Exhibit 10.1

AVATAR HOLDINGS INC.

FORM OF DEFERRED COMPENSATION AGREEMENT
FOR NON-EMPLOYEE DIRECTOR’S FEES

This Deferred Compensation Agreement (this “Agreement”), dated as of [     ],
200[_], is made by and between Avatar Holdings Inc., a Delaware corporation (the
“Company”), and [DIRECTOR], a non-employee director of the Company (the
“Participant”), pursuant to, and subject to the terms and conditions of, the
Amended and Restated 1997 Incentive and Capital Accumulation Plan (2005
Restatement), as the same may be amended, restated, modified or supplemented
from time to time (the “Plan”).

1. DEFINITIONS. For purposes of this Agreement, the following terms shall have
the following meanings:

(a) “Beneficiary” shall mean the beneficiary or beneficiaries designated in
writing by the Participant pursuant to Section 4 hereof to receive the
Participant’s deferred compensation benefits in the event of the Participant’s
death.

(b) “Board of Directors” shall mean the board of directors of the Company.

(c) “Change in Control” shall mean the occurrence of any change in ownership of
the Company, change in effective control of the Company, or change in the
ownership of a substantial portion of the assets of the Company, as defined in
Code Section 409A(a)(2)(A)(v), the regulations thereunder, and any other
published interpretive authority, as issued or amended from time to time.

(d) “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended from
time to time.

(e) “Committee” shall mean the Nominating and Corporate Governance Committee of
the Board of Directors or such other committee of the Board of Directors
designated by the Board of Directors to administer the terms and conditions of
this Agreement.

(f) “Common Stock” shall mean the common stock, par value $1.00 per share, of
the Company.

(g) “Deferral” shall mean a contribution of cash under this Agreement made by
the Company on behalf of the Participant to the Participant’s Deferred
Compensation Account and shall include any notional dividends credited pursuant
to Section 2(b) below.

(h) “Deferral Date” shall mean the date on which the Participant would be paid
in cash a Director’s fee, committee fee, committee chairperson fee or would be
credited with a notional dividend pursuant to Section 2(b) below.

(i) “Deferred Compensation Account” shall mean the separate account established
by the Company under this Agreement for the Participant.

(j) “Director” shall mean a member of the Board of Directors who is not an
employee of the Company.

(k) “Fair Market Value” shall mean, as of any date, the value of the Common
Stock determined as follows:

(i) If the Common Stock is listed on one or more established stock exchanges or
national market systems, including without limitation The Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, the Fair Market Value
of the Common Stock shall be the closing sale price of the Common Stock on such
date (or the last preceding trading date if Common Stock was not traded on such
date) as quoted on the principal exchange or quotation system on which the
Common Stock is listed (as determined by the Committee); or

(ii) In the absence of an established market for the Common Stock of the type
described in clause (i) above, the Fair Market Value thereof shall be determined
by the Committee in good faith and in accordance with Code Section 409A, the
regulations thereunder, and any other published interpretive authority, as
issued or amended from time to time.

(l) “Separation from Service” shall mean the termination of the Participant’s
services as a Director for any reason.

(m) “Stock Units” shall mean notional shares of Common Stock to be used to
determine the deferred compensation benefits distributable to the Participant
under this Agreement.

2. CONTRIBUTIONS AND DETERMINATION OF BENEFITS

(a) Contributions.

(i) The Participant may elect to defer up to fifty percent (50%) of the annual
Director’s fee and any committee fee or committee chairperson fee due in cash to
the Participant for service as a Director, committee member or chairperson.
Elections shall be made in the form attached as Exhibit A hereto (the “Deferral
Election Form”). Elections must be made by the Participant prior to the calendar
year in which the Participant earns such compensation, except that the
Participant may make an election within thirty (30) days of the date on which
the Participant is first eligible to participate in the Plan (and then only with
respect to amounts earned after the date such election is made). All
contributions made to fund benefits under this Agreement shall be paid by the
Company and no direct contributions by the Participant to the Deferred
Compensation Account are required or permitted.

(ii) The Company shall allocate a number of Stock Units to the Deferred
Compensation Account of the Participant determined by dividing the amount of the
Deferral by the Fair Market Value of one share of Common Stock on the Deferral
Date and rounding to the nearest 1/100 of a unit. For purposes of this
Section 2(a)(ii), any fractional unit greater than or equal to 0.0050 shall be
rounded up to the nearest 1/100 of a unit and any fractional unit less than
0.0050 shall be rounded down to the nearest 1/100 of a unit.

(b) Notional Dividends. Stock Units in the Participant’s Deferred Compensation
Account shall be credited with notional dividends at the same time and in
equivalent amounts as dividends that are payable from time to time on shares of
Common Stock. Any such notional dividends shall be valued as of the date on
which they are credited to the Participant’s Deferred Compensation Account and
the Company shall allocate additional Stock Units to the Deferred Compensation
Account based on such notional dividends in the manner described in
Section 2(a)(ii) above. If such notional dividends are credited in a form other
than Common Stock or cash, the Committee will determine their value in good
faith.

3. VESTING AND DISTRIBUTION OF BENEFITS

(a) Vesting of Deferred Compensation Accounts. The Participant’s Deferred
Compensation Account shall be fully vested at all times.

(b) Distribution of Deferred Compensation Accounts. Subject to Sections 3(c),
3(d) and 3(e) hereof, the Company shall distribute the Participant’s Deferred
Compensation Account in accordance with the dates and percentages designated by
the Participant in the Deferral Election Form. Distributions shall be made in
shares of Common Stock determined by multiplying the percentage of the balance
of the Deferred Compensation Account to be distributed on such date (as
designated in the Deferral Election Form) by the aggregate number of Stock Units
allocated to the Deferred Compensation Account pursuant to this Agreement as of
such date. For purposes of this Section 3(b), any fractional share of Common
Stock greater than or equal to 0.50 shall be rounded up to the nearest whole
share of Common Stock and any fractional share of Common Stock less than 0.50
shall be rounded down to the nearest whole share of Common Stock.

(c) Change of Distribution Schedule. The Participant may elect, at any time, to
change distribution date(s) by amending the Deferral Election Form, provided
that such election shall not take effect for one (1) year from the date of the
new election and that under the amended Deferral Election Form, each
distribution installment (or lump sum) shall occur no earlier than five
(5) years after such installment (or lump sum) would have been paid under the
prior distribution schedule, and in accordance with Code Section 409A(a)(4)(C),
the regulations thereunder, and any other published interpretive authority, as
issued or amended from time to time.

(d) Death Benefit. Upon the death of the Participant prior to complete
distribution to the Participant of the entire balance of Participant’s Deferred
Compensation Account, the entire remaining balance of the Deferred Compensation
Account on the date of death shall be payable to the Participant’s Beneficiary
as soon as practicable following the date of Participant’s death.

(e) Pro Rata Adjustments. Notwithstanding anything to the contrary contained in
this Agreement, if Participant’s Separation from Service occurs prior to the
Participant’s performance of services as a Director for which Stock Units have
been allocated to the Participant’s Deferred Compensation Account, the
Committee, in its sole discretion, may make a pro rata adjustment in the number
of shares of Common Stock distributable to the Participant upon the
Participant’s Separation from Service to account for such services not
performed.

4. DESIGNATION OF BENEFICIARY. The Participant may designate a Beneficiary to
receive any amount due hereunder via written notice thereof, in the form
attached as Exhibit B hereof, to the Committee at any time prior to the
Participant’s death and may revoke or change the Beneficiary designated therein
without the Beneficiary’s consent by written notice delivered to the Committee
at any time and from time to time prior to the Participant’s death. If the
Participant fails to designate a Beneficiary, or if no such designated
Beneficiary shall survive the Participant, then such amount shall be paid to the
Participant’s estate.

5. EQUITABLE ADJUSTMENT. If there shall be any change in the Common Stock of the
Company, through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, reverse stock split, split up, spinoff, combination of
shares, exchange of shares, dividend in kind or other like change in capital
structure or distribution (other than normal cash dividends) to stockholders of
the Company, in order to prevent dilution or enlargement of the Participant’s
rights under this Agreement and the Plan, the Committee may, in an equitable
manner, adjust the number and kind of shares that may be issued under this
Agreement and make any other appropriate adjustments in the terms of the Stock
Units and this Agreement to reflect such changes or distributions.

6. TAXES. Any distribution of Common Stock pursuant to this Agreement shall be
net of any amounts required to be withheld pursuant to applicable federal, state
and local tax withholding requirements. In connection with any such
distribution, the Company may require the Participant to remit to it an amount
sufficient to satisfy such tax withholding requirements prior to the delivery of
any certificates for such Common Stock. In lieu thereof, the Company shall have
the right to withhold the amount of such taxes from any other sums due or to
become due from the Company to the Participant as the Committee shall prescribe.
The Committee may, in its discretion and subject to such rules as it may adopt
(including any as may be required to satisfy applicable tax and/or non-tax
regulatory requirements), permit the Participant to pay all or a portion of the
federal, state and local withholding taxes arising in connection with any
distribution of shares of Common Stock hereunder by electing to have the Company
withhold shares of Common Stock having a Fair Market Value equal to the amount
of tax to be withheld, such tax calculated at rates prescribed by statute or
regulation.

7. REGULATORY COMPLIANCE AND LISTING. The issuance or delivery of any stock
certificates representing shares of Common Stock issuable pursuant to this
Agreement may be postponed by the Committee for such period as may be required
to comply with any applicable requirements under the federal or state securities
laws, any applicable listing requirements of any national securities exchange or
The Nasdaq Stock Market, Inc., and any applicable requirements under any other
law, rule or regulation applicable to the issuance or delivery of such shares,
and the Company shall not be obligated to deliver any such shares of Common
Stock to the Participant if either delivery thereof would constitute a violation
of any provision of any law or of any regulation of any governmental authority,
any national securities exchange or The Nasdaq Stock Market, Inc., or the
Participant shall not yet have complied fully with the provisions of Section 6
hereof.

8. INVESTMENT REPRESENTATIONS AND RELATED MATTERS. The Participant hereby
represents that the Common Stock issuable pursuant to this Agreement is being
acquired for investment purposes and not for sale or with a view to distribution
thereof. The Participant acknowledges and agrees that any sale or distribution
of shares of Common Stock issued pursuant to this Agreement may be made only
pursuant to either (a) a registration statement on an appropriate form under the
Securities Act of 1933, as amended (the “Securities Act”), which registration
statement has become effective and is current with regard to the shares being
sold, or (b) a specific exemption from the registration requirements of the
Securities Act that is confirmed in a favorable written opinion of counsel, in
form and substance satisfactory to counsel for the Company, prior to any such
sale or distribution. The Participant hereby consents to such action as the
Committee or the Company deems necessary or appropriate from time to time to
prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act or to implement the provisions of this
Agreement, including but not limited to placing restrictive legends on
certificates evidencing shares of Common Stock issued pursuant to this Agreement
and delivering stop transfer instructions to the Company’s stock transfer agent.

9. CONSTRUCTION. This Agreement will be construed by and administered under the
supervision of the Committee, and all determinations of the Committee will be
final and binding on the Participant.

10. GENERAL AND MISCELLANEOUS

(a) Rights Against Company. Nothing in this Agreement shall be construed as
creating a trust or fiduciary relationship of any kind between the Company and
the Participant. Except as expressly provided by this Agreement, the
establishment of this Agreement shall not be construed as giving to the
Participant, any employee or any person any legal, equitable or other rights
against the Company, or against its officers, directors, agents or members, or
as giving to the Participant or any Beneficiary any equity or other interest in
the assets or business of the Company or giving the Participant the right to be
retained in the employ of the Company. In no event shall the terms of service of
the Participant, expressed or implied, be modified or in any way affected by the
execution of this Agreement or by any election under this Agreement made by the
Participant. The rights of the Participant or any Beneficiary hereunder shall be
solely those of an unsecured general creditor of the Company and neither the
Participant nor any Beneficiary shall have any rights as a stockholder, and
shall not be entitled to vote, with respect to the Stock Units credited to the
Deferred Compensation Account.

(b) Assignment or Transfer. No right, title or interest of any kind in this
Agreement shall be transferable or assignable by the Participant or any
Beneficiary or be subject to alienation, anticipation, encumbrance, garnishment,
attachment, execution or levy of any kind, whether voluntary or involuntary, nor
subject to the debts, contracts, liabilities, engagements, or torts of the
Participant or any Beneficiary. Any attempt to alienate, encumber, hypothecate,
sell, transfer, assign, pledge, garnish, attach or otherwise subject to legal or
equitable process or to dispose of any interest in this Agreement shall be void
ab initio.

(c) Severability. If any provision of this Agreement shall be declared illegal
or invalid for any reason, said illegal or invalid provision shall not affect
the remaining provisions of this Agreement but shall be fully severable, and
this Agreement shall be construed and enforced as if said illegal or invalid
provision was not part of this Agreement.

(d) Governing Law. This Agreement shall be governed by and construed according
to the laws of the State of Delaware, without regard to the conflicts of laws
provisions thereof.

(e) Failure To Enforce Not A Waiver. The failure of either party hereto to
enforce at any time any provision of this Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.

(f) Incorporation of Plan. The Plan is hereby incorporated by reference and made
a part of this Agreement, and this Agreement shall be subject to the terms of
the Plan.

IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement
as of the date first set forth above.

AVATAR HOLDINGS INC.

     
By:
Title:

     
[DIRECTOR]

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EXHIBIT A

AVATAR HOLDINGS INC.

DEFERRED COMPENSATION AGREEMENT
FOR DIRECTOR’S FEES

DEFERRAL ELECTION FORM

Name:      

I,      , hereby elect to defer the following amounts in accordance with the
terms of the Deferred Compensation Agreement (the “Agreement”), dated as of
[DATE], by and between me and Avatar Holdings Inc., a Delaware corporation (the
“Company”). Capitalized terms used but not otherwise defined herein shall have
the same meanings as set forth in the Agreement.

This election shall remain in effect indefinitely for all years of service until
terminated or modified by a subsequent deferral election form which shall
generally be effective for amounts earned in the year following the year such
subsequent deferral election form is filed with the Company:

[ ]      % of my Director’s annual retainer fees relating to my service as a
Director of Avatar Holdings Inc.

[ ]      % of my committee fees relating to my service as a Director of Avatar
Holdings Inc.

[ ]      % of my chairperson fees relating to my service as a Director of Avatar
Holdings Inc.

My Deferred Compensation Account shall be distributed to me upon the earlier of
(i) the following date(s) and in the following increment(s) and (ii) the date of
my Separation from Service.

[ ]      

Percentage            Month            Day            Year

[ ]      

Percentage            Month            Day            Year

[ ]      

Percentage            Month            Day            Year

[ ]      

Percentage            Month            Day            Year

NOTE: You can file a new election form at any time for new deferrals, which will
take effect upon the following calendar year.

         
Submitted by:
      Accepted by:
 
       
PARTICIPANT
      AVATAR HOLDINGS INC.
 
        _________________________________
  By: ____________________________
 
       
Date:
  [Name]   Name:      
Title:     
Date:
 
       

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EXHIBIT B

AVATAR HOLDINGS INC.
BENEFICIARY DESIGNATION PURSUANT TO
DEFERRED COMPENSATION AGREEMENT

In the event that I,      , should die prior to the receipt of all amounts
credited to my Deferred Compensation Account under the Deferred Compensation
Agreement (the “Agreement”), dated as of [DATE], by and between me and Avatar
Holdings Inc., a Delaware corporation, and in lieu of disposing of my interest
in my Deferred Compensation Account by my will or the laws of intestate
succession, I hereby designate the following person(s) as primary
Beneficiary(ies) and contingent Beneficiary(ies) of my interest in my Deferred
Compensation Account (please attach additional sheets if necessary):

PRIMARY BENEFICIARY(IES) (Select only one of the three alternatives)

                 
[ ] (a) INDIVIDUALS AND/OR CHARITIES

  % SHARE Name____________________________________________
    _____  
Address
    —           Name____________________________________________
    _____  
Address
    —           Name____________________________________________
    _____  
Address
    —          

[ ] (b) RESIDUARY TESTAMENTARY TRUST

In trust, to the trustee of the trust named as the beneficiary of the residue of
my probate estate.

[ ] (c) LIVING TRUST

      The___________________________________ Trust, dated
_______________________

 
   
(print name of trust)
  (fill in date trust was established)

CONTINGENT BENEFICIARY(IES) (Select only one of the three alternatives)

                 
[ ] (a) INDIVIDUALS AND/OR CHARITIES
          % SHARE
Name
    —       —   Address ____________________________________________
       
Name
    —       —   Address ____________________________________________
       
Name
    —       —  

Address      

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[ ] (b) RESIDUARY TESTAMENTARY TRUST

In trust, to the trustee of the trust named as the beneficiary of the residue of
my probate estate.

[ ] (c) LIVING TRUST

      The___________________________________ Trust, dated
_______________________

 
   
(print name of trust)
  (fill in date trust was established)

Capitalized terms used but not otherwise defined herein shall have the same
meanings as set forth in the Agreement. Any distribution to a primary or
contingent Beneficiary(ies) of amounts in Participant’s Deferred Compensation
Account shall be subject to, and in accordance with, the terms and conditions of
the Agreement. Should all the individual primary Beneficiary(ies) fail to
survive me or if the trust named as the primary Beneficiary does not exist at my
death (or no will of mine containing a residuary trust is admitted to probate
within six months of my death), the contingent Beneficiary(ies) shall be
entitled to my interest in the Deferred Compensation Account in the shares
indicated above. Should any individual beneficiary fail to survive me or a
charity named as a beneficiary no longer exists at my death, such beneficiary’s
share shall be divided among the remaining named primary or contingent
Beneficiaries, as appropriate, in proportion to the percentage shares I have
allocated to them. In the event that no individual primary Beneficiary(ies) or
contingent Beneficiary(ies) survives me, no trust (excluding a residuary
testamentary trust) or charity named as a primary Beneficiary or contingent
Beneficiary exists at my death, and no will of mine containing a residuary trust
is admitted to probate within six (6) months of my death, then my interest in
the Deferred Compensation Account shall be disposed of by my will or the laws of
intestate succession, as applicable.

This Beneficiary Designation is effective until I file another such Beneficiary
Designation with the Company. Any previous Beneficiary Designations are hereby
revoked.

     
Submitted by:
  Accepted by:
 
   
 
  AVATAR HOLDINGS INC.
 
   
     
  By:      
 
   
Name:      
  Title:      
 
   
Date:      
  Date:      
 
   

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