**Exhibit 10.10**

 

EMPLOYMENTAGREEMENT

 

THISEMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of May 1, 1998by and between ED MOUNTFORD (“Executive”) and Hearthside Homes, Inc., aCalifornia corporation (“Employer”), which is an indirect wholly-ownedsubsidiary of California Coastal Communities, Inc., a Delaware corporation(“Parent”).

 

WITNESSETH:

 

WHEREAS, Executive hasserved Employer in various executive capacities and Employer desires to obtainthe benefit of continued service by Executive, and Executive desires to rendercontinued services to Employer;

 

WHEREAS,Employer has determined that because of Executive’s substantial experience and businessrelationships in connection with the business of Employer, it is in theEmployer’s best interest and that of its stockholders to secure services ofExecutive and to provide Executive certain additional benefits; and

 

WHEREAS,Employer and Executive desire to set forth in this Agreement the terms andconditions of Executive’s employment with Employer.

 

NOW,THEREFORE, in consideration of the mutual promises and covenants hereincontained, the parties agree as follows:

 

# SECTION 1.                                TERM.Employer agrees to employ Executive and Executive agrees to serve Employer, inaccordance with the terms of this Agreement, for a term of two (2) years, commencingon the date hereof.

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# SECTION 2.                                SERVICES.So long as this Agreement shall continue in effect, Executive shall use hiscommercially reasonably efforts and abilities to promote Employer’s business,affairs and interests, and shall perform the services contemplated by thisAgreement in accordance with policies established by the Company.

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# SECTION 3.                                SPECIFICPOSITION; DUTIES AND RESPONSIBILITIES. Employer and Executive agree that,subject to the provisions of this Agreement, Employer will employ Executive andExecutive will serve Employer as a senior officer for the duration of thisAgreement. The specific job position in which Executive shall serve shall be SeniorVice President. Executive agrees to observe and comply with the rules andregulations of Employer respecting the performance of Executive’s duties andagrees to carry out and perform directions and policies of Employer asthey may be, from time to time, stated either orally or in writing. Employeragrees that the duties which may be assigned to Executive shall be usualand customary duties of the job position set forth in this Section 3, andshall not be inconsistent with the provisions of the charter documents ofEmployer or applicable law. Executive shall have such corporate power andauthority as shall reasonably be required to enable the discharge of duties inany office that may be held.

 

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# SECTION 4.                                COMPENSATION.

 

(a)                                  BaseSalary and Bonus.

 

##### (i)                                     BaseSalary. During the Term of this Agreement, Employer agrees to pay Executivea base salary of at least One Hundred Twenty Thousand Dollars ($120,000) peryear in semi-monthly installments on the same dates the other senior officersof Employer are paid (“Base Salary”).

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##### (ii)                                  Bonus.Employer agrees to provide Executive with an incentive bonus, based upon the bonusamount and performance targets mutually agreed upon and set forth on Schedule Aattached hereto.

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## (b)                                 AdditionalBenefits. Executive shall also be entitled to all rights and benefits underany bonus plan, incentive, participation or extra compensation plan, pensionplan, profit-sharing plan, life, medical, dental, disability, or insurance planor policy or other plan or benefit that Employer or its subsidiaries may providefor Executive (provided Executive is eligible to participate therein) oremployees of Employer generally as from time to time in effect during the Termof this Agreement (the “Plans”). In any event, Employer shall provide Executivewith term life insurance, health insurance and long-term disability insuranceprovided for Employer’s executive employees generally. Executive shall also beentitled to fringe benefits in accordance with the plans, practices, programsand policies as in effect generally with respect to other peer executives ofEmployer.

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## (c)                                  Perquisites.

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### (i)                                     Vacation.Executive shall be entitled to four (4) weeks of paid vacation eachtwelve-month period, which shall accrue on a monthly basis. Such vacation shallbe taken at such time or times as shall not unduly disrupt the orderly conductof the business of Employer and the duties of Executive. At the time of anytermination of employment, Executive shall be paid for all accrued but unusedvacation..

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### (ii)                                  AutoAllowance. During the Term of this Agreement, Employer shall provideExecutive a monthly automobile allowance in the amount of $550 plusreimbursement of operating costs as is currently covered under Employer’s AutoAllowance Policy.

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## (d)                                 OverallQualification. Employer reserves the right to modify, suspend ordiscontinue any and all practices, policies and programs generally applicableto executives and other similarly situated executives at any time (whetherbefore or after termination of employment) without notice to or recourse byExecutive; however, Employer shall not amend the perquisites provisions setforth in Section 4(c) to reduce Executive’s benefits thereunderduring the Term of this Agreement.

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# SECTION 5.                                TERMINATION.The compensation and other benefits provided to Executive pursuant to thisAgreement, and the employment of Executive by Employer, shall be terminatedprior to expiration of the Term of this Agreement only as provided in this Section 5:

 

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## (a)                                  Disability.In the event that Executive shall fail, because of illness, incapacity orinjury which is determined to be total (“Disability”) by a physician selectedby Employer or its insurers and acceptable to Executive or Executive’s legalrepresentative (such agreement as to acceptability not to be withheldunreasonably), to render, for three consecutive months or for shorter periodsaggregating ninety (90) or more business days in any twelve (12)-month period,the services contemplated by this Agreement, Executive’s employment hereunder may beterminated by sixty (60) days’ prior written notice of termination fromEmployer to Executive. Thereafter, Employer shall continue to (i) pay theBase Salary to Executive for a period of six (6) months after the date oftermination, subject to adjustments referenced in the following paragraph, and (ii) providemedical insurance as in effect prior to such termination for a period of six (6) monthsfollowing the date of termination. Thereafter, no further salary shall be paidor medical insurance be provided. Executive’s rights under the Plans subsequentto termination of employment pursuant to this paragraph shall be determinedunder the applicable provisions of the respective Plans, unless otherwiseexpressly stated herein. This Agreement in all other respects will terminateupon the termination of employment pursuant to this paragraph.

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## The amount of compensation to be paid to Executivepursuant to the preceding paragraph shall be adjusted in the event Executivebecomes entitled to and receives disability benefits under any disabilitypayment plan, including disability insurance. The amount of Executive’scompensation otherwise payable by Employer pursuant to the preceding paragraphshall be reduced, on a dollar-for-dollar basis, but not to less than zero, bythe amount of any such disability benefits received by Executive, but only tothe extent such benefits are attributable to payments made by Employer.

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## (b)                                 Death.In the event of Executive’s death during the Term of this Agreement, Executive’sBase Salary shall immediately terminate and Employer shall pay to the estate ofExecutive the Base Salary accrued to the date of Executive’s death to theextent not theretofore paid. If Executive’s death occurs while receiving paymentsunder Section 5(a) above, such payments shall cease. Executive’srights under the Plans subsequent to his death shall be determined under theapplicable provisions of the respective Plans; provided that, notwithstandingany provisions to the contrary therein, Employer shall continue to providemedical insurance to the dependents of Executive for a period of six (6) monthsfollowing the death of Executive. This Agreement in all other respects willterminate upon the death of Executive.

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## (c)                                  ForCause. The employment of Executive hereunder shall be terminable byEmployer in the event that Executive (i) is or has been engaging inwillful or grossly negligent conduct which has resulted in a failure to perform Executive’sduties hereunder or, (ii) has committed an act of dishonesty, grossnegligence or misconduct, which has a direct, substantial and adverse effect onEmployer, its business or reputation.

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## Notwithstanding the foregoing, Executive shall not beterminated for cause pursuant to the first paragraph of this subsection 5(c) unlessand until Executive has received written notice of a proposed termination forcause and Executive has had an opportunity to be heard by an officer of theCompany authorized to take such action. Executive shall be deemed to have hadsuch opportunity if given written or telephonic notice by any officer at least72 hours in advance of a meeting.

 

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## In the event of Executive’s termination pursuant tothis subsection 5(c), Executive’s rights to receive Base Salary shallimmediately terminate and Employer shall pay to Executive his Base Salary andvacation accrued to the date of such termination to the extent not theretoforepaid. Executive’s rights under the Plans subsequent to termination shall bedetermined under the applicable provisions of the respective plans. ThisAgreement in all other respects will terminate upon such termination.

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## (d)                                 WithoutCause. Notwithstanding any other provision of this Section 5, theBoard shall have the right to terminate Executive’s employment with Employerwithout cause at any time upon at least thirty (30) days’ prior written noticeto Executive. The following conditions shall thereupon become applicable:

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### (i)                                     SeverancePay. Employer shall continue to pay Executive the Base Salary on a semi-monthlybasis for the remainder of the Term of this Agreement.

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### (ii)                                  MedicalInsurance Continuation. Employer shall continue to provide (under COBRA)medical insurance as in effect prior to such termination for twelve (12) monthsfollowing such termination, and Employer shall bear all costs for suchinsurance.

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### (iii)                               BonusPayment. If Executive is terminated without cause, Executive shall also bepaid for any potential bonuses under this Agreement (the “Bonus Severance”). The amount of any such Bonus Severance shallbe equal to the full amount of any unpaid target bonus payment(s) set forth on Schedule A.

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## (e)                                  VoluntaryTermination. At any time during the Term of this Agreement, Executive shallhave the right, upon thirty (30) days’ prior written notice to Employer, toterminate his employment with Employer. Upon termination of Executive’semployment pursuant to this subsection 5(e), (i) Executive’s right toreceive Base Salary shall immediately terminate and Employer shall pay toExecutive his Base Salary accrued to the date of such termination to the extentnot theretofore paid and (ii) Executive’s rights under the Planssubsequent to such termination shall be determined under the applicableprovisions of the respective Plans. This Agreement in all other respects willterminate upon such termination.

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## (f)                                    Terminationby Executive for “Good Reason”. Notwithstanding any other provisions ofthis Agreement, Employer shall provide Executive with the payments and benefitsset forth in Section 5(d) in the event Executive terminatesemployment for “Good Reason.”  Forpurposes of this Agreement, “Good Reason” for Executive to terminate employmentshall mean voluntary termination as a result of (i) the assignment toExecutive of duties inconsistent with the position and status of Executive asset forth in this Agreement without Executive’s prior written consent, (ii) asubstantial alteration in the nature, status or prestige of Executive’sresponsibilities as set forth in this Agreement or a change in Executive’stitle or reporting level from that set forth in this Agreement, (iii) therelocation of Employer’s executive offices or principal business location to apoint more than twenty-five (25) miles from the location of such offices orbusiness as of the date of this Agreement, (iv) reduction by Employer ofExecutive’s Base Salary in effect on the date hereof or as the same may beincreased from time to time, (v) any action by Employer (including theelimination of benefit plans without providing substitutes therefor or thereduction of Executive’s benefits thereunder) that would substantially diminishthe aggregate

 

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## value of Executive’s incentive awards (including anyaction taken by Employer, following a Change of Control, that materiallyimpairs the ability of Executive to achieve the Performance Objectives setforth on Schedule A attached hereto) and other fringe benefits, or (vi) afailure by Employer to obtain from any successor, before succession takesplace, an agreement to assume and perform this Agreement.

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## For purposes of theforegoing paragraph, a “Change of Control” means, and shall be deemed to havetaken place upon, the occurrence of: (i) a transaction requiring stockholderapproval involving the sale of all or substantially all of the assets of Parentor the merger of Parent with or into another corporation or business entity,other than a transaction in which stockholders of Parent immediately prior tothe closing of such transaction own a majority of the acquiring corporation orentity immediately after giving effect to such transaction, or (ii) the acquisitionby any Person as Beneficial Owner (as such terms are defined in the SecuritiesExchange Act of 1934, as amended), directly or indirectly, of securities ofParent representing fifty percent (50%) or more of the total voting powerrepresented by Parent’s then outstanding voting securities.

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# SECTION 6.                                BUSINESSEXPENSES. During the Term of this Agreement, Employer shall reimburseExecutive promptly for reasonable business expenditures, including travel,entertainment, parking, business meetings and professional dues made andsubstantiated in accordance with policies, practices and procedures establishedfrom time to time by the Board and incurred in pursuit and furtherance ofEmployer’s business and goodwill.

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# SECTION 7.                                MISCELLANEOUS.

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## (a)                                  Succession;Survival. This Agreement shall inure to the benefit of and shall be bindingupon Employer, its successors and assigns. Absent the prior written consent ofExecutive, this Agreement may not be assigned by Employer other than inconnection with a merger or sale of all or substantially all the assets ofEmployer or a similar transaction in which the successor or assignee assumes(whether by operation of law or express assumption) all obligations of Employerhereunder. The obligations and duties of Executive hereunder are personal andotherwise not assignable. Executive’s obligations and representations underthis Agreement will survive the termination of Executive’s employment,regardless of the manner of such termination.

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## (b)                                 Notices.Any notice or other communication provided for in this Agreement shall be inwriting and sent if to Employer to its office at:

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Hearthside Homes, Inc.4343 Von Karman AvenueNewport Beach, California 92660Attention: Chief Executive Officer

 

or at such other address as Employer may fromtime to time in writing designate, and if to Executive at such address asExecutive may from time to time in writing designate (or Executive’sbusiness address of record in the absence of such designation). Each suchnotice or other communication shall be effective (i) if given bytelecommunication, when transmitted to

 

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the applicable number so specified in (or pursuant to)this Section 7 and an appropriate answer back is received, (ii) ifgiven by mail, three days after such communication is deposited in the mailswith first class postage prepaid, addressed as aforesaid or (iii) ifgiven by any other means, when actually delivered at such address.

 

## (c)                                  EntireAgreement; Amendments. This Agreement contains the entire agreement of theparties relating to the subject matter hereof and it supersedes any prior agreements,undertakings, commitments and practices relating to Executive’s employment byEmployer. No amendment or modification of the terms of this Agreement shall bevalid unless made in writing and signed by Executive and, on behalf ofEmployer, by an officer expressly so authorized by its Board of Directors.

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## (d)                                 Waiver.No failure on the part of any party to exercise or delay in exercising anyright hereunder shall be deemed a waiver thereof or of any other right, norshall any single or partial exercise preclude any further or other exercise ofsuch right or any other right.

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## (e)                                  Choiceof Law. This Agreement, the legal relations between the parties and anyaction, whether contractual or non-contractual, instituted by any party withrespect to matters arising under or growing out of or in connection with or inrespect of this Agreement, the relationship of the parties or the subjectmatter hereof shall be governed by and construed in accordance with the laws ofthe State of California, applicable to contracts made and performed in suchState and without regard to conflicts of law doctrines, to the extent permittedby law.

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## (f)                                    Attorney’sFees. If any action at law or in equity is necessary to enforce orinterpret the terms of this Agreement, the prevailing party shall be entitledto recover reasonable attorney’s fees, costs and necessary disbursements fromthe non-prevailing party in addition to any other relief to which such party may beentitled.

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## (g)                                 Confidentiality;Proprietary Information. Executive agrees to not make use of, divulge orotherwise disclose, directly or indirectly, any trade secret or otherconfidential or proprietary information concerning the business (including butnot limited to its products, employees, services, practices or policies) ofEmployer or any of its affiliates of which Executive may learn or be awareas a result of Executive’s employment during the Term of the Agreement or priorthereto as stockholder, employee, officer or director of, or consultant to,Employer, except to the extent such use or disclosure is (i) necessary tothe performance of this Agreement and in furtherance of Employer’s bestinterests, (ii) required by applicable law, (iii) lawfully obtainablefrom other public sources, or (iv) authorized in writing by or pursuant toa written agreement with Employer. The provisions of this subsection (g) shallsurvive the expiration, suspension or termination, for any reason, of thisAgreement.

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## (h)                                 Severability.If any provision of this Agreement is held invalid or unenforceable, theremainder of this Agreement shall nevertheless remain in full force and effect,and if any provision is held invalid or unenforceable with respect toparticular circumstances, it shall nevertheless remain in full force and effectin all other circumstances, to the fullest extent permitted by law.

 

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## (i)                                     Withholding;Deductions. All compensation payable hereunder, including salary and otherbenefits, shall be subject to applicable taxes, withholding and other required,normal or elected employee deductions.

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## (j)                                     Section Headings.Section and other headings contained in this Agreement are for convenienceof reference only and shall not affect in any way the meaning or interpretationof this Agreement.

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## (k)                                  Counterparts.This Agreement and any amendment hereto may be executed in one or morecounterparts. All of such counterparts shall constitute one and the sameagreement and shall become effective when a copy signed by each party has beendelivered to the other party.

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INWITNESS WHEREOF, the parties have executed this Agreement as of the date firstabove 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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