Document:

EX-10.(BX) Fletcher Employment Agreement

 

Exhibit 10(bx)

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of November 8, 2006, by and
between Avatar Holdings Inc., a Delaware corporation (the “Company”), and Patricia Kimball
Fletcher (the “Employee”).

W I T N E S S E T H

          WHEREAS, the Company desires to employ the Employee as its Executive Vice President and
General Counsel and the Employee desires to accept such employment, all on the terms and conditions
specified herein; and

          WHEREAS, the Employee and the Company desire to set forth in writing all of their respective
duties, rights and obligations with respect to the Employee’s employment by the Company.

          NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth,
the parties hereto agree as follows:

          1. Employment and Term. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, in the capacity and upon the terms and conditions set
forth herein. The term of employment under this Agreement shall be for the period commencing
January 1, 2007 and ending on December 31, 2009, unless earlier terminated as herein provided (the
“Term of Employment”). The last day of the Employee’s Term of Employment shall be referred
to in this Agreement as the “Date of Termination.”

          2. Duties. During the Term of Employment, the Employee shall serve as the Company’s
Executive Vice President and General Counsel, and shall perform such duties, functions and
responsibilities as are customarily associated with and incident to the positions of Executive Vice
President and General Counsel and as the Company may, from time to time, require of her, including,
but not limited to, the performance of such functions and duties for the Company’s subsidiaries or
affiliates (the Company and the foregoing entities being referred to herein collectively as the
“Avatar Entities” and each as an “Avatar Entity”), subject to the direction of the
Company’s Board of Directors. The Employee shall serve the Company faithfully, conscientiously and
to the best of the Employee’s ability and shall promote the interests and reputation of the
Company. Except as expressly provided herein, unless prevented by sickness or disability, the
Employee shall devote all of her time, attention, knowledge, energy and skills, during normal
working hours, and at such other times as the Employee’s duties may reasonably require, to the
duties of the Employee’s employment. The principal place of employment of the Employee shall be
the principal executive offices of the Company and/or such other location within fifty (50) miles
of Company’s current principal place of business as shall be necessary for the Employee to
discharge the Employee’s duties hereunder. The Employee acknowledges that in the course of
employment the Employee may be required, from time to time, to travel on behalf of the Company.
Notwithstanding the foregoing, the Employee shall be permitted to assist

 

 

Duane Morris LLP on any transition matters relating to the Employee’s current files and
clients so long as such assistance does not adversely affect the Employee’s performance of her
duties and so long as the Employee receives no compensation for such assistance; provided,
however, that nothing in this Agreement shall prohibit or in any way limit the Employee
from receiving compensation from Duane Morris LLP for services performed by the Employee on or
prior to December 31, 2006.

          3. Compensation and Benefits. As full and complete compensation for the Employee’s
execution and delivery of this Agreement and performance of any services hereunder, the Company
shall pay, grant or provide the Employee, and the Employee agrees to accept, the following
compensation and benefits:

     (a) Base Salary. The Company shall pay the Employee a base salary (“Base
Salary”) at an annual rate of $700,000 payable at such times and in accordance with the
standard payroll practices of the Company. On an annual basis or at such other times as the
Company may determine, the Employee’s Base Salary shall be reviewed, and in the sole discretion of
the Board of Directors of the Company, the Company may increase (but not decrease) the Employee’s
Base Salary.

     (b) Employee Benefits. The Company shall afford the Employee the opportunity to
participate during the Term of Employment in any medical, dental, disability insurance, retirement,
savings and any other employee benefits plans or programs (including perquisites) which the Company
maintains for senior executives of the Avatar Entities. Nothing in this Agreement shall require
any Avatar Entity to establish, maintain or continue any benefit programs already in existence or
hereafter adopted for senior executives of the Avatar Entities, and nothing in this Agreement shall
restrict the right of the Avatar Entities to amend, modify or terminate any such benefit program.

     (c) Expenses. The Employee shall be entitled to reimbursement or payment of
reasonable business expenses (in accordance with the Company’s policies for its senior executives,
as the same may be amended from time to time in the Company’s sole discretion), following the
Employee’s submission of appropriate receipts and/or vouchers to the Company.

     (d) Vacations, Holidays or Temporary Leave. The Employee shall be entitled to take
such amount of vacation per year as is permitted pursuant to and in accordance with the policies of
the Company for its senior executives (as such policies may be amended from time to time or
terminated in the Company’s sole discretion), without loss or diminution of compensation. Such
vacation shall be taken at such time or times, and as a whole or in increments, as the Employee
shall elect, consistent with the reasonable needs of the Company’s business. The Employee shall
further be entitled to the number of paid holidays, and leaves for illness or temporary disability
in accordance with the policies of the Company’s for its senior executives (as such policies may be
amended from time to time or terminated in the Company’s sole discretion).

          4. Protection of Confidential Information; Ownership Interests in Competing
Businesses.

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     (a) Trade Secrets and Know-how.

          (i) During the Term of Employment and for all time following the Date of Termination, the
Employee shall not, directly or indirectly, use, furnish or make accessible to any person, firm or
corporation or other business entity, whether or not he, she, or it competes with the business of
the Company or any other Avatar Entity, (x) any trade secret or know-how acquired by the Employee
during the Employee’s employment by the Company which relates to the business practices, methods,
processes or other confidential or secret aspects of the business of any of the Avatar Entities,
(y) any information concerning the business and affairs of the Avatar Entities and (z) any notes,
analyses, compilations, studies, summaries and other material prepared by or for the Company
continuing or based, in whole or in part, on any information included in clause (x) or (y) above,
without the prior written consent of the Company (such information, subject to Section 4(a)(ii)
below, being referred to as the “Confidential Information”).

          (ii) Confidential Information shall not include any information or documents that (A) are or
become publicly available without breach by the Employee of Section 4(a)(i) hereof, (B) the
Employee receives from any third party who, to the best of the Employee’s knowledge upon reasonable
inquiry, is not in breach of an obligation of confidence with any of the Avatar Entities, or (C) is
required to be disclosed by law, statute, governmental or judicial proceeding; provided,
however, that in the event that the Employee is requested by any governmental or judicial
authority to disclose any Confidential Information, the Employee shall give the Company prompt
notice of such request, such that the Company may seek a protective order or other appropriate
relief, and in any such proceeding the Employee shall disclose only so much of the Confidential
Information as is required to be disclosed.

     (b) Ownership Interests in Competing Businesses. In the event that the Employee
desires to acquire an equity interest in any entity, whether publicly or privately owned, that
competes directly or indirectly with any Avatar Entity, the Employee shall seek, and any such
investment by the Employee shall require, the prior written consent of the Company, which consent
may be withheld by the Company in its sole discretion.

     (c) Remedies. The Employee acknowledges that her services are of a special, unique
and extraordinary character and, her position with the Avatar Entities places her in a substantial
relationship and a position of confidence and trust with specific prospective or existing
customers, suppliers and employees of the Avatar Entities, and that in connection with her services
to the Avatar Entities, the Employee will have access to confidential business or professional
information vital to the businesses of the Avatar Entities. The Employee further acknowledges that
in view of the nature of the business in which the Avatar Entities are engaged, the foregoing
restrictive covenants in this Section 4 are reasonable and necessary in order to protect the
legitimate business interests of the Avatar Entities and that violation thereof would result in
irreparable injury to the Avatar Entities. Accordingly, the Employee consents and agrees that if
the Employee violates or threatens to violate any of the provisions of this Section 4 the Avatar
Entities would sustain irreparable harm and, therefore, any of the Avatar Entities shall be
entitled to obtain from any court of competent jurisdiction, temporary, preliminary and/or

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permanent injunctive relief as well as damages, attorneys’ fees and costs, and an equitable
accounting of all earnings, profits and other benefits arising from such violation, which rights
shall be cumulative and in addition to any other rights or remedies in law or equity to which any
of the Avatar Entities may be entitled.

          5. Termination of Employment:

     (a) The Employee’s employment with the Company shall terminate upon the occurrence of any of
the following events:

          (i) on December 31, 2009 (absent the parties having entered into a written agreement for the
renewal or extension of this Agreement);

          (ii) the death of the Employee during the Term of Employment;

          (iii) at any time upon written notice to the Employee from the Company of termination of her
employment due to Disability (as defined below) of the Employee during the Term of Employment;

          (iv) at any time upon written notice to the Employee from the Company of termination of her
employment for Cause (as defined below);

          (v) at any time upon written notice to the Employee from the Company of termination of her
employment Without Cause (as defined below);

          (vi) the resignation by the Employee for Good Reason (as defined below) during the Term of
Employment;

          (vii) the resignation by the Employee Without Good Reason (as defined below) during the Term
of Employment; or

          (viii) by mutual written agreement of the parties.

     (b) For purposes of this Agreement, the “Disability” of the Employee shall mean the
Employee’s inability, because of mental or physical illness or incapacity, whether total or
partial, to perform one or more material functions of the Employee’s employment under this
Agreement with or without reasonable accommodation and which entitles the Employee to receive
benefits under a disability plan or program that is provided to the Employee pursuant to Section
3(b), if any.

     (c) For purposes of this Agreement, the term “Cause” shall mean the Employee’s (i)
conviction or entry of a plea of guilty or nolo contendere, with respect to any felony, in each
case that the Board of Directors of the Company determines in good faith is or may become
materially harmful to any Avatar Entity (either financially or with respect to such Avatar Entity’s
business reputation), (ii) commission of any act of willful misconduct, gross negligence, fraud or
dishonesty, in each case that the Board of Directors of the Company determines in good faith is or
may become materially harmful to any Avatar Entity (either financially or with respect to such
Avatar Entity’s business reputation) or (iii) violation of any material term of this Agreement or
any material

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written policy of the Company or any Avatar Entity; provided, that, in the case of
clauses (ii) and (iii), the Company first deliver written notice of such violation to the Employee
and the Employee shall not have cured such violation within thirty (30) days after receipt of such
written notice (the “Cure Period”); and provided further, that if upon
expiration of the Cure Period such violation has not been cured and the Company determines, in its
sole discretion, that the Employee is using her best efforts to cure such violation and such
violation is capable of being cured, the Company shall provide the Employee, pursuant to a written
notice, a reasonable amount of additional time (the “Extended Cure Period”) to cure such
violation but in no event shall such Extended Cure Period exceed forty-five (45) days from the date
on which the initial Cure Period expired.

     (d) For purposes of this Agreement, “Without Cause” shall mean any reason other than
the reasons described in Sections 5(a)(i), 5(a)(ii), 5(a)(iii) and 5(a)(iv) hereof. For the
avoidance of doubt, the parties acknowledge that the termination of the Employee’s employment
hereunder pursuant to Section 5(a)(i) upon expiration of the Term of Employment shall not
constitute a termination “Without Cause.” The parties expressly agree that a termination of
employment Without Cause pursuant to Section 5(a)(v) hereof may be for any reason whatsoever, or
for no reason, in the sole discretion of the Company.

     (e) For purposes of this Agreement, “Good Reason” shall mean (i) any assignment of
material duties to the Employee other than those contemplated by this Agreement, provided that the
Company shall have thirty (30) days after receipt of written notice by the Employee to cure, and
(ii) a reduction in Base Salary, or a material reduction in fringe benefits (other than a material
reduction in fringe benefits generally applicable to senior executives of the Company) or any other
material failure by the Company to perform its material obligations, provided that the Company
shall have thirty (30) days after receipt of written notice by the Employee to cure. For the
avoidance of doubt, the parties acknowledge that the termination of the Employee’s employment
hereunder pursuant to Section 5(a)(i) upon expiration of the Term of Employment shall not
constitute a termination for “Good Reason.” “Good Reason” shall not be deemed to occur solely as a
result of Change in Control, including without limitation any transaction in which the Company
becomes a wholly-owned subsidiary of another company, so long as the Employee’s duties and
responsibilities following such Change in Control are not materially changed as they relate
primarily to the Company and the other Avatar Entities prior to such Change in Control.

     (f) For purposes of this Agreement, “Without Good Reason” shall mean any reason other
than that defined in this Agreement as constituting Good Reason.

     (g) For purposes of this Agreement, “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 50.1% or more of the
combined voting power of the issued and outstanding common stock of the Company; (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

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     (a) above, and such transaction shall have been consummated; (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; or (d) the Company sells, transfers or otherwise disposes of
all or substantially all of its assets in one transaction or a series of transactions. The date on
which a Change in Control is consummated, with respect to clauses (a) and (b), or occurs, with
respect to clauses (c) and (d), is herein referred to as the “Change in Control Date.”

          6. Payments Upon Termination of Employment.

     (a) Termination upon Expiration of Term of Employment. If the Employee’s employment
hereunder is terminated pursuant to Section 5(a)(i), the Company shall pay or provide to the
Employee (i) all Base Salary payments pursuant to Section 3(a) hereof, respectively, and any
vacation pay pursuant to Section 3(d) hereof, in each case which has been earned but has not been
paid as of the Date of Termination and (ii) any benefits to which the Employee may be entitled
under any employee benefits plan or program pursuant to Section 3(b) hereof in which she is a
participant in accordance with the terms of such plan or program up to and including the Date of
Termination.

     (b) Death or Disability. If the Employee’s employment hereunder is terminated due to
the Employee’s death or Disability pursuant to Sections 5(a)(ii) or (iii) hereof, the Company shall
pay or provide to the Employee, her designated beneficiary or to her estate (i) all Base Salary
pursuant to Section 3(a) hereof and any vacation pay pursuant to Section 3(d) hereof, in each case
which has been earned but has not been paid as of the Date of Termination and (ii) any benefits to
which the Employee may be entitled under any employee benefits plan or program pursuant to Section
3(b) hereof in which she is a participant in accordance with the terms of such plan or program up
to and including the Date of Termination. Should the Company wish to purchase insurance to cover
the costs associated with the Employee’s termination of employment pursuant to Sections 5(a)(ii) or
(iii), the Employee agrees to execute any and all necessary documents necessary to effectuate such
insurance.

     (c) Termination for Cause or Resignation Without Good Reason. If the Employee’s
employment hereunder is terminated pursuant to Section 5(a)(iv) or Section 5(a)(vii), the Company
shall pay or provide to the Employee (i) all Base Salary pursuant to Section 3(a) hereof and any
vacation pay pursuant to Section 3(d) hereof, in each case which has been earned but has not been
paid as of the Date of Termination, and (ii) any benefits to which the Employee may be entitled
under any employee benefits plan or program pursuant to Section 3(b) hereof in which she is a
participant in accordance with the terms of such plan or program up to and including the Date of
Termination, in each case subject to set-off, counterclaim, recoupment, defense or any other claim,
right or cause of action which the Company may have against the Employee or others.

     (d) Termination Without Cause or Resignation For Good Reason. If the Employee’s
employment hereunder is terminated by the Company Without Cause pursuant to Section 5(a)(v), or due
to the Employee’s resignation for Good Reason pursuant to Section 5(a)(vi), then:

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          (i) The Company shall continue to pay the Employee her full Base Salary in accordance with
normal payroll practices and without interest through January 14, 2010 at the rate in effect at the
time notice of the termination of the Employee’s employment is given in accordance with Section
5(a)(v) or Section 5(a)(vi) hereof, as the case may be; and

          (ii) The Employee shall be entitled to participate in all employee benefit plans and programs
to the extent applicable to other senior executives of the Company (provided that the Employee’s
continued participation is permissible under the general terms and provisions of such plans and
programs) through January 14, 2010. In the event that the Employee’s participation in any such
plan or program is not permitted, the Employee shall be entitled to receive an amount equal to the
annual contributions, payments, credits or allocations made by the Company to the Employee’s
account or on the Employee’s behalf under such plans and programs.

     (e) No Other Payments. Except as provided in this Section 6 and except as may
otherwise be provided pursuant to any written incentive award agreement between the Employee and
the Company, the Employee shall not be entitled to receive any other payments or benefits from the
Company due to the termination of her employment, including but not limited to, any employee
benefits under any of the Company’s employee benefits plans or programs (other than at the
Employee’s expense under the Consolidated Omnibus Budget Reconciliation Act of 1985 or pursuant to
the terms of any pension plan which the Company may have in effect from time to time) or any right
to be paid severance pay. If the Employee is entitled to any notice or payment in lieu of any
notice of termination required by federal, state or local law, including but not limited to the
Worker Adjustment and Retraining Notification Act, the Company’s obligation to make payments
pursuant to Section 6(d) shall be reduced by the amount of any such payment in lieu of notice.

     (f) Conditions to Payments upon Termination of Employment. Notwithstanding anything
to the contrary contained in this Agreement, all payments and benefits to the Employee provided
pursuant to this Section 6 shall be subject to the Employee’s compliance with Section 4.

          7. No Conflicting Agreements; Indemnification.

     (a) The Employee hereby represents and warrants that she is not a party to any agreement, or
non-competition or other covenant or restriction contained in any agreement, commitment,
arrangement or understanding (whether oral or written), which would in any way conflict with or
limit her ability to commence work on the first day of the Term of Employment or would otherwise
limit her ability to perform all responsibilities in accordance with the terms and subject to the
conditions of this Agreement.

     (b) The Employee agrees that the compensation provided in Section 3 represents the sole
compensation to be paid to the Employee in respect of the services performed or to be performed for
the Avatar Entities by the Employee (other than any

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incentive compensation paid or to be paid to the Employee pursuant to any written incentive
award agreement between the Employee and the Company).

          8. Deductions and Withholding. The Employee agrees that the Company shall withhold
from any and all compensation required to be paid to the Employee pursuant to this Agreement all
federal, state, local and/or other taxes which the Company determines are required to be withheld
in accordance with applicable statutes and/or regulations from time to time in effect and all
amounts required to be deducted in respect of the Employee’s coverage under applicable employee
benefit plans.

          9. Entire Agreement. This Agreement, the letter agreement, dated as of the date
hereof, by and between the Company and the Employee, and any written incentive award agreement
entered into from time to time between the Employee and the Company, collectively embody the entire
agreement of the parties with respect to the Employee’s employment with the Company and supersede
any other prior oral or written agreements between the Employee and any Avatar Entity. This
Agreement may not be modified or terminated orally but only by an agreement in writing signed by
the parties hereto.

          10. Waiver. The waiver by the Company of a breach of any provision of this Agreement
by the Employee shall not operate or be construed as a waiver of any subsequent breach by the
Employee. The waiver by the Employee of a breach of any provision of this Agreement by the Company
shall not operate or be construed as a waiver of any subsequent breach by the Company.

          11. Governing Law. This Agreement 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.

          12. Jurisdiction. Any legal suit, action or proceeding against any party hereto
arising out of or relating to this Agreement shall be instituted in a federal or state court in
Dade County or Broward County in the State of Florida and each party hereto waives any objection
which it may now or hereafter have to the laying of venue of any such suit, action or proceeding
and each party hereto irrevocably submits to the jurisdiction of any such court in any suit, action
or proceeding.

          13. Assignability. The obligations of the Employee may not be delegated and, except
as expressly provided in Section 6(b) relating to the designation of beneficiaries, the Employee
may not, without the Company’s written consent thereto, assign, transfer, convey, pledge, encumber,
hypothecate or otherwise dispose of this Agreement or any interest therein. Any such attempted
delegation or disposition shall be null and void and without effect. This Agreement and all of the
Company’s rights and obligations hereunder shall be binding upon and inure to the benefit of any
successors and assigns of the Company. This Agreement may be assigned or transferred by the
Company to, and may be assumed by, any other Avatar Entity or successor thereof. The term
“successor” shall mean, with respect to any Avatar Entity, and any other corporation or
other business entity which, by merger, consolidation, purchase of the assets, or otherwise,
acquires all or a material part of the assets of such Avatar Entity. Except as

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expressly provided in Section 6(e) hereof, any assignment by the Company of its rights and
obligations hereunder to any affiliate of or successor shall not be considered a termination of
employment for purposes of this Agreement.

          14. Severability. If any provision of this Agreement as applied to either party or to
any circumstances shall be adjudged by a court of competent jurisdiction to be void or
unenforceable, the same shall in no way affect any other provision of this Agreement or the
validity or enforceability of this Agreement. If any court construes any of the provisions of
Section 4 hereof, or any part thereof, to be unreasonable because of the duration of such provision
or the scope thereof, such court may reduce the duration or restrict the scope of such provision
and enforce such provision as so reduced or restricted.

          15. Notices. All notices to the Employee hereunder shall be in writing and shall be
delivered personally or sent by registered or certified mail, return receipt requested, to:

			
	                    	 	Patricia Kimball Fletcher

2732 S.W. 2nd Avenue

Miami, FL 33129

All notices to the Company hereunder shall be in writing and shall be delivered personally or sent
by registered or certified mail, return receipt requested, to:

			
	                    	 	Avatar Holdings Inc.

201 Alhambra Circle

12th Floor

Coral Gables, Florida 33134

Attention: President

Facsimile: (305) 448-7876

and with a copy to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention: R. Todd Lang, Esq.

Facsimile: (212) 310-8007

Either party may change the address to which notices shall be sent by sending written notice of
such change of address to the other party.

          16. Section Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.

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          17. Counterparts. This Agreement 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.

          18. 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.

          19. Neutral Construction. Each party to this Agreement was represented by counsel, or
had the opportunity to consult with counsel. No party may rely on any drafts of this Agreement in
any interpretation of the Agreement. Each party to this Agreement has reviewed this Agreement and
has participated in its drafting and, accordingly, no party shall attempt to invoke the normal rule
of construction to the effect that ambiguities are to be resolved against the drafting party in any
interpretation of this Agreement.

(signature page follows)

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

	 	 	 	 	 
	 	AVATAR HOLDINGS INC.

 	 
	 	By:  	/s/ Gerald D. Kelfer
 	 
	 	 	Name:  	Gerald D. Kelfer 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	 	 
	 	     /s/ Patricia Kimball Fletcher
 	 
	 	Patricia Kimball Fletcher 	 
	 	 	 
	 

11EX-10.(BY) RESTRICTED STOCK UNTI AGREEMENT

 

Exhibit 10(by)

RESTRICTED STOCK UNIT AGREEMENT

          This RESTRICTED STOCK UNIT AGREEMENT (“Agreement”), dated November 8, 2006, by and
between Avatar Holdings Inc., a Delaware corporation (the “Company”) and Patricia Kimball
Fletcher (the “Participant”).

     1. AWARD. Pursuant to the provisions of the Avatar Holdings Inc. Amended and Restated 1997
Incentive and Capital Accumulation Plan (2005 Restatement), as the same may be amended, restated,
modified or supplemented (the “Plan”), the Committee (as defined in the Plan, the
“Committee”) hereby awards to the Participant, on January 1, 2007, subject to the
Participant commencing employment with the Company pursuant to the employment agreement between the
Company and the Employee, dated as of the dated hereof, and further subject to the terms and
conditions of the Plan and the terms and conditions set forth herein, an opportunity to receive
18,900 Performance Conditioned Restricted Stock Units (“Units”). Capitalized terms used
but not defined herein shall have the meanings assigned to them in the Plan. This award is
intended to constitute a Performance-Based Award within the meaning of the Plan.

     2. TERMS AND CONDITIONS. The award evidenced by this Agreement is subject to the following
terms and conditions:

     (a) Subject to Section 4 hereof, the Participant shall be granted, automatically and without
further authorization on the part of the Committee, 18,900 Units upon satisfaction of the following
condition (the date on which such condition is satisfied is hereinafter referred to as the
“Grant Date”): (i) the closing stock price of the Common Stock on its principal trading
market shall have been at least $72.50 per share for twenty (20) trading days out of thirty (30)
consecutive trading days or (ii) the Company consummates a transaction which results in the
stockholders of the Company receiving cash, securities, or other property (or any combination
thereof) having a “value” as determined by the Committee of at least $72.50 per share in either
case, during the period beginning on January 1, 2007 and ending on December 31, 2009 (the
“Hurdle Price Condition”); provided, however, that, except as provided in
Sections 4(c) and 4(d), no Units shall be granted if the Participant’s employment with the Company
has terminated for any reason on or prior to the time the Hurdle Price Condition is satisfied. For
purposes of this Section 2(a), “value” shall mean the amount received by the stockholders
of the Company taking into account the net present value of any debt, securities, future payments,
contingent rights or other non-cash consideration to be paid to such stockholders.

     (b) The Participant shall not possess any incidents of ownership (including, without
limitation, dividend, interest and voting rights) in shares of Common Stock in respect of the Units
or the Change in Control Amount, as applicable, until such Units or the Change in Control Amount,
as applicable, shall have vested and been distributed to the Participant in the form of shares of
Common Stock or, in the case of a Change in Control Amount, a single, lump sum cash payment, in
accordance with Sections 3 and 4 hereof.

 

 

     (c) Except as provided in this Section 2(c), the Units and any interest of the Participant
therein may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of.
Any attempt to transfer Units in contravention of this Section 2(c) is void ab initio.
Units shall not be subject to execution, attachment or other process. Notwithstanding the
foregoing, with the written consent of the Committee, the Participant shall be permitted to
transfer such Units to members of his immediate family (i.e., children, grandchildren or
spouse), trusts for the benefit of such family members, and partnerships whose only partners are
such family members; provided, however, that no consideration can be paid for the
transfer of the Units and the transferee of the Units shall be subject to all conditions applicable
to the Units (including all of the terms and conditions of this Agreement) prior to transfer.

     (d) Each reference contained in this Agreement to:

     “Anniversary” shall mean, with respect to any date, the annual recurrence of
such date.

     “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 50.1% 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; (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; or (d) the Company sells, transfers or
otherwise disposes of all or substantially all of its assets in one transaction or a series
of transactions. The date on which a Change in Control is consummated, with respect to
clauses (a) and (b), or occurs, with respect to clauses (c) and (d), is herein referred to
as the “Change in Control Date.”

     “Change in Control Amount” shall have the meaning set forth in Section 4(e)
hereof.

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

     “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 (15) trading days
ending with and

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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 tradable
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.

     3. VESTING AND CONVERSION OF UNITS. On December 31, 2009, the Units granted to the
Participant pursuant to Section 2(a) hereof, if any, shall vest in full and such vested Units shall
be converted into an equivalent number of shares of Common Stock that will be immediately
distributed to the Participant; provided, however, that subject to the provisions
of Section 4 hereof, no Units shall vest or be converted and distributed to the Participant unless
the Participant is an employee of the Company on December 31, 2009.

     Upon the distribution of the shares of Common Stock in respect of the Units, the Company shall
issue to the Participant or the Participant’s personal representative a stock certificate
representing such shares of Common Stock, free of any restrictions, subject to Section 8 hereof.

     4. TERMINATION OF EMPLOYMENT; CHANGE IN CONTROL.

     (a) For purposes of this Section 4, the terms Cause, Without Cause, Good Reason, Without Good
Reason and Disability shall have the meanings ascribed to such terms in the Participant’s
employment agreement with the Company, 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 the Company is terminated by the Company for Cause or
by the Participant Without Good Reason, the Participant shall forfeit all Units granted to the
Participant pursuant to Section 2(a) hereof (or, in the event a Change in Control has occurred, the
Change in Control Amount), if any, as of the date of termination of employment.

     (c) If the Participant’s employment with the Company is terminated by the Company Without
Cause, or is terminated by the Participant for Good Reason, (i)(A) all Units granted to the
Participant pursuant to Section 2(a) hereof, if any, shall vest, be converted into shares of Common
Stock and be immediately distributed to the Participant, and (B) any additional Units that satisfy
the Hurdle Price Condition on or before December 31, 2009, if any, shall vest on the date the
Hurdle Price Condition is satisfied, be converted into shares of Common Stock and be immediately
distributed to the Participant, or, (ii) in the event a Change in Control has occurred, the
Participant shall be entitled to receive the Change in Control Amount, if any, upon the date of
termination of employment.

     (d) If the Participant’s employment with the Company is terminated due to the Participant’s
death or Disability, the number of Units granted to the Participant pursuant

3

 

to Section 2(a) hereof, if any, which equals the greater of (i) the product of (x) a fraction
the numerator of which is the number of completed whole months elapsed from January 1, 2007 to the
date of death or Disability, as the case may be (whichever is sooner), and the denominator of which
thirty-six (36) and (y) 18,900 or (ii) 9,450 Units, shall vest, be converted into shares of Common
Stock and be immediately distributed 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), and any portion of the
Units then remaining unvested shall be forfeited. If the Participant’s employment with the Company
is terminated by Participant’s death or Disability prior to the Grant Date and the Hurdle Price
Condition is satisfied on or before the first Anniversary of Participant’s termination for death or
Disability, 9,450 Units shall be granted and shall vest, be converted into shares of Common Stock
and be immediately distributed 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), and any portion of the Units then
remaining unvested shall be forfeited. Notwithstanding the foregoing, if a Change in Control has
occurred prior to such termination for death or Disability, 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)
shall be entitled to receive the Change in Control Amount, if any, upon the date of termination of
employment.

     (e) In the event of a Change in Control, all Units granted to the Participant pursuant to
Section 2(a) hereof, if any, shall be converted into shares of Common Stock immediately prior to
the consummation of the Change in Control and, upon consummation of the Change in Control, shall be
converted into such amount of cash, securities or other property (or any combination thereof)
received by the stockholders of the Company in connection with the Change in Control (the
“Change in Control Amount”). The Change in Control Amount shall be distributed to the
Participant on or promptly following the Change in Control Date.

     5. DEFERRAL. With the prior written consent of the Committee, and on such terms as the
Committee may prescribe (which terms shall be in compliance with Section 409A of the Internal
Revenue Code of 1986, as amended), the Participant may elect to defer the receipt of Common Stock
upon the vesting of the Units granted to the Participant pursuant to Section 2(a) hereof and for
the Company to continue to maintain such Units on its books of account.

     6. 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

4

 

appropriate adjustments in the terms of the Units and this Agreement to reflect such changes
or distributions.

     7. 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 the Units granted hereunder 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.

     8. FORFEITURE OF UNITS AND PROFITS. At the discretion of the Committee, all or any portion of
the shares of Common Stock issued to the Participant in respect of Units awarded pursuant to
Section 2(a) hereof, if any, and all or any portion of the proceeds received from the sale of such
shares of Common Stock (or, in the event of Change in Control, all or any portion of the Change in
Control Amount) shall be subject to forfeiture in accordance with the provisions of 15 U.S.C. §
7243 (Section 304 of the Sarbanes-Oxley Act of 2002), or any successor statute, as if the
Participant were subject to such statute; provided, however, that the provisions of
this Section 8 shall no be applicable on or after a Change in Control Date.

     9. 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 7 hereof.

     10. INVESTMENT REPRESENTATIONS AND RELATED MATTERS. The Participant hereby represents that
the Common Stock issuable pursuant to this Agreement is being acquired for investment 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

5

 

     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.

     11. NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement does not confer upon the Participant any
right to continued employment by the Company or any of its subsidiaries or affiliated companies,
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.

     12. CONSTRUCTION. The Plan and 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.

     13. 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 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, 12th Floor, Coral Gables, Florida 33134,
Attention: Corporate Secretary, or such other address as the Company may designate in writing to
the Participant.

     14. 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.

     15. 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.

     16. 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, as the Plan may be
amended from time to time.

     17. 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.

6

 

     18. MISCELLANEOUS. This Agreement cannot be modified or terminated orally. This Agreement,
the Plan 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)

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     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/ Patricia Kimball Fletcher
 	 
	 	Patricia Kimball Fletcher 	 
	 	 	 
	 

8

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