reasonable
      accommodation for a continuous period of more one hundred twenty (120) days
      or
      for more than one hundred twenty (120) cumulative days in any one (1) year
      period (“Permanent Disability”).  Any question as to the existence of
      Permanent Disability upon which Executive and the Company cannot agree shall
      be
      determined by a qualified independent physician selected by Executive (or,
      if
      Executive is unable to make such selection, such selection shall be made by
      any
      adult member of Executive’s immediate family or Executive’s legal
      representative) and approved by the Company, with approval not to be
      unreasonably withheld.  The determination of such physician shall be
      communicated in writing to the Company and to Executive and shall be final
      and
      conclusive for all purposes of this Agreement.  Until the date of
      termination by reason of Permanent Disability, Executive shall continue to
      receive the compensation and benefits as set forth in paragraph 3 of this
      Agreement.  No termination of employment for Permanent Disability
      shall impair any rights of Executive to collect benefits according to the terms
      of any disability policy maintained by the Company for that Permanent
      Disability;

    (d)  By
      the
      Company, at any time, for other than Cause upon thirty (30) days written notice
      to Executive;

    (e)  By
      Executive’s voluntary resignation (before the end of the term) for other than
      Good Reason upon not less than thirty (30) days prior written notice to the
      Company;

    (f)  By
      Executive’s voluntary resignation upon thirty (30) days prior written notice to
      the Company for Good Reason.  “Good Reason” means:  (1) a
      material diminution in any of Executive’s base compensation, authority (which
      includes but is not limited to a change in the reporting structure identified
      in
      paragraph 1), duties or responsibilities without her agreement; (2) Executive
      being required to relocate her office to executive offices outside of an area
      within a fifty (50) mile radius of the Company’s existing executive offices; (3)
      there being a material reduction in the overall value of the employee benefits
      being provided to Executive, unless the reduction is effective for all senior
      executive employees; or (4) a material breach by the Company of any of its
      obligations to Executive under this Agreement, and in each case, so long as
      Executive gives such notice within sixty (60) days of the circumstances believed
      by Executive to constitute Good Reason and the Company fails to remedy those
      circumstances within thirty (30) days of its receipt of such
      notice;

    (g)  By
      Executive’s voluntary resignation following a Change of Control of the Company,
      upon not less than thirty (30) days prior written notice to the
      Company.  For purposes of this Agreement, a “Change of Control” shall
      mean any one or more of the following:

    (1)  The
      consummation by any individual, entity or group (within the meaning of Section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
      “Exchange Act”)) (a “Person”) of a transaction or series of transactions as a
      result of which (i) a Person acquires beneficial ownership (within the meaning
      of Rule 13d-3 promulgated under the Exchange Act) of not less than 50% of the
      then-outstanding common shares or other voting securities of the Company or
      any
      successor (collectively, “Voting Securities”)

    (2)  The
      consummation by any Person of a transaction or series of transactions as a
      result of which (i) a Person either (a) acquires beneficial ownership (within
      the meaning of Rule 13d-3 promulgated under the Exchange Act) of not less than
      65% of the then-outstanding common shares or other voting securities of the
      Company or any successor (collectively, “Voting Securities”) not beneficially
      owned by J. Michael Wilson and his affiliates and family members (“Wilson Family
      Shares”), and (ii) such Voting Securities shall cease to be registered under
      Section 12 of the Exchange Act and be delisted from the American Stock Exchange
      (“AMEX”) or any such other national securities exchange, automated quotation
      system or over-the-counter bulletin board as such securities were listed for
      trading or included immediately prior to consummation of such transaction or
      transactions; provided, however, that in the absence of any other transaction
      relating to the acquisition by a Person of Voting Securities other than Wilson
      Family Shares, neither (x) the mere act of filing a Form 15 and taking actions
      to delist ACPT’s common shares from the AMEX or such other national securities
      exchange, automated quotation system or over-the-counter bulletin board as
      such
      securities were listed for trading or included, nor (y) a reverse stock split
      shall constitute a Change of Control under this subparagraph (1);
      or

    (3)  Individuals
      who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
      for any reason to constitute at least a majority of the Board; provided,
      however, that any individual becoming a trustee subsequent to the date hereof
      whose election, or nomination for election by the Company’s shareholders, was
      approved by a vote of at least a majority of the disinterested, non-employee
      trustees then comprising the Incumbent Board shall be considered as though
      such
      individual were a member of the Incumbent Board, but excluding, for this
      purpose, any such individual whose initial assumption of office occurs as a
      result of either an actual or threatened election contest (as such terms are
      used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
      other actual or threatened solicitation of proxies or consents by or on behalf
      of a Person other than the Incumbent Board; or

    (4)  Approval
      by the holders of a majority of the Voting Securities of a reorganization,
      merger or consolidation involving the Company, in each case, unless, following
      such reorganization, merger or consolidation, (i) more than 75% of,
      respectively, the then outstanding shares of Voting Securities or interests
      of
      the corporation, trust or other entity resulting from such reorganization,
      merger or consolidation and the combined voting power of the then outstanding
      voting securities of such corporation, trust or other entity entitled to vote
      generally in the election of directors, trustees or other managers is then
      beneficially owned, directly or indirectly, by all or substantially all of
      the
      individuals and entities who were the beneficial owners, respectively, of the
      outstanding Voting Securities immediately prior to such reorganization, merger
      or consolidation in substantially the same proportions as their ownership,
      immediately prior to such reorganization, merger or consolidation, of the
      outstanding Voting Securities, as the case may be, (ii) no Person (excluding
      the
      Company and its affiliates, any employee benefit plan (or related trust) of
      the
      Company or such corporation resulting from such reorganization, merger or
      consolidation and any Person beneficially owning, immediately prior to such
      reorganization, merger or consolidation, directly or indirectly, 20% or more
      of
      the outstanding Voting Securities, as the case may be) beneficially owns,
      directly or indirectly, 20% or more of, respectively, the then outstanding
      shares of voting securities of the corporation, trust or other entity resulting
      from such reorganization, merger or consolidation entitled to vote generally
      in
      the election of directors, trustees or other managers, and (iii) at least a
      majority of the members of the board of directors, trustees or other managers
      of
      the corporation, trust or other entity resulting from such reorganization,
      merger or consolidation were members of the Incumbent Board at the time of
      the
      execution of the initial agreement providing for such reorganization, merger
      or
      consolidation; or

    (5)           Approval
      by the holders of Voting Securities of (i) a complete liquidation or dissolution
      of the Company or (ii) the sale or other disposition of all or substantially
      all
      of the consolidated assets of the Company, other than to a corporation, trust
      or
      other entity with respect to which, following such sale or other disposition,
      (I) more than 60% of, respectively, the then outstanding voting securities
      of
      such corporation, trust or other entity entitled to vote generally in the
      election of directors, trustees or other managers is then beneficially owned,
      directly or indirectly, by all or substantially all of the individuals and
      entities who were the beneficial owners, respectively, of the outstanding Voting
      Securities immediately prior to such sale or other disposition in substantially
      the same proportion as their ownership, immediately prior to such sale or other
      disposition, of the outstanding Voting Securities, as the case may be, (II)
      no
      Person (excluding the Company and its affiliates, any employee benefit plan
      (or
      related trust) of the Company or such corporation resulting from such
      reorganization, merger or consolidation and any Person beneficially owning,
      immediately prior to such reorganization, merger or consolidation, directly
      or
      indirectly, 20% or more of the outstanding Voting Securities, as the case may
      be) beneficially owns, directly or indirectly, 20% or more of, respectively,
      the
      then outstanding shares of voting securities of the corporation, trust or other
      entity resulting from such reorganization, merger or consolidation entitled
      to
      vote generally in the election of directors, trustees or other managers, and
      (III) at least a majority of the members of the board of directors, trustees
      or
      other managers of the corporation, trust or other entity were members of the
      Incumbent Board at the time of the execution of the initial agreement or action
      of the Board providing for such sale or other disposition of
      assets;

    (h)  By
      the
      Company or Executive giving notice pursuant to paragraph 2 of its intent not
      to
      renew employment pursuant to the Agreement at least ninety (90) days prior
      to
      the date on which employment would have otherwise renewed pursuant to the
      Agreement.

    6.  Incidents
      of Termination.

    (a)  If
      Executive’s employment is terminated under subparagraph 5(a), (b), (c), or
      (e), then the Company shall have no further obligation under this Agreement,
      except as provided under paragraph 13 and except the obligation to: (1) pay
      Executive an amount equal to the portion of her compensation and out-of-pocket
      business expenses, as defined in paragraph 4, as may be accrued and unpaid
      on
      the date of termination, minus any appropriate withholding and deductions,
      as
      determined by the Company, and (2) provide all benefits set forth pursuant
      to the benefit, medical, pension or other plans and programs provided by the
      Company for which Executive qualifies as are due under the terms of the benefits
      plans and programs, recognizing that Executive’s employment has
      terminated.  In the event of Executive’s death, any sums and benefits
      due to Executive under any provision of this Agreement shall be paid to her
      estate or heirs, as applicable.

    (b)  If
      Executive’s employment is terminated under subparagraph 5(d) or (f) , then the
      Company will provide the payments and benefits set forth in subparagraphs
      6(b)(1) and 6(b)(2), subject to subparagraph 6(b)(3).

    (1)  The
      Company will, in addition to providing the payments and benefits set forth
      in
      subparagraph 6(a), pay Executive twenty-four months Base Salary; These severance
      payments will be made in one lump sum payment within thirty (30) days of the
      date Executive’s employment terminates.

    (2)  Further,
      if Executive elects to continue her health insurance benefits under COBRA,
      the
      Company will continue to pay the same monthly subsidy of the premiums for such
      insurance as was being paid by the Company as of the date Executive’s employment
      terminated through the earlier of eighteen (18) months or the date Executive
      obtains alternative health insurance coverage.  It is intended that
      this provision of continuation health coverage shall run concurrently with
      any
      period of continuation coverage required under COBRA.

    (3)  The
      Company’s obligation to provide the severance pay and benefits provided in
      subparagraphs 6(b)(1) and 6(b)(2) is conditioned upon Executive’s signing and
      not revoking a valid general release agreement in the form attached hereto
      as
Exhibit A, and is further conditioned upon Executive’s continued
      compliance with her obligations in this Agreement, including those obligations
      set forth in paragraphs 8 through 11.

    (c)  If
      Executive’s employment is terminated under subparagraph 5(h), then the Company
      will provide the payments and benefits set forth in subparagraphs 6(c)(1) and
      6(c)(2), subject to subparagraph 6(c)(3).

    (1)  The
      Company will, in addition to providing the payments and benefits set forth
      in
      subparagraph 6(a), pay Executive an amount equal to twenty-four (24) months
      of
      Base Salary, minus any appropriate withholding and deductions, as determined
      by
      the Company, without regard to whether Executive obtains another position with
      a
      new employer.  The severance payment will be made in one lump sum
      payment within thirty (30) days of the date Executive’s employment
      terminates.

    (2)  Further,
      if Executive elects to continue her health insurance benefits under COBRA,
      the
      Company will continue to pay the same monthly subsidy of the premiums for such
      insurance as was being paid by the Company as of the date Executive’s employment
      terminated through the earlier of eighteen (18) months or the date Executive
      obtains alternative health insurance coverage.  It is intended that
      this provision of continuation health coverage shall run concurrently with
      any
      period of continuation coverage required under COBRA.

    (3)  The
      Company’s obligation to provide the severance pay and benefits provided in
      subparagraphs 6(c)1 and 6(c)(2) is conditioned upon Executive signing and not
      revoking a valid general release agreement in the form attached hereto as
      Exhibit A, and is further conditioned upon Executive’s continued
      compliance with his obligations in this Agreement, including those obligations
      set forth in paragraphs 8 through 11.

    (d)  Upon
      any
      termination of employment, Executive shall be deemed to have automatically
      resigned from the Board and as an officer of the Company and each of its
      affiliates, including ARMC.

    (e)           Anything
      in this Agreement to the contrary notwithstanding, if on the date of the
      termination of Executive's employment with the Company (1) any of the Company’s
      stock is publicly traded on an established securities market or otherwise
      (within the meaning of section 409A(a)(2)(B)(i) of the Internal Revenue Code,
      as
      amended (the “Code”)) and (2) Executive is a “specified employee” within the
      meaning of Code section 409A(a)(2)(B)(i), then payments to be made in accordance
      with subparagraphs 6(b) and 6(c) shall be paid on the date which is six (6)
      months after the date Executive’s employment terminates.

    (f)           If
      Executive terminates her employment under subparagraph 5(g), then the Company
      will provide the payments and benefits set forth in subparagraphs 6(f)(1) and
      6(f)(2), subject to subparagraph 6(f)(3).

    (1)  If
      Executive terminates her employment under subparagraph 5(g) prior to the first
      anniversary of the applicable Change of Control, the Company will provide the
      payments and benefits set forth in subparagraph 6(a).  If Executive
      terminates her employment under subparagraph 5(g) on the first anniversary
      of
      the applicable Change of Control by giving notice of intent to terminate her
      employment due to a Change of Control at least 30 days prior to the first
      anniversary date of a Change of Control, the Company will, in addition to
      providing the payments and benefits set forth in subparagraph 6(a), pay
      Executive an amount equal to twenty-four (24) months of Base Salary, minus
      any
      appropriate withholding and deductions, as determined by the Company, without
      regard to whether Executive obtains another position with a new
      employer.  The severance payment will be made in one lump sum payment
      within thirty (30) days of the date Executive’s employment
      terminates.

    (2)  Further,
      if Executive terminates her employment under subparagraph 5(g) on the first
      anniversary of the applicable Change of Control and if Executive elects to
      continue her health insurance benefits under COBRA, the Company will continue
      to
      pay the same monthly subsidy of the premiums for such insurance as was being
      paid by the Company as of the date Executive’s employment terminated through the
      earlier of eighteen (18) months or the date Executive obtains alternative health
      insurance coverage.  It is intended that this provision of
      continuation health coverage shall run concurrently with any period of
      continuation coverage required under COBRA.

    (3)           The
      Company’s obligation to provide the severance pay and benefits provided in
      subparagraphs 6(f)1 and 6(f)(2) is conditioned upon Executive signing and not
      revoking a valid general release agreement in the form attached hereto as
      Exhibit A, and is further conditioned upon Executive’s continued
      compliance with his obligations in this Agreement, including those obligations
      set forth in paragraphs 8 through 11.

    7.  Excise
      Taxes.  If the value of any compensation (in whatever form)
      provided pursuant to this Agreement (a) is counted as a “parachute payment”
within the meaning of Code section 280G, and the value of all such parachute
      payments would be subject to the excise tax imposed by section 4999 of the
      Code
      (the “4999 Excise Tax” the “Penalties”), then Executive shall be entitled to
      receive from the Company an additional payment (a “Gross-Up Payment”) in an
      amount such that after payment by Executive of all taxes (but not including
      any
      interest or penalties imposed with respect to such taxes), including any Penalty
      imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
      Payment equal to the Penalties imposed upon such payment.  The
      Gross-Up Payment shall be paid to Executive by the end of the calendar year
      in
      which the 4999 Excise Tax would be incurred.

    8.  Trade
      Secrets and Confidential Information.  Executive shall not
      disclose or use at any time either during or after her employment hereunder
      (regardless of how employment ends), any Confidential Information (as defined
      below) of which she becomes aware, whether or not any such information is
      developed by her, except to the extent that such disclosure or use during
      employment is required or appropriate in the performance of the duties assigned
      to her by the Company or if Executive is required to testify under subpoena
      or
      court order after Executive gives sufficient advance written notice of such
      requirement to the Company so that it may seek to limit or otherwise protect
      such testimony from public disclosure.  Executive shall follow all
      procedures established by the Company to safeguard Confidential Information
      and
      to protect it against disclosure, misuse, espionage, loss or
      theft.  “Confidential Information” means information that is not
      generally known or available to the public, which is used, developed or obtained
      by the Company and its affiliates including ARMC, 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.

    9.  Creative
      Works and Other Property.

    (a)  Executive
      will promptly disclose to the Company all inventions, concepts, processes,
      improvements, methodologies and other creative works, including without
      limitation, insurance products, whether or not they can be patented or
      copyrighted, that during her employment were or were caused to be conceived
      or
      developed by her, either solely or jointly with others, relating to the business
      of the Company and its affiliates, including ARMC, (collectively “Creative
      Works”) and Executive agrees that all such Creative Works arethe sole property
      of the Company.  Upon the request and at the expense of the Company,
      Executive will at any time (whether during his employment or after its
      termination for any reason) assist the Company and fully cooperate with it
      to
      protect the Company’s interest in Creative Works and to obtain, for the
      Company’s benefit, patents or copyrights for any Creative Works in the United
      States and in any foreign countries.  This subparagraph does not apply
      to any Creative Work that Executive develops entirely on her own time and for
      which no equipment, supplies, facility or Confidential Information of the
      Company was used, unless:  (1) the Creative Work relates to the
      Company’s business or to the actual or anticipated research or development
      activities of the Company; or (2) the Creative Work results from any work
      Executive performs for the Company.

    (b)  Upon
      the
      termination of Executive’s employment for the Company for any reason or at any
      other time upon request by the Company, Executive shall immediately, and without
      request, deliver to the Company all copies and embodiments, in whatever form,
      of
      all Confidential Information and all other documents, materials or property
      belonging to the Company even if they do not contain Confidential Information
      including but not limited to:  written records, notes, photographs,
      manuals, computers and computer equipment, cell phones, notebooks, reports,
      keys, credit cards, documentation, flow charts and all magnetic media such
      as
      tapes, disks or diskettes, wherever located, and, if requested by the Company,
      Executive shall provide the Company with written confirmation that all such
      materials have been returned.  Executive has no claim or right to the
      continued use, possession or custody of such information, documents, materials
      or property following the termination of his employment with the
      Company.

    10.  Cooperation.  At
      all times during the term of this Agreement and for a period of three (3) years
      thereafter (regardless of how employment ends), Executive will reasonably
      cooperate with the Company in any litigation or administrative proceedings
      involving any matters with which Executive was involved during his employment
      by
      the Company; provided that, following the term of this Agreement, such
      activities will be scheduled at such times and locations as the Company and
      Executive may mutually agree.  The Company will reimburse Executive
      for her reasonable out-of-pocket expenses, if any, incurred in providing such
      assistance.  In addition, if such assistance is provided by Executive
      after her employment has terminated and at a time when she is not receiving
      severance payments from the Company shall be paid $250 per hour for her
      assistance.

    11.  Assignment.  Neither
      the Company nor Executive shall have the right to assign this Agreement or
      any
      obligation hereunder without the written consent of the other, except that,
      subject to Executive’s rights under paragraph 5(g) above, if there is a Change
      of Control, the Company may assign this Agreement to a successor or assignee
      in
      connection with a merger, consolidation, sale or transfer of assets of the
      Company, provided, however, that such successor or assignee expressly assumes
      all obligations of the Company under this Agreement.

    12.  Indemnification.  The
      Company shall indemnify Executive or her estate to the full extent provided
      in
      its articles of incorporation and/or its bylaws as of the date of this
      Agreement.

    13.  No
      Mitigation.  Executive shall not be required to mitigate the
      amount of any payment or benefit provided for in this Agreement or the Company’s
      benefits plans by seeking other employment or otherwise, nor shall the amount
      of
      any payment or benefit provided for in this Agreement or the Company’s benefits
      plans be reduced by any compensation or benefits earned by Executive either
      as a
      result of her engaging in business or his employment by another employer, or
      by
      retirement benefits payable after the termination of this
      Agreement.

    14.  Indulgences.  The
      failure of the Company or Executive at any time or times to enforce its or
      his
      rights under this Agreement strictly in accordance with the same shall not
      be
      construed as having created a custom in any way or manner contrary to the
      specific provisions of this Agreement or as having in any way or manner modified
      or waived the same.

    15.  Notices.  Any
      notice required or permitted to be given by this Agreement shall be in writing
      and shall be sufficiently given to the parties if delivered in person or sent
      by
      United States registered or certified mail or nationally recognized overnight
      courier (return receipt requested) or by telefax (with evidence of successful
      transmission) addressed to the respective parties at the following addresses
      or
      at such other addresses as may from time to time

    be
      designated in writing by the parties:

    

    
      	
              If
                to the Company:

              American
                Rental Management Company

              222
                Smallwood Village Center

              St.
                Charles Maryland 20602

              If
                to the Executive:

              Ms.
                Cynthia Hedrick

              c/o
                American Rental Management Company

              222
                Smallwood Village Center

              St.
                Charles, Maryland 20602

               

            

    

    16.  Entire
      Agreement.  This Agreement, together with the attachments hereto
      and the Company’s Benefits plans, sets forth the entire agreement between the
      parties with respect to the matters covered herein, and supersedes all other
      agreements and understandings.  No waiver or amendment to this
      Agreement shall be effective unless reduced to writing and executed by the
      parties hereto.

    17.  Arbitration.  All
      disputes between Executive and the Company (except those relating to
      unemployment compensation and workers’ compensation and except for disputes
      arising under paragraphs 8 through 11 of this Agreement) arising out of
      Executive’s employment or concerning the interpretation or application of this
      Agreement or its subject matter (including without limitation those relating
      to
      any claimed violation of any federal, state or local law, regulation or
      ordinance, such as Title VII of the Civil Rights Act, the Age Discrimination
      in
      Employment Act, the Americans with Disabilities Act and their state and local
      counterparts, if any) shall be resolved exclusively by binding arbitration
      in
      Washington, D.C. pursuant to the National Rules for the Resolution of Employment
      Disputes of the American Arbitration Association.  Each party shall
      bear its own attorneys’ fees and costs; provided, however, that the arbitrator
      may award reasonable attorneys’ fees and costs to the prevailing
      party.  Any award of attorney’s fees and costs to Executive shall be
      paid in a manner that does not violate section 409A of the
      Code. The parties expressly waive their rights to have any
      such claims resolved by jury trial.  The arbitration opinion and award
      shall be final, binding and enforceable by any court under the Federal
      Arbitration Act.

    18.  Controlling
      Law and Dispute Resolution.  This Agreement shall be construed and
      applied in accordance with the laws of Maryland without giving effect to the
      principles of conflicts of law under Maryland law.  The parties agree
      to submit to the jurisdiction and venue of the state and federal courts located
      in Maryland in the event that there is any claim that this Agreement has been
      breached and that any such claim is not subject to arbitration as provided
      in
      paragraph 17 of this Agreement.

    19.           Code
      Section 409A.  It is the intention of the parties that payments or
      benefits payable under this Agreement not be subject to the additional tax
      imposed pursuant to Code Section 409A.  To the extent such potential
      payments or benefits could become subject to Code Section 409A, the parties
      shall cooperate to amend this Agreement with the goal of giving Executive the
      economic benefits described herein in a manner that does not result in such
      tax
      being imposed.

    IN
      WITNESS WHEREOF, this Agreement has been duly executed by and on behalf of
      the
      parties hereto as of the day and year first above written.

     

    AMERICAN
      RENTAL MANAGEMENT COMPANY

    

    

    
      	
               

            	
              By:

            	
              /s/J.
                Michael Wilson

            	 

    

    
      	
               

            	
              Name:

            	
              J.
                Michael Wilson, Chairman

            

    

    
      	
               

            	
              Dated:

            	
              July
                30, 2007

            

    

    

    

    AMERICAN
      COMMUNITY PROPERTIES TRUST

    

    

    
      	
               

            	
              By:

            	
              /s/J.
                Michael Wilson

            	 

    

    
      	
               

            	
              Name:            
                J. Michael Wilson, Chairman

            

    

    
      	
               

            	
              Dated:

            	
              July
                30, 2007

            

    

    

                 CYNTHIA
      HEDRICK

                                        /s/
      Cynthia
      Hedrick                                                                          

                          Cynthia
      Hedrick

    
      	
               

            	
              Dated:

            	
              August
                6, 2007

            

    

    

    
      
              

                  DMEAST
            #9784432
            v5      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    General
      Release Agreement

    

    THIS
      GENERAL RELEASE AGREEMENT (the “Release”) is made and entered into as of this
      ____ day of _______________, 20__, by and among American Community Properties
      Trust, a Maryland real estate investment trust (together with its subsidiaries,
      the “Company”) and American Rental Management Company (“ARMC”), on the one hand,
      and Cynthia Hedrick (the “Executive”) on the other hand.

    WHEREAS,
      the Company, ARMC and Executive entered into the Amended and Restated Executive
      Employment Agreement (the “Employment Agreement”) effective as of June ____,
      2007;

    WHEREAS,
      under the terms of the Employment Agreement, Executive is entitled to severance
      payments as provided therein; and

    WHEREAS,
      the Employment Agreement conditions receipt of the severance payments upon
      Executive’s signing and not revoking a valid General Release
      Agreement;

    NOW,
      THEREFORE, intending to be legally bound hereby and in consideration of receipt
      of the severance payments provided for in the Employment Agreement and for
      other
      good and valuable consideration, Executive, for herself, and his executors,
      administrators, heirs and assigns, agrees as follows:

    1.           Executive
      fully waives, releases, and forever discharges the Company and each and all
      of
      its past and present subsidiaries, parent and related corporations, companies
      and divisions, and their past and present respective officers, directors,
      shareholders, trustees, employees, attorneys, agents and affiliates, and their
      predecessors, successors and assigns (collectively, the “Releasees”) of and from
      any and all rights, debts, claims, actions, liabilities, agreements, damages,
      or
      causes of action (collectively, the “claims”), of whatever kind or nature,
      whether in law or equity, whether known or unknown, that Executive ever had
      or
      now has in any capacity, either individually, or on behalf of another person
      or
      entity against any or all of the Releasees, for, upon, or by reason of any
      cause, matter, thing or event whatsoever occurring at any time up to and
      including the date Executive signs this Release.  Executive
      acknowledges and understands that the claims and rights being released in this
      paragraph include, but are not limited to, all claims and rights arising from
      or
      in connection with any agreement of any kind Executive may have had with any
      of
      the Releasees, or in connection with Executive’s employment or termination of
      employment, all claims and rights for wrongful discharge, breach of contract,
      either express or implied, interference with contract, emotional distress,
      back
      pay, front pay, benefits, fraud, misrepresentation, defamation, claims and
      rights arising under the Civil Rights Acts of 1964 and 1991, as amended (which
      prohibit discrimination in employment based on race, color, national origin,
      religion or sex), the Americans with Disabilities Act (ADA), as amended (which
      prohibits discrimination in employment based on disability), the Age
      Discrimination in Employment Act (ADEA), as amended (which prohibits age
      discrimination in employment), Worker Adjustment and Retraining Notification
      Act
      (WARN), the National Labor Relations Act, the Fair Labor Standards Act, the
      Employee Retirement Income Security Act of 1974 (ERISA), as amended, the Family
      and Medical Leave Act (FMLA), as amended, the Health Insurance Portability
      and
      Accountability Act (HIPPA), Article 49B of the Maryland Code, and any and all
      other claims or rights, whether arising under federal, state, or local law,
      rule, regulation, constitution, ordinance or public policy.  Executive
      agrees that she will not initiate any civil complaint or institute any civil
      lawsuit or file any arbitration against Releasees, or any one of them, based
      on
      any fact, action, event or circumstance occurring up to and including the date
      of the execution by Executive of this Release.  This Release and the
      foregoing covenant not to sue do not cover claims relating to: (i) Executive’s
      right to indemnification under paragraph 12 of the Employment Agreement, or
      pursuant to the Company’s articles of incorporation or bylaws as they may exist
      from time to time, or pursuant to applicable law; (ii) Executive’s right to
      benefits under the Company’s benefits plans due after termination of employment;
      (iii) Executive’s right to payments under the Employment Agreement due after
      termination of employment; or (iv) the validity or enforcement of this
      Release.

    2.           Executive
      waives any provision of state or federal law that explicitly or implicitly
      would
      prevent the application of this Release to claims of which Executive does not
      know or expects to exist in Executive’s favor at the time of executing this
      Release.  In addition, Executive waives any provisions of state or
      federal law which might require a more detailed specification of the claims
      being released pursuant to the provisions of this Release.

    3.           Executive
      acknowledges that she has carefully read and understands the provisions of
      this
      Release, that she has had twenty-one (21) days from the date she received a
      copy
      of this Release to consider entering into this Release and accepting the
      severance payments set forth in the Retention Agreement, that if she signs
      and
      returns this Release before the end of the 21-day period, she will have
      voluntarily waived his right to consider this Release for the full twenty-one
      (21) days and that she has executed this Release voluntarily and with full
      knowledge of its significance, meaning and binding effect.  Executive
      also acknowledges that the Company has advised her in writing to consult with
      an
      attorney of his own choosing with regard to entering into this Release and
      accepting the severance payments set forth in the Retention
      Agreement.  Finally, Executive acknowledges that her decision to sign
      this Release has not been influenced in any way by fraud, duress, coercion,
      mistake or misleading information and that she has not relied on any information
      except what is set forth in this Release and the Employment
      Agreement.

    4.           Executive
      acknowledges that she may revoke this Release within seven (7) days of his
      execution of this document by submitting written notice of his revocation to
      ___________________________________________.  Executive also
      understands that this Release shall not become effective or enforceable until
      the expiration of that 7-day period.

    5.           Executive
      agrees that if any provision of this Release is or shall be declared invalid
      or
      unenforceable by a court of competent jurisdiction, then such provision will
      be
      modified only to the extent necessary to cure such invalidity and with a view
      to
      enforcing the parties’ intention as set forth in this Release to the extent
      permissible and the remaining provisions of this Release shall not be affected
      thereby and shall remain in full force and effect.

    

    

    Dated:                      ________________                                                                           ____________________________________

                CYNTHIA
      HEDRICK

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