Exhibit 10.5

FIFTH
EXTENSION AND MODIFICATION
OF
EMPLOYMENT AGREEMENT

THIS FIFTH EXTENSION AND MODIFICATION OF EMPLOYMENT AGREEMENT (the “Extension”)
is entered into as of April 30, 2007 by and between Hearthside Homes, Inc., a
California corporation (“Employer”), which is an indirect wholly-owned
subsidiary of California Coastal Communities, Inc., a Delaware corporation
(“Parent”), and ED MOUNTFORD (“Executive”).

W I T N E S S E T H:

WHEREAS, Executive and Employer have entered into an Employment Agreement dated
as of May 1, 1998, an Extension and Modification of Employment Agreement dated
December 7, 1999, a Second Extension and Modification of Employment Agreement
dated April 30, 2001, a Third Extension and Modification of Employment Agreement
dated March 18, 2003, a Modification of Employment Agreement dated November 12,
2003 and a Fourth Extension and Modification of Employment Agreement dated July
20, 2005 (collectively, the “Employment Agreement”), through which Executive has
provided various executive capacities to Employer and Employer has obtained
various executive services by Executive; and

WHEREAS, Employer desires to obtain the benefit of continued service from
Executive by extending the Employment Agreement, and Executive desires to render
continued services to Employer by extending the Employment Agreement pursuant to
the terms and conditions of this Extension;

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises and covenants herein contained, the parties agree as follows:

SECTION 1.           CONTINUING EFFECTIVENESS OF EMPLOYMENT AGREEMENT.  EXCEPT
TO THE EXTENT OF ANY MODIFICATION MADE PURSUANT TO THE TERMS OF THIS EXTENSION,
THE EMPLOYMENT AGREEMENT SHALL CONTINUE TO REMAIN IN FULL FORCE AND EFFECT
FOLLOWING THE DATE HEREOF.

SECTION 2.           EXTENSION OF TERM.  EMPLOYER AND EXECUTIVE HEREBY AGREE TO
EXTEND THE TERM OF THE EMPLOYMENT AGREEMENT UNTIL APRIL 30, 2009.

SECTION 3.           BASE SALARY.  EFFECTIVE JANUARY 1, 2007 AND UNTIL THE
EXPIRATION OF THE TERM SET FORTH IN SECTION 2 ABOVE, EMPLOYER AGREES TO PAY
EXECUTIVE A BASE SALARY OF AT LEAST ONE HUNDRED AND NINETY THOUSAND FIVE HUNDRED
DOLLARS ($190,500) PER YEAR IN SEMI-MONTHLY INSTALLMENTS ON THE SAME DATES THE
OTHER SENIOR OFFICERS OF EMPLOYER ARE PAID.

(I)               PAID TIME OFF.  EXECUTIVE SHALL BE ENTITLED TO FIVE (5) WEEKS
OF PAID TIME OFF (“PTO”) EACH TWELVE-MONTH PERIOD, IN ACCORDANCE WITH THE TERMS
AND PROVISIONS SET FORTH IN

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THAT CERTAIN HEARTHSIDE HOMES/CALIFORNIA COASTAL COMMUNITIES EMPLOYEE HANDBOOK
ADDENDUM DATED DECEMBER 4, 2006 (THE “ADDENDUM”) A COPY OF WHICH HAS BEEN
DELIVERED TO EXECUTIVE; AND EXECUTIVE HEREBY REPRESENTS AND WARRANTS THAT (I)
THE ADDENDUM HAS BEEN FULLY READ AND UNDERSTOOD, AND (II) EXECUTIVE AGREES TO BE
BOUND BY THE ADDENDUM WITH RESPECT TO ALL MATTERS OF PTO.

SECTION 4.           BONUS.  FROM THE DATE HEREOF AND UNTIL THE EXPIRATION OF
THE TERM SET FORTH ABOVE, EMPLOYER AGREES TO PROVIDE EXECUTIVE WITH THE
OPPORTUNITY TO EARN THE FOLLOWING INCENTIVE BONUSES: (I) A DISCRETIONARY BONUS,
TO BE DETERMINED ON AN ANNUAL BASIS IN THE SOLE AND ABSOLUTE DISCRETION OF
PARENT’S COMPENSATION COMMITTEE, RELATED TO SUCH COMMITTEE’S ASSESSMENT OF
EXECUTIVE’S RELATIVE CONTRIBUTION TOWARDS THE SUCCESS OF SIGNAL LANDMARK’S
BRIGHTWATER PROJECT; (II) AN INCENTIVE BONUS IN THE AMOUNT OF FIFTY THOUSAND
DOLLARS ($50,000) UPON THE RECORDING BY THE COUNTY OF ORANGE OF ALL FINAL MAPS
NECESSARY FOR DEVELOPMENT OF 349 HOMES AT BRIGHTWATER; AND (III) THE “OXNARD
PROJECT BONUS” THAT MAY BE EARNED BY EXECUTIVE IN CONNECTION WITH HEARTHSIDE
HOMES OXNARD LLC’S DEVELOPMENT PROJECT IN OXNARD, CALIFORNIA (THE “OXNARD
PROJECT”) UNDER THE TERMS SET FORTH IN THE MODIFICATION OF EMPLOYMENT AGREEMENT
DATED NOVEMBER 12, 2003.

IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS EXTENSION AS OF THE DATE
FIRST ABOVE WRITTEN.

 

“EMPLOYER”

 

 

 

HEARTHSIDE HOMES, INC.

 

 

 

By:

/s/ RAYMOND J. PACINI

 

 

 

Raymond J. Pacini

 

 

 

Chief Executive Officer

 

 

 

 

 

 

“EXECUTIVE”

 

 

 

 

 

 

/s/ ED MOUNTFORD

 

 

 

Ed Mountford

 

 

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