Document:

EX-10.3

EXHIBIT 10.3

SECOND AMENDMENT TO THE 2005 AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

Second Amendment, dated as of December 26, 2006 (this “Amendment”), to the 2005
Amended and Restated Employment Agreement, dated as of April 15, 2005, by and between Avatar
Properties Inc., a Florida corporation (the “Company”), and Jonathan Fels (the
“Employee”).

W I T N E S S E T H:

WHEREAS, the Company and the Employee entered into the 2005 Amended and Restated Employment
Agreement, dated as of April 15, 2005, and the first amendment thereto, dated as of September 28,
2005 (as amended, the “Agreement”); and

WHEREAS, the Company and the Employee desire to amend the Agreement as set forth in this
Amendment.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations
hereinafter set forth, the Company and the Employee, intending to be legally bound, hereby agree as
follows:

1. Clause (ii) of Section 3(b) of the Agreement is hereby amended by deleting the following
phrase:

“, but no later than thirty (30) days after the end of each calendar
year in respect of which the Annual Bonus is earned”

2. The heading to Section 6(f) of the Agreement is hereby deleted and replaced in its entirety
with the following:

“Change in Control; Termination Upon the Retention Date; Excise Taxes Upon Change in
Control.”

3. The following subparagraph (iii) is hereby added to Section 6(f) of the Agreement:

“(iii) If the Employee becomes entitled to any payment, benefit or
distribution (or combination thereof) by the Company or any other
Avatar Entity, whether paid or payable pursuant to this Agreement or
any other plan, arrangement, or agreement with the Company or any
other Avatar Entity (the “Payments”), which are or become
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended, or any interest or penalties are
incurred by the Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties,
hereinafter collectively referred to as the “Excise Tax”),
the Payments shall be reduced by an amount not to exceed $250,000
until no portion of such Payments would be subject to Excise Tax.
Notwithstanding the foregoing, if the reduction in the Payments
required so that no portion of the Payments are subject to the
Excise Tax would be greater than $250,000, then the Employee in his
sole discretion may elect whether or not to reduce the Payments to
avoid the Excise Tax. In such case, if the Employee elects not to
reduce the Payments then the Employee shall be responsible for the
payment of the Excise Tax.”

4. Except as expressly set forth herein, the Agreement remains unmodified and in full force
and effect.

5. This Amendment shall be subject to, and governed by, the laws of the State of Florida
applicable to contracts made and to be performed in the State of Florida, regardless of where the
Employee is in fact required to work.

6. This Amendment may be executed in one or more counterparts, each of which shall be deemed
to be an original, but all of which taken together shall constitute one and the same instrument.

[Signature Page Follows]

1

IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.

AVATAR PROPERTIES INC.

	 	 	 
	By:

	 	/s/ Gerald D. Kelfer
	
 
	 	 
	
 
	 	Name:Gerald D. Kelfer

Title:Chairman of the Board
	 
	 	 
	
 
	 	/s/ Jonathan Fels
	 

	 	 
	
 
	 	Jonathan Fels
	 
	 	 

2EX-10.4

EXHIBIT 10.4

SECOND AMENDED AND RESTATED EARNINGS 

PARTICIPATION AWARD AGREEMENT

THIS SECOND AMENDED AND RESTATED EARNINGS PARTICIPATION AWARD AGREEMENT, dated December 26,
2006 (this “Agreement”), is made by and between Avatar Holdings Inc., a Delaware
corporation (the “Company”), and Jonathan Fels (the “Participant”) and amends and
restates in its entirety the Earnings Participation Award Agreement, by and between the Company and
the Participant, dated March 6, 2003 (the “Award Date”), as amended and restated on April
15, 2005 (the “Original Agreement”).

The Company and the Employee wish to provide for certain modifications to the Original
Agreement and wish to amend, restate and supersede the Original Agreement, all upon the terms and
conditions set forth herein.

The Cash Award and the Stock Award (each as defined in the Original Agreement) granted to the
Participant pursuant to the Original Agreement remain in effect as amended and restated in this
Agreement.

1. AWARD. Pursuant to the provisions of the (i) Avatar Holdings Inc. Executive Incentive
Compensation Plan, as the same may be amended, restated, modified and supplemented from time to
time (the “Executive Plan”) the Committee (as defined in the Executive Plan) hereby awards
to the Participant, as of the Award Date, subject to the terms and conditions of the Executive Plan
and subject further to the other provisions herein set forth, the Cash Award and (ii) Avatar
Holdings Inc. Amended and Restated 1997 Incentive and Capital Accumulation Plan, as the same may be
amended, restated, modified and supplemented from time to time (the “1997 Plan” and
together with the Executive Plan, collectively the “Plans”) the Committee (as defined in
the 1997 Plan) hereby awards to the Participant, as of the Award Date, subject to the terms and
conditions of the 1997 Plan and subject further to the terms and conditions and other provisions
herein set forth, the Stock Award if, as of an applicable Performance Goal Test Date (as defined
below), the Performance Goal (as defined below) applicable to a Cash Award or the Stock Award, as
the case may be, is satisfied.

2. CERTAIN DEFINITIONS.

(a) Capitalized terms used but not defined herein shall have the meanings assigned to them in
the Plans.

(b) Each reference contained in this Agreement to:

“Actual Gross Profit Amount” shall mean the Company’s cumulative Gross Profit
during the Performance Period.

“Business Plan” shall mean the Company’s business plan for the period
commencing on January 1, 2003 and ending on December 31, 2007, as submitted to the
Compensation Committee on or prior to the Award Date.

“Cash Award” shall mean, with respect to each fiscal year during the
Performance Period ending on a Performance Goal Test Date, a cash payment equal to two
percent (2%) of the excess, if any, of (x) the Gross Profit earned by the Company for such
fiscal year, over (y) the Minimum Gross Profit Level for such fiscal year.

“Change in Control” shall mean any of the following events: (a) a person or
entity or group of persons or entities, acting in concert, becomes the direct or indirect
beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) of securities of the Company representing ninety percent (90%) or more of the
combined voting power of the issued and outstanding Common Stock; (b) the Board of
Directors of the Company approves any merger, consolidation or like business combination or
reorganization of the Company, the consummation of which would result in the occurrence of
the event described in clause (a) above, and such transaction shall have been consummated;
or (c) the Company ceases to be engaged, directly or indirectly, and does not intend to be
engaged at any time in the foreseeable future, in any real estate business. The date on
which a Change in Control is consummated, with respect to clauses (a) and (b), or occurs,
with respect to clause (c), is herein referred to as the “Change in Control Date.”

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

“Excluded Amounts” shall mean, with respect to a fiscal year of the Company,
as at any date of determination, an amount equal to the dollar amount of any Gross Profit
attributable to Harbor Islands and the Rio Rico Excluded Properties for such fiscal year.

“Fair Market Value” shall mean the average of the closing prices of the Common
Stock for the fifteen trading days ending with and including the measuring date if the
Common Stock is readily tradeable on a national securities exchange, the National
Association of Securities Dealers Automated Quotation System or other national market
system, provided, however, if such exchange or system is not open for business on any day
during such period or the Common Stock was not traded on any day during such period, the
Fair Market Value shall be determined as of the most recent fifteen trading days ending
with and including the measuring date on which such exchange or system shall have been open
for business and the Common Stock was traded, and if the Common Stock is not readily
tradeable as set forth above, Fair Market Value shall mean the amount determined in good
faith by the Committee as the fair market value of the Common Stock of the Company.

“Gross Profit” shall mean, with respect to a fiscal year of the Company, the
excess, if any, of (x) the sum of (i) the amount set forth in the Income Statement for such
fiscal year (or portion thereof) with respect to the line item “Net income (loss)”
plus (ii) the amount, if any, set forth in the Company’s Income Statement for such
fiscal year (or portion thereof) with respect to the line item “Income tax expense
(benefit)”, to the extent that there is “Income tax expense” less (iii) the amount,
if any, set forth in the Company’s Income Statement for such fiscal year (or portion
thereof) with respect to the line item “Income tax expense (benefit)”, to the extent that
there is “Income tax (benefit)” plus (iv) the amount(s), if any, set forth in the
Company’s Income Statement for such fiscal year (or portion thereof) relating to any income
tax expense included in any income or (loss) attributable to the discontinued operations
and/or extraordinary items set forth in the Income Statement less (v) the
amount(s), if any, set forth in the Company’s Income Statement for such fiscal year (or
portion thereof) relating to any income tax (benefit) included in any income or (loss)
attributable to such discontinued operations and/or extraordinary items set forth in the
Income Statement, over (y) the Excluded Amounts for such fiscal year (or portion thereof).

“Harbor Islands” shall mean the development and/or sale of the Company’s
property in Hollywood, Florida, generally known by the Company as parcels 1, 8 and 9 at
“Harbor Islands.”

“Income Statement” shall mean (i) with respect to any completed fiscal year
during the Performance Period, the Company’s audited Consolidated Statements of Operations
as set forth in the Company’s annual report on Form 10-K and, (ii) for purposes of
determining the First Tranche of the Stock Award, with respect to any portion of a fiscal
year that has not been completed as of the applicable Performance Goal Test Date, the
Company’s unaudited Consolidated Statements of Operations as set forth in the Company’s
quarterly reports on Form 10-Q for any completed fiscal quarters during such fiscal year.

“Minimum Cumulative Gross Profit Level” shall mean that with respect to the
Stock Award, as of the applicable Performance Goal Test Date, (x) the Actual Gross Profit
Amount is greater than (y) the Target Gross Profit Amount.

“Minimum Gross Profit Level” shall mean the Gross Profit set forth opposite
each fiscal year ending on the dates set forth below:

	 	 	 
	Fiscal Year End	 	Gross Profit
	December 31, 2003

December 31, 2004

December 31, 2005

December 31, 2006

December 31, 2007

	 	$10,000,000

$12,000,000

$14,400,000

$17,280,000

$20,736,000

“Payment Date” shall have the meaning ascribed to such term in Section 3(d).

“Performance Goal” shall mean (i) in the case of the Cash Award, the
achievement of the Minimum Gross Profit Level in any fiscal year, ending on December 31,
during the Performance Period and (ii) in the case of the Stock Award, the achievement of
the Minimum Cumulative Gross Profit Level for the entire Performance Period.

“Performance Goal Test Date” shall mean with respect to the Cash Award,
December 31 of each year within the Performance Period and with respect to the Stock Award,
each of (i) September 30, 2007 and (ii) the Last Day of the Performance Period.

“Performance Period” shall mean the period commencing January 1, 2003 and
ending on December 31, 2007 (December 31, 2007, being the “Last Day of the Performance
Period”).

“Rio Rico Excluded Properties” shall mean those parcels of land not suitable
for development in accordance with the Company’s current Business Plan due to environmental
factors located in the Company’s property in Rio Rico, Arizona, generally known by the
Company as “Rio Rico”.

“Stock Award” shall mean a grant of a number of shares of Common Stock having
a Fair Market Value on the Payment Date equal to two percent (2%) of the excess, if any, of
(x) the Actual Gross Profit Amount over (y) the Target Gross Profit Amount.

“Target Gross Profit Amount” shall mean $186,956,000.

3. TERMS AND CONDITIONS. The Cash Award and the Stock Award (together, the “Awards”)
evidenced by this Agreement are subject to the following terms and conditions:

(a) The payment of performance-based compensation described herein is contingent upon the
achievement of the Performance Goal applicable to a Cash Award or the Stock Award, as the case may
be.

(b) Subject to Section 4 hereof, the Participant shall be entitled to receive a payment on the
related Payment Date pursuant to the Cash Award if the applicable Performance Goal is satisfied on
the applicable Performance Goal Test Date.

(c) Subject to Section 4 hereof:

(i) if the Performance Goal applicable to the Stock Award is satisfied as of September 30,
2007, the Participant shall be entitled to receive on the related Payment Date the Stock Award (the
“First Tranche”); provided that the First Tranche shall be reduced by the amount
required by Section 162(m) of the Code (as determined by the applicable Committee) in order to
reflect the time value of the Employee receiving the First Tranche prior to the Last Day of the
Performance Period; and

(ii) if the Performance Goal applicable to the Stock Award is satisfied as of the Last Day of
the Performance Period, the Participant shall be entitled to receive on the related Payment Date an
additional Stock Award (the “Second Tranche”) equal to the Stock Award as of the Last Day
of the Performance Period less the Fair Market Value of the First Tranche (if any) as of the
related Payment Date of the First Tranche. For the avoidance of doubt, if the Stock Award as of
December 31, 2007 is greater than the Stock Award as of September 30, 2007, the Participant shall
be entitled to receive Common Stock pursuant to the Second Tranche having a Fair Market Value as of
the related Payment Date of the Second Tranche equal to such excess; provided,
however, that if the Stock Award as of September 30, 2007 is greater than the Stock Award
as of December 31, 2007, the Participant shall be required, upon written request of the Company, to
promptly pay the Company an amount in cash equal to such excess.

(d) The applicable Committee shall determine whether a Performance Goal has been met as of the
applicable Performance Goal Test Date and, (i) if it has, shall so certify in writing and ascertain
the amount of cash to be paid, if any, or Common Stock to be issued, if any, to the Participant and
(ii) if it has not, shall so certify in writing with a brief explanation as to the methodology and
calculation of the Committee in determining that such Performance Goal has not been met. Payments
of cash, if any, or the issuance of Common Stock, if any, pursuant to the Awards shall be made to
the Participant, (x) in the case of the First Tranche, on or before December 31, 2007 and, (y) in
the case of the Second Tranche, within thirty (30) days following the filing with the Securities
and Exchange Commission of an annual report on Form 10-K (which contains audited financial
statements) for the year ended as of the applicable Performance Goal Test Date (each such payment
date being a “Payment Date”).

(e) Notwithstanding anything to the contrary contained in this Agreement, in the event a
Change in Control occurs during the Performance Period, (i) the Participant shall no longer be
entitled to receive any issuance of shares of Common Stock pursuant to the Stock Award and (ii) the
Participant shall be entitled to receive a pro rata portion of the Cash Award (as of the Change in
Control Date) for the fiscal year in which such Change in Control occurs. The Committee shall
determine the basis, methodology and calculation for, and any estimates used in, determining the
prorated Actual Gross Profit Amount and prorated Minimum Gross Profit Level for the portion of the
fiscal year preceding the Change in Control Date. The determination of the Committee as to any
such partial award shall be final and binding on all parties, including the Participant and the
Company. Such prorated Cash Award shall be paid to the Participant on or promptly following the
Change in Control Date.

4. LIMITATIONS ON COMPENSATION. Notwithstanding anything to the contrary herein, the maximum
payment of cash pursuant to the Cash Award or the issuance of Common Stock pursuant to the Stock
Award to the Participant hereunder shall be subject to the limitations in the Plans and the
Participant’s employment agreement with the Company or a subsidiary thereof, each as may be amended
from time to time.

5. TERMINATION OF EMPLOYMENT.

(a) For purposes of this Section 5, the terms Cause, Without Cause, Good Reason, Without Good
Reason and Disability shall have the meanings ascribed to such terms in the Participant’s amended
and restated employment agreement with Avatar Properties Inc. (“Avatar Properties”), dated
as of the date hereof, as amended or restated from time to time; provided, however,
if the Participant is no longer employed pursuant to such employment agreement, each such term
shall have the meaning ascribed to it in the employment agreement last in effect which contains
such defined term.

(b) If the Participant’s employment with Avatar Properties is terminated by Avatar Properties
for Cause or by the Participant Without Good Reason, in addition to any other consequences of such
termination provided for in this Agreement or any other agreement, notwithstanding Section 3
hereof, Participant shall, (i) if such termination occurs on or before December 31, 2007, forfeit
any shares of Common Stock received by the Participant pursuant to the First Tranche, if any, by
forfeiting and returning such shares of Common Stock to the Company or paying to the Company
immediately upon such termination an amount in cash equal to the value of the First Tranche as
determined by the applicable Committee pursuant to Section 3(d) above, the form of such forfeiture
to be determined by the Participant, and (ii) forfeit any right to cash payments or Common Stock
issuances that would otherwise accrue pursuant to this Agreement on or after the date of such
termination.

(c) If the Participant’s employment with Avatar Properties is terminated by Avatar Properties
Without Cause or by the Participant for Good Reason, the Participant shall be entitled to continue
to receive such cash payments or Common Stock issuances as would otherwise be made pursuant to this
Agreement as though the Participant’s employment had not been terminated.

(d) If the Participant’s employment with Avatar Properties is terminated due to the
Participant’s death or Disability, notwithstanding Section 3 hereof:

(i) the Participant shall be entitled to receive only that portion of any cash payments or
Common Stock issuances otherwise payable pursuant to Section 3(d) hereof following such
termination, equal to the product of (x) a fraction (which in no event shall exceed one (1)) the
numerator of which is the number of completed whole months elapsed after the first day of the
Performance Period to the date of death or Disability, as the case may be, and the denominator of
which is the number of whole months from the first day of the Performance Period until the
applicable Performance Goal Test Date and (y) the amount of any cash payments or Common Stock
issuances that would have been payable pursuant to Section 3(d) hereof if the Participant remained
an employee of Avatar Properties through and including the Last Day of the Performance Period;
provided, however, that with respect to cash payments pursuant to the Cash Award,
the Participant shall only be eligible to receive a cash payment for the fiscal year in which the
Participant’s employment was terminated for death or Disability, as the case may be, and the
Participant shall not be eligible for any additional cash payments; and

(ii) the Participant will have no right to any other payments hereunder.

Any payments shall be made to the Participant (or the executor or administrator of the
deceased Participant’s estate or the person or persons to whom the deceased Participant’s rights
shall pass by will or the laws of descent or distribution, as applicable) no later than the
relevant Payment Date.

6. FORFEITURE UPON BREACH OF RESTRICTIVE COVENANTS. Notwithstanding anything to the contrary set
forth in this Agreement, if the Participant breaches any provision relating to the Participant’s
covenant to keep information confidential, not to compete, not to solicit or similar restrictive
covenant contained in the Participant’s employment agreement or any other agreement with the
Company or any of its subsidiaries or affiliates (each of the foregoing entities being referred to
herein collectively as the “Avatar Entities” and each as an “Avatar Entity”), after
the expiration of any notice and cure period, then in addition to any other rights or remedies
arising from or relating to such breach the Participant shall forfeit any right to any cash
payments or Common Stock issuances that would otherwise accrue pursuant to this Agreement on or
after the date of such breach.

7. CLAWBACK; ADDITIONAL PAYMENTS; NO OFFSET BY PARTICIPANT; COMPANY OFFSET.

(a) In the event that the Company’s financial statements with respect to any fiscal year (or
portion thereof) within the Performance Period are restated within eighteen (18) months following
the payment to the Participant of cash pursuant to the Cash Award or the issuance to the
Participant of Common Stock pursuant to the Stock Award such that Gross Profit is less than
previously reported, the Participant shall pay to the Company upon demand by the Company following
the filing of such restated financial statements with the Securities and Exchange Commission, an
amount equal to the sum of (i) the excess of (A) the Excess Bonus Payments (as defined below) over
(B) the hypothetical income tax liability attributable to such Excess Bonus Payments (as determined
by the Committee by applying the highest marginal United States federal, state and local individual
income tax rates applicable to an individual resident of Coral Gables, Florida for the relevant
taxable period, taking into account the deductibility of state and local income taxes for federal
income tax purposes), and (ii) as determined by the Committee, the present value of any tax
benefits accruing to the Participant as a result of making any payments pursuant to this Section
7(a) to the Company. For purposes of the preceding sentence, “Excess Bonus Payments” shall
mean an amount equal to the sum of (A) the difference between (x) the amount of the cash payment
pursuant to the Cash Award paid to the Participant with respect to any fiscal year (or portion
thereof) in which the audited financial statements have been restated and (y) the amount that cash
payment pursuant to the Cash Award would have been if the Company had used the restated financial
statements to determine the amount of the Company’s Gross Profit for the applicable Performance
Goal Test Date and (B) the difference between (x) the Fair Market Value on the Payment Date of the
Common Stock issued pursuant to the Stock Award and (y) the amount that the Fair Market Value of
the Common Stock would have been on the Payment Date if the Company had used the restated financial
statements to determine the amount of the Company’s Actual Gross Profit Amount on the Last Day of
the Performance Period.

(b) In the event that the Company’s financial statements with respect to any fiscal year (or
portion thereof) within the Performance Period are restated within eighteen (18) months following
the payment to the Participant of cash pursuant to the Cash Award or issuance to the Participant of
Common Stock pursuant to the Stock Award such that Gross Profit is greater than previously
reported, the Company shall pay to the Participant upon demand by the Participant following the
filing of such restated financial statements with the Securities and Exchange Commission, an amount
(the “Lesser Bonus Payments”) equal the sum of (A) the difference between (x) the amount
that the cash payment pursuant to the Cash Award would have been if the Company had used the
restated financial statements to determine the amount of the Company’s Gross Profit for the
applicable Performance Goal Test Date less (y) the amount of the cash payment pursuant to the Cash
Award paid to the Participant with respect to any fiscal year (or portion thereof) in which the
audited financial statements have been restated and (B) the difference between (x) the amount that
the Fair Market Value of the Common Stock issued to the Participant pursuant to the Stock Award
would have been on the Payment Date if the Company had used the restated financial statements to
determine the amount of the Company’s Actual Gross Profit Amount on the Last Day of the Performance
Period and (y) the Fair Market Value on the Payment Date of the Common Stock issued pursuant to the
Stock Award. At the option of the Company, the amount of the Lesser Bonus Payments attributable to
the Stock Award may be payable in cash or Common Stock.

(c) The Participant shall be obligated to pay to the Company any amount due pursuant to this
Section 7 regardless of whether the Participant has or claims to have any claim against any of the
Avatar Entities, and the Participant shall have no right to offset any amount due or claimed to be
due from any of the Avatar Entities. The Company shall be obligated to pay to the Participant any
amount due pursuant to this Section 7 regardless of whether the Company has or claims to have any
claim against the Participant, and the Company shall have no right to offset any amount due or
claimed to be due from the Participant or any of its affiliates.

(d) In the event that the Participant has failed to repay any amount required pursuant to
Section 7(a) above, the Company shall be entitled to offset such amount against any amounts due
from the Company to the Participant.

(e) The foregoing provisions of this Section 7 shall not be applicable to any restatement,
after the consummation of a Change in Control (as defined in clauses (a) and (b) of the definition
of “Change in Control” above), of the Company’s financial statements with respect to any fiscal
year (or portion thereof) within the Performance Period.

8. TAXES. Any cash payment pursuant to a Cash Award or Common Stock issuance pursuant to the Stock
Award shall be net of any amounts required to be withheld pursuant to applicable federal, state,
local and foreign tax withholding requirements. 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. In connection with any issuance of Common Stock pursuant to the
Stock Award, 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.
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, local and foreign withholding taxes
arising in connection with the Stock Award and any distribution of shares of Common Stock in
respect thereof 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.

9. NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement does not confer upon the Participant any right
to continued employment by any of the Avatar Entities, nor shall it interfere in any way with the
right of the Participant’s employer to terminate the Participant’s employment at any time for any
reason or no reason.

10. NO OBLIGATION TO PURSUE PROJECTS. This Agreement shall in no way obligate the Company to
pursue any projects, developments or sales of any assets, and the Company may limit, abandon or
change any projects, developments or sales of any assets at any time in its sole discretion and the
Company shall have no obligation to take any action or provide any financing with respect to any
projects, developments or sales of any assets.

11. UNSECURED CREDITOR STATUS; NO PARTNERSHIP. The Participant shall rely solely upon the
unsecured promise of the Company, as set forth herein, for payment hereunder, and nothing herein
contained shall be construed to give to or vest in the Participant or any other person now or at
any time in the future, any right, title, interest, or claim in or to any specific asset, fund,
reserve, account, insurance or annuity policy or contract, or other property of any kind whatsoever
owned by the Company, or in which the Company may have any right, title, or interest, nor at any
time in the future. This Agreement is an agreement to pay compensation for services provided by
the Participant and is not a partnership or joint venture and is not intended to create a
partnership or joint venture between the Company and the Participant or any other person. The
Participant shall take no position inconsistent with this characterization.

12. ASSIGNMENT; SUCCESSORS.

(a) The Cash Award, Stock Award and any interest of the Participant in any such awards may not
be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of. Any attempt to
transfer any such Awards in contravention of this Section 12(a) is void ab initio. The
Awards shall not be subject to execution, attachment or other process.

(b) The Company’s rights and obligations hereunder may be assigned or transferred by the
Company to and may be assumed by and become binding upon and may inure to the benefit of any Avatar
Entity or successor thereof. The term “successor” shall mean, with respect to any Avatar Entity,
any other corporation or other business entity which, by merger, consolidation, purchase of assets,
or otherwise, acquires all or a material part of the assets of such Avatar Entity.

(c) In the event of the Participant’s death, the Participant’s rights and obligations
hereunder shall be binding upon and inure to the benefit of the Participant’s heirs and legal
representatives.

13. CONSTRUCTION. The Plans and this Agreement will be construed by and administered under the
supervision of the applicable Committee in such Committee’s sole and absolute discretion, and all
determinations of such Committee will be final and binding on the Participant.

14. NOTICES. Any notice required or permitted under this Agreement shall be deemed given when
delivered personally, or when deposited in a United States Post Office, postage prepaid, addressed,
as appropriate, (i) to the Participant at the last address specified in the Participant’s
employment records, or such other address as the Participant may designate in writing to the
Company, or (ii) to the Company, Avatar Holdings Inc., 201 Alhambra Circle, Coral Gables, Florida
33134, Attention: Chief Executive Officer, with a copy to the Company’s Corporate Secretary, or
such other address as the Company may designate in writing to the Participant.

15. 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.

16. 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.

17. INCORPORATION OF PLANS. Each of the Plans is hereby incorporated by reference and made a part
of this Agreement, and this Agreement shall be subject to the terms of the Plans, as the Plans may
be amended from time to time.

18. STOCKHOLDER APPROVAL OF 1997 PLAN. In the event that the requisite number of shares of Common
Stock reserved for issuance under the 1997 Plan to issue the Common Stock pursuant to the Stock
Award are not available, the Company shall undertake to submit an amendment to the 1997 Plan (the
“1997 Plan Amendment”), which increases the number of shares available for issuance
thereunder to satisfy the Company’s obligations pursuant to the Stock Award for approval by
stockholders at an annual meeting or meetings (or at a special meeting or special meetings) after
it is determined that additional shares of Common Stock are needed for issuance pursuant to the
Stock Award. The Participant agrees that the failure of the Company’s stockholders to approve the
1997 Plan Amendment (and any adverse financial consequences to Participant resulting therefrom)
shall not constitute a “good reason” under the Participant’s employment with the Company or any
other Avatar Entity.

19. ATTORNEYS’ FEES. In the event that either party hereto commences litigation against the other
to enforce such party’s rights hereunder, the prevailing party shall be entitled to recover all
costs, expenses and fees, including reasonable attorneys’ fees (including in-house counsel),
paralegals’ fees, and legal assistants’ fees through all appeals.

20. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall
be an original but all of which together shall represent one and the same agreement.

21. MISCELLANEOUS. This Agreement cannot be modified or terminated orally. This Agreement, the
Plans and the letter agreement, dated as of the date hereof, among the Company, Avatar Properties
and the Participant, contain the entire agreement between the parties relating to the subject
matter hereof. The section headings herein are intended for reference only and shall not affect
the interpretation hereof.

(signature page follows)

1

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first
written above.

	 	 	 
	AVATAR HOLDINGS INC.

By:

	 	

/s/ Gerald D. Kelfer
	
 
	 	 

	 	 	Name: Gerald D. Kelfer

Title: Chief Executive Officer

	 	 	 	/s/ Jonathan Fels

	 	 	Jonathan Fels

2

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