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Shareholder Approval of Borrowings Required. Under Article IX of Pennichuck’s Articles of
Incorporation, the City, acting in its capacity as Pennichuck’s sole shareholder, must approve:

“(3) any action to (A) create, incur or assume any indebtedness for borrowed
money or guarantee any such indebtedness of any person, (B) issue or sell
any debt securities or warrants or other rights to acquire any debt securities
of the [Pennichuck]} Corporation or any of its Subsidiaries, or (C) guarantee
any debt securities of any person.”

Proposed Term Loan Borrowing from CoBark

PEU is a New Hampshire public utility corporation providing retail water service to
approximately 8,450 customers in the New Hampshire towns of Atkinson, Barnstead, Bow,
Chester, Conway, Derry, Exeter, Hooksett, Lee, Litchfield, Londonderry, Middleton, Pelham,
Plaistow, Raymond, Sandown, Tilton, Weare and Windham. PEU is wholly-owned by
Pennichuck which, in turn, is wholly-owned by the City.

PEU has entered into a Master Loan Agreement with CoBank dated as of February 9, 2010 (the
“Master Loan Agreement”), which provides the framework for CoBank to make loans to PEU from
time to time. A copy of the Master Loan Agreement is attached to this letter as Attachment A.

PEU requests the City’s approval for PEU to enter into a term loan with CoBank in an amount of
$1,135,409 with an amortization period of up to 25 years, with an interest rate to be determined
based on market conditions (currently estimated at approximately 4.25% per annum). A copy of
the CONFIDENTIAL term sheet for the term loan with CoBank is attached to this letter as
Attachment B.

The proceeds from the CoBank loan will be used to refinance and repay up to approximately
$1,135,409 of Fixed Asset Line of Credit (““FALOC”) borrowings by PEU, under its $3 million
FALOC with CoBank, which was used to fund capital improvements to the PEU water system
infrastructure during 2020, which were not funded by State of New Hampshire Drinking Water
Revolving Loan Fund (SRF) or NH Drinking Water and Groundwater debt or grants.

The FALOC with CoBank was approved by the Company’s Board of Directors, the NH Public
Utilities Commission (“NHPUC”), and the City of Nashua as shareholder, in March of 2018 (in
NHPUC Order No. 26,117; Docket PWC 17-157), to provide for capital improvements financing
during each calendar year, with subsequent annual refinancing and repayment of amounts
borrowed with term loans, consistent with the Company’s allowed rate structure with the
NHPUC, under Order No. 26,179 (Docket DW 17-128). This facility was renewed and
extended thru June 30, 2023 during 2020, with all of the approvals required at that time, and as
included in NHPUC Docket No. DW 20-081, and Order No. 26,418.

The CoBank loan will be secured by (i) a security interest in PEU’s equity interest in CoBank
(consisting of PEU’s $212,825 earned equity investment in CoBank from patronage dividends
received since 2010, and PEU’s right to receive future patronage dividends), and (ii) the

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unconditional guarantee of PEU’s obligations to CoBank by Pennichuck pursuant to the
Guarantee of Payment (Continuing) dated as of February 9, 2010 between Pennichuck and
CoBank (the “Guaranty Agreement”), a copy of which is attached to this letter as Attachment C.

The Lender —- CoBank, ACB. CoBank is a government sponsored enterprise (“GSE”) owned
by its customers, who consist of agricultural cooperatives, rural energy, communications and
water companies and other businesses that serve rural America. As a GSE, CoBank issues its
debt securities with the implicit full faith and credit of the United States Government and uses
these low-cost funds to make loans to companies like PEU that meet its charter requirements.
As a result of the implicit backing of the U.S. Government, CoBank’s borrowing costs are lower
than commercial banks and financial institutions, and these lower costs are passed on to its
borrowers. In addition to the lower rates, CoBank loans generally have fewer covenants or
restrictions as compared to loans from commercial banks and other financial institutions.

Approval by Pennichuck and PEU. The CoBank loan and guaranty, have been approved by
the Board of Directors of Pennichuck and PEU.

Pennichuck recommends that the City authorize (i) PEU to enter into the loan with CoBank; and
(it) Pennichuck to guaranty the loan.

Lower Costs Are Good for Customers. Pennichuck and its Board of Directors have
determined that the capital projects to be refinanced by the CoBank loan, will allow PEU to
continue to provide safe, adequate and reliable water service to their customers on a cost-
effective basis. The terms of the loan are very favorable compared to other alternatives and will
result in lower financing costs than would be available under other debt options. These lower
financing costs will be passed on to customers.

Other Approvals. As a regulated public utility, PEU must obtain approval of the term Joan
from the New Hampshire Public Utilities Commission (“NHPUC”), which will approve the term
loan if it finds the loan to be consistent with the public good. PEU is filing a petition for
approval with the NHPUC contemporaneously with this notice to the City and expects the
NHPUC to consider the petition promptly.

Requested Approvals. For the reasons described above, Pennichuck respectfully requests that
the City, acting in its capacity as sole shareholder of Pennichuck and pursuant to Article 1X(3) of
Pennichuck’s Articles of Incorporation, authorize the following actions:

RESOLVED, that the City hereby approves the loan to Pennichuck East Utility, Inc.
from CoBank, ACB, in an amount of $1,135,409, with a 25-year amortization schedule:
and

FURTHER RESOLVED, that the City hereby approves the guaranty by Pennichuck
Corporation of the payment by Pennichuck East Utility, Inc. of the joan authorized in
the prior resolution; and

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FURTHER RESOLVED, that the City hereby authorizes Pennichuck Corporation and
Pennichuck East Utility, Inc., their Boards of Directors, and their Officers, to take any
and ali actions required to obtain all necessary approvals with respect to the actions
described in these resolutions and to execute and deliver such documents as are
necessary to affect the CoBank loan, and the guaranty described in these resolutions.

Respectfully submitted,

PENNICHUCK CORPORATION

Larry D. Goodhue

Chief Executive Officer

cc. Mayor James Donchess

ATTACHMENT A

Master Loan Agreement between
Pennichuck East Utility, Inc. and CoBank, ACB

Attachment A

MLA No. RX0848
MASTER LOAN AGREEMENT

THIS MASTER LOAN AGREEMENT (this “Agreement”) is entered into as of February 9,
2010, between PENNICHUCK EAST UTELITY, INC., a New Hampshire corporation (the
“Company"}, and CoBANK, ACB, a federally chartered instrumentality of the United States
(*CoBank”).

BACKGROUND

Fram time to time, CoBank may make joans and extend other types of credit to or for the account
of the Company. In order to facilitate the making of such loans and other types of credit, the parties are
entering into this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agrce as follows:

ARTICLE ]
DEFINITIONS AND RULES OF INTERPRETATION

SECTION 1.01. Definitions. Capitalized terms used in this Agreement and defined in
Exhibit A hereto shall have the meanings set forth in that Exhibit.

SECTION (.02. Rutes of Interpretation. The rules of interpretation set forth in Exhibit A
shail apply to this Agreement.

ARTICLE 2
THE SUPPLEMENTS

SECTION 2.01. Promissory Notes and Suppiements. In the event the Company desires to
borrow from CoBank and CoBank is willing to lend to the Company, the parties will enter into a
promissory note and supplement hereto (each a “Promissory Note and Supplement"). Lach Promissory
Note and Supplement will set forth CoBank’s commitment xo make a loan or loans to the Company, the
amount of the loan(s}, the purpose of the loan(s}, the interest rate or interest rate options applicable to the
loan(s), the Company's promise to repay the loans, and any other terms and conditions applicable to the
particular loan(s). Each loan will be governed by the terms and conditions sct forth in this Agreement and
in the Promissory Note and Supplement relating to thal loan. [n the absence of a Promissory Note and
Suppleincnt hereto duly executed by CoBank, CoBank shall have no obligation to make a joan to the

Company under this Agreement.

SECTION 2.02. Notice and Manner of Borrowing New Loans. Except as othenvise
provided in a Promissory Note and Supplement: (A) loans will be made available on any Business Day
upon the telephonic or written request of an authorized employee of the Company (which request, if
made telephonically, shall be promptly confirmed in writing if required hy CoBank); (B) requests for
ioans must be received by 12:00 noon Company’s local time on the date the loan is to be made; and (C}
joans will be made available by wire transfer of immediately available funds to such account or accounts
as may be authorized by the Company on forms supplied by CoBank.

SECTION 2.63. Method of Payment. The Company shall make ail payments to CoBank
under this Agreement and each Promissory Notc and Supplement hereto by wire transfer of immediately
available funds, by check, or, if specified by separate agreement between the Company and CoBank, by
automated clearing house (ACH) or other similar cash handling processes. Wire transfers sha'l be made
to ABA No. 307088754 for advice to and credit of “CoBANK"” (or to such other account as CoBank may
direct by notice). The Company shait give CoBank telephonic notice no later than 12:00 noon
Company's local time of its intent to pay by wire, and funds received after 3:00 p.m. Company's local
time shall be credited on the next Business Day. Checks shail be mailed to COBANK, Department 167,
Denver, Colorado 80291-0167 for to such other place as CoBank may direct by notice). Credit for
payment by check will not be given until the latter of the next Business Day alter receipt of the check or
the Business Day on which CoBank receives immediately available funds

SECTION 2.04. Security and Guaranty.

(A) Security. The Company's obligations hereunder and under each other Loan
Document to which the Company is a party (whether executed contemporancously herewith or at a later
date) shall be secured by a stanitory first priority Lien on all equity which the Company may now own or
hereafter acquire or be allocated in CoBank and afl proceeds thereof.

(B) Credit Support. {n addition to the above, the Company's obligations hereunder
and under each Promissory Note and Supplement hereto shall be guarantied by Pennichuck Corporation
fthe “Guarantor”) pursuant to a guarantee of payment in form and content acceptable to CoBank {as
anicnded or restated from time to time, the “Guaranty”),

ARTICLE 3
CONDITIONS PRECEDENT

SECTION 3.0. Conditions Precedent to the Initial Promissory Notes and Suppicments
Hereto. CoBank's obligation to make a loan or loans under the initial Promissory Note and Supplement
hereto (or, in the event that more than one Promissory Note and Supplement is being executed on the
date hereof, each initial Promissory Note and Supplement hereto), is subject to the Following conditions
precedent, which, in the case of instruments and documents, must be in form and content acceptable to
CoBank:

(A} This Agreement. CoBank shail have received a duly executed original of this
Agreement.

(B) Guaranty and Related Documents. (1) A duly executed original Guaranty; (2)
copies, certified by the Secretary of the Guarantor as of the date hereof (or as of another date acceptable
to CoBank), of such board resolutions, evidence of incumbency, and other evidence as CoBank may
require that the Guaranty has been duly authorized, executed and delivered by the Guarantor; and (3) an
opinion of counse! to the Guarantor, which counscl and opinion must be in form and content acceptable
to CoBank.

(C} Consent and Agreement. A consent and agreement (the “Consent and
Agrecment”) between che Company, Pennichuck Water Works, lac. (“PW”), and CoBank in form and
content acceptable to CoBank.

{D) Secretary's Certificate. CoBank shall have received an original certificate of
the Secretary of the Company dated as of the date hereof (or as of another date acceptable to CoBank)

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attaching and certifying as to each of the following, all of which must be in form and content acceptabie
to CoBank: (1) the Articles of Incorporation of the Company, certified by the Secretary of State of New
Hampshire within 30 days of the date hereof; (2) the Bylaws of the Company; and (3) a certificate of the
Secretary of State of New Hampshire issued within 30 days of the date hereof attesting to the duc
formation and good standing of the Company in the State of New Hampshire.

(C) Delegation and Wire Transfer Form. CoBank shail have received a duly
executed original deiegation and wire transfer authorization form.

(D) Equity In CoBank. The Company shall have purchased $1,000 in equity in
CoBank.

SECTION 3.02. Conditions ta Each Suppiement. CoBank’s obligation to make the initial
foan under each Promissory Note and Supplement hereto (including the initial Promissory Note(s) and
Supplement(s) hereto} is subject to the following conditions precedent (which in the case of instruments
and documents, must be originals and in form and content acceptable to CoBank):

(4) Supplement. CoBank shail have reccived a duly executed Promissory Note and
Suppicment and all Loan Documents required by the Promissory Note and Supplement

(B) Evidence of Authority. CoBank shail have received copies, certified by the
Secretary of the Company as of the date of the Promissory Note and Supplement (or as of another date
acceptable to CoBank), of such board resolutions, evidence of incumbency, and other evidence as
CoBank may require that the Promissory Note and Supplement and all Loan Documents executed in
connection therewith have been duly authorized, executed and delivered.

(Cj Consents and Approvals, CoBank shall have received such evidence as
CoBank may require that all consents and approvals referred to in Section 4.11 hereof, have been
obtained and are in full force and effect.

(D) ~—- Fees and Other Charges. Colank shall have received all fecs or other charges
provided for herein or in the Promissary Note and Supplement.

(E) Application. CoBank shall have received a duly executed and completed copy of
an application for the credit and all instruments and documents required by the application for credit.

(F) Insurance. CoBank shall have received such evidence as CoBank may
reasonably require that the Company 1s in compliance with Section 5.03 hereof.

{G) Opinion of Counsel. CoBank shall have received an opinion of counsci to the
Coinpany, which counsel and opinion must be reasonably acceptable to CoBank.

SECTION 3.03. Conditions to Each Loan. CoBank’s obligation under each Promissory
Note and Supplement (including the initial Promissory Note(s) and Supplement(s) hereto} to make any
Joan to the Company thereunder, including the initia: loan, is subject to the conditions precedent that: (A)
no Default or Event of Default shall have occurred and be continuing: (B) each of the representations and
warranties of the Company set forth herein, in the Promissery Note and Supplement, and in alt other
Loan Documents shali be true and correct as of the date of the loan; and (C) the Company shall have

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satisfied all conditions and requirements set forth in the Promissory Note and Supplement relazing to that
loan.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

Te induce CoBank to enter into and make loans under each Promissery Note and Suppiement,
the Company represenzs and warrants that:

SECTION 4,01. Organization, Etc. The Company: {1} is a corporation duly organized,
valtd-y existing, and in good standing under the Laws of the State of New Hampshire; (2) has the pawer
end authority to own its assets and fo transact the business in which it is engaged or proposes to engage
and to enter int® and perforn the Loan Documents; and (3} is duly qualified to do business in, and is in
good standing under the Laws of, each jurisdiction in which such qual:fication is required.

SECTION 4.62, Loan Documents. This Agreement, the Promissory “ote and Supplement,
and al! other Loan Dacuments: (1) have bcen duly authorized, executed and delivered by the Company
and each ather Person that is a party thercto; and (2) create lega!, valid and binding ohiigations of the
Company and each other Person that is a party thereto which are enforceable in accordance with their
terms, éxcept to the extent that enforcement may be limited by applicable bankruptcy, insolvency or
similar Laws affecting creditors’ rights generally.

SECTION 4.03. Operation of Business. The Company possesses all licenses, certificates,
permits, authorizations, approvals, franchises, patents, copyrights, trademarks, trade names, riglits
thercta, or the like which are material to the operation of its business or required by Law, and the
Company is not in violation of the rights of others with respect thereto.

SECTEON 4.04. Litigation. Except as disclosed in any application submited in connection
with the Promissory Note and Supplement, there are no pending or threatencd actions or proceedings
against or affecting the Company before any court, governmental agency, mediator, arbitrator, or the like
which could, in any one case or in the aggregate, if adversely decided, have a Material Adverse Effect.

SECTION 4.05. Ownership and Subsidiaries. The Company: (A) ts owned 100% by the
Ciuarantor; and (2) has no Subsidiaries,

SECTION 4.06. Financial Statements. The Financial Statements are compiete and correct
and fairly present the financial condition of the Company, and the results of the operations of the
Company as of the date and for the periods covered by such Financial Statements, all in accordance with
GAAP consistently applied. Since the date of the most recent Financial Statement, there has been no
material adverse change in the condition, financial or otherwise, business or operations of the Company.
There are no liabHities of the Company which are material but not reflected in the Financial Statements
or in the notes thereto.

SECTION 4.07. Ownership and Liens. The Company has title to, or valid easement or
leasehold interests in, all of its properties, real and personal, including the property and leasehold
interests reflected in the Financia! Statements (other than any property disposed of in the ordinary course
af business), and none of the properties or leasehold interests of the Company are subject to any Lien,
except such as may be permitted under Section 6.01 of this Agreement.

SECTION 4.08. Compliance with Law. Al: of the Company's properties and ail of its
Operations, are in compliance in ail material respects with 2] Laws. Without limiting the foregoing, al!
property owned or leased by the Company, all property proposed fo be acquired with the proceeds of the
Promissory Note and Supplement, and ali operations conducted thereon on al! such property, are in
compliance in ail material respects with ali Laws relating to the environment

SECTION 4.09. Environment. Except as disclosed in any application submitted in
connection with the Promissory Note and Supplement: (A) no property owned or leased by the Company
is being used. or to its knowledye, has been used for the disposal, treatment, storage, processing or
handling of hazardous waste or materials (as defined under any applicable environmental Law); (B) no
investigation, clam, litigation, proceedings, order, judgment, decree, settlement, Lien or the like with
respect ta any environmental matter is praposed, threatened, anticipated or in existence with respect to
the properties or eperations af the Company; and (C)no environmental contamination or condition
currently exists on any property of the Company which could delay the sale or other disposition of such
property or could havc, or already has had, en adverse effect an the value of such property.

SECTION 4.10, ERISA, All plans (“ERISA Plans”) of a type deseribed in Section 343) of
ERISA in respect of which Company is an “Iimployer”, as defined in Section 3(5) of FRISA, are, ic the
best knowledge of the Company, in substantial compliance with ERISA, and none of such ERISA Plans
's insolvent or in reorganization, or has an accumulated or waived funding deficiency within the meaning
cf Section 412 of the Internal Revenue Code. The Company has not incurred any material lability
{including any material contingent frability) to or on account af any such ERISA Plan pursuant to
Sections 4062, 4063, 4064, 4201 or 4204 of ERISA. No proceedings have been instituted to terminate
any such ERISA Pian.

SECTION 4.11. Consents and Approvals. Except for such as shall have been obtained and
are in full force and cffect. no consent, permission, authorization, order or license of any governmental
authority or of any party to any agreement to which the Company is a party or by which it or any of its
property may be bound or affected, is necessary in connection with: (A) the execution, delivery,
performance or enforcement of the Loan Documents; and (B} the project, acquisition, or other activity
being financed by the Promissory Note and Supplement.

SECTION 4.12. Conflicting Agreements. None of the Loan Documents canflicts with, or
constitutes (with or without the giving of notice and’or the passage of time andor the occurrence of any
other condition) a default under, any other agreement to which the Company is or expects to become a
party or by which the Company or any of its properties may be bound or affected, and do not conflict
with any provision of the articles of incorporation, bylaws, or other organizational documents of the

Company.

SECTION 4.13. Compliance and No Default. (he Company is operating its business in
compliance with all of the terms of the Loan Documents, and no Default or Event of Default exists.

SECTION 4.14, Applications. Each representation and warranty and all tnformation set
forth in the application submitted in connection with, or to induce CoBank to enter into, the Promissory
Note and Supplement is correct in all material respects.

SECTION 4.15. Budgets, Etc. Al! budgets, projections, feasibiliry studies, and other
goecumentation submitted by or on behalf of the Company te CeBank in connection with, or to induce
CoBank ta enter into, the Promissory Note and Supplement, are based upon assumptions that are

reasonable and realistic, and no fact has come to light, and no event has occurred. which would cause any
material assumption made therein to not be reasonable or realistic.

SECTION 4.16. Water Rights. The Company: (A) has water rights with such amounts,
priurities and qualities as are necessary to adequately serve the customers of the Company; (B) controls,
owns, or has access to all such water rights free and clear of the interests of any third party; and (C} has
not suffered or permitted any transfer or encumbrance of such water rights, has not abandoned such water
tights, or any of them, and has not done any act or thing which would impair or cause the loss of any
such water rights.

SECTION 4.17. Facilities. The Company's utility facilities: (A) meet present demand in alt
inaterial respects, (B} are constructed in a good and professional manner; (C) are in good working order
and condition; and (D)} comply in all materia! respects with all applicable Laws.

SECTION 4.18. Rate Matters. (A) The Company's rates for water andor wastewater
services are subject to rate regulation by the Public Utilities Commission of the State of New Hampshire:
and (B) there is no pending and, to the Company's knowledge, threatened action or proceeding before any
court or governmental authority, the objective or result of which is or could be to: (1) reduce or otherwise
adversely change any of the Company’s rates for the provision of water and.or wastewater services: (2)
himit or revoke any of the Companys permits or other authorizations to conduct business; or (3) except
as disclosed in any application submitted in connection with the Promissory Note and Supplement,
otherwise have a Material Adverse Effect,

SECTION 4.19. Enforcement Actions. The Company is not subject to any Enforcement
Action and, to the knowledge of the Company, no such actions have been threatened or are contemplated.

SECTION 4.20. Taxes. The Company has timely and properly filed all tax returns (federal,
state and local) that were required to be filed, and has paid any taxes, assessments, and other
governmental charges, including interest and penalties. There are no audits pending or, to the knowledge
of the Company, threatened against the Company.

ARTICLE 3
AFFIRMATIVE COVENANTS

Unless othcrwise agreed to in writing by CoBank, while this Agreement is in effect, the
Company agrees to’

SECTION 5.0]. Maintenance of Existence, Etc. Preserve and maintain its existence and
good standing in the jurisdiction of its formation, qualify and remain qualified to transact business in ail
Jurisdictions where such qualification is required, and obtain and maintain all licenses, permits,
franchises, palenis, copyrights, trademarks, tradenames, or rights thereto which are material to the
conduct of its business or required by Law.

SECTION 5.02, Compliance With Laws. Comply in afl material respects with all
applicable Laws (including all Laws refating lo the environment). In addition, the Company agrees to
cause afl Persons occupying or present on any of its properties to comply in all material respects with all
such Laws.