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point, shall match the colors and roof materials of the residence, and shall be reviewed and approved by the RHADC and shall then submitted to the Planning Division under an application for Administrative Design Review for review and approval before the issuance of a building permit. d. Grading encroachments and drainage issues at neighboring properties. The applicants are required to retain a qualified Civil Engineer to identify all corrective measures necessary to ensure that proper drainage systems are designed and installed to prevent runoff between the applicants' property and adjacent properties. The applicants shall then submit the plans showing these measures to the City Engineer for review and approval before installation, and shall then install the corrective measures to the satisfaction of the City Engineer. The applicants can retain the trees, shrubs, vineyard planting, and irrigation lines installed on the City's water line easement, without review and approval by the City, however, the applicants do so at their own risk. The City maintains the right to access the easement area unimpeded and work on the underground pipe without having to replace the vines, shrubs, trees, irrigation lines or any other improvements located within the City's easement. 4. The applicants shall diligently pursue and shall have one year to complete Condition number 3 described above. Inspections by the RHADC, Planning Division, and Building Division shall be coordinated with regards to the completion of these items before a Final Certificate of Occupancy shall be considered for issuance by the Director of Community Development. 5. The City shall retain the $100,000 cash deposit and shall disperse that money to the Reddys in accordance with section 6 of the Temporary Certificate of Occupancy Agreement between the Reddys and the City. 6. To the extent permitted by law, the project applicant shall defend (with counsel reasonably acceptable to the City), indemnify, and hold harmless the City, its City Council, its officers, boards, commissions, employees and agents ("Indemnified Parties") from and against any claim, action, or proceeding brought by a third party against the Indemnified Parties and/or the applicant to attack, set aside, or void the approval of the project or any permit authorized hereby for the project, including (without limitation) reimbursing the City its attorneys fees and costs incurred in defense of litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its choice. 7. The applicants shall obtain a Building Permit from the Building Division and any other applicable City permits for the project prior to the commencement of any construction. < End > Page 2