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Laerdal Medical Bldg.Elaine Snowden Town of Wappinger County Clerk 20 Middlebush Road Wappingers Falls, NY 12590 Dear Ms. Snowden: I am hereby transmitting for filing by you, the New York State Urban Development Corporation's (the "Corporation") General Project Plan, together with the findings required pursuant to Section 10 of the New York State Urban Development Corporation Act (the "UDC Act"), for the Laerdal Medical Corporation Industrial Effectiveness, Expansion, Retention, and Attraction Assistance Program Project in the Town of Wappinger, Dutchess County. This material is being filed pursuant to Section 16(2) of the UDC Act. A public hearing, also required by the UDC Act, will be held by the Corporation at the Town of Wappinger Town Hall, 20 Middlebush Road, Wappingers Falls, New York on Thursday, June 8, 1995 from 1:00 P.M. to 2:OOP.M. to consider the General Project Plan. If you have any questions concerning this project please call me at (212) 930-0450. Sincerely, :; c Edward Poteat Project Manager Industrial Development Enclosure cc: John Nodl, Esq. - UDC N New York State 1515 Broadway Charles A. Gargano Urban Development New York, NY 10036-8960 Chairman of the Board, Corporation 212/930-0200 and Chief Executive Officer FOR CONSIDERATION May 18, 1995 TO: The Directors FROM: Charles A. Gargano SUBJECT: Wappingers Falls (Dutchess County) - Laerdal Medical Corporation Industrial Project REQUEST FOR: Industrial Project Findings; Industrial Effectiveness, Expansion, Retention and Attraction Assistance Program Project Determinations; Adoption of the Proposed General Project Plan; Determination of No Significant Effect.on the Environment; Authorization to Make a Grant and to Take Related Actions GENERAL PROJECT PLAN I. Project Summary Grantee: Laerdal Medical Corporation ("Laerdal" or the "Company") Grantee Contact Information: Mr. John Farrell, Chief Financial Officer Laerdal Medical Corporation One Labriola Court Armonk, NY 10504 (914) 273-9404 Project Site: 167 Myers Corners Road Wappingers Falls, NY 12590 Proposed Project: The project involves the consolidation of Laerdal`s U.S. operations into a 135,000 square foot existing facility in Dutchess County. The facility will be renovated and machinery and equipment will be purchased. Employment: Existing Employment Level: 65 Projected Employment Three years after UDC disbursement: 200 UDC Investment: A $400,000 interest rate subsidy grant payable up -front and subject to full or partial repayment if job creation goals are not met (see Section IV) . Anticipated Appropriation Source: Strategic Resurgence Fund; Fiscal Year 1995-96 (See Section XI) Commitment Expiration Date: The UDC commitment will expire at the time of the first Directors' meeting occurring nine months after PACE approval of the project. UDC Project No: C622G Project Team: Economic Development Edward Poteat Legal Laurentina McKetney- Butler/Maria Buscarello Affirmative Action Delia Santana Finance Sam Coleridge Environmental Review Jill Jeffries II. Project Costs and Financing Sources Financing Uses• Amount Renovations $4,268,750 Soft Costs 300,000 Purchase of Machinery & Equipment 1,500,000 Fees 181,250 TOTAL: $6,250,000 Financing Sources: Amount Percent Rates/Terms/Lien Dutchess County $4,600,000 740 6.5% variable Industrial Revenue floater rate/ Bonds 10 years/ 1st lien on leasehold improvements UDC ERA Grant 400,000 50-. See note Company Equity 1,250,000 200 TOTAL: $6,250,000 100% Note: UDC will provide Laerdal with a $400,000 interest subsidy grant to subsidize the interest expenses incurred on the IDA bonds. The grant will be disbursed at closing on the IDA bonds and will immediately reduce the principal amount of the bonds to be issued from $5 million to $4.6 million. 2 III. Project Description A. BACKGROUND Laerdal manufactures, designs, and markets state -of -the --art therapeutic equipment, systems solutions for basic and advanced life support, and training aids for pre -hospital care. Many of the Company's products, including resuscitators and early defibrillation mechanisms, are used as life saving devices after an acute injury and before hospital care can be administered. Laerdal was founded in Norway in 1950. The Company began operations in the United States in 1967 with three employees. Today, the U.S. subsidiary of the Company has over 100 employees and facilities in Armonk, NY, Long Beach, CA, and Portland, OR. The Company also has a significant international presence with facilities in over ten countries, including Australia, England, Italy, Spain, and West Germany. The Company has been and continues to be a leader in pre- hospital care product development. In 1960, Laerdal introduced the Resusci Anne mannequin which is used for a variety of pre- hospital care training programs including CPR. In the 19701s, the Company began developing a cardiac rhythm simulator, hand-held manual resuscitators and pocket masks. In response to recent medical studies which have proven that 25. of all spinal cord injuries occur after the initial accident, Laerdal introduced the Stifneck cervical collar. This device was the first one-piece rigid cervical collar designed for pre -hospital use. "Helping Save Lives" is the Laerdal motto. Besides demonstrating its commitment to helping save lives through its products, the Company also sponsors many events and activities which promote comprehensive pre -hospital care. For example, in 1996, Laerdal will co-sponsor the Emergency Cardiac Care Update Conference. Moreover the Laerdal Foundation for Acute Medicine supports projects involving clinical studies and educational activities concerning acute medicine. For 1995, the Company has committed $600,000 to the foundation. Laerdal is.a market leader in many of the products it manufactures. The Company has a market share of over 250-. for CPR mannequins, suction devices, and early defibrillation devices. Laerdal customers include the New York City Health and Hospitals Corporation, the fire departments of Dallas and Washington D.C., the American Red Cross and many other municipalities and large health care agencies. For fiscal year 1994, net sales were $57 million. Between 1991 and 1994 sales revenue increased significantly, and the Company projects strong growth for the next five years. 3 B. THE PROJECT Laerdal proposes to renovate a 135,000 square foot facility in Wappingers Falls, Dutchess County. In addition, the Company will purchase machinery and equipment for the new facility. Project costs are estimated at $6.25 million. Sources of funds include Dutchess County IDA bonds of $4.6 million, a UDC ERA Grant of $400,000, and Company equity of $1.25 million. Laerdal will use the new facility to consolidate all of its U.S. operations. Currently, the Company has three facilities in the United States. Due to transportation, communication and other related costs, the present structure of its U.S. operations is inefficient. Laerdal hopes to streamline operations in order to meet future industry demands. The machinery & equipment purchased as a result of this project will be used for two purposes. First, the Company will upgrade its present telecommunication and computer systems for more efficient operations. Second, Laerdal will produce, in house, several high margin products which are currently produced by licensees. Laerdal undertook an extensive search for the optimum site for its consolidation. The Company evaluated sites on the West Coast as well as many mid -Hudson Valley buildings before selecting the Wappingers Falls facility. The decision to select a New York State.site was motivated in large part by an incentive package offered to Laerdal in 1994. That package included a $1.5 million loan for ten years at an escalating interest rate of 00i during years 1-2, 2k during years 3-4, 39,; during years 5-7, and 6k during years 8-10. In lieu of the loan, the Company has agreed to accept a $400,000 interest rate subsidy grant. The grant will be used up- front to reduce the principal amount on the bonds to be issued for the project, thereby, reducing interest expenses on the project financing to a comparable UDC loan. In order to calculate the overall value of the grant, UDC staff calculated the difference between the debt service under an IDA bond at 6.75% over 10 years and the proposed UDC loan. This difference was then discounted at a rate of 6.5k in order to find its present value. This project will result in significant economic development benefits for the Dutchess County area. The new location is a former IBM facility, and the project will help to stabilize a community severely hurt by the recent IBM downsizing. Laerdal currently employs 65 individuals in New York and has committed to add 135 more employees in three years as result of this project. 4 C. FINANCIAL CONDITION AND PROFORMA ANALYSIS This is a review of the consolidated statements of Laerdal Corporation and its subsidiaries (this group includes Laerdal Medical Corporation). Operating Results The Company has enjoyed profitable operations during the three-year period under review. However, its earnings have fluctuated reflecting the intense competition and the inefficiency of operating out of several inadequate facilities. In the calendar year ending December 31, 1992, the Company generated $48.87 million in revenues on which it earned $810,521. The following year, revenues increased 13.140, and earnings more than tripled to $3.74 million. In 1994, revenues increased marginally (3.540) to $57.3 million, and earnings declined by 79.3. to $776,000. The earnings decline was caused principally by increased selling, general and.administrative expenses ("SG&A") that significantly exceeded the marginal sales gain. SG&A increased 21.2. to $25.6 million in 1994, and represented 45.4% of revenues compared with the 38.7% recorded in 1993. Financial Condition The Company is in a very strong financial condition. In the calendar year ending December 31, 1994, its ratio of current assets to current liabilities was 4.28 times. This was well above the industry average of 2.6 times. The Company had $21.6 million in cash and marketable securities. Leverage, as measured by the ratio of total liabilities to net worth was a modest 210 when compared with the industry average of 60%. The Company has no long-term debt. Net worth as of December 31, 1994 was $44.8 million. The table below summarizes the Company's financial condition. Laerdal Corporation Years Ending December 31st (Dollars in Thousands) 1992 1993 1994 Net Sales $48,872 $55,296 $57,267 Net Income $. 817. $ 3,745 $ 776 Current. Assets $26,113 $29,388 $39,356 Current Liabilities $ 9,923 $ 7,313 $ 9,182 Current Ratio 2.63 4.02 4.28 Total Liabilities $10,325 $7,313 $9,192 Net Worth $40,230 $44,076 $44,775 Total Liabilities/Diet 260 17% 21% Worth Proforma Analysis Management projects that revenues will increase a modest 3.10 to $59.06 million in 1995 as it undertakes its physical consolidation program in the new 135,000 square foot building in Wappingers Falls. Revenues are expected to grow at an average rate of 100 over the next five years as the Company takes advantage of its consolidation. The gross profit margin benefiting from this consolidation should be maintained at about 520 over the prof ection period versus the 48 o earned in the past two years. Net income in 1994 should be $1.4 million. In 1996, revenues are projected to increase 100-. to $64.97 million and net income should be $7.3 million. Its liquidity (ratio of current assets to current liabilities) is projected to be 3.40 times while its leverage should be a moderate 31.9e underscoring its ample financial resources. The table below outlines the Company's projected financial condition. Laerdal Corporation Years Ending December 31st (Dollars in Thousands) IV. Financial. Terms and Conditions 1. Current financial statements (not more than three months old) for the Company will be submitted to UDC prior to closing. 2. The Company will contribute at least 100i in equity to the project. 3. The UDC interest subsidy grant will be disbursed simultaneously or subsequently to the closing of the loan that is being subsidized as described in these materials, assuming all project terms and conditions have been complied with. C 0 1995 1996 1997 1998 1999 Net Sales $59,062 $64,968 $71,465 $78,612 $86,473 Net Income $ 1,420 $ 7,319 $ 8,201 $ 8,957 .$ 9,788 Current Assets $39,356 $33,655 $36,591 $37,591 $37,819 Current Liabilities $10,014 $9,682 $10,609 $11,629 $12,778 Current Ratio 3.26 3.78 3.56 3.64 3.67 Total Liabilities $14,663 $13,956 $14,482 $15,074 $15,737 Net Worth $46,742. $54,060 $62,261 $71,218 $81,006 Total 321 26t 23% 211 20"s Liabilities/Net Worth IV. Financial. Terms and Conditions 1. Current financial statements (not more than three months old) for the Company will be submitted to UDC prior to closing. 2. The Company will contribute at least 100i in equity to the project. 3. The UDC interest subsidy grant will be disbursed simultaneously or subsequently to the closing of the loan that is being subsidized as described in these materials, assuming all project terms and conditions have been complied with. C 0 4. If Laerdal defaults in payments on the loan(s) being subsidized by the UDC interest subsidy grant at any time during the loan term and/or if Laerdal fails to create 135 new jobs by the end of three years following disbursement of the UDC grant and retain those jobs over a four year period, penalties may be imposed at UDC`s discretion. The maximum penalty is 1000 of the grant amount. These penalties would vary depending on the Company's performance in meeting employment levels set forth in the following chart. End of Year Base Grant. Amount(a) Job Goal(b) Penalty(c) 1 $400,000 65 (Penalty varies - 2 .$360,000 65 see notes below.) 3 $320,000 200 4 $260,000 200 5 $240,000 200 6 $200,000 200 7 $160,000 200 8 $120,000 200 9 $80;000 200 10 $40,000 200 (a) The Base Grant amount is approximately equal to a straight- line declining balance of the interest subsidy grant over the term of the loan being subsidized. In this project, the loan being subsidized has a ten year term. The Base Grant amount equals the penalty assessed if the Company defaults on the loan, but does not equal the penalty assessed for failure to create or retain the required jobs. (b). The Job Goal is the number of jobs which the Company agrees to retain or create. The number of jobs being retained by this project is 65, and the number of new jobs being created three years after project completion is 135 for a total of 200 jobs. (c) The penalty, in each year, for failing to meet the promised employment levels will equal the percentage (%) deficit in meeting the Job Goal times the Base Grant Amount. Thus a penalty is charged for each year the Company fails to meet its employment goals. Please note that the amount of the penalty is directly tied to the actual number of jobs retained and created. 7 101 V. Notification of Plant Closings and Major Layoffs The Company has agreed to comply with UDC's policy of prior notification with respect to any substantial reduction of its work force during the term of UDC's financial assistance. VI. ELnRloyment Enforcement Policy for Loans and Grants UDC's employment enforcement policy for loans and grants will apply. The Company has agreed to a minimum employment level of 200 employees within three years after disbursement of the UDC grant. Full or partial repayment of UDC's interest subsidy grant will be. required if the Company does not meet its employment goals. (See Section IV) VII. Disadvantaged Worker's Ecruity Program The Company has agreed to participate in the Disadvantaged Worker's Equity Program and will consider persons eligible to participate in the Federal Job Training Partnership Act programs for employment opportunities generated as a result of the project. VIII. Statutory Basis The project meet's the statutory requirements of a UDC Industrial Project and is consistent with the purposes of the ERA legislation in, among others, the following respects: Dutchess County is an economically distressed area. Poverty rates for the county are estimated at 15a, and unemployment has risen dramatically as a result of recent corporate downsizings. Laerdal will create 135 new jobs within three years of the disbursement of the UDC grant and will contribute to the industrial base of Dutchess County, thus reducing and helping to eliminate unemployment in the region. The. project consists of the renovation of a facility suitable.for manufacturing purposes. Laerdal has made adequate provisions for the implementation and completion of the project. Plans and specifications for the project assure adequate light, air, sanitation.and fire protection. EM Q IX. Environmental Review The Town of Wappingers has conducted an environmental review of the project pursuant to the requirements of the State Environmental Quality Review Act ("SEQRA"} and the implementing regulations of the New York State Department of Environmental Conservation. Based on this review, the lead agency for the project, the Town of Wappingers Planning Board, found the project to be an unlisted action which would not result in any significant impact on the environment. UDC staff has reviewed the SEQRA materials and concurs. It is recommended that the Directors make a determination of no significant effect on the environment. X. Affirmative Action UDCCIs Non -Discrimination and Affirmative Action program will apply. The project sponsor shall use its best efforts to solicit and utilize Minority/Women Owned Business Enterprise firms for any. contractual opportunities generated in connection with this project. X2. UDC Financial Assistance Subject to Availability of Funds and Additional Approval The provision of UDC financial assistance is subject to the availability of funds and the approval of the State Division of the Budget. XII. Ado tion of Rules and Re lations Pursuant to an Executive Order currently in effect, there is a moratorium on the adoption of new or revised Rules and Regulations for economic development programs. Upon the expiration of this moratorium, UDC staff will re -adopt the Rules and Regulations for the Strategic Resurgence Expansion, Retention, and Attraction Assistance Program. Additional Submissions to Directors Resolutions E N u May 18, 1995 WAPPINGERS FALLS (DUTCHESS COUNTY) - Laerdal Medical Corporation Industrial Effectiveness Expansion Retention and Attraction Assistance Project -- Findings Pursuant to Section 10(b) and 10(g) of the UDC Act RESOLVED, that on the basis of the materials presented to this meeting, a copy of which is hereby ordered filed with the records of the Corporation, relating to the Laerdal Medical Corporation Industrial Project (the "Project"), the Corporation hereby finds pursuant to Sections 10 (b) (1) , ( 2) , ( 3) , (4) , ( 5 ) and ( 6 ) and Section 10 (g) of the New York State Urban Development Corporation Act of 1968, as amended (the "Act"): (1) that the area in which the Project is to be located is a substandard or insanitary area, or is in danger of becoming a substandard or insanitary area, wherein there exists a condition of substantial and persistent unemployment or underemployment; (2) that the acquisition or construction and operation of such Project will prevent, eliminate or reduce unemployment or underemployment in such area; (3) that such Project shall consist of a building or buildings which are suitable for manufacturing, warehousing or research or other industrial, business or commercial purposes; (4) that adequate provision has been, or will be made for the payment of the cost of the acquisition, construction, operations, maintenance and upkeep of such Project; (5) that the acquisition and construction, proposed leasing, operation and use of such Project will aid in the development, growth and prosperity of the State, and the area in which such Project is located; (6) that the plans and specifications assure adequate light, air, sanitation and fire protection; and be it further RESOLVED, that on the basis of the materials presented to this meeting relating to the Project indicating that there are no families or individuals to be displaced from the Project area, the Corporation hereby finds that the requirements of Section 10 (g) of the Act are satisfied. 0 May 18, 1995 WAPPINGERS FALLS (DUTCHESS COUNTY) - Laerdal Medical Corporation Industrial Effectiveness Expansion Retention and Attraction Assistance Project - Strategic Resurgence Industrial Effectiveness Expansion Retention and Attraction Program Project Determinations RESOLVED, that on the basis of the materials presented at this meeting, a copy. of which is hereby ordered filed with the records of the Corporation relating to the Laerdal Medical Corporation Industrial Project (the "Project"), the Corporation hereby determines that: ( i) the Project will create or preserve a substantial number of jobs; { ii) the Project will assist in the expansion or retention of the business located in New York State or the attraction of a business to the State; (iii) the proposed assistance is consistent with the purposes of the Strategic Resurgence Industrial Effectiveness Expansion, Retention and Attraction Assistance Program; ( iv) that the area in which the Project is to be located is a.substandard or insanitary area, or is in danger of becoming a substandard or insanitary area, wherein there exists a condition of substantial and persistent unemployment or underemployment. May 18, 1995 WAPPINGERS FALLS (DUTCHESS COUNTY) - Laerdal Medical Corporation Industrial Effectiveness Expansion Retention and Attraction Assistance Project - Adoption of Proposed General Project Plan; Authorization to Make a Grant and to Take Related Actions RESOLVED, that with respect to the Laerdal Medical Corporation Industrial Effectiveness, Expansion, Retention and Attraction Assistance Project (the "Project"), the Corporation does hereby adopt, subject to the requirements of Section 16(2) of the New York State Urban Development Corporation Act of 1968 as amended (the "Act"), the proposed General Project Plan (the "Plan") for the Project submitted to this meeting, together with such changes therein as the President and Chief Executive Officer of the Corporation or his designee(s) may deem appropriate, a copy of which Plan, together with such changes, is hereby ordered filed with the records of the Corporation; and be it further RESOLVED, that the provision of UDC financial assistance is expressly contingent upon: (1) the enactment of a New York State Budget for Fiscal Year 1995-1996, which makes funding available for this project, (2) the approval of the Public Authorities Control Board, if applicable, and (3) the receipt of all other necessary approvals; and be it further RESOLVED, that upon a written finding of the President and Chief Executive Officer that no substantive negative testimony or comment has been received at the public hearing held on the Plan, such Plan shall be effective as of the conclusion of such hearing, and that upon such written finding being made, the President and Chief Executive Officer or his designee(s) shall be, and each of them hereby is, authorized to make a grant to Laerdal Medical Corporation for a total amount not to exceed $400,000 (Four Hundred Thousand Dollars) for the purposes and substantially on the terms and conditions set forth in the materials presented to this meeting, with such changes therein as the President and Chief Executive Officer or his designee(s) may deem appropriate; and be it further RESOLVED,, that subsequent to the disbursement of the grant, the President and Chief Executive Officer of the Corporation, or his designee be, and each of them hereby is, authorized to take such actions and make such modifications to the terms of the grant as he or she may deem necessary or appropriate; and be it further 0 RESOLVED, that the President and Chief Executive Officer or his designee(s) be, and each of them hereby is, authorized to take such actions or execute on behalf of the Corporation such agreements, instruments and resolutions as he or she may consider necessary or appropriate in connection with the foregoing resolution. May 18, 1995 WAPPINGERS FALLS (DUTCHESS COUNTY) - Laerdal Medical. Corporation Industrial Effectiveness Expansion Retention and Attraction Assistance Project - Determination of No.Significant Effect on the Environment RESOLVED, that based on the materials submitted to the Directors with respect to the Laerdal Medical Corporation Industrial Project, the Corporation hereby determines that the proposed action will not have a significant effect on the environment. 52 Laerda'F helping save lives February 23, 1996 Mrs. Constance O. Smith Supervisor Town of Wappinger P. O. Box 324 22 Middlebush Road Wappinger Falls, NY 12590-0324 Dear Connie: n0. FEB 2 3 1996 ' � , The Laerdal Organization has been busy assimilating into the prestigious Dutchess County culture and business environment since opening it's doors in Wappingers Falls on October 6, 1995. We would like to thank the State and Local Officials for their support and financial aid packages. However, the Company believes that its tax bill is 11% higher than preliminary tax abatement commitment from the Town of Wappinger. Due to various time constraints, it appears that we will be unable to meet until after February 29, 1996. 1 feel that it is imperative that Laerdal Medical Corporation state its position on tax bills received for 1996, which are due on February 29, 1996. Based on the most recent 1996 State, County and Town Tax bill in the amount of $153,114.58 (copy enclosed), Laerdal is being charged $1.28 per square foot. Please note, in the first quarter of 1995, when Laerdal was conducting a nationwide site selection, you ' stated that Laerdal's total taxes associated with occupying Building 920 would be $1.15 per foot. The major reasons for the town granting this significant tax abatement were: • Laerdal provided you with competitive property tax rates from five sites located in the tri-state area. Please note that all of these sites have gross property taxes of under $1.00 per foot before we even entered into negotiations. • Laerdal spent almost $6 million in refurbishing Building 920 located in Wappingers Falls facility. In addition, Laerdal incurred over $4 million in expenses in closing and moving our West Coast and Armonk facilities to Wappingers Falls. • The tax abatement granted to Laerdal by Wappingers Falls is relatively small compared to the opportunity costs of $10 million spent (refer to above). • Over 35 Laerdal families have purchased homes in Duchess County. Many of them reside within Wappingers Falls, i.e. Clive Patrickson, Laerdal's Chief Executive Officer. Laerdal Medical Corporation, 167 Myers Corners Road, P.O. Box 1840, Wappingers Falls, NY 12590-8840 Telephone (914) 297-7770, Fax (914) 297-7737 Customer Service (800) 431-1055, Customer Service Fax (800) 227-1143 or (974) 298-4545, Sales Representatives (800) 648-1851 Page 2, February 23, 1996 Mrs. Constance O: Smith • Laerdal/Building 920 may act as an anchor to attract other new businesses to Buildings 921/922. During the second half of 1995, we verbally confirmed with you and the tax assessor that Laerdal would be charged a gross tax rate of $1.15 per foot commencing January 1, 1996. In addition, on December 21, 1995, we faxed projected school and property tax rates based on the $1.1.5 per foot rate (see attached letter). At this point and time, we did not receive any notification for any representative from the Wappingers Falls tax assessors office that the $1.15 rate per foot would not be honored. Also, for the last eight months of 1995, Laerdal paid approximately $2.15 per foot on a pro rata property tax to IBM (5 out of S months, the building was unoccupied/under construction). Therefore, Laerdal has paid a premium of $96,000 in property taxes during 1995 (benchmark $1.00 per foot). In conclusion, the Town of Wappingers is asking us to pay an additional $31,810.00 in 1996. We are not prepared to accept this expenditure. We have now asked Pizzagalli Development Corporation, property owners, to protest this tax bill. Sincerely, John Farrell Chief Financial Officer JF/ams Enc. cc: William Steinhaus Kathleen Sullivan-Norat Thomas Login Terje Gran Mike Tomkovich T Vy J a LL. m LU 0 4 0 N h J .1 MCC w LL1 w z O CL z �O 0 J J LL, Cie �-t, .x z LL O Cl_ z 0 TAXPAYER'S Co.'v H z o � 0. Q UJ o Z N UJ Qpq c CJ,7 in E a 0 c , 0 ca � 4 ZLn a z� m M � m UJ ` p Z � p Q. 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Simcoe Program Manager IBM Real Estate Operations 150 Kettletown Road Southbury, CT 06488 Dear John: We have moved into our new Wappingers home as of October 9, 1995. It has been extremely hectic during this time frame, however, the majority of work is now behind us. This letter is my first attempt at reconciling the allocation of expenses that IBM and/or Laerdal Medical Corporation have paid on behalf of both parties. I would also like to lay the ground work for assumptions for allocating future expenses over the lease period. I . Taxes Paid (Please refer to Schedule "A" for details). A. School Taxes from May 1, 1995 through September 30, 1995 B. School Taxes from July 1, 1995 through December 31, 1995 C. Proper Taxes from May 1, 1995 through December 31, 1995 DUE TO IBM..... 5178,4,06.80 IBM should continue to make property tax payments and Laerdal will pay its prorata share monthly. Laerdal Meoical Cerporatign, 167 Myers Corners Rcad. P.O. Sax 18-10. Wappingers Falls. NY 1,25ao-6610 Teieohone j91 -1i 29'-77;0, =a,c r91J1 297-1197 Customer Service y800) 431-1055. Customer Service Fay (8Q0 227- 1 74:i or;914) 298-.1545, Sales Representatives (800) 6-18-1851 A. School Taxes 2112 $395,376 286,000 sf 50% $32,947.20 511195 - 6/30/95 B. School Taxes 6/12 $213,316 286,000 sf 50% $53,367.60 7/1195 - 12/31/95 C. Property Tax i` 8/12 $276,275 1286,000 sf 50% $92,092,00 5/1/95 -12/31195 1 DUE TO IBM..... 5178,4,06.80 IBM should continue to make property tax payments and Laerdal will pay its prorata share monthly. Laerdal Meoical Cerporatign, 167 Myers Corners Rcad. P.O. Sax 18-10. Wappingers Falls. NY 1,25ao-6610 Teieohone j91 -1i 29'-77;0, =a,c r91J1 297-1197 Customer Service y800) 431-1055. Customer Service Fay (8Q0 227- 1 74:i or;914) 298-.1545, Sales Representatives (800) 6-18-1851 Page 2 Mr. John Simcoe December 21, 1995 * Wappingers tax assessor has provided Laerdal with a tax rate for 1996. We are forwarding a copy of the first page of this letter to Constance Smith, Town Supervisor of Wappingers. 2. Central -Hudson Gas & Electric Corporation - Please refer to letter received today, December 21, 1995. Central -Hudson has prepared an analysis of the electric and natural gas usage for Building 9201921 to properly allocate charges between IBM and Laerdal Medical Corporation. Central Hudson has used the following methodology to calculate 1996 allocation charges to IBM. • Central Hudson has analyzed the base usage over the 12 month period commencing November 1994 to ascertain gas and electric usage Ievels. • Central Hudson has .multiplied the base year billing units times estimated 1996 fuel costs. • Central Hudson has estimated that IBM's 1996 average monthly base year billing estimate for electric is $10,092.67 (please refer to Schedule "B"). • CentraI Hudson has estimated that IBM's 1996 average monthly base year billing estimate for gas is $1,2$2.59 (please refer to Schedule "C"). • Central Hudson has recommended that their allocation schedule be updated annually. We are recommending that Central Hudson representative be present at our initial meeting scheduled for Thursday, January 4, 1996 at 9:00 a.m. in Building 921. Effective November 1, 1995, all Central Hudson gas and electric bills will be paid by Laerdal. Listed below are two schedules that allocate gas and electric costs from May 1, 1995 to December 31, 1995. .. ...........:. . :rc.............. .., ....... yt..: t2$*£R.w :.:...;r:::i::.,v.:;•::::::::::: r::::::::n.: n• ,. �:::.:. i:.:L:::--::-.:�.}:::::::... ....:: :.: ..:: :...n......:o:-::.:..:................ ...r��. 2 5. :' .., ...... ..... .ni'::i:•: - � ..... :•:' .: rc•. a ......vn•}.... ;...;.;npn......: - :.. .:-.::: ...........:r.:: .:{4:n:•}::.::?::::::::.vt:.:: n::::.:::. �:. _: rc . ..... ... n.. .:..::........:... ....t...... - .:i:...... :.:i'i: is is i::: s:}.. .::::v:n�:: :}. }:.i}::.:: :t.: .::i i•;: ir.}>:}ri?:- ........:......... ::.:: :::.:.:.: Hurn .:............:�:. �: ...... r...:n....... !iii{til.:'. ...........:.. :icYc+':��c D. School Taxes 1112 * $213,316 $286,000 sf 50% $8,885 111196 - 6/30196 E. Property Taxes 111196 - 12/31/96 1112 * $121,304 $286,000 sf 50% $5.054 $13,939 * Wappingers tax assessor has provided Laerdal with a tax rate for 1996. We are forwarding a copy of the first page of this letter to Constance Smith, Town Supervisor of Wappingers. 2. Central -Hudson Gas & Electric Corporation - Please refer to letter received today, December 21, 1995. Central -Hudson has prepared an analysis of the electric and natural gas usage for Building 9201921 to properly allocate charges between IBM and Laerdal Medical Corporation. Central Hudson has used the following methodology to calculate 1996 allocation charges to IBM. • Central Hudson has analyzed the base usage over the 12 month period commencing November 1994 to ascertain gas and electric usage Ievels. • Central Hudson has .multiplied the base year billing units times estimated 1996 fuel costs. • Central Hudson has estimated that IBM's 1996 average monthly base year billing estimate for electric is $10,092.67 (please refer to Schedule "B"). • CentraI Hudson has estimated that IBM's 1996 average monthly base year billing estimate for gas is $1,2$2.59 (please refer to Schedule "C"). • Central Hudson has recommended that their allocation schedule be updated annually. We are recommending that Central Hudson representative be present at our initial meeting scheduled for Thursday, January 4, 1996 at 9:00 a.m. in Building 921. Effective November 1, 1995, all Central Hudson gas and electric bills will be paid by Laerdal. Listed below are two schedules that allocate gas and electric costs from May 1, 1995 to December 31, 1995.