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31. CHOICE OF LAW AND VENUE This contract shall be governed exclusively by the laws of
the State of New Hampshire and any claim or action brought relating to this contract, the
work performed or contracted to be performed thereunder, or referable in anyway thereto
shall be brought in Hillsborough County (New Hampshire) Superior Court Southern
Judicial District or in the New Hampshire 9th Circuit Court—Nashua and not elsewhere.

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

(603) 882-5191
FAX (603) 913-2305

WWW.PENNICHUCK COM

VIA HAND DELIVERY
May 26, 2022

Mr. Steven A. Bolton
Corporation Counsel
City of Nashua

229 Main Street
Nashua, NH 03060

Re: Request for Approval of Loans from the New Hampshire State Revolving Fund
to Pennichuck Water Works. Inc. - AMENDED from May 24. 2022 Letter

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 several resolutions authorizing Pennichuck’s regulated public water utility subsidiary,
Pennichuck Water Works, Inc. (“P'WW”), to borrow funds from the New Hampshire State
Revolving Fund (the “SRF Fund” or “SRF’”).

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 IX of Pennichuck’s Articles of
Incorporation, the City, acting in its capacity as Pennichuck’s sole shareholder, must approve:

-2-

“(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 Borrowings. Pennichuck requests the City’s approval for two loans from the SRF
Fund to PWW. The specifics of these loans are described below:

¢ under the proposal, PWW would enter into a new long-term loan from
the SRF Fund in the principal amount of $300,000 to fund the Twin
Ridge Interconnection Main project.

* under the proposal, PWW would enter into a new long-term loan from
the SRF Fund in the principal amount of $240,000 to fund the Sweet Hill
Interconnection Main project.

Both of these projects pertain to community water systems in Plaistow, NH, serviced and
owned by PWW, and for which an interconnection to the new Plaistow Municipal Water
System is both economically advantageous currently and into the future, but also provides for
water quantity and quality issues that need to be addressed for those community water systems.

The Lender. The funds for these loans will be provided by the New Hampshire State Revolving
Loan Fund. The SRF Fund is administered by the New Hampshire Department of Environmental
Services (“NHDES”). The SRF Fund provides public and private water systems the opportunity to
borrow funds on favorable terms at interest rates that are below commercial loan rates. Pennichuck
has received confirmation from the NHDES that funding is available for these projects.

Terms of the Borrowings. The loans will have favorable terms, which will be reflected in a
written Loan Agreement and Promissory Note issued by PWW, as required by the SRF Fund.
Amounts advanced pursuant to the loans during the construction period will accrue interest at a
rate of 1% per annum, and the total accrued interest will be due upon substantial completion of
the projects. The terms of the SRF Fund loans will require repayment of the loan principal plus
interest over a period not to exceed 20 years, commencing six months after the project is
substantially complete. The current interest rate on the SRF Fund borrowing is 1.256% per
annum, though the final rate is not locked in until the loans commence their repayment periods.
The loans will be unsecured. The corporate parent, Pennichuck, will provide an unsecured
corporate guaranty of the repayment of the loans in accordance with the terms of a Guaranty
Agreement.

Approyal by Pennichuck and PWW. The loans to finance the projects and the guaranty of the
loans have been approved by the respective Boards of Directors of Pennichuck and PWW.

Pennichuck recommends that the City authorize (i) PWW to enter into the loans under the SRF
Fund, and (ii) Pennichuck to enter into the Guaranty Agreement for the loans.