**Exhibit 10.3**

 

**CALIFORNIA COASTALCOMMUNITIES, INC. RETIREMENT PLAN**

**AMENDMENTNO. 1**

The California Coastal Communities, Inc. RetirementPlan (“Plan”), which was executed December 21, 2001, and which has been amendedfor EGTRRA in a separate amendment, is hereby further amended by this AmendmentNo. 1, in order to incorporate changes required as part of the IRSdetermination letter process.  ThisAmendment No. 1 does not amend the EGTRRA Amendment, which was executed onDecember 19, 2001.

### 1.     EffectiveJanuary 1, 1997, a new Section 1.30A is added to the Plan to read as follows:

Highly CompensatedEmployee.  “HighlyCompensated Employee” means (a) any 5% owner during the current Plan Year orthe preceding Plan Year (“look back year”), and (b) any Employee receivingCompensation within the meaning of Section 6.1 of the Plan in the look backyear in excess of $80,000, as indexed pursuant to Code Section 414(q).

 

### 2.     EffectiveJanuary 1, 1995, a new  Section 6.3.3 isadded to the Plan, to read as follows:

GATT.

Effective December 31, 1993, benefit accruals under this Plan werefrozen.  Consequently, this Section 6.3.3is to apply prospectively, only, to benefits (if any) accrued under the Planafter the date (if ever) that benefit accruals under the Plan cease to befrozen and after December 31, 1994 (the “GATT effective date”).

For purposes of applying Code Section 415(b) to a benefit that is notpayable in the form of an annual straight life annuity within the meaning ofCode Section 415(b)(2)(A) and that is not subject to Code Section 417(e)(3),the equivalent annual benefit determined in Step 1, below will be no greaterthan the lesser of the age-adjusted dollar limit determined in Step 2 below andthe Code Section 415(b) compensation limitation determined in Step 3, below.

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STEP1:  Under Code Section415(b)(2)(B), determine the annual benefit in the form of a straight lifeannuity commencing at the same age that is actuarially equivalent to the planbenefit.  This equivalent annual benefitwill be the greater of the equivalent annual benefit computed using theinterest rate and mortality table outlined in the Plan’s definition ofActuarial Equivalent, and the equivalent annual benefit computed using a 5%interest rate assumption and the Applicable Mortality Table under Section417(e) of the Code.  This step will notapply to a benefit that is not required to be converted to a straight lifeannuity pursuant to Code Section 415(b)(2)(B) (for example a qualified jointand survivor annuity).

STEP 2:  Under Code Section415(b)(2)(C) or (D), determine the Code Section 415(b) dollar limitation thatapplies at the age the benefit is payable (age-adjusted dollar limit).  The age-adjusted dollar limit will be theannual benefit that is actuarially equivalent to an annual benefit equal to theCode Section 415(b) dollar limitation payable at the participant’s SocialSecurity Retirement Age.

If the age at which the benefit is payable is 62 or greater, and lessthan the participant’s Social Security Retirement Age, the age-adjusted dollarlimit will be as determined for this age pursuant to Section 6.3.2 of the Plan.

If the age at which the benefit is payable is less than 62, the reducedage-adjusted dollar limit will be the lesser of the equivalent amount computedunder Section 6.3.2 of the Plan for this age and the amount computed using 5%interest and the Applicable Mortality Table under Section 417(e) of theCode.  To the extent a forfeiture doesnot occur upon death, the mortality decrement may be ignored prior to age 62and must be ignored after Social Security Retirement Age.

If the age at which the benefit is payable is greater than theparticipant’s Social Security Retirement Age, the increased age-adjusted dollarlimit will be the lesser of the equivalent amount computed under Section 6.3.2of the Plan for this age and the equivalent amount computed using 5% interestand the Applicable Mortality Table under Code Section 417(e).

2

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STEP 3:  Determine theparticipant’s Code Section 415(b) compensation limitation.  This limitation is equal to the participant’scompensation (within the meaning of Section 6.1 of the Plan) averaged over theconsecutive 3-year period producing the highest average, as provided in CodeSection 415(b)(3).

 

IN WITNESS WHEREOF, thisAmendment No. 1 is executed this 26 day of June, 2002.

 
|        | California  Coastal Communities, Inc. |             |
|--------|---------------------------------------|------------------|
|   |                                  |             |
|   |                                  |             |
|   | By:                                   | //s// R J Pacini |   |   |
|   |                                  |             |
|   | Raymond J.  Pacini                    |             |
|   |                                  |             |
|   | President and                         |             |
|   | Chief Executive  Officer              |             |
|        |                                       |                  |  |  |

 

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