Document:

EX-10.1

Exhibit 10.1

Amendment to

Avatar Holdings Inc. Amended and Restated 1997 Incentive and Capital Accumulation Plan (2005

Restatement)

On May 31, 2007, at the Annual Meeting of Stockholders of Avatar Holdings Inc. (the “Company”), the
stockholders approved an amendment to the Avatar Holdings Inc. Amended and Restated 1997 Incentive
and Capital Accumulation Plan (2005 Restatement) (the “Plan”). The Compensation Committee of the
Company’s Board of Directors had adopted the amendment on April 23, 2007, subject to stockholder
approval.

After giving effect to the amendment, the text of Section 5 of the Plan is as follows:

5. Common Stock Available Under the Plan. Subject to the provisions of this Section 5 and any
adjustments made in accordance with Section 12 hereof, the aggregate number of shares of Common
Stock that may be subject to Benefits granted under this Plan shall be 1,500,000 shares of Common
Stock, which may be authorized and unissued or treasury shares. The maximum number of shares of
Common Stock with respect to which Benefits may be granted or measured to any individual
participant under the Plan during the term of the Plan shall not exceed 950,000, subject to
adjustments made in accordance with Section 12 hereof). Any shares of Common Stock subject to a
Stock Option or Stock Appreciation Right which for any reason is cancelled or terminated without
having been exercised, any shares subject to Stock Awards, Performance Awards or Stock Units which
are forfeited, any shares subject to Performance Awards settled in cash or any shares delivered to
the Company as part or full payment for the exercise of a Stock Option or Stock Appreciation Right,
and any shares withheld by the Company to satisfy tax withholding with respect to Benefits shall
again be available for Benefits under the Plan. The preceding sentence shall apply only for
purposes of determining the aggregate number of shares of Common Stock subject to Benefits under
the Plan but shall not apply for purposes of determining the maximum number of shares of Common
Stock with respect to which Benefits (including the maximum number of shares of Common Stock
subject to Stock Options and Stock Appreciation Rights) that may be granted to any individual
participant under the Plan.EX-10.1

EXHIBIT 10.1

May 11, 2007

Brad Morrice

President and Chief Executive Officer

New Century Financial Corporation

18400 Von Karman, Suite 1000

Irvine, CA 92612

Re: Agreement for Interim Management and Restructuring Services – First Amendment

Dear Brad:

This letter represents the first amendment (“First Amendment”) to the agreement between AP
Services, LLC, a Michigan limited liability company (“APS”) and New Century Financial Corporation
(the “Company”) dated March 22, 2007 (the “Engagement Letter”). This First Amendment shall be
effective as of May 11, 2007 (the “Effective Date”). The Engagement Letter shall remain effective
with respect to all periods and events prior to the Effective Date and, except as expressly
modified by this First Amendment, the Engagement Letter shall remain in full force and effect after
such date.

1. The following is incremental to the section titled Objective and Tasks.

APS will provide Holly Felder Etlin to serve as the Company’s Chief
Restructuring Officer (“CRO”), reporting to the Company’s Chief Executive Officer
(“CEO”) and Board of Directors. Working collaboratively with the senior management
team, the Board of Directors and other Company professionals, Ms. Etlin will assist
the Company in evaluating and implementing strategic and tactical options through
the restructuring process by performing those tasks outlined in the Engagement
Letter and include, without limitation, the following: (i) strengthening the
Company’s core competencies in the finance organization, particularly cash
management, planning, general accounting and financial reporting information
management and with communicating and reporting to the Company’s stakeholders and
representatives, (ii) developing and implementing cash management strategies,
tactics and processes and (iii) managing the claim and claim reconciliation process
and supervising the preparation of reports required by the Bankruptcy Court,
including, without limitation, bankruptcy schedules and statements of financial
affairs. As CRO, Ms. Etlin shall have such additional duties as set forth by the
Bankruptcy Court or the Company’s Board of Directors or CEO.

	2.	 	Schedule 2 to the Engagement Letter, Disclosures, is hereby replaced in its entirety by the
attached Schedule 2.

	3.	 	Exhibit A, Temporary Staff, is replaced in its entirety with the attached Exhibit A dated
May 11, 2007.

If these terms meet with your approval, please sign and return the enclosed copy of this First
Amendment.

We look forward to our continuing relationship with you.

Sincerely yours,

AP Services, LLC

/s/ Holly Felder Etlin

Holly Felder Etlin

Managing Director

	 	 	 
	Acknowledged and Agreed to:

	 	

	 
	 	 
	NEW CENTURY FINANCIAL CORPORATION

	 
	 	 
	By:

Its:

Dated:

	 	/s/ Brad A. Morrice

President and Chief Executive Officer

May 16, 2007EX-10.2

EXHIBIT 10.2

NEW CENTURY FINANCIAL CORPORATION

KEY EMPLOYEE INCENTIVE RETENTION PLAN

PLAN OBJECTIVE:

The New Century Financial Corporation Key Employee Incentive Retention Plan (the “Plan”) is
designed to (a) assist New Century Financial Corporation (the “Company”) to retain key personnel
critical to the successful operation of the Company and its subsidiaries and (b) maximize assets
available for distribution to creditors by providing incentives to certain personnel to maximize
the consideration received by the Company upon the consummation of the sale of (i) the Company’s
servicing assets and servicing platform pursuant to that certain Asset Purchase Agreement with
Carrington Capital Management, LLC and its affiliate, dated April 2, 2007, or the overbid process
contemplated therein (the “Servicing Assets Sale”), (ii) certain mortgage loans originated by the
Company, as well as residual interests in certain securitization trusts owned by the Company,
pursuant to that certain Asset Purchase Agreement with Greenwich Capital Financial Products, Inc.,
dated April 2, 2007, or the overbid process contemplated therein (the “Mortgage Assets Sale”) and
(iii) the Company’s wholesale, retail and other financial asset classes (other than tax refunds and
assets included in the Servicing Assets Sale and the Mortgage Assets Sale) (the “Other Assets
Sale”).

ELIGIBLE EMPLOYEES:

The Plan covers the employees of the Company and its subsidiaries listed on the tables titled “Tier
I Employees” (the “Tier I Employees”), “Tier II Employees” (the “Tier II Employees”), “Tier III
Employees” (the “Tier III Employees”), and “Tier IV Employees” (the “Tier IV Employees”)
(collectively, the “Plan Participants”), each attached as part of Exhibit A hereto. All
Plan Participants will be eligible to participate in the Retention Pool (as defined below) and the
Critical Retention Pool (as defined below) and receive Retention Bonuses (as defined below) and
Critical Retention Bonuses (as defined below), however, only those employees with an amount
set forth opposite their name in the column for an Incentive Pool (as defined below) will be
eligible to participate in and receive Incentive Bonuses (as defined below) from that Incentive
Pool. The entitlement to any bonus is subject to the other terms and conditions of the Plan as set
forth herein.

All payments under the Plan shall be in lieu of any other performance bonus or retention
compensation under any other plan, program, agreement, applicable law, or policy otherwise
applicable to the Plan Participants by the Company or any of its subsidiaries (collectively, the
“Debtors”). As a condition precedent of any obligation of the Company to pay any Retention Bonus,
Critical Retention Bonus or Incentive Bonus to any Plan Participant, the Plan Participant shall,
prior to or upon the date that a Retention Bonus, Critical Retention Bonus or Incentive Bonus is
paid to the Plan Participant, be required to fully execute and return to the Company a general
release and waiver of claims, excluding those claims specifically excepted from the release and
waiver as described therein, in substantially the form attached hereto as Exhibit B. The
Company shall have no obligation to pay and shall not pay any Retention Bonus, Critical Retention
Bonus or Incentive Bonus to any Plan Participant that does not satisfy such release requirement or
who otherwise revokes such release within any revocation period afforded by applicable law.

PLAN POOLS:

Retention Pool

The Company will contribute $1,037,952 (the “Retention Pool”) to make retention bonuses (the
“Retention Bonuses”) to be paid under the Plan.

Incentive Pools

The amounts contributed (each a “Contribution”) by the Company, if any, to make incentive bonuses
(the “Incentive Bonuses”) under the Plan (the “Incentive Pools”) shall be based on the liquidation
prices received for sales (the “Sales”) of the Company’s various assets and shall be calculated as
follows:

Servicing Assets Sale

The Contribution, if any, upon the consummation of the Servicing Assets Sale (the “Servicing
Assets Sale Contribution”) will be calculated based on the extent to which the ratio of (i)
the net liquidation price to (ii) the principal amount of loans held by securitization
trusts and third party whole loan purchasers for which the Company has mortgage service
rights (such ratio, “BPS”) equals or exceeds 50.0. There will be no Servicing Asset Sale
Contribution if BPS is less than 50.0. If BPS is equal to 50.0, the Servicing Assets Sale
Contribution will be $119,387. If BPS is greater than 50.0, the Servicing Assets Sale
Contribution will be increased proportionately e.g. if BPS is 57.5 (115% of 50.0), the
Servicing Assets Sale Contribution will be $137,295 (115% of $119,387).

Mortgage Assets Sale

The Contribution, if any, upon the consummation of the Mortgage Assets Sale (the “Mortgage
Assets Sale Contribution”) will be based on the extent to which the liquidation price (the
“Mortgage Assets Sale Price”) equals or exceeds $47,250,000. There will be no Mortgage
Asset Sale Contribution if the Mortgage Assets Sale Price is less than $47,250,000. If the
Mortgage Asset Sale Price is equal to $47,250,000, the Mortgage Asset Sale Contribution will
be $43,044. If the Mortgage Asset Sale Price is greater than $47,250,000, the Mortgage
Assets Sale Contribution will be equal to $43,044 plus 2% of the amount by which the
Mortgage Asset Sale Price exceeds $47,250,000 e.g. if the Mortgage Assets Sale Price is
$54,337,500, the Mortgage Assets Sale Contribution will be $184,794 ($43,044 + (($54,337,500
– $47,250,000) X 2%)).

Other Assets Sale 

The Contribution, if any, upon the consummation of the Other Assets Sale (the “Other Assets
Sale Contribution”) will be based on the extent to which the liquidation price (the “Other
Assets Sale Price”) equals or exceeds the Other Assets Sale target price set forth on
Exhibit C (the “Target Price”). There will be no Other Assets Sale Contribution if
the Other Assets Sale Price is less than the Target Price. If the Other Asset Sale Price is
equal to the Target Price, the Other Asset Sale Contribution will be $121,824. If the Other
Assets Sale Price is greater than the Target Price and equal to or less than $37,375,000,
then the Other Assets Sale Contribution will be equal to $121,824 plus 2.5% of the amount by
which the Other Assets Sale Price exceeds the Target Price, e.g. if the Other Assets Sale
Price is $X, which exceeds the Target Price but is equal to or less than $37,375,000, the
Other Assets Sale Contribution will be calculated as follows: Other Assets Sale Contribution
= ($121,824 + (($X – Target Price) X 2.5%)) (the “2.5% Contribution”). If the Other Assets
Sale Price is greater than the Target Price and greater than $37,375,000, then the Other
Assets Sale Contribution will be equal to $121,824 plus the 2.5% Contribution plus 6% of the
amount by which the Other Assets Sale Price exceeds $37,375,000, e.g. if the Other Assets
Sale Price is $Y, which exceeds the Target Price and $37,375,000, the Other Assets Sale
Contribution will be calculated as follows: Other Assets Sale Contribution = ($121,824 +
2.5% Contribution + (($Y – $37,375,000) X 6%)).

Critical Retention Pool

The Company will contribute $175,000 (the “Critical Retention Pool”) to make payments of bonuses
(the “Critical Retention Bonuses”) under the Plan. The Critical Retention Pool may be distributed
by the Company in its sole discretion, in addition to any Retention Bonuses or Incentive Bonuses,
to recognize contributions made by the Company’s employees receiving such Critical Retention
Bonuses toward increasing the liquidation value of the Company’s assets; provided, however, that no
Plan Participant will be eligible to receive a Critical Retention Bonus greater than (i) $40,000 or
(ii) 20% of such Plan Participant’s current annual salary at the Company without the prior approval
of the creditors committee.

PLAN PAYMENTS:

Plan Participants shall be eligible to receive that portion of the Retention Pool set forth
opposite their name on Exhibit A. Retention Bonuses and Critical Retention Bonuses, if
any, for Plan Participants who are designated as servicing employees on Exhibit A will be
paid on June 15, 2007, and for all other Plan Participants will be paid on July 9, 2007 (the
applicable date as to a particular Plan Participant is referred to as his or her “Release Date”) to
all such Plan Participants (i) then actively employed in his or her then currently held position
with the Company on a full-time basis in good standing (defined as not, before or after adoption of
the Plan, having violated the Company’s policies and procedures or otherwise engaged in conduct
warranting disciplinary action, and performance and attendance at or above standards) or (ii) whose
employment was terminated other than “for cause.” If a Plan Participant is on approved leave
status during a portion of the period beginning on the Plan implementation date and ending on the
Release Date applicable to such Plan Participant (the “Retention Period”), such Plan Participant
will remain eligible to receive a Retention Bonus, but the Retention Bonus will be pro-rated for
the portion(s) of the Retention Period during which he or she was employed on active, full-time
status in good standing. If a Plan Participant is on leave status for the majority or the entirety
of the Retention Period, such Plan Participant will not be eligible to receive any portion of the
Retention Bonus.

Additionally, Tier I Employees and Tier II Employees shall receive the share of the Incentive Pools
set forth opposite their name on Exhibit A. Incentive Bonuses will be paid to Tier I
Employees and Tier II Employees within 50 days following the consummation of each respective Sale;
provided, however, that if any portion of the sales price for any of the asset classes is held back
or subject to an escrow (each a “Holdback”) by the purchaser thereof, a proportionate percentage of
the contribution to the Plan Pool for that asset class will be held back by the Company and will be
contributed to such Plan Pool, if at all, at such time as the purchaser delivers payment of the
Holdback, with the related bonuses being paid to the Plan Participants within 50 days thereafter.

TERMINATION OF EMPLOYMENT:

Retention Bonuses and Critical Retention Bonuses under the Plan are offered as discretionary
incentive amounts. If a Plan Participant voluntarily terminates employment or is involuntarily
terminated “for cause” (as defined below) before such Plan Participant’s Release Date, the Plan
Participant will not receive any Retention Bonus or Critical Retention Bonus under the Plan. In
the event a Plan Participant’s employment is terminated by the Company or one of its subsidiaries
other than “for cause”, the Participant will be entitled to the full amount of his or her Retention
Bonus and Critical Retention Bonus, if any (and his or her Release Date shall be deemed to be the
date of such termination of employment).

Incentive Bonuses under the Plan are offered as discretionary incentive amounts. If a Plan
Participant voluntarily terminates employment or is terminated “for cause”, such Plan Participant
will not thereafter be entitled to any unpaid Incentive Bonuses, including unpaid bonuses related
to Holdbacks as described above. In the event a Plan Participant’s employment is terminated by the
Company or one of its subsidiaries other than “for cause”, the Participant will be entitled to any
unpaid Incentive Bonuses.

Additionally, if there is any ongoing investigation by the Audit Committee (the “Audit Committee”)
of the Company’s Board of Directors (the “Board”) into the actions or omissions of a Plan
Participant at the time such Plan Participant becomes entitled to any Retention Bonus, Critical
Retention Bonus or Incentive Bonus under the Plan, which could result in the Company having the
right to terminate such Plan Participant “for cause”, the Company will be entitled to delay payment
of such bonus (without any interest accruing thereon) until the matter is determined by the Audit
Committee. If the Company would have the right to terminate such Plan Participant “for cause”
based on the findings of the Audit Committee, then the Company will not be obligated to make and
will not make any payments of such bonus (even if such Plan Participant’s employment had terminated
for other reasons) to such Plan Participant.

For purposes of the Plan, the term “for cause” means, either before or after the adoption of the
Plan:

	 	•	 	Commission of a crime against the Company or its affiliates, customers or employees,
whether prosecuted or not;

	 	•	 	a finding by the Audit Committee that the Plan Participant engaged in willful
misconduct, or was grossly negligent, in the performance of his or her duties;

	 	•	 	Conviction of (or pleading guilty or nolo contendere to, or entering a similar plea
to) any other crime or violation of law, statute or regulation that creates an
inability to perform job duties;

	 	•	 	Failure or inability to perform job duties due to intoxication by drugs or alcohol
during working hours;

	 	•	 	A material and direct conflict of interest, not specifically waived in advance by
the Company;

	 	•	 	Unauthorized use or disclosure of confidential information that belongs to the
Company or its affiliates, customers or employees;

	 	•	 	Habitual neglect of duties or repeated absences from work;

	 	•	 	Refusal to follow the instructions of a supervisor or the Board (or a committee
thereof); or

	 	•	 	Other material misconduct including, but not limited to: falsification of Company
records; theft; sexual harassment; or possession of firearms, controlled substances or
illegal drugs on Company premises or while performing Company business.

FURTHER ACTIONS:

As a condition to each Plan Participants participation in the Plan, such Plan Participant shall
agree to take such further actions as are reasonably requested by the Company, including such
actions as the Company may request subsequent to the termination of such Plan Participant’s
employment with the Company or its subsidiaries, as the case may be, to assist the Company and its
subsidiaries in the conduct of the bankruptcy cases filed under chapter 11 of the United
States Bankruptcy Code to which they are currently parties.

CHANGE OF ADDRESS:

The Plan Participants shall be responsible for notifying the Company of any change of address
before payment is made by mail notification to [Name].

NO PROMISE OF CONTINUED EMPLOYMENT, FULL-TIME ATTENTION, AND GOOD STANDING:

The Plan and any Plan Participant’s selection as a participant in the Plan does not, and is in no
manner intended to constitute, a promise of employment for any period of time or to change a Plan
Participant’s status, if applicable, as an at will employee subject to termination of employment by
his or her employer at any time for any reason.

TAXES:

All payments will be subject to standard withholding and deductions. Neither the Company nor any
of its subsidiaries, officers or agents makes or has made any representation about the tax
consequences of any payments or benefits offered by the Company to any Plan Participant under the
Plan.

SEVERABILITY:

If any provision of the Plan is determined to be invalid or unenforceable, in whole or in part,
this determination will not affect any other provision of the Plan and the provision in question
shall be modified so as to be rendered enforceable in a manner consistent with the intent of the
parties insofar as possible. Any waiver of or breach of any of the terms of the Plan shall not
operate or be construed as a waiver of any other breach of such terms or conditions or of any other
terms and conditions, nor shall any failure to enforce any provision hereof operate or be construed
as a waiver of such provision or of any other provision.

CHOICE OF LAW AND VENUE:

The Plan will be governed by the laws of the State of California, notwithstanding that State’s
conflict of law provisions. The Company and each of the Plan Participants shall irrevocably and
unconditionally consent to the exclusive jurisdiction of the United States Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”). The Company and each of the Plan Participants shall
irrevocably and unconditionally waive any objection to the laying of venue of any action, suit, or
proceeding arising out of or related to the Plan in the Bankruptcy Court and shall further
irrevocably and unconditionally waive and agree not to plead or claim that any such action, suit or
proceeding brought in the Bankruptcy Court has been brought in an inconvenient forum.

ENTIRE AGREEMENT AND AMENDMENT:

This document constitutes the complete, final and exclusive embodiment of the terms and conditions
of the Plan and may only be modified in writing signed by an authorized officer of the Company.
Any agreement between any Plan Participant and the Company or any of its subsidiaries with regard
to the Plan and its subject matter is superseded in its entirety by this document.

NO ASSIGNMENT:

The rights of a Plan Participant or any other person to any payment or other benefits under the
Plan may not be assigned, transferred, pledged, or encumbered except by will or the laws of decent
or distribution.

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