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Charles V.


W "A*#Hfril
Stewards of the Enuironnl'ent

President & Chief Executive Officer 203.336.7628 Phone 203.336'5639 fax





Sheila O'MalleY Mayor's Office City of DerbY 1 Elizabeth Street Derby, Connecticut 0641

RE: Proposal to Purchase Gity of Derby Water System

Dear Ms. O'MalleY:
("Agua rion", ."we"), is pleased to submit this Aquarion water company of connecticut -o.f Watenrvorks owned by the City of bid for the proposed acquisition of tne East,oerby published

iorth in fxninit C to the City's Request for Bids Derby (,,City,), "r:;i November 27 ,2012 (the "Assefs")'
Purchase Price


("Proposed Purchase Price') for the Aquarion's proposed binding purchase price proposed Furchase pricewiil be paid in cash Assets is provided in Attachmentl. The will be deposited in escrow on the following schedule: 10o/o of the Purchase Price the remaining 90% of the prompily after the city's acceptance of this proposal; and the Assets proposed purchase Piice will paid at the closing of the purchase and sale of close' the deposit will (lhe ,,Transaction'). ln the event that the Transaction does not be promptlY returned to Aquarion'



existing credit facilities and capital Aquarion proposes to finance the acquisition through the Transaction is not contingent from its parent company. Accordinglv,ln" closing-of upon Aquarion obtaining financing'


Benefits of the Transaction

this Transaction makes sense There are many reasons why having Aquarion complete for both Aquaribn and the City on so many levels' a seamless transition (1) No other company can offer your prese"nt customers of providing excellent service to nat proud history or better " tradition with ""-it",'nquarion and Aquarion ii wett positioned to continue this its customer base, from our presence will benefit the city's *alei customers. The city's customers by our exclllent customer service record' evidenced area and
in the surrounding

Aquarion Water

Company 835 Main Street Bridgeport' CT 06604


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Depaftment our number one ranking for customer satisfaction by the Connecticut proud of our track record of of Public Utilities for six consecutive years. we are in place' including customer service, and we have seveialfeedback mechanisms value to our surveys and customer advisory boards, to assist us in delivering the City's water customers. We doubt there is another provider that could offer customers a better deal in this regard'

and local (2) Aquarion would be seen as the logical choice by elected officials residents:Webelievethattheseofficialsandresidentsarefamiliarwith England with Aquarion as the largest investor-owned water utility in New as" a world-class utility. As a result, exemplary .uitori service and a reputation to be welcomed by we would expect the choice of Aquarion to acquire the Assets both elected officials and residents of the City'
has closed (3) Aquarion has a strong record of closing acquisitions: Aquarion past acquisitions, invoiving a total of 57 systems, in the on eight watei of small "o*p"n! twenty montns. Theseiransactions have ranged from acquisitions to the acquisition of United systems operated by homeowners associations these water connecticut, wittr 7,400 customers, earlier this year. Eac! 9f Utilities Regulatory acquisitions has required approval by the Connecticut Public a proven track Authority ano ine blpartmjnt of Public Health. Aquarion has and get these transactions closed, record of Oeing ;bb i; obtain those approvals into the which eliminatli a significant elemeni of risk to the City in entering Transaction.
and (4) Aquarion can be trusted as a business partner: Aquarion has a. strong and proprietors of credible record of working with municipalities, business owners we can be water systems. our repu-tation in this regard is second to none and

trusted io deliver and work with the City on our commitments'

we believe that the benefits cited here are compelling to the city, and no otherpositioned Aquarion is offer the city and your water customers the potential benefits that
to deliver.

party can

D. Additional lnformation
previous The city's Request for Bids requests specific inform-ation regarding Aquarion's bidder can offer experience and ability *J, oni" again, we are confident that no other superior experience or abilitY'

its constituent Aquarion has been providing water utility service in Connecticut, through since 1857. A{uarion currently serves approximately 193,000 customers, "orfanier, than OZS,OOO people in 47 cities and towns in Connecticut, making it the ,"ring more and rargesiwater utility in tire state.' ln addition, Aquarion's affiliates in Massachusetts more tha.n .90'000 people' New Hampshire serve another 28,000 customers serving in New England making Aquarion and its affiliates the largest investor-owned water utility the seven larsest in the United states'


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c91n9cticut, many of whom work in Aquarion currentty has more than 280 employees i1 that it could operate and maintain the region surrounding the City. Aquarion is tonfident costs atditionat emptoyees, thereby keeping the operating the Assets without for the Assets at a reasonably low level'



Conditions of Closing

conditions at or prior to the This proposal is subject to the satisfaction of the following
closing of the Transaction:


the Assets to its reasonable Aquarion shall have completed due diligence 9.n due diligence prior to -propoial, satisfaction. We have undertat<en .oi1" preliminary thus far causes us any and nothing we have observed submitting tnis that due diligence before we concern, nuf we wlluld obviously n"6O to complete *e have completed many due close the Transaction. ln this reiard, we note ihat acquisitions and are confident diligence p,o""''". in connection with our recent process expeditiously' of our abilitrto move through the due diligence
a mutually satisfactory sale Aquarion and the city shall negotiate and enter into Agreement, as contemplated by the Request for Bids'


Water Authority 3. Aquarion and the South Central Connecticut RegionalRWA's delivery of water to to


shall have reiolved any outstanding issues related supply water to its the City's water system and RWAIs use of that system to noted that the Request for customers in the Town of orante. ln this regard, we provides water to the City's Bids states ttrat tne agreement" under which RWA to clarify those water customers has been terminated, and we would need arrangements.

4.AsstatedinthemodelsaleAgreementincludedintheRequestforBids'the in the Transaction, connecticut public Utilities Reguiatory Authority must approve extent that or any other a form u.."pirOfl 1o nquariJn. ln addition, to tne Connecticut Department of of regulatory approvals, such as [h" "pptoual "the those approvals must be public n"Jirt lr" iequired for the Transaction,
obtained Prior to closing.

or financial information This letter and Attachment 1 to this letter constitute commercial be disclosed to third given in confiden.",-not required by statute, and are therefore not to


Closing Date

application within 2 weeks of Aquarion will work closely with the City to file any the transaction the execution of tne SafL Agreement and will work diligently to close promptly.



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Gontact lnformation

individuals listed below: our primary contact information includes either of the Charles V. Firlotte President Aquarion ComPanY 835 Main Street BridgePort, CT 06604 Tel - (203) 336-7628 Fax - (203) 336-5639 Donald J. MorrisseY Chief Financial Officer Aquarion ComPanY 835 Main Street BridgePort, CT 06604 Tel - (203) 336-7650 Fax - (203) 336-5639

This address is our primary office in Connecticut' proposal and we will work diligently Aquarion appreciates the opportunity to submit this conclusion' to bring the proposed transaction to successful
I remain Looking forward to your favorable response'

Very truly Yours,

Charles V. Firlotte President

Attachment East DerbY Water SYstem Purchase Price

water price ("Pronose! Purchase Price") for the Aquarion's proposed binding purchase The Proposed Purchase Price will be system assets o*n"o Lv tn-e'city is 92,01o,doo' ptiO in cash as set forth in the attached cover letter'