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Corporate Governance Matters

Current Board of Directors. The Pennichuck Corporation Board of Directors is divided into
three classes, each class serving for three years following their election and until their successors
have been elected and qualified.

The number of Directors is currently fixed at eleven. Of the eleven directors, three have terms
ending in 2021 (Class C), four have terms ending in 2022 (Class A), and four have terms ending
in 2023 (Class B).

The current members of the Company’s Board of Directors are as follows:

Term Expiring 2021 Term Expiring 2022 Term Expiring 2023
Class C Class A Class B
David P. Bernier C. George Bower James P. Dore
Stephen D. Genest Jay N. Lustig Elizabeth A. Dunn
Thomas J. Leonard John D. McGrath H. Scott Flegal
Preston J. Stanley, Jr. Deborah Novotny

Board Meetings, Committee Meetings and Attendance. In 2020, the Company’s Board of
Directors held 14 Board meetings and 12 Committee meetings. Each current member of the
Board attended a majority of the total number of meetings of the Board of Directors and the
number of meetings of all committees of the Board on which they served. All members of the
Board of Directors attended the 2020 Annual Meeting of Sole Shareholder.

Board Compensation. In 2020, each director, with the exception of Scott Flegal, received an
annual retainer of $12,000. Mr. Flegal, who joined the Board on May 2, 2020, received $8,000
in compensation for his services as a director.

Annual Performance Evaluation. The Board of Directors conducts an annual self-evaluation
of the Board and its Committees to determine whether they are functioning effectively. Each
Committee is also required to evaluate their performance.

Corporate Code of Conduct. The Company has adopted a written Corporate Code of Conduct
that applies to its directors, officers and employees. A current copy of the Corporate Code of
Conduct can be found on the Company’s website at www.pennichuck.com, under the “Board of
Directors — Meetings, Minutes and Corporate Governance” caption.

Board Committees. The Board of Directors has established four standing committees: the
Audit, Finance and Risk Committee, the Communications Committee, the Compensation and
Benefits Committee, and the Nominating and Governance Committee.

Each Committee has adopted a written Charter which sets forth its purpose, membership,
duties and responsibilities. A copy of each Charter can be found on the Company’s website at
www.pennichuck.com, under the “Board of Directors — Meetings, Minutes and Corporate
Governance” caption.

The current members of the Board Committees are as follows:

Audit, Finance and Risk Committee Communications Committee
James P. Dore, Chairman Jay N. Lustig, Chairman
C. George Bower James P. Dore
H. Scott Flegal Thomas J. Leonard
Thomas J. Leonard Deborah Novotny
Deborah Novotny Preston J. Stanley, Jr.

Compensation and Benefits Committee Nominating and Governance Committee

Stephen D. Genest, Chairman Elizabeth A. Dunn, Chairman
David P. Bernier Stephen D. Genest

C. George Bower Thomas J. Leonard

Elizabeth A. Dunn Jay N. Lustig

Thomas J. Leonard Preston J. Stanley, Jr.

John D. McGrath

Audit, Finance and Risk Committee. The Audit, Finance and Risk Committee is responsible for
the appointment, compensation and retention of the independent auditors; preapproval of all
audit and non-audit services to be provided by the independent auditors; review and approval of
all related party transactions; review and evaluation of the qualifications, performance and
independence of the lead partner of the independent auditors; oversight of the integrity of the
Company’s financial statements and internal controls; oversight of Company financing activities;
oversight of the policies and procedures established to assess, monitor and control operational
and financial risk; and oversight of the Company’s insurance programs. The Audit, Finance and
Risk Committee held 3 meetings in 2020.

Communications Committee. The Communications Committee develops and assists with the
policies and strategies of external communications between the Board, the Company and the
Sole Shareholder, other stakeholders, and the public, as needed. The Communications
Committee did not meet in 2020.

Compensation and Benefits Committee. The Compensation and Benefits Committee is
responsible for annually reviewing and approving corporate goals and objectives relevant to
Chief Executive Officer compensation; evaluating the Chief Executive Officer’s performance in
light of those goals and objectives, and determining and recommending to the Board of Directors
the Chief Executive Officer’s compensation based on evaluation of performance; reviewing and
approving executive salaries; reviewing and approving any employment agreements, special
compensation and benefits, or severance arrangements as they pertain to executive officers other
than the Chief Executive Officer; overseeing the Company’s compensation and benefit policies;
and recommending to the Board of Directors the establishment, termination or amendment of
existing Compensation and employee benefit plans. The Compensation and Benefits Committee
held 6 meetings in 2020.

Nominating and Governance Committee. The Nominating and Governance Committee is
responsible for identifying individuals qualified to become Board members; recommending to
the Board the persons to be nominated by the Board for election as directors at the Annual
Meeting of Sole Shareholder; developing and recommending to the Board of Directors a set of
corporate governance principles; overseeing an annual self-evaluation of the Board; and annually
reviewing the Corporate Code of Conduct. The Nominating and Governance Committee is
authorized to retain advisors and consultants and to compensate them for their services. The
Nominating and Governance Committee did not retain such advisors or consultants during 2020.
The Nominating and Governance Committee held 3 meetings in 2020.

As part of the nomination process, the Nominating and Governance Committee reviewed the
current composition of the Board as a whole, and reviewed the qualifications and performance of
the incumbent directors who are up for re-election to the Board in 2021.

The Nominating and Governance Committee considers whether to nominate any candidate for
director in accordance with the criteria set forth in its Charter, subject to the restrictions set forth
in the Company’s By-Laws. These criteria include the candidate’s integrity, business acumen,
knowledge of the Company’s business and industry, experience, diligence, conflicts of interest,
and the ability to act in the interests of the Sole Shareholder. The Committee does not assign
specific weights to particular criteria and no particular criterion is a prerequisite for each
prospective nominee. The backgrounds and qualifications of the Company’s directors,
considered as a group, should provide a composite mix of experience, knowledge and abilities
that will allow the Board of Directors to fulfill its responsibilities.

Senior Management. The members of the Company’s Senior Management team are as follows:
Larry D. Goodhue, Chief Executive Officer and Chief Financial Officer

Mr. Goodhue has been the Chief Executive Officer and Chief Financial Officer of
Pennichuck Corporation and its subsidiaries since November 6, 2015. He was the Chief
Financial Officer and Controller from March 2012 through November 2015, and Treasurer
from March 2012 until May 2, 2020. He was Controller from December 2006 to March
2012. Mr. Goodhue served as a financial consultant to Metrobility Optical Systems, Inc.
from July 2006 to October 2006 and to Pennichuck Corporation from October 2006 to
November 2006. From October 2005 to June 2006, he was the Vice President of Finance
and Administration for Metrobility Optical Systems, Inc. and the Corporate Controller from
September 2000 to September 2005. From May 2000 to August 2000, he served as Acting
Chief Operating Officer for Annalee Mobilitee Dolls, Inc. and was the Controller from
January 1998 to April 2000. Mr. Goodhue holds a Bachelor of Science degree in Business
Administration from Merrimack College, and is a Certified Public Accountant in the State
of New Hampshire (for which his certification is currently in an inactive status).

Mr. Goodhue’s base annual salary beginning as of April 1, 2020 was $218,171.

Donald L. Ware, Chief Operating Officer

Mr. Ware has been the Chief Operating Officer of Pennichuck Corporation since

January 27, 2012. He was the Senior Vice President of Operations and Engineering of
Pennichuck Corporation from 2004 to January 2012, and Chief Engineer and Vice
President from 1995 to 2004. Mr. Ware is also the Chief Operating Officer of Pennichuck
Water Works, Inc. and the Company’s other water utilities. From 1986 to 1995, Mr. Ware
was General Manager for the Augusta Water District in Augusta, Maine. Mr. Ware holds a
Bachelor of Science degree in Civil Engineering from Bucknell University and a Master of
Business Administration degree from the Whittemore Business School at the University of
New Hampshire. Mr. Ware’s base annual salary beginning as of April 1, 2020 was
$212,197.

Summary of Proposal to be Voted Upon at the Annual Meeting

PROPOSAL 1 - ELECTION OF DIRECTORS

On February 26, 2021, the Company’s Board of Directors took action to recommend that the
Sole Shareholder elect David P. Bernier, Stephen D. Genest and Thomas J. Leonard as Class C
directors, each for a three-year term and until their successors are elected and qualified.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THESE
THREE NOMINEES.

Information regarding the professional backgrounds for each nominee follows:
Nominees for Director:

David P. Bernier
(Director Since: January 2012)

Mr. Bernier was the Superintendent of the North Conway Water Precinct in North Conway,
NH from October 2004 until his retirement on February 28, 2018. Beginning on May 1,
2018, Mr. Bernier joined the firm of Wright-Pierce as a Resident Engineer. He was the
Superintendent of Public Works for the Town of Dartmouth, MA from November 2000 to
October 2004, and Supervisor of the Water and Sewer Department from March 2000 to
November 2000. He was the Superintendent of the Town of Gorham, NH Water and
Sewer Department from October 1984 to March 2000. Mr. Bernier holds an AAS degree
with emphasis in water treatment from New Hampshire Technical College.

Stephen D. Genest
(Director Since: January 2012)

Mr. Genest is a retired Human Resource professional currently doing consulting work as
well as serving on the Board of Directors as Treasurer for NH Humanities and serving on
the Board of Directors of Families Flourish Northeast. He was the Nashua Community
Coordinator for Southern New Hampshire Services in Nashua, NH from October, 2017
through February, 2020. Mr. Genest was the Director of Human Resources of SMITHS
Titeflex Aerospace in Laconia, NH from 2007 until his retirement on January 1, 2017.
From 2006 to 2007, Mr. Genest was the Director of Human Resources for L3
Communications Security and Detection Systems in Woburn, MA. He was the Director of
Human Resources for Ametek Aerospace and Defense in Wilmington, MA from 2000 to
2005, and Manager of Employee Relations from 1997 to 2000. From 1986 to 1996,

Mr. Genest held various positions in Human Resources at Nashua Corporation in Nashua
and Merrimack, NH. Mr. Genest holds a Bachelor of Arts degree in English from St.
Anselm College, a Master’s degree in English from Rivier College, and a Master of
Business Administration from Rivier College.

Thomas J. Leonard
(Director Since: January 2012)

Mr. Leonard has served as the Chairman of Pennichuck Corporation’s Board of Directors
since January 27, 2012. He has been an Attorney with the law firm of Welts White and
Fontaine, PC in Nashua, NH since 2011. From 1996 through 2010, Mr. Leonard was
In-House Counsel, COO and Director of Friel Business Enterprises in Hudson, NH.

Mr. Leonard holds a Bachelor of Arts degree in Economics from Dartmouth College, and a
Juris Doctor degree from University of New Hampshire Law (formerly Franklin Pierce
Law Center).

COPY — FOR INFORMATION ONLY

ZZ PENNICHUCK:?

PROXY CARD
PENNICHUCK CORPORATION

PROXY for Annual Meeting of Sole Shareholder - May 8, 2021

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The Sole Shareholder, the City of Nashua, New Hampshire, hereby appoints LARRY D. GOODHUE or
DONALD L. WARE, as proxies to represent and vote as designated hereon, all shares of common stock of
Pennichuck Corporation (the “Company”’) which the Sole Shareholder would be entitled to vote if personally
present at the Annual Meeting of Sole Shareholder of the Company to be held on Saturday, May 8, 2021, at

9:00 a.m., via electronic and telephonic means. The shares represented by this proxy will be voted as directed by
the Sole Shareholder.

The Board of Directors recommends a vote “FOR” each of the nominees named in Proposal 1.
Proposal 1:
To elect David P. Bernier, Stephen D. Genest and Thomas J. Leonard to the Pennichuck

Corporation Board of Directors, as Class C directors, each for a three-year term, and until
their successors are elected and qualified.

For Against
David P. Bernier oO O
Stephen D. Genest oO Oo
Thomas J. Leonard oO oO

Authorized Signature:

CITY OF NASHUA, NEW HAMPSHIRE (Sole Shareholder)

By: Date:
Name:

Title:

This Proxy Card is Valid Only When Signed and Dated

as:

Nashua Fire Rescue Jeremy H Audette

: : . Superintendent
Fire Alarm / Communications [603] 594-.3636

38 Lake Street, Nashua, NH 03060 Fax: [603] 594-3640
www.nashuafire.com AudetteJ @nashuanh.qov

May 16, 2022

Karen Conde
Fire Administration

Dear Karen,

The Administration and Fire Alarm have been working these past few months to do a capital
improvement project on the Municipal Fire Alarm System in the City. Resolution 22-021
brought the funds together but during the legislative process the price of copper has
skyrocketed and become a volatile marketplace. Cabling vendors are changing pricing daily and
will not give any lock in on price quoting. This environment has forced us to scale back the
original scope to accomplish all underground installations, additionally all vendors require a
minimum order of 10,000 feet of any one specified cable due to setup and fabrication and with
a lead time of twenty to twenty-five weeks.

In discussions with Purchasing Manager Parkinson the cable would be considered a
“Commodity items which are generally available for a publicly advertised price in national or
online sources, and are not customized by the vendor for individual purchasers.”

The finalized project with the fund allocated from resolution 22-021 include four phases for
Circuit 16 and one phase of “Circuit 12”. The total order from a vendor would be for
International Municipal Signaling Association Specified cable:

e A total of 11,000 feet of IMSA Spec 20-2, 10 pair, 14-gauge solid copper wire
(this cable has twisted pairs with a copper shielding over all wires).

e A total of 18,000 feet of IMSA Spec 20-1, 20 count, 14-gauge solid copper wire.
(this cable has straight laid conductors with no shielding).

The more expensive IMSA Spec 20-2 is for aerial installation in close proximity to power lines to
resist electrical inductance. The IMSA 20-1 is to be installed in the underground conduit
systems.

Three vendors were contacted for pricing, Power and Tel, Granite City Electric and Allied Wire
and Cable. Quotes for each vendor are attached and are provided in a per 1,000 feet unit of
measurement the same IMSA specification was used for each vendor ensuring the “apples to
apples” comparison.

V2 PENNICHUCK?®

March 31, 2021
ANNUAL REPORT TO THE SOLE SHAREHOLDER

Dear Shareholder:

The Annual Meeting of Pennichuck Corporation will be held at 9:00 a.m. on Saturday, May 8,
2021. Due to the state of emergency declared by Governor Sununu relating to the COVID-19

virus, the Annual Meeting of Sole Shareholder will be conducted via electronic and telephonic
means. To attend the meeting, please use the following dial-in instructions — Dial-in Number:

1-425-436-6322, Access Code: 871028#.

Background on the City’s Acquisition and Our Corporate Structure. The City’s acquisition of
the shares of Pennichuck Corporation was completed on January 25, 2012. As part of the
acquisition, the corporate structure of Pennichuck Corporation and its subsidiaries was retained.
Under the structure, the City of Nashua is the sole shareholder of Pennichuck Corporation.
Under the Company’s By-Laws, the City in its capacity as shareholder makes its decisions
through actions by its Board of Aldermen, in accordance with the City’s Charter. No single
person — the Mayor or any individual member of the Board of Aldermen — is him or herself a
shareholder; rather, the entity of the City itself is the sole shareholder of Pennichuck Corporation
represented by the Board of Aldermen and the Mayor.

Pennichuck continues to own five corporate subsidiaries, including three regulated utilities
(Pennichuck Water Works, Inc., Pennichuck East Utility, Inc., and Pittsfield Aqueduct Company,
Inc.), an unregulated service company (Pennichuck Water Service Corporation), and a shell
company (The Southwood Corporation).

As unanimously approved by the City’s Board of Aldermen at the time of the acquisition, the
corporate structure was retained for several reasons.

First, the City’s Mayor and Board of Aldermen desired to maintain some stability and continuity
for all of the customers and employees of the Pennichuck companies. Retaining the existing
corporate structure minimized the need for any radical changes to the utility companies and
operations and encouraged support by all of the communities served by the utilities.

Second, retaining the corporate structure provided continuity for the regulatory and financial
status of the companies and their respective businesses. The New Hampshire Public Utilities
Commission continues to provide regulatory oversight for the utility companies, and banks,
lenders and other contract parties continue to be able to rely on existing contracts and other rules
with respect to financing and other operations.

-2-

Third, the Mayor and Board of Aldermen unanimously agreed to establish a corporate
governance system for the purposes of managing Pennichuck Corporation. This corporate
governance system relies upon well-established principles of corporate law, and is established
pursuant to Pennichuck Corporation’s Articles of Incorporation and By-Laws, as adopted by the
City and the Company at the time of the acquisition pursuant to the Merger Agreement.

This well-known corporate governance model, which incorporates well-established principles
regarding fiduciary obligations of board members, was structured to provide assurances to the
City’s rating agencies, potential lenders, the New Hampshire Public Utilities Commission and
the many communities we serve that decisions are based on sound business and financial
analysis, and in a manner that minimizes political considerations.

Operations, Communities and Customers. Our companies provide water service to a wide
range of communities and customers.

Pennichuck Water Works, Inc. provides water service to approximately 29,000 customers in
11 communities which include Amherst, Bedford, Derry, Epping, Hollis, Merrimack, Milford,
Nashua, Newmarket, Plaistow and Salem.

Pennichuck East Utility, Inc. provides water service to approximately 8,400 customers in
19 communities which include Atkinson, Barnstead, Bow, Chester, Conway, Derry, Exeter,
Hooksett, Lee, Litchfield, Londonderry, Middleton, Pelham, Plaistow, Raymond, Sandown,
Tilton, Weare and Windham.

Pittsfield Aqueduct Company, Inc. provides water service to approximately 640 customers in
Pittsfield.

Pennichuck Water Service Corporation provides service in connection with the management of
water operations services for 1 community; water operations, billing, collection and customer
services for 3 communities; billing services for 4 communities; and water meter testing services,
as well as contracted water services at various levels, for approximately 70 small independently
owned water systems.

The Southwood Corporation previously owned various parcels of land in the Town of
Merrimack, which were all transferred to ownership by Pennichuck Corporation as of the end of
2019. Southwood remains as a “corporate shell” at this time, in order to facilitate any actions
which might arise from legacy contractual obligations.

The Company’s mission is to be a premier supplier of water in New Hampshire by providing
reliable, high quality and affordable water in sufficient quantities, and be New England’s
premier supplier of water related contract services by providing high quality solutions to meet
our customers’ needs.

Strategies supporting the corporate mission have been developed relative to our water resources,
employees, financing, customer services and Company assets. These strategies are available on the
Company’s website, www.pennichuck.com, under the “Management and Financial Information”
caption, and the sub-caption of “Strategic Plan.”

-3-

The Company currently has 127 employees. The employees are committed to supporting the
Company’s mission. Each of our managers has goals and objectives to support the strategies
supporting the mission. Pennichuck is an Equal Opportunity/Affirmative Action Employer. It is
the policy of the Company to hire, train, promote, and otherwise provide terms and conditions of
employment without regard to race, color, religion, sex, sexual orientation, gender identity,
national origin, ancestry, age, marital status, pregnancy, disability or veteran status. All
employment and promotion decisions are based solely on valid requirements, in accordance with
the principles of equal employment opportunity and affirmative action.

Financial Performance During the Last Year. The Company’s audited consolidated financial
statements for the year ended December 31, 2020 are attached to this report.

($ Millions)
4" Quarter Year-to-Date
2020 2019 2020 2019

Revenues $12.1 $10.6 $49.7 $44.5
Operating Expenses (10.4) (9.8) (39.4) (38.6)
Operating Income 1.7 0.8 10.3 5.9
Interest Expense (3.6) (2.8) (11.9) (11.1)
Other Income _0O1 _0.1 | _ 0.1 0.2
Pre-Tax Income (Loss) (1.8) (1.9) (1.5) (5.0)
Income Tax Provision (Benefit) _ 0.8. _0.1 — _0.5_ 0.3
Net Income (Loss) (2.6) (2.0) (2.0) (5.3)
Dividends Paid to the Shareholder 0.1 0.1 0.3 0.3
Earnings Before Interest, Taxes,

Depreciation and Amortization (EBITDA) 4.0 3.2 19.1 14.7

e Consolidated revenues for the fourth quarter increased by $1.5 million from $10.6 million
in 2019 to $12.1 million in 2020. The increase is attributable to $1.6 million in additional
recoupment revenues earned and recorded for Pennichuck Water Works, Inc. in the fourth
quarter, which resulted from the November 24, 2020 NHPUC issued Order No. 26,425.
This order approved an overall rate increase of 11.85%, which was effective for services
rendered back to April 14, 2020.

* Consolidated year-to-date revenues increased from $44.5 million in 2019 to $49.7 million
in 2020, an increase of 11.7%. Revenues from the regulated utilities increased due to:
(1) increased consumption levels at the regulated utilities due to the dry weather patterns
experienced during the Spring and mid-Summer months, versus the comparative year;
and (2) the additional $1.6 million in recoupment revenues recorded for PWW, resulting
from the November 24, 2020 NHPUC order, as previously discussed. The Service
Company revenues decreased from the prior year due to reductions in their Unplanned
Revenues and Backflow Sales, as these activities were negatively impacted by the
ongoing COVID-19 pandemic, versus prior year results and unimpeded activities.

e Consolidated operating expenses increased by $0.6 million for the fourth quarter of 2020,
over the same quarter in 2019. The increase is related to increased direct operating costs
associated with the increase in water consumption levels, as well as labor and benefit
related costs.