CALIFORNIA COASTAL COMMUNITIES INC
MATERIAL CONTRACTS
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<TYPE>EX-10.10
<SEQUENCE>2
<FILENAME>a06-1965_2ex10d10.htm
<DESCRIPTION>MATERIAL CONTRACTS
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<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit&nbsp;10.10</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;page-break-after:auto;text-align:center;text-decoration:underline;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">EMPLOYMENT
AGREEMENT</font></u></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">THIS
EMPLOYMENT AGREEMENT (the &#147;Agreement&#148;) is entered into as of May&nbsp;1, 1998
by and between ED MOUNTFORD (&#147;Executive&#148;) and Hearthside Homes,&nbsp;Inc., a
California corporation (&#147;Employer&#148;), which is an indirect wholly-owned
subsidiary of California Coastal Communities,&nbsp;Inc., a Delaware corporation
(&#147;Parent&#148;).</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:23.75pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WITNESSETH:</font></p>

<p style="margin:0in 0in .0001pt;page-break-after:auto;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;page-break-after:auto;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHEREAS, Executive has
served Employer in various executive capacities and Employer desires to obtain
the benefit of continued service by Executive, and Executive desires to render
continued services to Employer;</font></p>

<p align="left" style="margin:0in 0in .0001pt;page-break-after:auto;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHEREAS,
Employer has determined that because of Executive&#146;s substantial experience and business
relationships in connection with the business of Employer, it is in the
Employer&#146;s best interest and that of its stockholders to secure services of
Executive and to provide Executive certain additional benefits; and</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHEREAS,
Employer and Executive desire to set forth in this Agreement the terms and
conditions of Executive&#146;s employment with Employer.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">NOW,
THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties agree as follows:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h1 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SECTION&nbsp;1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>TERM</u>.
Employer agrees to employ Executive and Executive agrees to serve Employer, in
accordance with the terms of this Agreement, for a term of two (2)&nbsp;years, commencing
on the date hereof.</h1>

<h1 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h1>

<h1 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SECTION&nbsp;2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>SERVICES</u>.
So long as this Agreement shall continue in effect, Executive shall use his
commercially reasonably efforts and abilities to promote Employer&#146;s business,
affairs and interests, and shall perform&nbsp;the services contemplated by this
Agreement in accordance with policies established by the Company.</h1>

<h1 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h1>

<h1 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SECTION&nbsp;3.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>SPECIFIC
POSITION; DUTIES AND RESPONSIBILITIES</u>. Employer and Executive agree that,
subject to the provisions of this Agreement, Employer will employ Executive and
Executive will serve Employer as a senior officer for the duration of this
Agreement. The specific job position in which Executive shall serve shall be Senior
Vice President. Executive agrees to observe and comply with the rules&nbsp;and
regulations of Employer respecting the performance of Executive&#146;s duties and
agrees to carry out and perform&nbsp;directions and policies of Employer as
they may&nbsp;be, from time to time, stated either orally or in writing. Employer
agrees that the duties which may&nbsp;be assigned to Executive shall be usual
and customary duties of the job position set forth in this Section&nbsp;3, and
shall not be inconsistent with the provisions of the charter documents of
Employer or applicable law. Executive shall have such corporate power and
authority as shall reasonably be required to enable the discharge of duties in
any office that may&nbsp;be held.</h1>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h1 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SECTION&nbsp;4.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>COMPENSATION</u>.</h1>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Base
Salary and Bonus</u>.</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h5 style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Base
Salary</u>. During the Term of this Agreement, Employer agrees to pay Executive
a base salary of at least One Hundred Twenty Thousand Dollars ($120,000) per
year in semi-monthly installments on the same dates the other senior officers
of Employer are paid (&#147;Base Salary&#148;).</h5>

<h5 style="font-weight:normal;margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h5>

<h5 style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Bonus</u>.
Employer agrees to provide Executive with an incentive bonus, based upon the bonus
amount and performance targets mutually agreed upon and set forth on <u>Schedule&nbsp;A
</u>attached hereto.</h5>

<h5 style="font-weight:normal;margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h5>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Additional
Benefits</u>. Executive shall also be entitled to all rights and benefits under
any bonus plan, incentive, participation or extra compensation plan, pension
plan, profit-sharing plan, life, medical, dental, disability, or insurance plan
or policy or other plan or benefit that Employer or its subsidiaries may&nbsp;provide
for Executive (provided Executive is eligible to participate therein) or
employees of Employer generally as from time to time in effect during the Term
of this Agreement (the &#147;Plans&#148;). In any event, Employer shall provide Executive
with term life insurance, health insurance and long-term disability insurance
provided for Employer&#146;s executive employees generally. Executive shall also be
entitled to fringe benefits in accordance with the plans, practices, programs
and policies as in effect generally with respect to other peer executives of
Employer.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Perquisites</u>.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Vacation</u>.
Executive shall be entitled to four (4)&nbsp;weeks of paid vacation each
twelve-month period, which shall accrue on a monthly basis. Such vacation shall
be taken at such time or times as shall not unduly disrupt the orderly conduct
of the business of Employer and the duties of Executive. At the time of any
termination of employment, Executive shall be paid for all accrued but unused
vacation..</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Auto
Allowance</u>. During the Term of this Agreement, Employer shall provide
Executive a monthly automobile allowance in the amount of $550 plus
reimbursement of operating costs as is currently covered under Employer&#146;s Auto
Allowance Policy.</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Overall
Qualification</u>. Employer reserves the right to modify, suspend or
discontinue any and all practices, policies and programs generally applicable
to executives and other similarly situated executives at any time (whether
before or after termination of employment) without notice to or recourse by
Executive; however, Employer shall not amend the perquisites provisions set
forth in Section&nbsp;4(c)&nbsp;to reduce Executive&#146;s benefits thereunder
during the Term of this Agreement.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h1 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SECTION&nbsp;5.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>TERMINATION</u>.
The compensation and other benefits provided to Executive pursuant to this
Agreement, and the employment of Executive by Employer, shall be terminated
prior to expiration of the Term of this Agreement only as provided in this Section&nbsp;5:</h1>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Disability</u>.
In the event that Executive shall fail, because of illness, incapacity or
injury which is determined to be total (&#147;Disability&#148;) by a physician selected
by Employer or its insurers and acceptable to Executive or Executive&#146;s legal
representative (such agreement as to acceptability not to be withheld
unreasonably), to render, for three consecutive months or for shorter periods
aggregating ninety (90) or more business days in any twelve (12)-month period,
the services contemplated by this Agreement, Executive&#146;s employment hereunder may&nbsp;be
terminated by sixty (60) days&#146; prior written notice of termination from
Employer to Executive. Thereafter, Employer shall continue to (i)&nbsp;pay the
Base Salary to Executive for a period of six (6)&nbsp;months after the date of
termination, subject to adjustments referenced in the following paragraph, and (ii)&nbsp;provide
medical insurance as in effect prior to such termination for a period of six (6)&nbsp;months
following the date of termination. Thereafter, no further salary shall be paid
or medical insurance be provided. Executive&#146;s rights under the Plans subsequent
to termination of employment pursuant to this paragraph shall be determined
under the applicable provisions of the respective Plans, unless otherwise
expressly stated herein. This Agreement in all other respects will terminate
upon the termination of employment pursuant to this paragraph.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The amount of compensation to be paid to Executive
pursuant to the preceding paragraph shall be adjusted in the event Executive
becomes entitled to and receives disability benefits under any disability
payment plan, including disability insurance. The amount of Executive&#146;s
compensation otherwise payable by Employer pursuant to the preceding paragraph
shall be reduced, on a dollar-for-dollar basis, but not to less than zero, by
the amount of any such disability benefits received by Executive, but only to
the extent such benefits are attributable to payments made by Employer.</font></h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Death</u>.
In the event of Executive&#146;s death during the Term of this Agreement, Executive&#146;s
Base Salary shall immediately terminate and Employer shall pay to the estate of
Executive the Base Salary accrued to the date of Executive&#146;s death to the
extent not theretofore paid. If Executive&#146;s death occurs while receiving payments
under Section&nbsp;5(a)&nbsp;above, such payments shall cease. Executive&#146;s
rights under the Plans subsequent to his death shall be determined under the
applicable provisions of the respective Plans; provided that, notwithstanding
any provisions to the contrary therein, Employer shall continue to provide
medical insurance to the dependents of Executive for a period of six (6)&nbsp;months
following the death of Executive. This Agreement in all other respects will
terminate upon the death of Executive.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>For
Cause</u>. The employment of Executive hereunder shall be terminable by
Employer in the event that Executive (i)&nbsp;is or has been engaging in
willful or grossly negligent conduct which has resulted in a failure to perform&nbsp;Executive&#146;s
duties hereunder or, (ii)&nbsp;has committed an act of dishonesty, gross
negligence or misconduct, which has a direct, substantial and adverse effect on
Employer, its business or reputation.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Notwithstanding the foregoing, Executive shall not be
terminated for cause pursuant to the first paragraph of this subsection&nbsp;5(c)&nbsp;unless
and until Executive has received written notice of a proposed termination for
cause and Executive has had an opportunity to be heard by an officer of the
Company authorized to take such action. Executive shall be deemed to have had
such opportunity if given written or telephonic notice by any officer at least
72 hours in advance of a meeting.</font></h2>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In the event of Executive&#146;s termination pursuant to
this subsection&nbsp;5(c), Executive&#146;s rights to receive Base Salary shall
immediately terminate and Employer shall pay to Executive his Base Salary and
vacation accrued to the date of such termination to the extent not theretofore
paid. Executive&#146;s rights under the Plans subsequent to termination shall be
determined under the applicable provisions of the respective plans. This
Agreement in all other respects will terminate upon such termination.</font></h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Without
Cause</u>. Notwithstanding any other provision of this Section&nbsp;5, the
Board shall have the right to terminate Executive&#146;s employment with Employer
without cause at any time upon at least thirty (30) days&#146; prior written notice
to Executive. The following conditions shall thereupon become applicable:</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Severance
Pay</u>. Employer shall continue to pay Executive the Base Salary on a semi-monthly
basis for the remainder of the Term of this Agreement.</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Medical
Insurance Continuation</u>. Employer shall continue to provide (under COBRA)
medical insurance as in effect prior to such termination for twelve (12) months
following such termination, and Employer shall bear all costs for such
insurance.</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h3 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Bonus
Payment</u>. If Executive is terminated without cause, Executive shall also be
paid for any potential bonuses under this Agreement (the &#147;Bonus Severance&#148;). The amount of any such Bonus Severance shall
be equal to the full amount of any unpaid target bonus payment(s) set forth on <u>Schedule&nbsp;A</u>.</h3>

<h3 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h3>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Voluntary
Termination</u>. At any time during the Term of this Agreement, Executive shall
have the right, upon thirty (30) days&#146; prior written notice to Employer, to
terminate his employment with Employer. Upon termination of Executive&#146;s
employment pursuant to this subsection&nbsp;5(e), (i)&nbsp;Executive&#146;s right to
receive Base Salary shall immediately terminate and Employer shall pay to
Executive his Base Salary accrued to the date of such termination to the extent
not theretofore paid and (ii)&nbsp;Executive&#146;s rights under the Plans
subsequent to such termination shall be determined under the applicable
provisions of the respective Plans. This Agreement in all other respects will
terminate upon such termination.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(f)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Termination
by Executive for &#147;Good Reason&#148;</u>. Notwithstanding any other provisions of
this Agreement, Employer shall provide Executive with the payments and benefits
set forth in Section&nbsp;5(d)&nbsp;in the event Executive terminates
employment for &#147;Good Reason.&#148;&#160; For
purposes of this Agreement, &#147;Good Reason&#148; for Executive to terminate employment
shall mean voluntary termination as a result of (i)&nbsp;the assignment to
Executive of duties inconsistent with the position and status of Executive as
set forth in this Agreement without Executive&#146;s prior written consent, (ii)&nbsp;a
substantial alteration in the nature, status or prestige of Executive&#146;s
responsibilities as set forth in this Agreement or a change in Executive&#146;s
title or reporting level from that set forth in this Agreement, (iii)&nbsp;the
relocation of Employer&#146;s executive offices or principal business location to a
point more than twenty-five (25) miles from the location of such offices or
business as of the date of this Agreement, (iv)&nbsp;reduction by Employer of
Executive&#146;s Base Salary in effect on the date hereof or as the same may&nbsp;be
increased from time to time, (v)&nbsp;any action by Employer (including the
elimination of benefit plans without providing substitutes therefor or the
reduction of Executive&#146;s benefits thereunder) that would substantially diminish
the aggregate</h2>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>

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</div>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">value of Executive&#146;s incentive awards (including any
action taken by Employer, following a Change of Control, that materially
impairs the ability of Executive to achieve the Performance Objectives set
forth on Schedule&nbsp;A attached hereto) and other fringe benefits, or (vi)&nbsp;a
failure by Employer to obtain from any successor, before succession takes
place, an agreement to assume and perform&nbsp;this Agreement.</font></h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For purposes of the
foregoing paragraph, a &#147;Change of Control&#148; means, and shall be deemed to have
taken place upon, the occurrence of: (i)&nbsp;a transaction requiring stockholder
approval involving the sale of all or substantially all of the assets of Parent
or the merger of Parent with or into another corporation or business entity,
other than a transaction in which stockholders of Parent immediately prior to
the closing of such transaction own a majority of the acquiring corporation or
entity immediately after giving effect to such transaction, or (ii)&nbsp;the acquisition
by any Person as Beneficial Owner (as such terms are defined in the Securities
Exchange Act of 1934, as amended), directly or indirectly, of securities of
Parent representing fifty percent (50%) or more of the total voting power
represented by Parent&#146;s then outstanding voting securities.</font></h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h1 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SECTION&nbsp;6.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>BUSINESS
EXPENSES</u>. During the Term of this Agreement, Employer shall reimburse
Executive promptly for reasonable business expenditures, including travel,
entertainment, parking, business meetings and professional dues made and
substantiated in accordance with policies, practices and procedures established
from time to time by the Board and incurred in pursuit and furtherance of
Employer&#146;s business and goodwill.</h1>

<h1 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h1>

<h1 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SECTION&nbsp;7.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>MISCELLANEOUS</u>.</h1>

<h1 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h1>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Succession;
Survival</u>. This Agreement shall inure to the benefit of and shall be binding
upon Employer, its successors and assigns. Absent the prior written consent of
Executive, this Agreement may&nbsp;not be assigned by Employer other than in
connection with a merger or sale of all or substantially all the assets of
Employer or a similar transaction in which the successor or assignee assumes
(whether by operation of law or express assumption) all obligations of Employer
hereunder. The obligations and duties of Executive hereunder are personal and
otherwise not assignable. Executive&#146;s obligations and representations under
this Agreement will survive the termination of Executive&#146;s employment,
regardless of the manner of such termination.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Notices</u>.
Any notice or other communication provided for in this Agreement shall be in
writing and sent if to Employer to its office at:</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Hearthside Homes,&nbsp;Inc.<br>
4343 Von Karman Avenue<br>
Newport Beach, California 92660<br>
Attention: Chief Executive Officer</font></p>

<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">or at such other address as Employer may&nbsp;from
time to time in writing designate, and if to Executive at such address as
Executive may&nbsp;from time to time in writing designate (or Executive&#146;s
business address of record in the absence of such designation). Each such
notice or other communication shall be effective (i)&nbsp;if given by
telecommunication, when transmitted to</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">the applicable number so specified in (or pursuant to)
this Section&nbsp;7 and an appropriate answer back is received, (ii)&nbsp;if
given by mail, three days after such communication is deposited in the mails
with first class&nbsp;postage prepaid, addressed as aforesaid or (iii)&nbsp;if
given by any other means, when actually delivered at such address.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Entire
Agreement; Amendments</u>. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof and it supersedes any prior agreements,
undertakings, commitments and practices relating to Executive&#146;s employment by
Employer. No amendment or modification of the terms of this Agreement shall be
valid unless made in writing and signed by Executive and, on behalf of
Employer, by an officer expressly so authorized by its Board of Directors.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Waiver</u>.
No failure on the part&nbsp;of any party to exercise or delay in exercising any
right hereunder shall be deemed a waiver thereof or of any other right, nor
shall any single or partial exercise preclude any further or other exercise of
such right or any other right.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Choice
of Law</u>. This Agreement, the legal relations between the parties and any
action, whether contractual or non-contractual, instituted by any party with
respect to matters arising under or growing out of or in connection with or in
respect of this Agreement, the relationship of the parties or the subject
matter hereof shall be governed by and construed in accordance with the laws of
the State of California, applicable to contracts made and performed in such
State and without regard to conflicts of law doctrines, to the extent permitted
by law.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(f)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Attorney&#146;s
Fees</u>. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to recover reasonable attorney&#146;s fees, costs and necessary disbursements from
the non-prevailing party in addition to any other relief to which such party may&nbsp;be
entitled.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(g)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Confidentiality;
Proprietary Information</u>. Executive agrees to not make use of, divulge or
otherwise disclose, directly or indirectly, any trade secret or other
confidential or proprietary information concerning the business (including but
not limited to its products, employees, services, practices or policies) of
Employer or any of its affiliates of which Executive may&nbsp;learn or be aware
as a result of Executive&#146;s employment during the Term of the Agreement or prior
thereto as stockholder, employee, officer or director of, or consultant to,
Employer, except to the extent such use or disclosure is (i)&nbsp;necessary to
the performance of this Agreement and in furtherance of Employer&#146;s best
interests, (ii)&nbsp;required by applicable law, (iii)&nbsp;lawfully obtainable
from other public sources, or (iv)&nbsp;authorized in writing by or pursuant to
a written agreement with Employer. The provisions of this subsection&nbsp;(g)&nbsp;shall
survive the expiration, suspension or termination, for any reason, of this
Agreement.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(h)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Severability</u>.
If any provision of this Agreement is held invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full force and effect,
and if any provision is held invalid or unenforceable with respect to
particular circumstances, it shall nevertheless remain in full force and effect
in all other circumstances, to the fullest extent permitted by law.</h2>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>

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<div style="font-family:Times New Roman;">

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Withholding;
Deductions</u>. All compensation payable hereunder, including salary and other
benefits, shall be subject to applicable taxes, withholding and other required,
normal or elected employee deductions.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(j)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Section&nbsp;Headings</u>.
Section&nbsp;and other headings contained in this Agreement are for convenience
of reference only and shall not affect in any way the meaning or interpretation
of this Agreement.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="left" style="font-size:10.0pt;font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(k)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Counterparts</u>.
This Agreement and any amendment hereto may&nbsp;be executed in one or more
counterparts. All of such counterparts shall constitute one and the same
agreement and shall become effective when a copy signed by each party has been
delivered to the other party.</h2>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#147;EMPLOYER&#148;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">HEARTHSIDE HOMES,&nbsp;INC.</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.86%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By</font></p>
  </td>
  <td width="21%" colspan="2" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:21.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">:&nbsp;&nbsp; /s/ Raymond J. Pacini</font></p>
  </td>
  <td width="21%" valign="top" style="padding:0in 0in 0in 0in;width:21.36%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.86%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="42%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:42.76%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;Raymond J. Pacini</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.86%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="42%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:42.76%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;Chief Executive Officer</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#147;EXECUTIVE&#148;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="23%" colspan="2" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:23.38%;">
  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;/s/ Ed
  Mountford</font></p>
  </td>
  <td width="22%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:22.22%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:45.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">ED MOUNTFORD</font></p>
  </td>
 </tr>
 <tr height="0">
  <td width="407" style="border:none;"></td>
  <td width="21" style="border:none;"></td>
  <td width="153" style="border:none;"></td>
  <td width="6" style="border:none;"></td>
  <td width="160" style="border:none;"></td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7</font></p>

<div style="margin:0in 0in .0001pt;"><hr size="2" width="100%" noshade color="gray" align="left"></div>

</div>
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