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4. Any military duty pay hours used since January 1, 2021 will be deducted from the two hundred
and forty (240) hours available to the employee for 2021.

IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto.

For the City of Nashua:

Date

For the Union:

Date

R-21-181

RESOLUTION

AUTHORIZING PENNICHUCK CORPORATION AND PENNICHUCK EAST
UTILITY, INC. TO ENTER INTO A LOAN WITH COBANK, ACB

CITY OF NASHUA

In the Year Two Thousand and Twenty-One

WHEREAS, the City of Nashua is the sole shareholder of Pennichuck Corporation
(“Pennichuck”’) and each of its subsidiaries:

WHEREAS, Article [X (3) of the Articles of Incorporation of Pennichuck and Article V
$2 of the by-laws of Pennichuck require the approval of the sole shareholder (the City of
Nashua) for Pennichuck to create, incur, assume, or guarantee any indebtedness for borrowed
money, which includes contracting a loan on behalf of Pennichuck or its subsidiaries; and

WHEREAS, Pennichuck East Utility, Inc. is a regulated New Hampshire public water
utility, and is a wholly owned subsidiary of Pennichuck which, in turn, is wholly owned by the
City of Nashua.

NOW, THEREFORE, BE IT RESOLVED by the Board of Aldermen of the City of
Nashua that the City approves (1} the loan to Pennichuck East Utility, Inc. from CoBank, ACB,
in an amount of up to $2,550,000, with a 25-year amortization schedule; and (2) the guarantee by
Pennichuck Corporation of the payment by Pennichuck East Utility, Inc. of said loan.

LEGISLATIVE YEAR 2021

RESOLUTION: R-21-181
PURPOSE: Authorizing Pennichuck Corporation and Pennichuck East

Utility, Inc. to enter into a loan with CoBank, ACB

ENDORSERS: Alderman-at-Large Lori Wilshire
Se: Pennichuck Special Water Committee

FISCAL NOTE: None.

ANALYSIS

This resolution approves the proposal by Pennichuck Corporation and one of their regulated
public water subsidiaries to enter into a loan as described in the resolution.

We have forwarded additional information provided by Pennichick on the proposal to the Board
of Aldermen.

Article IX (3) of Pennichuck Corporation’s Articles of Incorporation and Article V $2 of the
Pennichuck Corporation's by-laws requires City approval for the borrowing.

Approved as to form: Office of Corporation Counsel

By: Veto, Con te _

Date: aA OcrAnix«, PoOo-

Steven A. Bolton
Corporation Counsel
BoltonS@nashuanh. gov

Celia K. Leonard
Deputy Corporation Counsel
LeonardC@nashuanh. gov

229 Main Street
P.O. Bex 2019
Nashua, NH 03061-2019

CITY OF NASHUA
OFFICE OF
CORPORATION COUNSEL

FIRST MEMORANDUM

Dorothy Clarke
Deputy Corporation Counsel
DoryC@nashuanh.gov

Nicole M. Clay
Attorney/RTK Coordinator
ClayN@nashuanh. gov

T: (603) 589-3250
F: (603) 589-3259
Legal@nashuanh.gov

TO: Board of Aldermen
FROM: Office of Corporation Counsel
Dorothy Clarke, Esquire
DATE: October 21, 2021
RE: R-21-181! “Authorizing Pennichuck Corporation and Pennichuck East Utility, Inc.

to enter into a loan with CoBank, ACB”

Attached please find a letter from Pennichuck with supporting information for Resolution

R-21-181 “Authorizing Pennichuck Corporation and Pennichuck East Utility, Inc. to enter into a

loan with CoBank, ACB”.

Please note that the letter references Attachment B, which is a confidential term sheet for

the term loan with CoBank, ACB. This attachment is not included in the document attached to

this memo. This document, which is a confidential financial document, will be provided to the

Board separately.

V2 PENNICHUCK:

25 WALNUT STREET
PO BOX 428
NASHUA, NH 03061-0428

(603) 682-5191
FAX (603) 913-2305

WWW .PENNICHUCK.COM
October 8, 2021

Mr. Steven A. Bolton
Corporation Counsel
City of Nashua

229 Main Street
Nashua, NH 03060

Re: Pennichuck East Utility, Inc. — Request for Approval of Term Loan with CoBank, ACB

Dear Attorney Bolton:

Introduction. As you know, the City of Nashua, New Hampshire (the “City”) is the sole
corporate shareholder of Pennichuck Corporation (“Pennichuck”). The City has been the sole
shareholder since the acquisition of Pennichuck on January 25, 2012.

The purpose of this letter is to request that the City, acting in its capacity as sole shareholder,
approve resolutions authorizing Pennichuck’s regulated public water utility subsidiary,
Pennichuck East Utility, Inc. (*PEU”), to enter into a term loan with CoBank, ACB (““CoBank”).

Background. As part of the City’s acquisition of Pennichuck, in accordance with special
legislation enacted by the State Legislature, and as unanimously approved by the Mayor and
Board of Aldermen on January 11, 2011, the corporate structure of Pennichuck and its utility
subsidiaries was retained. This corporate structure was retained for several reasons. First, the
Mayor and Board of Aldermen desired to maintain stability and continuity for customers and
employees of the Pennichuck utilities and the communities they serve. Second, retaining the
corporate structure provided continuity for the existing relationships with regulatory agencies
and financial/banking partners. Third, the Mayor and Board of Aldermen unanimously agreed
that the corporate structure would encourage business-smart decisions and rely upon well-
established governance principles of corporate law, pursuant to Pennichuck’s Articles of
Incorporation and its by-laws.

Shareholder Approval of Borrowings Required. Under Article |X 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.”

-2-

Proposed Term Loan Borrowing from CoBank

PEU is a New Hampshire public utility corporation providing retail water service to approximately
8,565 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
up to $2,550,000 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 for “one time” use of debt funds to refill PEU’s
Rate Stabilization Funds (“RSF funds”) to their imprest levels, in conjunction with the
implementation of new rate structure elements in PEU’s current permanent rate proceeding before
the NH Public Utilities Commission (Docket No. DW 20-156), including the implementation of a
Material Operating Expense Factor (“MOEF”) in its allowed revenues which is designed to
maintain the RSF funds at or near their imprest levels on a going forward basis.

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
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. Asa
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 (1) PEU to enter into the loan with CoBank; and
(11) Pennichuck to guaranty the loan.

-3-

Lower Costs Are Good for Customers. Pennichuck and its Board of Directors have
determined that the “one time” refilling of the RSF funds with this 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 and/or a better and more immediate “fix” than the cash flow
implications from the timing of recovery and regulatory lag that would be available under those
other options to refill the RSF funds, as may be available in the current rate case. These lower
financing costs, as well as the rate stability that will be achieved with the new MOEF in PEU’s
rate structure, will be passed on to customers.

Other Approvals. As a regulated public utility, PEU must obtain approval of the term loan
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 has filed 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 [X(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 up to $2,550,000, 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 loan authorized in

the prior resolution; and

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 all 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

MLA No. RX0848

MASTER LOAN AGREEMENT

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

BACKGROUND

From time to time, CoBank may make loans 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 goed and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree 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 1.02. Rufes of Interpretation. The rules of interpretation set forth in Exhibit A
shali apply to this Agreement.

ARTICLE 2
THE SUPPLEMENTS

SECTION 2.01. Promissory Notes and Supplements. [n 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"). Each Promissory
Note and Supplement will set forth CoBank's commitment to make 4 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 set forth in this Agreement and
in the Promissory Note and Supplement relating to that loan. In the absence of a Promissory Note and
Supplement hereto duly executed by CoBank, CoBank shall have no obligation to make a loan to the

Company under this Agreement.

SECTION 2.02. Notice and Manner of Borrowing New Loans. Except as otherwise
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 by CoBank); (B) requests for
loans must be received by 12:00 noon Company’s local time on the date the loan is to be made; and (C)
loans 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 2.03. Method of Payment. The Company shall make all payments to CoBank
under this Agreement and each Promissory Note 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. Wirc transfers shall 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 shall 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 shalt be credited on the next Business Day. Checks shall be mailed to COBANK, Department 167,
Denver, Colorado 80291-0167 (or 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 after 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 contemporaneously herewith or at a later
date) shall be secured by a statutory first priority Lien on all equity which the Company may now own or
hereafter acquire or be allocated in CoBank and al! 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
(the “Guarantor”) pursuant to a guarantee of payment in form and content acceptable to CoBank (as
amended or restated from time to time, the “Guaranty”’).

ARTICLE 3
CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to the Initial Promissory Notes and Supplemerts
Hereto. CoBank's obligation to make a loan or loans under the initia! 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, tn the case of instruments and documents, must be in form and content acceptable to

CoBank:

(A) This Agreement. CoBank shall have received a duly executed original of this
Agreement.

(B) Guaranty and Related Documents. (|} 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 counsel to the Guarantor, which counsel and opinion must be in form and content acceptable
to CoBank.

(C)} Consent and Agreement. A consent and agreement (the “Consent_and
Agreement”) between the Company, Pennichuck Water Works, Inc. (“PWW”), and CoBank in form and
content acceptable to CoBank.

(D) Seeretary’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)

RFPO718-022322
CTV Management Notes

Bartis-Russell Broadcasting

Financials: Year 1 $175,000
Year 2 $163,800

Year 3 $168,000

3 Year Total $506,800

Qualifications:

* Owns Bartis-Russell Broadcasting which operates WSMN (since March 2017). WSMN is a
selffunded private radio station.

* Staff o Engagement Manager — 7 years’ experience in managements/operations of AM/FM
radio. Can offer legal expertise to ensure content meets local and community standards.

o Technical Service Manager - 22 years’ experience in managements/operations of
AM/FM radio. Provides a technical point of contact for public who need assistance
using equipment, provides an interface with Comcast (technical), ensures FCC
compliance. o Independent Contractors

= Project Manager — 43 years’ experience in management/operations of
commercial TV & radio broadcasting. Responsible for overall channel
management

# Spanish language staff to promote diversity

# Editors

=" Trainers

« 3" Party Accounting/Financial Auditing (retainer)

= Legal services on FCC regulatory issues (retainer)

Studio Management:
* Equipment Operations, Training & Inventory Management
* Scheduling
* Hosted programs
¢« Previewing contributed programing
* Broadcast of contributed programming from religious/civic organizations

Original Content Programming:

* City Sponsored Events: Memorial Day, July 4°, Summer Fun, Arts Walk, Veterans Day, Holiday
Stroll

* Organizational Sponsored Events: PAC, Historical/Cultural, Community Awards

Documentation Provided:
* Review/renew or draft new policy & procedure manual
¢ Review training and user manuals and complement as necessary

3/10/22