<PAGE>   1
                                                                 Exhibit (10)(3)

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                   -----------------------------------------



        THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, (which hereinafter,
along with all Exhibits and Schedules referenced herein and attached hereto, is
referred to as the "Agreement") is made by and between CLEVETRUST REALTY
INVESTORS, a Massachusetts voluntary association of the type generally known as
a business trust (the "Trust"), and RAYMOND C. NOVINC ("Officer"). The Trust and
the Officer are sometimes referred to as a "party" or, collectively, as the
"parties."


                                R E C I T A L S:

        A. The parties entered into an Amended and Restated Employment Agreement
dated as of January 1, 1993 pursuant to which the Officer was retained as the
Trust's Vice President, Secretary, and Counsel.

        B. The Board of Trustees of the Trust (the "Board") has resolved to
recommend to the Trust's shareholders that all Trust properties be sold and that
the Trust be liquidated over a period of three years or the Trust properties be
otherwise disposed of in a merger, consolidation or similar transaction (the
"Liquidation Process"), and the Board desires to retain the Officer for at least
a portion of the Liquidation Process as Vice President, Secretary, and Counsel
to assist in that Process.

        C. As an inducement to the Officer to continue in the employment of the
Trust as its Vice President, Secretary, and Counsel for at least a portion of
the Liquidation Process, the parties desire to amend and completely restate the
terms of the Officer's employment agreement as set forth below, effective
September 1, 1996.

        NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the parties hereby agree as follows provided that
the Liquidation process is subsequently approved by the Trust's shareholders:

        Section 1.      Status of Prior Agreement.
        ----------      --------------------------

        The Officer's current employment agreement with the Trust shall be
superseded by the terms of this Agreement effective September 1, 1996 provided
that as conditions subsequent the Trust's shareholders approve this Agreement
and the Liquidation Process. If for any reason this Agreement does not become
effective, the Officer's current employment agreement shall remain in force
according to its terms.


<PAGE>   2


        Section 2.      Continuation of Officer's Services.
        ----------      -----------------------------------

        Until such employment is terminated as provided herein, the Trust hereby
retains the Officer to render services to the Trust as its Vice President,
Secretary, and Counsel in connection with the management and liquidation of the
Trust including the timely sale of the Trust's properties (but subject to prior
Board approval), the payment of its expenses and liabilities, the distribution
of its net assets and the winding up of its affairs. It is the intention of the
Board that the Liquidation Process be completed by the third anniversary of the
shareholder vote approving the Liquidation Process (the "Termination Date") but
subject, however, to the Board's subsequent determination in its discretion to
extend the Liquidation Process beyond the Termination Date but no guarantee is
made that Officer's employment shall continue for the entire Liquidation
Process. During the term of this Agreement the Officer shall devote his full
time during normal working hours (except normal vacation periods and periods of
illness) and shall exert his best efforts, knowledge, and skill to the business
affairs of the Trust including the Liquidation Process.

        Section 3.      Base Salary.
        ----------      ------------

        The Trust will pay to the Officer during the period from and after the
effective date hereof through December 31, 1996 (i) base salary at a rate of
$80,000 per year, which shall be paid (net of applicable withholding taxes) in
semi-monthly installments plus (ii) a bonus of $12,000 (payable on December 1,
1996, net of applicable withholding taxes). Thereafter, during the term of this
Agreement, the Trust will pay the Officer a base salary at a rate of $92,000 per
year, which shall be paid (net of applicable withholding taxes) in semi-monthly
installments.

        Section 4.      Additional Compensation in Lieu of Stock Options.
        ----------      -------------------------------------------------

        (a) In February, 1992, shareholders of the Trust adopted and approved
the 1992 Stock Option Plan which further amended and extended the 1983 Incentive
Stock Option Plan. The Officer has been granted certain stock options to
purchase shares in the Trust in accordance with the terms of the 1992 Incentive
Stock Option Plan or otherwise.

        (b) The Officer hereby waives all rights with respect to unexercised
options described in (a) above as of the effective date of this Agreement. The
Trust will make additional compensation payments to the Officer in an amount
based upon the liquidating distributions made to Trust shareholders from time to
time pursuant to the table set forth on Exhibit A attached hereto and made a
part hereof (the "Payments in Lieu of Options"). In addition to the Payments in
Lieu of Options, the Trust shall also pay to the Officer an additional amount
(the "Tax Gross Up Amount") which, shall be based on the difference between the
ordinary income tax rate to which such payment will be subject for federal
income tax purposes and the capital gains rate which could have applied for
federal income tax purposes to the stock options. For purposes of

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<PAGE>   3


the computation of the Gross Up Amount it is assumed that the Officer's combined
tax rate for capital gains is 35% and for ordinary income is 46%. The
computation of the Gross Up Amount is illustrated in the example set forth on
Exhibit A-l. Such Payments in Lieu of Options and the related Gross Up Amount
(net of applicable withholding taxes) shall be made at the same time as
liquidating distributions are paid to the shareholders by the Trust. If the
Trust is sold, merged or combined with another entity resulting in payment by
the Buyer directly to the Trust's shareholders rather than payments to and
liquidating distributions from the Trust, the Trust shall pay the Officer as
additional compensation the amount which would be payable to him under the
foregoing provisions of this Section 4(b) as if the present cash value of the
consideration received in such sale, merger or combination would be distributed
to the shareholders as a liquidating distribution on the closing date of such
transactions If at the termination of Officer's employment under this Agreement,
any Trust properties remain unsold, the Officer shall be entitled to further
distributions (including Gross Up Amounts) at such times as additional
liquidating distributions are made to the Trust shareholders from the sale of
such properties.

        Section 5.      Other Benefits.
        ----------      ---------------

        During the term of his employment, the Trust shall continue to provide
benefits to the Officer comparable to those presently being provided, including
a retirement plan, group life insurance, health and accident insurance,
hospitalization and other similar plans and will continue to pay or reimburse
the Officer for reasonable and ordinary business expenses (including
professional dues and membership fees in professional and industry
associations). Notwithstanding any provision to the contrary in this Agreement
or in any qualified or non qualified retirement or deferred compensation plan of
the Trust, it is specifically agreed by the Officer that any payments made to
him under Sections 4, 5 or 7 hereof, will not be considered in determining any
benefit payments due to the Officer under any qualified retirement or deferred
compensation plan of the Trust.

        Section 6.      Termination and Severance Payment.
        ----------      ----------------------------------

        (a) The Trust and Officer shall have the right to terminate this
Agreement at any time, for any reason, without any prior notice to the other.
This Agreement shall automatically terminate upon the disability or the death of
the Officer. In the event of the termination of this Agreement either (i) by
action of the Trust or as a result of the Officer's death or disability either
before or after the conclusion of the Liquidation Process or (ii) by action of
the Officer after a material change in the Officer's duties (as described in (b)
below), the Trust shall pay to the Officer (or his estate in the event of his
death) a severance payment equal to $184,000 within fifteen (15) days after the
event giving rise to the payment obligation. For purposes of this Agreement,
"disability" shall mean the inability of the Officer to carry out his duties
hereunder by reason of any medically

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<PAGE>   4


determinable physical or mental impairment which can be expected to result in
death or which can be expected to last for a continuous period of not less than
six months.

        (b) For purposes of this Agreement, the parties acknowledge that the
Officer's duties will be changing in some respect from the duties he previously
performed as Vice President, Secretary, and Counsel as a result of the
Liquidation Process and such changes shall not be considered a "material change"
for purposes of (a) above provided, however, that any change of duties which
results in the Officer no longer functioning as Vice President, Secretary, and
Counsel of the Trust or any relocation of the Officer from the greater Cleveland
area without his consent shall be considered a "material change."

        (c) In the event the Officer is accused by the Trust of appropriating
$25,000 or more of the Trust's funds or property for his personal betterment,
the Trust may immediately terminate the Officer and withhold the severance
payment described in (a) above pending the adjudication of the allegation. In
the event the Officer is subsequently convicted in a court of law of embezzling
$25,000 or more from the Trust, the Trust shall have no obligation to pay any
severance payment. If, however, the Officer is not convicted of embezzlement,
the Trust shall immediately pay to the Officer the severance payment and
reimburse him for legal fees and related expenses.

        (d) In consideration for the Officer's continued employment under this
Agreement and the payments and benefits provided hereunder, and particularly,
the severance payment provided hereunder and as a condition precedent to
receiving such payment, the Officer shall sign and deliver to the Trust a
Release of Claims substantially in the form as set forth on Exhibit B attached
hereto and with such changes thereto as specifically authorized by the Board.
For purposes of this Section 6(d), the Release of Claims shall not be considered
delivered until the period for rescission set forth therein has expired.

        Section 7.      Legal Fees and Expenses.
        ----------      ------------------------

        (a) In the event the Trust has failed to comply with any of its
obligations under Section 6 of this Agreement or in the event that the Trust or
any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation designed to deny, or to recover from
the Officer the benefits intended to be provided to the Officer under Section 6
of this Agreement, the Trust irrevocably authorizes the Officer, from time to
time, to retain legal counsel of his choice, at the expense of the Trust, to
represent the Officer in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Trust or any
Trustee, Officer, shareholder or other person affiliated with the Trust, in any
jurisdiction. The Trust shall pay all such legal costs promptly upon receipt of
a detailed invoice and be solely responsible for any and all attorneys' and
related fees and expenses incurred by

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<PAGE>   5


the Officer as a result of the Trust's failure to perform its obligation under
this Section 7 or as a result of the Trust or any person contesting the validity
or enforceability of this Section 7.

        (b) The Trust shall pay to Jason C. Blackford, legal counsel for the
Officer and certain other officers executing employment agreements with the
Trust, his reasonable fee for legal representation of such officers with respect
to such employment agreements in an amount not to exceed five thousand dollars
($5,000) with respect to such representation of all such officers in the
aggregate, and the obligations of the Trust under the provisions of this Section
7(b) shall be the only responsibility of the Trust with respect to legal fees of
Officer in connection with the negotiation and drafting of this Agreement.

        Section 8.      Notice.
        ----------      -------

        Any notice required to be given pursuant to the provisions of this
Agreement shall be deemed to be effectively given if personally delivered or if
mailed, by certified mail, postage prepaid, to the parties at the following
addresses:

        To the Trust:   Board of Trustees
                        CleveTrust Realty Investors
                        2001 Crocker Road, Suite 400
                        Westlake, Ohio  44145

        To Officer:     Raymond C. Novinc
                        217 Wells Court
                        Euclid, Ohio  44132

or to such other addresses as may be designated by one party to the other in a
notice complying with the provisions of this Section 8.

        Section 9.      Existing Agreements and Amendments.
        ----------      -----------------------------------

        This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and, shall supersede any and all existing
agreements between the parties with respect to the Officer's employment by the
Trust. This Agreement may be modified and amended only in a writing signed by
each of the parties.

        Section 10.     Non-Assignability.
        -----------     ------------------

        None of the rights or obligations of the Officer hereunder may be
assigned without the prior written consent of the Board.

        Section 11.  Benefit.
        -----------  --------

        This Agreement shall inure to the benefit of and be binding upon the
Trust, its successors and assigns, and upon the Officer, his heirs and personal
representatives and permitted assigns.

                                       5

<PAGE>   6


        Section 12.     Severability.
        -----------     -------------

        If any provision of this Agreement shall be held invalid under any
applicable law, such invalidity shall not affect any other provision of this
Agreement which can be given effect without the invalid provisions, and, to that
end, the provisions hereof are severable and any invalid provision shall be
deemed modified to the least extent necessary to render such provision valid.

        Section 13.     Equitable Adjustment.
        -----------     ---------------------

        With respect to any payments hereunder which are computed with reference
to "per share" valuations or distributions or with respect to the number of
Trust shares outstanding, there shall be an equitable adjustment as determined
by the Board in such computations in the event of any stock split, reverse stock
split or similar transaction causing a change in the number of Trust shares
outstanding from the date this Agreement is executed to the date such payment
computation is required.

        Section 14.     Waiver.
        -----------     -------

        The failure or omission by any party to enforce any provision of this
Agreement, no matter how long continued, shall not be considered to be a waiver
of such provision. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any other subsequent breach or default of the same or similar or dissimilar
nature.

        Section 15.     Controlling Law.
        -----------     ----------------

        This Agreement shall be interpreted and enforced in accordance with the
laws of the State of Ohio.

        Section 16.     Status of the Trust.
        -----------     --------------------

        The Trust is a Massachusetts business trust governed by the terms of a
Second Amended and Restated Declaration of Trust dated as of February 21, 1992
as amended by an Amendment dated February 21, 1995. No obligation of the Trust
is personally binding upon, nor shall resort be had to the private property of
any of the Trustees, shareholders, officers, employees or agents of the Trust,
but the Trust property or a specific portion thereof only shall be bound.










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<PAGE>   7


        IN WITNESS WHEREOF, the parties have executed this Agreement this
25th day of September, 1996.



CLEVETRUST REALTY INVESTORS

By /s/ John C. Kikol                    /s/ Raymond C. Novinc
-------------------------------------   ---------------------------------------
       JOHN C. KIKOL                        RAYMOND C. NOVINC







                                       7

<PAGE>   8


                                   EXHIBIT A

                          Payments in Lieu of Options
                          ---------------------------
                  Pursuant to Section 4(b) of this Agreement)

        Mr. Novinc is entitled to a share of each distribution when and if paid
to Trust shareholders based upon the following table:

<TABLE>
<CAPTION>
        Cumulative Distributions        Percentage of Total Distribution
        ------------------------        --------------------------------
        Payable Per Share               Which is Payable to Mr. Novinc(1)
        -----------------               ---------------------------------
<S>                                     <C>
        first   $2.62 of distribution                -0-
        next    $0.38 of distribution             0.004650
        next    $0.06 of distribution             0.004836
        next    $2.06 of distribution             0.006231
        all additional distributions              0.007533

        Example                         Amount Payable to Mr. Novinc

Amount of first distribution            $2.75   -         $3,250.18(2)
Amount of second distribution           $3.50   -       $122,591.81(3)
                                                        $125,841.99  Total
                                                                     Payments in
                                                                     Lieu of Option
                                                                     Payable to Mr.
                                                                     Novinc

----------

<FN>
(1) These percentages were computed on the assumption that all outstanding options
would be exercised when Trust distributions equaled the respective strike prices
and on the assumption that there are 5,179,143 actual shares outstanding. The
percentages will be equitably adjusted to the extent there is a change in the
number of actual shares outstanding from time to time.

(2)     $2.62 x 5,376,643 x 0           -             -0-
        $0.13 x 5,376,643 x 0.004650    -         $3,250.18
                                                -----------
                                                   3,250.18

(3)     $0.25 x 5,376,643 x 0.004650    -       $  6,250.34
        $0.06 x 5,376,643 x 0.004836    -       $  1,560.09
        $2.08 x 5,376,643 x 0.006231    -       $ 69,013.84
        $1.13 x 5,376,643 x 0.007533    -       $ 45,767.54
                                                -----------
                                                $122,591.81
</TABLE>

PLEASE NOTE: This example is only meant to illustrate the calculations for a
payment in lieu of options. No inference should be drawn concerning the
prospects for actual distributions. For purposes of this example it is assumed
that 5,179,143 Trust shares will be outstanding so that the shares on a fully
diluted basis would total 5,376,643. The actual calculations of payments will be
based on the actual number of fully diluted Trust shares outstanding at the time
a distribution is made.

<PAGE>   9


                                  EXHIBIT A-1

                         COMPUTATION OF GROSS UP AMOUNT
                  (Pursuant to Section 4(b) of this Agreement)

        Assume the Payments in Lieu of Options payable to Mr. Novinc are as set
forth on Exhibit A:

<TABLE>
<S>                                      <C>                             <C>        
Payments in Lieu of Options
---------------------------

        1.      $  3,250.18
        2.      $122,591.81
                -----------
                $125,841.99     Total Payments in Lieu of Options Payable to Mr. Novinc.

Gross Up Amount for First Payment
---------------------------------

        $3,250.18 x 20.37%(1)   =       $  622.06       Gross Up Amount
                                        $3,250.18       Payment in Lieu of Options
                                        ---------                                 
                                        $3,912.24       Total Payment to Mr. Novinc

Gross Up Amount for Second Payment
----------------------------------

        $122,591.81 x 20.37%(1)  =  $ 24,971.95     Gross Up Amount
                                    $122,591.81     Payment in Lieu of Options
                                    -----------                               
                                    $147,563.76     Total Payment to Mr. Novinc
Summary
-------

        1.      Total Payments in Lieu of Options Payable to Mr. Novinc  $  3,250.18
                                                                         $122,591.81
                                                                         -----------
                                                                         $125,841.99

        2.      Total Gross Up Payments payable to Mr. Novinc            $    662.06
                                                                         $ 24,971.95
                                                                         -----------
                                                                         $ 25,634.01

        3.      Total payments payable to Mr. Novinc under Section 4(b)  $125,841.99
                                                                         $ 25,634.01
                                                                         -----------
                                                                         $151,476.00


----------
<FN>
(1)     The spread between the deemed ordinary income rate of 46% and the deemed
        capital gain rate of 35% is 11%. That percentage divided by .54 yields
        the percentage to be used to determine the gross up amount for the
        payments which would otherwise have been taxed at capital gains rates.
</TABLE>

<PAGE>   10
                                  EXHIBIT B
                                      
                              RELEASE OF CLAIMS


        I,________________, the undersigned have been an employee of CleveTrust 
Realty Investors (the "Trust") pursuant to an Amended and Restated Employment
Agreement dated _____________, 1996 by and between the Trust and me (the 
"Employment Agreement"). My employment by the Trust is terminating effective
____________, 19___ and, pursuant to Section 6 of the Employment Agreement and
in consideration of my employment by the Trust and the payments and benefits
under the Employment Agreement and, particularly the severance payment under
Section 6 thereof, I hereby agree as follows:

        (1)     I hereby voluntarily agree to waive and release any and all
                claims, charges and actions, known or unknown, including those
                relating in any way to my employment, or to my termination from
                employment with the Trust, and any claims for wrongful
                discharge, breach of contract, implied contract, promissory
                estoppel, tortious conduct, or claims under any federal, state
                or local employment statute, law, order or ordinance, including
                any claims for discrimination, and rights under the Age
                Discrimination in Employment Act which I may now or in the
                future have or assert against the Trust or any of its officers,
                trustees, employees, representatives, shareholders or related
                entities. This Release applies to all rights or claims which
                arise on or before the date on which it is signed.

        (2)     I agree to return all property belonging to the Trust, including
                all keys, credit cards, and manuals.

        (3)     I agree that I will not seek re-employment with the Trust or any
                related entity in any capacity.

        (4)     I understand that I have the option to consider and reflect upon
                this Release before its signing. It is advised that I consult
                with an attorney and/or other professionals such as accountants,
                financial advisors concerning its terms. I will be responsible
                for my attorney's fees and costs should I choose to have counsel
                review this Release.

        (5)     I understand and agree that I will not make any derogatory or
                defamatory remarks about the Trust, its trustees, officers,
                employees, representatives or related entities.

        (6)     I agree to keep the terms of this Release and of my severance
                payment under my Employment Agreement confidential, and I will
                not publicize or communicate them in any newspaper, electronic


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<PAGE>   11


                media or other public or private forum, or in any manner
                whatsoever except as may be required by applicable law.

        (7)     For a period of seven days after I sign this Release and return
                it to the Trust, I may revoke it by advising the Trust in
                writing that I have decided to revoke it. This Release will not
                become effective until that seven day period has expired.

        (8)     I acknowledge that no promise agreement not expressed in my
                Employment Agreement, the Trust's personnel or employee benefit
                documents or this Release has been made to me, and that this
                Release and my Employment Agreement constitute the complete
                agreement between the Trust and me.

        (9)     I understand and agree completely to the terms and conditions
                listed above. I acknowledge that I have twenty-one (21) days
                after receiving this Release to sign it and return it to the
                Trust.


        AGREED TO at ___________________, Ohio, this _________ day of
___________, 19__.




                                          ______________________________________
                                                         [Employee]







                                      -2-