Document:

Exhibit 10.06D

FOURTH

EXTENSION AND MODIFICATION

OF

EMPLOYMENT AGREEMENT

THIS FOURTH EXTENSION AND
MODIFICATION OF EMPLOYMENT AGREEMENT (the “Extension”) is entered into as of March
14, 2005 by and between California Coastal Communities, Inc., a Delaware corporation
(“Employer”), and RAYMOND J. PACINI (“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, and
a Third Extension and Modification of Employment Agreement dated March 17, 2003
(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, 2007.

SECTION 3.           BASE SALARY.  Effective January 1, 2005 and until the
expiration of the term set forth in Section 2 above, Employer agrees to
pay Executive a base salary of at least Three Hundred and Thirty Thousand
Dollars ($330,000) per year in semi-monthly installments on the same
dates the other senior officers of Employer are paid.

SECTION 4. 
OUTSIDE CONSULTING.  Subject to the prior approval of the Compensation
Committee of Employer’s Board of Directors, Executive may be permitted to act
as an outside consultant or director to companies and businesses that are not
in competition with Employer.   There
shall be no reduction in the compensation to be paid to Executive under the
Employment Agreement, provided that the consulting services rendered by
Executive do not have a material adverse effect on Executive’s ability to render
services to Employer under

 

1

 

the Employment Agreement.

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

 

	
  “EMPLOYER”

  
	
   

  
	
  CALIFORNIA
  COASTAL COMMUNITIES, INC.

  
	
   

  
	
  By 

  	
          /s/ 
  SANDRA G. SCIUTTO

  
	
   

  	
  Sandra G.
  Sciutto

  
	
   

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
  “EXECUTIVE”

  
	
   

  
	
  /s/  RAYMOND J. PACINI

  
	
  Raymond J.
  Pacini

  

 

 

2Exhibit 10.07D

FOURTH

EXTENSION AND MODIFICATION

OF

EMPLOYMENT AGREEMENT

THIS FOURTH EXTENSION AND
MODIFICATION OF EMPLOYMENT AGREEMENT (the “Extension”) is entered into as of March
14, 2005 by and between California Coastal Communities, Inc., a Delaware corporation
(“Employer”), and SANDRA G. SCIUTTO (“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, and a Third Extension and Modification of Employment
Agreement dated March 17, 2003 (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, 2007.

SECTION 3.           BASE SALARY.  Effective January 1, 2005 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 Eighty-Five Thousand
Dollars ($185,000) per year in semi-monthly installments on the same
dates the other senior officers of Employer are paid.

SECTION 4.           BONUS.  From the date hereof and until the expiration
of the term set forth in Section 2 above, Employer agrees to provide
Executive with the opportunity to earn an annual incentive bonus of Ninety
Thousand Dollars ($90,000) based upon achieving performance targets which will
be mutually agreed upon.

 

 

1

 

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

 

	
  “EMPLOYER”

  
	
   

  
	
  CALIFORNIA
  COASTAL COMMUNITIES, INC.

  
	
   

  
	
  By 

  	
  /s/ RAYMOND J.
  PACINI

  
	
   

  	
  Raymond J.
  Pacini

  
	
   

  	
  Chief Executive
  Officer

  
	
   

  	
   

  
	
  “EXECUTIVE”

  
	
   

  
	
   

  	
  /s/ SANDRA G.
  SCIUTTO

  
	
  Sandra G.
  Sciutto

  

 

 

2Exhibit
10.08

 

 

AUDIT
COMMITTEE POLICY FOR

PRE-APPROVAL
OF AUDITOR SERVICES

 

 

ARTICLE I — PURPOSE

 

The Audit Committee of
California Coastal Communities, Inc. (the “Company”) is required to pre-approve
the audit and non-audit services performed by the Company’s independent auditor
in order to determine that the provision of such services does not adversely
affect the auditor’s independence. Other than services to be provided by the
independent auditor which have been generally pre-approved, specific pre-approval
by the Audit Committee will be required. If a proposed service exceeds
pre-approved cost levels, such services must receive specific pre-approval by
the Audit Committee.

 

The exhibits to this Policy
describe the “Audit”, “Audit-Related”, “Tax” and “Other” services that have
been pre-approved by the Audit Committee. Unless the Audit Committee
specifically provides for a different period, pre-approvals are for a twelve
(12) month period from the date of pre-approval. The Audit Committee may, at
any time, amend the list of pre-approved services.

 

 

ARTICLE II — AUDIT SERVICES

 

The annual Audit Services, terms
of engagement and fees will be subject to the specific pre-approval of the
Audit Committee. The Audit Committee will approve, as may be required, any
changes in such terms, conditions and fees resulting from changes in the scope
of the audit or other reasons.

 

The Audit Committee may grant
pre-approval for other Audit Services, that only the Company’s auditor can
reasonably provide. The Audit Services listed in Exhibit A have been
pre-approved, and any other Audit Services must be separately pre-approved by
the Audit Committee.

 

 

ARTICLE III — AUDIT-RELATED
SERVICES

 

Audit-Related Services are those
services that are reasonably related to the performance of the audit or review
of the Company’s financial statements and that are traditionally performed by
the auditor. The Audit Committee has pre-approved the Audit-Related Services
listed in Exhibit B and believes that the provision of such
Audit-Related Services does not impair the independence of the independent
auditor. Any other Audit-Related Services not listed in Exhibit B must
be separately pre-approved by the Audit Committee.

 

 

ARTICLE IV — TAX SERVICES

 

The Audit Committee believes
that, without impairing the auditor’s independence, the auditor can provide Tax
Services to the Company such as tax planning, tax compliance and tax 

 

 

 

advice. However, the auditor is not permitted to
be retained in connection with a transaction initially recommended by the
auditor, where the tax treatment of such transaction may not be supported in
the Internal Revenue Code and the regulations thereunder, or where the purpose
of which may be tax avoidance. The Tax Services listed in Exhibit C have
been pre-approved, and all Tax Services involving large and complex
transactions not listed in Exhibit C must be separately pre-approved by
the Audit Committee.

 

 

ARTICLE V — OTHER SERVICES

 

The Audit Committee may grant
pre-approval to other permissible non-audit services that it believes are
routine and recurring services, and which services the Audit Committee believes
would not impair the independence of the auditor. The Audit Committee has
pre-approved the Other Services listed in Exhibit D. Any additional
permissible Other Services not listed in Exhibit D must be separately
pre-approved by the Audit Committee.

 

Schedule
1 to this Policy sets forth a list of the SEC’s currently prohibited
non-audit services.

 

 

ARTICLE VI — PRE-APPROVAL FEE
LEVELS

 

The Audit Committee will periodically
establish Pre-approval fee levels for all services to be provided by the
auditor. Specific pre-approval by the Audit Committee will be required for any
proposed services exceeding these fee levels.

 

 

ARTICLE VII — SUPPORTING
DOCUMENTATION

 

The auditor will provide the
Audit Committee with detailed back-up documentation regarding the specific
services to be provided with respect to each proposed pre-approved service.

 

ARTICLE VIII — DELEGATION

 

The Audit Committee shall not delegate to management of the Company, any of its
responsibilities to pre-approve services performed by the independent auditor.
However, pre-approval authority may be delegated to one or more of the Audit
Committee members; provided that such member(s) to whom such authority is
delegated shall report each pre-approval decision to the Audit Committee at its
next scheduled meeting.

 

 

ARTICLE IX — PROCEDURES FOR
SEPARATE APPROVALS

 

The auditor and the Company’s
Chief Financial Officer shall submit to the Audit Committee all requests or
applications to provide services by the auditor, where such services require
separate approval by the Audit Committee. Such requests or applications must
include a joint statement as to whether, in their view, the request or
application is consistent with the SEC’s rules on auditor independence.

 

 

 

 

 

Exhibit  A

 

Pre-Approved
Audit Services for Year Ending December 31, 2005

 

Dated:   March
9, 2005

 

	
  Service:

  	
   

  	
  Range of Fees:

  
	
   

  	
   

  	
   

  
	
  Statutory audits or financial audits for subsidiaries or affiliates of
  the Company. 

  	
   

  	
  —
  

  
	
   

  	
   

  	
   

  
	
  Services associated with SEC registration statements, periodic reports
  and other documents filed with the SEC or other documents  issued in connection with securities offerings
  (e.g., comfort letters,  consents),
  and assistance in responding to SEC comment letters. 

  	
   

  	
  $5,000
  - $10,000

  
	
   

  	
   

  	
   

  
	
  Consultations by the Company’s management as to the accounting or
  disclosure treatment of transactions or events and/or the actual or  potential impact of final or proposed rules,
  standards or interpretations  by
  the SEC, FASB, or other regulatory or standard setting bodies. 

  	
   

  	
  $10,000
  - $20,000

  
	
   

  	
   

  	
   

  

 

 

A-1

 

Exhibit B

 

Pre-Approved
Audit-Related Services for Year Ending December 31, 2005

 

Dated:    March 9, 2005

 

	
  Service:

  	
   

  	
  Range of Fees:

  
	
   

  	
   

  	
   

  
	
  Due diligence services pertaining to potential business acquisitions/ dispositions.
  

  	
   

  	
  —

  
	
   

  	
   

  	
   

  
	
  Financial statement audits of employee benefit plans.

  	
   

  	
  —

  
	
   

  	
   

  	
   

  
	
  Agreed-upon or expanded audit procedures related to accounting and/or billing
  records required to respond to or comply with financial, accounting  or regulatory reporting matters. 

  	
   

  	
  —

  
	
   

  	
   

  	
   

  
	
  Internal control reviews and assistance with internal control reporting requirements.
  

  	
   

  	
  $90,000
  - $115,000

  
	
   

  	
   

  	
   

  
	
  Consultations by the Company’s management as to the
  accounting or disclosure
  treatment of transactions or events and/or the actual or potential  impact of final or proposed rules, standards or
  interpretations by the  SEC, FASB,
  or other regulatory or standard-setting bodies. 

  	
   

  	
  $10,000 - $25,000

  
	
   

  	
   

  	
   

  
	
  Attest services not required by statute or regulation.

  	
   

  	
  —

  

 

 

B-1

 

Exhibit C

 

Pre-Approved
Tax Services for Year Ending December 31, 2005

 

Dated: March 9, 2005

 

	
  Service:

  	
   

  	
  Range of Fees:

  
	
   

  	
   

  	
   

  
	
  U.S. federal, state and local tax planning and advice.

  	
   

  	
  $20,000
  - $40,000

  
	
   

  	
   

  	
   

  
	
  U.S. federal, state and local tax compliance.

  	
   

  	
  $15,000
  - $35,000

  
	
   

  	
   

  	
   

  
	
  Review of federal, state and local income, franchise, and other
  tax returns. 

  	
   

  	
  $10,000
  - $20,000

  
	
   

  	
   

  	
   

  
	
  Licensing or purchase of income tax preparation software from the auditor,
  provided the functionality is limited to preparation  of tax provisions or returns. 

  	
   

  	
  $5,000
  - $10,000

  
	
   

  	
   

  	
   

  

 

 

C-1

 

Exhibit D

 

	
  Pre-Approved All Other Services for Year Ending December 31, 2005

  
	
   

  	
   

  	
   

  
	
  Dated:
  March 9, 2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Service:

  	
   

  	
  Range of Fees:

  
	
   

  	
   

  	
   

  
	
  To be determined

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

D-1

 

Schedule 1

 

Prohibited
Non-Audit Services*

 

Bookkeeping or other services related to the
accounting records or financial statements of the audit client.

 

Financial information systems design and
implementation.

 

Appraisal or valuation services, fairness
opinions or contribution-in-kind reports.

 

Actuarial services.

 

Internal audit outsourcing services.

 

Management functions.

 

Human resources.

 

Broker-dealer, investment adviser or investment
banking services.

 

Legal services.

 

Expert services unrelated to the audit.

 

* Provision of these non-audit
services is permitted if it is reasonable to conclude that the results of these
services will not be subject to audit procedures.

 

Materiality is not an appropriate basis upon
which to overcome the rebuttable presumption that prohibited services will be
subject to audit procedures because determining materiality is itself a matter
of audit judgment.

 

 

 

S-1

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