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CIGNA Agree assign to Prudentia D~ ~</Á¿~ MEMORANDUM March 30, 2004 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Assignment of CIGNA Agreements to Prudential In 1999 the City entered into a Development Agreement and an Enterprise Zone Agreement with Trilog, Inc. (CIGNA) for the expansion of the Company at 5th and Main. The terms of the Development Agreement stipulated the City would provide a land grant for the expansion, and a rebate of property taxes paid on the incremental value created by the project. The Enterprise Zone agreement allowed the company to receive sales tax refunds on the materials used in construction, an increase in job training funding from the community college, and a tax credit on the capital investments made by the company. The Company agreed to employ 200 persons, in addition to the 1999 employment of 320, and to maintain these 520 positions for 10 years. Documentation has been received from CIGNA that employment at the end of December 2003 was 570. Therefore, the Company continues to be in compliance with the terms of the Enterprise Zone and Development Agreements. In November 2002 CIGNA announced the company had signed an agreement to sell its retirement business to Prudential Financial, Inc. Negotiations on the sale have been ongoing since, and are expected to be completed in April. Both the Development Agreement and the Enterprise Zone Agreement require City approval of an assignment or transfer of obligations to another company. Economic Development Director Bill Baum recommends City Council approval of a Memoranda of Understanding and Assignment and Assumption of the Enterprise Zone and Development Agreements. I concur with the recommendation and respectfully request Mayor and City Council approval. ~JJ ~11 ¡1Jt / Michaél C. Van Milligen - MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager William Baum, Economic Development Director D~~@UE ~</Á¿~ MEMORANDUM March 26, 2004 TO: FROM: Michael Van Milligen, City Manager William Baum, Economic Development Director /It! ~ Assignment of CIGNA agreements to Prudential f SUBJECT: Background In 1999 the City entered into a Development Agreement and an Enterprise Zone Agreement with Trilog, Inc. (CIGNA) for the expansion of the Company at 5th and Main. The terms of the Development Agreement stipulated the City would provide a land grant for the expansion, and a rebate of property taxes paid on the incremental value created by the project. The Enterprise Zone agreement allowed the company to receive sales tax refunds on the materials used in construction, an increase in job training funding from the community college, and a tax credit on the capital investments made by the company. The Company agreed to employ 200 persons, in addition to the 1999 employment of 320, and to maintain these 520 positions for 10 years. Discussion In November 2002 CIGNA announced the company had signed an agreement to sell its retirement business to Prudential Financial, Inc for $2.1 billion. Negotiations on the sale have been ongoing since, and are expected to be completed in April. We have met with officials of CIGNA and Prudential to discuss the terms and conditions of the EZ and Development Agreements, and other incentives that could be offered by the Iowa Department of Economic Development. Both the Development Agreement and the Enterprise Zone Agreement require City approval of an assignment or transfer of obligations to another' company. To accomplish this, Prudential has prepared Memoranda of Understanding (MOU) and two Assignment and Assumption Agreements, all attached to this memo. The MOU and Assignment and Assumptions for both agreements have been reviewed and approved by Corporation Counsel Barry Lindahl. The MOU provide the details of the structure of the sale, with CIGNA Retirement Benefits transferring its operations and the EZ Agreement to a wholly owned subsidiary, CIGNA Life Insurance Company. After the sale is complete, CIGNA Life Insurance Company's name will be changed to Prudential Retirement Benefits Services. Prudential Retirement Benefits Services will be the successor eligible for EZ benefits, and responsible for the job creation requirements under the EZ Agreement. I have received documentation from CIGNA that employment at the end of December 2003 was 570. Therefore, the Company continues to be in compliance with the terms of the Enterprise Zone and Development Agreements. Recommendation and Action Requested The attached resolution approving the Memoranda of Understanding and Assignment and Assumption of the Enterprise Zone and Development Agreements has been prepared for City Council review and approval. I recommend the City Council adopt the resolution. F:IUSERSIWBaumICIGNAIMemo on CIGNA assignmentdoc RESOLUTION NO. 126-04 APPROVING A MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF DUBUQUE, IOWA AND PRUDENTIAL INSURANCE COMPANY OF AMERICA FOR THE ASSIGNMENT OF AN ENTERPRISE ZONE AGREEMENT AMONG THE CITY OF DUBUQUE, THE STATE OF IOWA AND CIGNA RETIREMENT BENEFITS SERVICES FROM CIGNA RETIREMENT BENEFITS SERVICES TO PRUDENTIAL INSURANCE COMPANY OF AMERICA AND APPROVING THE ASSIGNMENT OF SUCH ENTERPRISE ZONE AGREEMENT; AND APPROVING A MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF DUBUQUE, IOWA AND PRUDENTIAL INSURANCE COMPANY OF AMERICA FOR THE ASSIGNMENT OF A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBUQUE, AND CIGNA RETIREMENT BENEFITS SERVICES FROM CIGNA RETIREMENT BENEFITS SERVICES TO PRUDENTIAL INSURANCE COMPANY OF AMERICA AND APPROVING THE ASSIGNMENT OF SUCH DEVELOPMENT AGREEMENT Whereas, the City of Dubuque entered into an Enterprise Zone Agreement #99- EZ-06 in 1999 with the State of Iowa and CIGNA Retirement Benefits Services; and Whereas, the City of Dubuque entered into a Development Agreement dated October 18, 1999 with CIGNA Retirement Benefits Services; and Whereas, Prudential Insurance Company of America, a subsidiary of Prudential Financial has entered into an agreement to acquire CIGNA Retirement Benefits Services (aka Trilog, Inc./Connecticut General Life Insurance); and Whereas, the Enterprise Zone Agreement and the Development Agreement are non-transferable except with the written consent of the City of Dubuque; and Whereas, Memoranda of Understanding and Assignment and Assumption Agreements have been prepared outlining the sale and providing that CIGNA Retirement Benefits Services will assign its interests in the Enterprise Zone Agreement and Development Agreement to Prudential Insurance Company of America; and Whereas, the City Council has determined that it is in the best interests of the City of Dubuque to enter into the Memoranda of Understanding and to consent to the Assignment and Assumption Agreements. NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF DUBUQUE, IOWA, AS FOLLOWS: Section 1. The attached Memoranda of Understanding and Assignment and Assumption Agreements are hereby approved. Section 2. The Mayor is hereby authorized and directed to execute the Memoranda of Understanding consenting to the Assignment and Assumption Agreements on behalf of the City of Dubuque. Passed, approved and adopted this 5th day of April, 2004. Terrance M. Duggan, Mayor Attest: Jeanne F. Schneider, City Clerk ATTEST: F:IUSERSIWBaumICIGNAIResolution approving mous and assignment with Prudential.doc March 29th, 2004 Ms. Melanie Johnson, Counsel Iowa Department of Economic Development 200 East Grand Avenue Des Moines, IA 50309 RE: Enterprise Zone Agreement #99-EZ-06 Memorandum of Understanding Dear Ms. Johnson: This letter is intended to outline our agreement and when executed by all parties will constitute a "Memorandum of Understanding" related to the Enterprise Zone (EZ) Agreement #99-EZ-06. 1) The Enterprise Zone (EZ) Agreement #99-EZ-06 ("EZ Agreement") was entered into among the Iowa Department of Economic Development, the City of Dubuque, Iowa and CIGNA Retirement Benefits Services, Inc. (formerly known as Trilog, Inc.), with respect to its leased location at Town Clock Plaza in Dubuque, Iowa. CIGNA Retirement Benefits Services, Inc. is a subsidiary of and currently 100% owned by Connecticut General Life Insurance Company of Bloomfield, Connecticut. According to the terms of the EZ Agreement, CIGNA Retirement Benefits Services, Inc. and Connecticut General Life Insurance Company were collectively defined as the eligible Business. 2) On or about April 1, 2004 ("Closing"), Prudential Financial, Inc. of Newark, New Jersey will acquire substantially all of the operations of CIGNA Retirement Benefits Services, Inc., including the Dubuque, Iowa operation referenced in the EZ Agreement. To facilitate the transaction, CIGNA Retirement Benefits Services, Inc. transferred its operations to a wholly- owned subsidiary, CIGNA Life Insurance Company prior to the Closing. 3) As part of the acquisition by Prudential Financial, Inc., CIGNA Retirement Benefits Services, Inc. will also transfer the EZ Agreement to The Prudential Insurance Company of America. A copy of the Assignment and Assumption of Enterprise Zone (EZ) Agreement is attached to this letter. 4) After the transaction is complete, CIGNA Life Insurance Company's name will be changed to prudential Retirement Benefits Services, Inc. 5) It is understood that The prudential Insurance Company of America (National Association of Insurance Commissioners #68241), which is a wholly- owned subsidiary of Prudential Financial, Inc., along with the newly renamed Prudential Retirement Benefits Services, Inc., will be considered the eligible Business and replace CIGNA Retirement Benefits Services, Inc. and Connecticut General Life Insurance Company in the EZ Agreement. As the successor eligible Business in the EZ Agreement, this means that all rights, obligations, and benefits of the Iowa Enterprise Zone program will be assigned to The Prudential Insurance Company of America and prudential Retirement Benefits Services, Inc. 6) It is understood that beyond the Job Maintenance requirement, which Prudential intends to adhere to, the most significant effect of this change of ownership is that under the EZ Agreement, Sections 2.1 (c) and Section 2.1 (f), the Business will now be defined as The prudential Insurance Company of America for purposes of receiving Iowa insurance premium tax credits as provided in Iowa Code section 15.333A, paragraph A and paragraph B. 7) It is understood that promptly after the Closing, the EZ Agreement will be amended to reflect the above changes and executed by the appropriate parties. Kindly confirm your agreement with the above provisions by signing and returning one (1) of the three (3) enclosed copies of this letter agreement. Very truly yours, The prudential Insurance Company Of America By: Name: Title: Accepted and Agreed: Iowa EDA Department of Economic Development By: Name: Title: City of Dubuque EDA By: Name: Title: cc: Jim Armstrong, Iowa Insurance Division Allen Williams, Iowa Dept. of Economic Development Bill Baum, City of Dubuque ASSIGNMENT AND ASSUMPTION OF ENTERPRISE ZONE (EZ) AGREEMENT Building: Town Clock Plaza Dubuque, Iowa AGREEMENT, made as of April I, 2004 (hereinafter, "Effective Date") between CIGNA RETIREMENT BENEFITS SERVICES, INC. (formerly known as Trilog, Inc.), a Pennsylvania corporation, having an office at c/o CIGNA Companies, Corporate Real Estate, 900 Cottage Grove Road, Hartford, Connecticut 06152-2125, Attention: Corporate Real Estate (hereinafter, "Assignor") and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, having an office at Two Gateway Center-17th Floor, Newark, New Jersey 07102, Attention: Corporate Real Estate-Lease Administration (hereinafter, "Assignee"). WIT N E SSE T H WHEREAS, Assignor is "Business" under the Enterprise Zone (EZ) Program Agreement described in Exhibit A hereto (hereinafter "Agreement") . WHEREAS, Assignor desires to assign all of its right, title and interest, as Business, in and to the Agreement to Assignee; and WHEREAS, Assignee desires to accept such assignment and assume the obligations of Assignor, as Business, under the Agreement. NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions hereinafter set forth, Assignor and Assignee hereby covenant and agree as follows: 1. Assignor does hereby assign, transfer and set over to Assignee, its successors and assigns, all of Assignor's right, title and interest, as Business, in and to the Agreement, to have and to hold the same unto Assignee, its successors and assigns, from and after the Effective Date and for all the remaining term thereof, upon all the terms, covenants, conditions and provisions therein contained. 2. Assignor agrees to indemnify, defend (with counsel reasonably acceptable to Assignee) and hold Assignee and its affiliates, representatives, successors and assigns harmless from and against any and all claims, costs, expenses and liabilities, including, without limitation, court costs and 1 3. 4. reasonable attorneys' fees, incurred or suffered by Assignee arising out of or resulting from the failure of Assignor to perform or discharge any obligation or liability incurred or accrued under the Agreement prior to the Effective Date. Assignee accepts the foregoing assignment and Assignee hereby assumes the performance of all of the terms, covenants, obligations and conditions of Business under the Agreement, arising and accruing from and after the Effective Date and for all the remaining term thereof. Assignee hereby agrees to indemnify, defend (with counsel reasonably acceptable to Assignor) and hold Assignor and its affiliates, representatives, successors and assigns harmless from and against any and all claims, costs, expenses and liabilities, including, without limitation, court costs and reasonable attorneys' fees, incurred or suffered by Assignor and arising out of or resulting from the failure of Assignee to perform or discharge any obligation or liability incurred or accrued under the Agreement from and after the Effective Date and for the balance of the term of the Agreement, including any renewal thereof. 5. All notices and correspondence to Assignee under the Agreement shall be sent to: The prudential Insurance Company of America P.O. Box 1079 Newark, New Jersey 07101-1079 Attn: Corporate Real Estate-Lease Administration For Overnight Delivery: of America The prudential Insurance Company Two Gateway Center- 17th Floor Newark, New Jersey 07102 Attn: Corporate Real Estate-Lease Administration 6. This Assignment and Assumption of Enterprise Zone (EZ) Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 7. This Assignment and Assumption of Enterprise Zone (EZ) Agreement may be executed by one or more of the parties to the Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 2 IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and Assumption of Enterprise Zone (EZ) Agreement to be executed as of the date first above written. Assignor: CIGNA RETIREMENT BENEFITS SERVICES, INC. (formerly, Trilog, Inc.) By: Name: Title: Assignee: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: Name: Cher Zucker-Maltese Title: Vice President, Corporate Real Estate 3 EXHIBIT A Enterprise Zone (EZ) Agreement Description Building: Town Clock Plaza Dubuque, Iowa Department/IDED: Iowa Department of Economic Development 200 East Grand Avenue Des Moines, Iowa 50309 Community: City of Dubuque, Iowa 50 West 13ili Street Dubuque, Iowa 52001 Landlord/Developer: Minglewood Limited Partnership, as successor- in-interest to Town Clock Plaza Associates, LLC Minglewood Limited Partnership C/O MCP Investments, Ltd. North 2210 Alta Vista Drive Lake Geneva, Wisconsin 53147 Attention: Jon Pusateri Tenant/Business: CIGNA Retirement Benefits Services, Inc. (fo~erly known as Trilog, Inc.) Agreement Effective Date: September 1,2000 Amendments: None Premises: Entire 3-story building, containing approximately 112,577 rentable square feet 4 March 29th, 2004 Mr. Barry Lindahl Corporation Counsel City of Dubuque, Iowa 50 West 13th Street Dubuque, IA 50309 RE: Development Agreement by and among the City of Dubuque, Iowa, Town Clock Plaza Associates, LLC and Trilog, Inc. dated October 18,1999 ("Development Agreement") Memorandum of Understanding Dear Mr. Lindahl: This letter is intended to outline our agreement and when executed by all parties will constitute a "Memorandum of Understanding" related to the Development Agreement. 1) On October 18th, 1999, the Development Agreement was entered into among the Iowa Department of Economic Development, the City of Dubuque, Iowa, and CIGNA Retirement Benefits Services, Inc. (formerly known as Trilog, Inc.) with respect to its leased building at Town Clock Plaza in Dubuque, Iowa. CIGNA Retirement Benefits Services, Inc. is a subsidiary of and currently 100% owned by Connecticut General Life Insurance Company of Bloomfield, Connecticut. According to the terms of the Development Agreement, CIGNA Retirement Benefits Services, Inc. and Connecticut General Life Insurance Company were collectively defined as the eligible Business. 2) On or about April 1, 2004 ("Closing"), Prudential Financial, Inc. of Newark, New Jersey will acquire substantially all of the operations of CIGNA Retirement Benefits Services, Inc., including the Dubuque, Iowa operation referenced in the Development Agreement. To facilitate the transaction, CIGNA Retirement Benefits Services, Inc. transferred its operations to a wholly-owned subsidiary, CIGNA Life Insurance Company prior to the Closing. 3) As part of the acquisition by Prudential Financial, Inc., CIGNA Retirement Benefits Services, Inc. will also transfer the Development Agreement to The Prudential Insurance Company of America. A copy of the Assignment and Assumption of Development Agreement is attached to this letter. 4) After the transaction is complete, CIGNA Life Insurance Company's name will be changed to Prudential Retirement Benefits Services, Inc. 5) It is understood that The Prudential Insurance Company of America (National Association of Insurance Commissioners #68241), which is a wholly-owned subsidiary of Prudential Financial, Inc. along with the newly renamed Prudential Retirement Benefits Services, Inc. will be considered the eligible Business and replace CIGNA Retirement Benefits Services, Inc. and Connecticut General Life Insurance Company in the Development Agreement. As the successor eligible Business in the Development Agreement this means that all rights, obligations, and benefits will be assigned to The Prudential Insurance Company of America and Prudential Retirement Benefits Services, Inc. 6) It is understood that promptly after the Closing, the Development Agreement will be amended to reflect the above changes and executed by the appropriate parties. 7) It is understood that The City of Dubuque, Iowa, hereby consents to the foregoing Assignment and Assumption Agreement Kindly confirm your agreement with the above provisions by signing and returning one (1) of the three (3) enclosed copies of this letter agreement. Very truly yours, The Prudential Insurance Company Of America By: Name: Title: Accepted and Agreed: City of Dubuque, Iowa By: Name: Title: Minglewood Limited Partnership (successor-in- interest to Town Clock Plaza Associates, Inc.) By: M.C.P. Investments, Ltd, General Partner By: Jon M. Pusateri, President cc: Jim Armstrong, Iowa Insurance Division Allen Williams, Iowa Dept. of Economic Development Bill Baum, City of Dubuque F:\USERS\WBaum\CIGNA\PICA- Dubuque, Iowa-Development Agrt(2Clean).doc ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT AGREEMENT Building: Town Clock Plaza Dubuque, Iowa AGREEMENT, made as of April 1, 2004 (hereinafter, "Effective Date") between CIGNA RETIREMENT BENEFITS SERVICES, INC. (formerly known as Trilog, Inc.), a Pennsylvania corporation, having an office at c/o CIGNA Companies, Corporate Real Estate, 900 Cottage Grove Road, Hartford, Connecticut 06152-2125, Attention: Corporate Real Estate (hereinafter, "Assignor") and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, having an office at Two Gateway Center-17th Floor, Newark, New Jersey 07102, Attention: Corporate Real Estate-Lease Administration (hereinafter, "Assignee"). WIT N E SSE T H WHEREAS, Assignor is Employer under the Development Agreement described in Exhibit A hereto (hereinafter "Agreement") . WHEREAS, Assignor desires to assign all of its right, title and interest, as Employer, in and to the Agreement to Assignee; and WHEREAS, Assignee desires to accept such assignment and assume the obligations of Assignor, as Employer, under the Agreement. NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions hereinafter set forth, Assignor and Assignee hereby covenant and agree as follows: 1. Assignor does hereby assign, transfer and set over to Assignee, its successors and assigns, all of Assignor's right, title and interest, as Employer, in and to the Agreement, to have and to hold the same unto Assignee, its successors and assigns, from and after the Effective Date for and during all the remaining term thereof, upon all the terms, covenants, conditions and provisions therein contained. 2. Assignor agrees to indemnify, defend (with counsel reasonably acceptable to Assignee) and hold Assignee and its affiliates, representatives, successors and assigns harmless from and against any and all claims, costs, expenses and 1 liabilities, including, without limitation, court costs and reasonable attorneys' fees, incurred or suffered by Assignee arising out of or resulting from the failure of Assignor to perform or discharge any obligation or liability incurred or accrued under the Agreement prior to the Effective Date. 3. Assignee accepts the foregoing assignment and Assignee hereby assumes the performance of all of the terms, covenants, obligations and conditions of Employer under the Agreement, arising and accruing from and after the Effective Date and for all the remaining term thereof. 4. Assignee hereby agrees to indemnify, defend (with counsel reasonably acceptable to Assignor) and hold Assignor and its affiliates, representatives, successors and assigns harmless from and against any and all claims, costs, expenses and liabilities, including, without limitation, court costs and reasonable attorneys' fees, incurred or suffered by Assignor and arising out of or resulting from the failure of Assignee to perform or discharge any obligation or liability incurred or accrued under the Agreement from and after the Effective Date and for the balance of the term of the Agreement, including any renewal thereof. 5. All notices and correspondence to Assignee under the Agreement shall be sent to: The Prudential Insurance Company of America P.O. Box 1079 Newark, New Jersey 07101-1079 Attn: Corporate Real Estate-Lease Administration For Overnight Delivery: The Prudential Insurance Company of America Two Gateway Center- 17th Floor Newark, New Jersey 07102 Attn: Corporate Real Estate-Lease Administration 6. This Assignment and Assumption of Development Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 7. This Assignment and Assumption of Development Agreement may be executed by one or more of the parties to the Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 2 IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and Assumption of Lease to be executed as of the date first above written. Assignor: CIGNA RETIREMENT BENEFITS SERVICES, INC. (fo~erly Trilog, Inc.) By: Name: Title: Assignee: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: Name: Title: 3 EXHIBIT A Development Agreement Description Building: Town Clock Plaza Dubuque, Iowa Landlord/Developer: Minglewood Limited Partnership, as successor- in-interest to Town Clock Plaza Associates, LLC Minglewood L~ited Partnership C/O MCP Investments, Ltd. North 2210 Alta Vista Drive Lake Geneva, Wisconsin 54137 Attention: Jon Pusateri Tenant/Employer: CIGNA Retirement Benefits Services, Inc. (formerly known as Trilog, Inc.) Agreement Dated: October 18, 1999 Amendments: None Premises: Entire 3-story building, containing approximately 112,577 rentable square feet 4 CIGNA Agrees to Sell Its Retirement Business to Prudential Financial, Inc. for $2.1 Billion Transaction positions CIGNA for Growth as a Leading Provider of Health Care Benefits and Disability, Life and Accident Insurance Programs for Employers and Their Employees PHILADELPHIA, Nov. 17 /PRNewswire-FirstCall/ -- CIGNA Corporation (NYSE: CI) announced today that it has signed a definitive agreement to sell its retirement business -- excluding its corporate life insurance unit and its investment advisory operation, TimesSquare Capital Management, Inc. -- to Prudential Financial, Inc. (NYSE: PRU) for $2.1 billion. (1) The transaction, subject to regulatory approval and other contingencies, is expected to be completed by March 31, 2004. "We'll now concentrate fully on being a leading provider of health care and disability, life and accident insurance benefits programs for employers and their employees," said H. Edward Hanway, chairman and chief executive officer, CIGNA Corporation. that objective with a heightened sense of urgency -- focused exclusively on delivering the health and insurance solutions our customers demand. We intend to capitalize on our considerable strengths in these areas to accelerate our profitable growth. "The sale is certainly a positive development," Hanway said. "Prudential, committed to growth in the markets served successfully by our retirement organization, is acquiring a profitable, well-managed operation with a broad range of products and programs and a team of knowledgeable, experienced professionals. Moreover, retirement plan sponsors and participants can expect to receive from Prudential the same high level of quality, product innovation and service they have come to expect from us." CIGNA expects to use the proceeds to support strong subsidiary and parent company ratings, ensure financial flexibility of the parent company, support the growth of its existing businesses, and return capital to investors by reducing corporate debt and repurchasing shares of outstanding stock. "This transaction enables us to pursue