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Mr. Lonnie Brokke December 9,2003 Page 4 All compensation under the Class Action Settlement Agreement is contingent upon the City in fact undertaking the project and removing the phenolic foam roof insulation. In order to accept the settlement compensation, the City must sign an "Acceptance of Settlement, Covenant to Remediate, and Release of All Claims." This document binds the City contractually to remove, replace and dispose of the phenolic foam insulation and undertake the deck remediation upon the receipt of compensation. Within five days of signing the Acceptance of Settlement, the City will receive 50% of the depreciated roof replacement compensation (minus Class Action Lawsuit Legal fees). The City must begin work on the roof remediation within 60 days from receipt of this compensation. An extension to this 60-day period may be requested. However, per Jim Edwards at PhenCon, the Claims Office generally does not grant extensions beyond the next construction season. The final installment of the roof replacement compensation and the payment of the deck remediation compensation and interior protection compensation will be paid after the Claims Office receives documentation verifying that the deck has been remediated, the phenolic foam insulation removed, and the roofing system replaced. OPTIONS While the City has several options with regard to its participation in the Class Action Settlement, these options are somewhat limited due to the language found in the Class Action Settlement Agreement. 1. Wait to accept the settlement offer until a later date, but prior to October 2008, and replace/remediate at that time. Theoretically, the existing Settlement Offer provided by Claims Office is on the table until the useful life of the roof expires in October 2008. The Class Action Settlement Agreement provides that a claimant is eligible for roof replacement compensation up to the time that the roofing system has any remaining useful life. Thus, under the Class Action Settlement Agreement as written, the City could accept the Offer anytime prior to October 2008, receive the f��l amount of the offer, and then replace the roof and remediate the deck at that time. However, there are several disadvantages to extending the City's acceptance of the Offer. First, although the Class Action SettlementAgreement appears to read that the Settlement Offer as it currently stands is on the table until the useful life of the roof expires, this reading is based upon what appears to have been an oversight by the Agreement's drafters. Under the Class Action SettlementAgreement, if a claimant signs an Acceptance of Settlement, but does not begin the work within 60 days of payment of the first installment, there is a provision which states that depreciation again begins to run and the Roof