CONSTRUCTION CONTRACT

1. THIS AGREEMENT is between ______________ (“owner”), whose address for notices is

_______________________, and California City Builders, Inc., a California Corporation (“contractor”),
whose address for notices is 113 St. Albans Place, Goleta, California 93117 and whose Contractors’ License
Number is 861440.

2. Description of Work. Contractor will furnish all work, labor, tools, equipment, materials, supervision,
scheduling, coordination, and contract administration necessary to construct and complete in a good,
expeditious, workmanlike, and substantial manner, under the terms of this contract, a single level, single
family residence of approximately 1670 square feet (“project”), (more specifically described in the
specifications attached to this contract as Exhibit 1), on real property owned by Owner described as follows:

[Legal description of property or property address sufficient to identify the building location].

3. Property lines. Owner will locate and point out the property lines to contractor and will provide
boundary stakes through a licensed land surveyor if any doubt about boundaries exists.

4. Right to Approve Financial Arrangements. Before the work begins, owner shall disclose to
contractor its arrangements for financing payments required under this contract. Contractor will have no
obligation to start work until contractor is satisfied that such financial arrangements are reasonably adequate
to assure payment of the contract price.

5. Personal Liability. If the owner is a business entity or a partnership rather than an individual, all of
the officers and director or all of the partners, as the case may be, shall be personally liable, jointly and
severally, with the owner for the performance of all obligations under this contract.

6. Building Department Requirements. The contract price includes full compensation to be paid to
contractor for compliance with all requirements of the applicable building codes and all requirements that
may be made by the building department, fire marshal, or any other public officer or agency, unless
otherwise specified in an exhibit or addendum hereto which exhibits or addendums shall be incorporated
herein by reference.

7. Payment. Owner will pay contractor the total sum of $148,500.00 in installments as follows:
i. $50,000.00 at permit issuance as a materials draw.
ii. $32,000.00 after “roof nail inspection”.
iii. $32,000.00 after Mechanical inspection.
iv. $32,000.00 upon substantial project completion but prior to issuance of certificate of occupancy.
v. Final payment of the balance of $2,500.00 within 3 days after issuance of certificate of occupancy.
Payment shall be due and payable five days after presentment of the bill for each progress payment.
No further work will proceed until payment is received.
If payments are to be made through a construction lender, owner represents that the construction loan
fund is sufficient to pay the contract price and any extra work that may be ordered by owner and owner will
do everything possible to expedite payments.
The request for payment must be accompanied by supporting data in such form and substance as
owner may require to confirm that the claimed portion of the work has been properly performed.
Final payment will be made to contractor as scheduled above provided that contactor has furnished
mechanics’ lien releases to Owner that comply with Civil Code § 3362 signed by all subcontractors, sub-
subcontractors, material suppliers, and others that have performed work on or furnished equipment or
materials to the job.
Notwithstanding the above, owner reserves the right to issue payment by joint check directly to
contractor and to any subcontractor or material supplier who claims to remain unpaid for labor or materials
provided for and incorporated into the work of improvement.

8. Start and Completion of Work. Contractor agrees to substantially commence work within ______
days after executing this agreement and shall diligently pursue the work to completion within 180 days,
subject to permissible delays as described in § 9, below. Work will begin approximately on the _______ day
of ________, 200__. Substantial commencement of the work shall be deemed to be the date when
contractor first supplies workers to the job who actually start construction operations. Contractor’s failure to
commence work substantially within 20 days after the approximated date specified is a violation of the
Contractors’ State License Law.

9. Delay Beyond Contractor’s Control. Contractor shall be excused for any delay in completion of the
contract caused by acts of God; acts of the owner, of owner’s agents, or of owner’s employees or
independent contractors; inclement weather; labor trouble; acts of public utilities, public bodies, or inspectors
(but not related to possible defects in contractor’s performance); changes requested by owner; owner’s
failure to make progress payments promptly; or other contingencies unforeseen by contractor and beyond its
reasonable control.

10. Right to Stop Work. Contractor may stop work if any payment, including any payment for extra work,
is not made to the contractor as agreed to under this contract. If such nonpayment occurs, contractor may
keep the job idle until all payments are received.

11. Corrective or Repair Work. If corrective or repair work of a minor nature remains undone by
contractor after the project is ready for occupancy, contractor shall perform the work expeditiously and
owner shall not withhold any payment pending completion of such work.
If major items of corrective or repair work remain undone after the building is ready for occupancy, the
cost of which aggregates more than 5 percent of the gross contract price, then owner, pending completion of
the work may withhold final payment but shall not withhold any greater amount.

12. Final Payment Waives Claims. The owner, by making final payment under this contract, waives any
claim that it may have against the contractor for damages from defects that are known to the owner,
apparent, or discoverable from reasonable inspection at the time final payment is made.

13. Drawings, Specifications, Permits and Fees. The project will be constructed according to drawings
and specifications that have been examined by owner and contractor and that have been or may be signed
(or initialed) by the parties to this contract. Unless otherwise specifically provided in the drawings or
specifications, contractor will obtain and pay for all required building permits, and owner will pay school,
transportation, and similar fees and assessments and charges required by public agencies and utilities for
financing or repaying the cost of sewers, storm-drains, water service, and other utilities, including sewer and
storm-drain reimbursement charges, revolving fund charges, hookup charges, and the like.

14. Labor and Material. Contractor shall pay all valid charges for labor and material furnished to
contractor or its subcontractors and used in the construction of the project, but is excused from this
obligation to the extent that owner may be in arrears in making progress payments to contractor. If
contractor fails to pay for work or materials furnished under this paragraph and as a result, mechanics’ liens
are recorded or threatened against the project, owner may make such payments in good faith on
contractor’s behalf, and contractor shall on demand reimburse owner for the amount actually paid. If owner
settles or purchases such claims at a discount, contractor shall be entitled to the benefit of the discount.

15. Interpretation of Documents. The contract, drawings, and specifications are intended to supplement
one another. In a conflict, however, the specifications shall control the drawings, and this contract shall
control both. If work is displayed on the drawings but not called for in the specifications, or if the work is
called for in the specifications but not displayed on the drawings, contractor shall be required to perform the
work as though it were called for and displayed in both places.

16. Change orders. Contractor may, without affecting the validity of this contract, and without prior
approval of the owner, perform minor changes, modifications, deletions, or additions to the project for which
there shall be no increase or reduction of the contract price. No such changes shall substantially change the
scope of the project. Contractor shall make no major changes in the work without issuing a written change
order, and contractor shall not be entitled to compensation for any major changes in the project unless the
owner agrees and has issued a written change order designating the work to be performed. Any substantial
changes in the project desired by the owner are subject to approval by the Contractor, and if owner orders
work added or deleted and contractor agrees, the contract price shall be increased or reduced by a fair and
reasonable valuation determined in advance of the change by agreement of the parties; if the parties are
unable to agree on the amount or value of the change ordered by the Owner, no change shall be allowed. If
any such change constitutes extra work, payment shall be made by the owner upon completion of the
change.

Requests for extra work should be made in writing, but the contractor is entitled to be paid for extra
work whether or not the requests are in writing. Expense incurred because of unusual or unanticipated
underground conditions (e.g., fill, rock, groundwater) shall be paid for by owner as extra work.

17. Allowances. If the contract price includes allowances and if the cost of materials, fixtures, or
equipment covered by the allowance is either greater or less than the allowance, the contract price shall be
increased or decreased accordingly. Allowances include only the cost of materials, fixtures, or equipment.
All costs of delivery, handling, and installations are included in the contract price and not the allowance.

18. Notice of Completion. Owner agrees to sign and record a notice of completion with 7 days after the
project is completed and ready for occupancy. If owner fails to so record the notice of completion, then
owner hereby appoints contractor as owner’s agent to sign and record a notice of completion on owner’s
behalf. The agency is irrevocable and is an agency coupled with an interest. Contractor may bar occupancy
of the project by owner or anyone else until contractor has received all payments due under this contract and
until notice of completion has been recorded.

19. Owner’s Required Insurance. Before work begins under the contract, owner will procure a broad
form of builder’s risk insurance, including course of construction, vandalism, and malicious-mischief
coverage. The insurance must be in a sum at least equal to the contract price with loss payable to the
owner or the beneficiary under any deed of trust covering the project. The insurance will name contractor
and subcontractors as additional insureds and shall be written to protect owner, contractor, subcontractors,
and construction lender as their interests may appear. If owner fails to do so for 20 days after receiving
notice from contractor, contractor may procure such insurance as agent for and at the expense of owner but
is not required to do so.

20. Contractor’s and Subcontractors’ Required Insurance. Contractor and all subcontractors shall, at
their expense, obtain and maintain insurance on all their operations with carriers acceptable to owner,
including the following coverages:
(a) Workers’ compensation and employer’s liability insurance;
(b) Commercial general liability insurance covering all operations;
(c) Automobile liability insurance including coverage for all owned, hired, and non-owned vehicles.
All insurance coverages shall be in amounts and for durations acceptable to owner but in no event
less than 1 million dollars per occurrence and 1 million in the aggregate. Contractor and subcontractors
shall name owner as additional insured under their commercial general liability insurance policies, and such
insurance shall be primary to owner’s liability insurance policies. Contractor and subcontractors shall
provide certificates of insurance and copies of additional insured endorsements to owner before
commencement of the work. If subcontractor or contractor fails to procure and deliver acceptable insurance
policies in accordance with the terms of this contract, owner may, at its option, obtain such insurance at the
expense of Subcontractor or Contractor, without notice to Subcontractor or Contractor.

21. Use of Insurance Proceeds. If the project is destroyed or damaged by fire, storm, flood, landslide,
earth movement, subsidence, or earthquake, or by theft or vandalism, the owner shall pay for any work done
by contractor in rebuilding or restoring the project as extra work, and owner may use insurance proceeds for
such payments if they are available. If, however, the estimated cost of replacing work already accomplished
by contractor exceeds 20 percent of the contract price, contractor may terminate further performance under
this contract, and, in that event, contractor shall be paid the reasonable cost, including a net profit to
contractor in the amount of ___ per cent, of all work performed by contractor before cancellation. If such
estimated cost exceeds _________ percent, owner may terminate the contractor’s further performance
under this contract and contractor shall be paid the amount computed in accordance with the preceding
sentence.

22. Guaranty. Contractor guarantees all equipment, material, supplies, and work furnished on the job
against defective construction, components, or workmanship for a period of ____________ after completion
of the project, except when the supplier or manufacturer of the equipment or material provides a longer
guaranty, contractor expressly agrees to act as co-guarantor of such equipment and materials, and
contractor shall supply owner with all warranty and guaranty documents relative to equipment and materials
incorporated in the job and guarantied by their suppliers and manufacturers.

23. Indemnity. Contactor and subcontractors will indemnify and hold owner harmless from all claims,
demands, or liability arising from\or encountered in connection with this contract or the prosecution of work
under it, whether such claims, demands, or liability are caused by contractor, contractor’s agents or
employees, or subcontractors employed on the project, their agents or employees, or products installed on
the project by contractor or subcontractors, excepting only such injury or harm as may be caused solely and
exclusively by owners fault or negligence. Such indemnity shall extend to claims, demands, and liability for
injuries occurring after completion of the project as well as during the work’s progress. Contractor shall
incorporate this indemnity clause into its subcontracts.

24. Arbitration. Any controversy among the parties to the construction of the project arising from or
relating to the performance or interpretation of this contract or any subcontract is subject to arbitration.
Owner, contractor, and all subcontractors, sub-subcontractors, material suppliers, sureties, and other parties
involved with the construction of the project are bound, each to the other, by this arbitration clause, provided
that the party has signed this contract or any document that refers to or incorporates this contract by
reference, or signs any other agreement to be bound by this arbitration clause.
On the demand of the arbitrator or any party to an arbitration initiated under the arbitration provisions
of this contract, owner, contractor, and any subcontractor, sub-subcontractor, surety, or other party bound by
this arbitration provision agrees to join in, become a party to, and be bound by such arbitration.
Arbitration shall be before a panel of three arbitrators chosen as follows: A party desiring arbitration
shall give the other party written notice containing the general description of the dispute and designating the
name and address of its arbitrator. Within 20 business days after receiving that notice, the other party shall
designate its arbitrator. The arbitrators so selected shall choose a third arbitrator within 10 business days. If
the other party fails to designate an arbitrator the arbitrator appointed by the party desiring arbitration shall
serve as sole arbitrator.
Any hearing shall take place in _____________at a time and place selected by the arbitrator(s). A pre-
arbitration hearing shall be held within ____ days after the arbitrators are selected. Arbitration shall be
conducted and the arbitrators shall decide the issues under the laws of the State of California, however the
Rules of Evidence need not be followed.
Unless otherwise ordered by the arbitrators, the arbitrators’ compensation and the other arbitration
expenses shall be divided equally between or among the parties. The arbitrators may award any remedy
that is just and equitable in the arbitrators’ opinion. The arbitrator will award to the prevailing party or parties
such sums as are proper to compensate for the time, expense, and trouble of arbitration, including
arbitration fees and attorney fees. Judgment may be entered on the award.
If any party refuses or neglects to appear at or participate in arbitration after reasonable notice, the
arbitrator(s) may decide the controversy in accordance with whatever evidence is presented by the party or
parties who do participate. The arbitrator(s) will retain jurisdiction of a controversy even if a party or parties
to the dispute will not or cannot be joined in the arbitration proceedings.
The parties authorize the arbitrators to order discovery proceedings, in the arbitrators’ discretion, and
on terms and conditions the arbitrators may consider appropriate, including depositions, interrogatories,
requests for admission, and orders for the examination of documents, persons, and things. Such orders
shall be binding on the parties. If any party fails to comply with a discovery order authorized by this clause
the arbitrators may assume that the evidence that would have been produced by complying with the order
would have been unfavorable to the party that failed to comply with the order.
All parties will promptly make their job documents available to one another for inspection and copying.
The arbitrators and parties may give notice by mail, delivery service, fax, or other method of electronic
transmission, including email if a valid email address has been provided by the party upon notice is served.
The arbitrators will not communicate with any party on any issue in controversy except at a hearing or during
a conference call with all parties represented after reasonable notice.
A party to this contract shall not be held to have waived the right to enforce this arbitration clause by
filing a lawsuit to obtain or protect a mechanics’ lien, a stop notice, a writ of attachment, a temporary
restraining order or a preliminary injunction, or a lis pendens notice. After the provisional remedy has been
obtained, court proceedings shall be stayed pending the arbitrators’ award, with the court retaining
jurisdiction only to enter and enforce a judgment arising from the arbitration.
 "NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES' PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE BUSINESS AND PROFESSIONS CODE OR OTHER APPLICABLE LAWS. YOUR
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY." "WE HAVE READ AND
UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE
MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES' PROVISION TO NEUTRAL
ARBITRATION."

I accept the arbitration provision: ____________(initial) ____________(Initial)

Owner Contractor

25. Time of the Essence. All time limits stated in this contract are of the essence to this contract, and
failure to comply with this provision shall be a material breach of this contract. Unless otherwise expressly
stated, any reference in this contract to days means calendar days.

26. Cleanup. Contractor shall keep the project free from accumulation of debris, waste materials, or
rubbish caused by its operations. On completion of the work, contractor will remove all debris, waste
materials, rubbish, and surplus material from owner’s property and will thoroughly clean the project, leaving
it in a neat and broom clean conditions. If contractor fails to clean up, owner may do so at the contractor’s
expense.

27. Assignment. Neither party may assign this contract, or payments due under the contract, without the
other party’s written consent.

28. Other Documents. The following drawings, specifications, and other documents are incorporated into
this contract: [list]

29. Costs and Fees. If any party to this contract commences an action or arbitration proceeding to
interpret or enforce this Contract or any provision of it, the party prevailing at trial or arbitration shall be
entitled recover his reasonable costs and fees, including attorneys fees and expert witness fees in addition
to any other amounts ordered by the court or arbitrator(s).

30. Unenforceable Provisions to be Stricken. If any portion of this agreement shall be deemed
unenforceable or illegal, that portion shall be stricken from the contract and the remainder of the contract
shall remain valid and in full force and effect.

31. Waiver. Waiver by any party of performance of any part of this contract shall not constitute waiver of
any other part of the contract or to any future performance of the contract including subsequent performance
under the part of the contract waived. All such waivers shall be in writing signed by the parties to this
contract.

32. Notice. Any notice required or permitted under this contract shall be deemed given, if in writing, on
the earlier of delivery or 5 days after deposit in the U.S. Mail, first class postage prepaid and addressed to
the party at the address shown in this contract, although such address may be changed by written notice
from one party to the other as necessary.

33. Integration. This contract constitutes the entire agreement of the parties. No other agreements, oral
or written, pertaining to the work to be performed under this contract, exist between the parties. This
contract can be modified only by an agreement in writing signed by both parties.
34. Governing Law. This contract shall be construed in accordance with, and governed by, the laws of
the State of California. This paragraph shall not prevent application of the Federal Arbitration Act to any
dispute that may arise under this contract.

35. Contractor’s License Notice. Contractors are required by law to be licensed and regulated by
the Contractors’ State License Board, which has jurisdiction to investigate complaints against
contractors if a complaint regarding a patent act or omission is filed within four years of the date of
the alleged violation. A complaint regarding a latent act or omission pertaining to structural defects
must be filed within 10 years of the date of the allege violation. Any questions concerning a
contractor may be referred to the Registrar, Contractors’ State License Board, P.O. Box 26000,
Sacramento, CA 95826.

36. PERFORMANCE AND PAYMENT BOND. THE OWNER HAS THE RIGHT TO REQUIRE THE
CONTRACTOR TO OBTAIN A PERFORMANCE AND PAYMENT BOND AT THE OWNER’S EXPENSE.

_________________________________________ Date:
Owner - Customer
By:
Its:

__________________________________________
California City Builders, Inc. (Contractor)
By: Dave Demeter
Its: President
 EXHIBIT 1
(Project Specifications)