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R-17-090
Endorser: Alderman-at-Large Daniel T. Moriarty
AUTHORIZING PENNICHUCK CORPORATION AND PENNICHUCK EAST UTILITY, INC. TO
BORROW FUNDS FROM THE NEW HAMPSHIRE DRINKING WATER STATE REVOLVING LOAN
FUND

NEW BUSINESS — ORDINANCES

O-17-033
Endorser: Alderman Ken Siegel
LIMITING THE SECOND PUBLIC COMMENT PERIOD AT BOARD OF ALDERMEN MEETINGS
TO ITEMS WITHIN THE SUBJECT MATTER JURISDICTION OF THE BOARD

O-17-034
Endorser: Alderman Ben Clemons
ADDING BADGER STREET TO THE OVERNIGHT ON-STREET PARKING PROGRAM

O-17-035
Endorsers: Mayor Jim Donchess
Alderman-at-Large Mark S. Cookson
Alderman David Schoneman
Alderman Sean M. McGuinness
Alderman Don LeBrun
ADOPTING THE ALL VETERANS’ TAX CREDIT

PERIOD FOR GENERAL PUBLIC COMMENT
REMARKS BY THE MEMBERS OF THE BOARD OF ALDERMEN
Committee announcements:

ADJOURNMENT

PENNICHUCK 25 MANCHESTER STREET
PO BOX 1947
MERRIMACK, NH 03054-1947

February 1, 2017 (603) 882-5191
FAX (603) 913-2305

WWW.PENNICHUCK.COM

Mr. Brian McCarthy
President, Board of Aldermen
City of Nashua

229 Main Street

Nashua, NH 03060

Re: Special Meeting of the Sole Shareholder — March 24, 2017

Dear President McCarthy:

In accordance with the Articles of Incorporation and By-Laws of Pennichuck Corporation, I am
pleased to provide this letter to inform you that a Special Meeting of the Sole Shareholder of
Pennichuck Corporation has been scheduled for Friday, March 24, 2017 at 8:00 a.m. at the
offices of Pennichuck Corporation, 25 Manchester Street, Merrimack, NH.

As we have discussed briefly prior to this letter, the purpose of the Special Meeting of Sole
Shareholder is to consider and vote upon the proposal to elect John M. Murphy to the
Pennichuck Corporation Board of Directors.

The Pennichuck Corporation Board of Directors is very pleased to nominate Mr. Murphy

for consideration by the City of Nashua, in the City’s capacity as the sole shareholder of
Pennichuck Corporation at the Special Meeting. The process that the Board has followed to
identify Mr. Murphy and, ultimately, to nominate him for the City’s consideration follows the
requirements set forth in Pennichuck’s By-Laws. As you know, these By-Laws were first
approved by the City at the time of the City’s acquisition of Pennichuck in January 2012, and
were amended in numerous respects by the City’s action on March 23, 2013. The By-Laws, as
approved by the City, authorizes the Pennichuck Board of Directors to identify and nominate
candidates to fill any vacancy that may arise in Board offices. Once nominated, the City, acting
in its capacity as the sole shareholder of Pennichuck, then has the power to consider a
nomination, and ultimately, to approve and elect the nominee to serve as a Pennichuck Director.

Mr. Murphy, if elected, would serve as a Class B director, filling the vacancy resulting from the
resignation of James McMahon from the Pennichuck Board.

Enclosed please find the following documents with respect to the Special Meeting of Sole
Shareholder:

1. Notice of Special Meeting of Sole Shareholder / Proxy Statement
2. Proxy Card

Mr. Brian McCarthy
President, Board of Aldermen
February 1, 2017

Page Two

Also enclosed for your information are the following:

1. Mr. Murphy’s letter dated September 30, 2016 to the Nominating and
Governance Committee and his resume;

2. An outline of the process that the Pennichuck Board of Directors, including
the actions of the Board’s Nominating and Governance Committee, followed
in searching for a new Director, and ultimately, taking action to nominate
Mr. Murphy; and

3. Draft minutes of the December 13, 2016 meeting of the Nominating and
Governance Committee at which a public interview of Mr. Murphy was held.

Thank you for your consideration of this information. Of course, I would be pleased to provide
any other information or answer any questions that you or any other representative of the City
may have with respect to this important nomination. Please contact me at 883-0797 if you have
any questions or need further information.

Sincerely,

< Zewle/)
Thomas J. Leonar

Chairman of the Board

cc. Board of Aidermen
Mayor James Donchess
Steven Bolton, Corporation Counsel

PENNICHUCK

PENNICHUCK CORPORATION
25 Manchester Street
Merrimack, New Hampshire 03054

NOTICE OF SPECIAL MEETING OF SOLE SHAREHOLDER
To be Held on Friday, March 24, 2017, 8:00 a.m.

To the City of Nashua, New Hampshire, in its capacity as the Sole Shareholder of Pennichuck
Corporation:

In accordance with the By-Laws of Pennichuck Corporation and applicable laws, Pennichuck
Corporation hereby provides notice that you are cordially invited to attend the Special Meeting
of Sole Shareholder of Pennichuck Corporation. The City of Nashua, New Hampshire, is the
Sole Shareholder of Pennichuck Corporation.

The Special Meeting will be held at Pennichuck Corporation, 25 Manchester Street, Merrimack,
New Hampshire, on Friday, March 24, 2017 at 8:00 a.m., for the following purpose:

1. To elect John M. Murphy to the Pennichuck Corporation Board of Directors
as a Class B director to fill the vacancy resulting from the resignation of
James McMahon.

To facilitate the City’s review of the matter to be addressed at the Special Meeting, the

Pennichuck Corporation Board of Directors have approved the delivery of the Proxy Statement
attached to this Notice.

By Order of the Board of Directors,

THOMAS J. LEONARD
Chairman of the Board of Directors

Merrimack, New Hampshire
February 1, 2017

PENNICHUCK

PENNICHUCK CORPORATION
25 Manchester Street
Merrimack, New Hampshire 03054

PROXY STATEMENT

Special Meeting of Sole Shareholder

This Proxy Statement is furnished to the City of Nashua, New Hampshire (the “City”), in its
capacity as the Sole Shareholder of Pennichuck Corporation (“Pennichuck Corporation” or the
“Company”), by the Board of Directors of Pennichuck Corporation, in connection with the
solicitation of a proxy to be voted at a Special Meeting of Sole Shareholder for the purpose set
forth in the accompanying Notice of Special Meeting of Sole Shareholder.

The Special Meeting will be held at Pennichuck Corporation, 25 Manchester Street, Merrimack,
New Hampshire, on Friday, March 24, 2017 at 8:00 a.m.

Matter to be Voted Upon at the Special Meeting

At the Special Meeting, the City, in its capacity as the Sole Shareholder of Pennichuck Corporation,
is being asked to consider and vote upon the following:

(1) To elect John M. Murphy to the Pennichuck Corporation Board of Directors
as a Class B director to fill the vacancy resulting from the resignation of
James McMahon.

Voting at the Special Meeting

It is important to remember that the City itself is the Sole Shareholder, not any individual person
who may hold an office with the City. The City must exercise its responsibilities as Sole
Shareholder through public meetings of the City’s Board of Aldermen and Mayor, acting in
accordance with applicable New Hampshire laws and the provisions of the City Charter. As a
municipal entity, the City is not typically in a position to “attend” a Special Meeting of the Sole
Shareholder “in person.”

Traditional corporate law principles provide a ready solution for this type of “institutional”
voting of shares. As the Sole Shareholder, the City may review the proposed vote and take
action at appropriate City meetings determined by the City. The City may then either designate
an individual person to attend the Special Meeting in person with the authority to vote the City’s
shares in accordance with the City’s determination, or the City may vote its shares by proxy.

To facilitate these options, the Pennichuck Corporation Board of Directors has prepared this
Proxy Statement which contains details of the business to be conducted at the Special Meeting.
Ifthe City determines to vote its shares by proxy, it should cause the enclosed proxy card to be
completed and returned to Pennichuck Corporation prior to the Special Meeting. By executing
the enclosed proxy card, the City will be designating the action it has determined to take with
respect to the matter to be heard at the Special Meeting and will be authorizing the officers of the
Company named on the proxy card to act as the City’s proxy to vote on the City’s behalf at the
Special Meeting in accordance with the instructions set forth on the proxy card.

Current Board of Directors
The Pennichuck Corporation Board currently consists of eleven positions, one of which is
vacant. Of the eleven director positions, four have terms ending in 2017, three have terms

ending tn 2018, and four have terms ending in 2019.

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

Term Expiring 2017 Term Expiring 2018 Term Expiring 2019
Class B Class C Class A
James P. Dore David P. Bernier C. George Bower
Elizabeth A. Dunn Stephen D. Genest Jay N. Lustig
Paul A. Indeglia Thomas J. Leonard John D. McGrath
[Vacancy] Preston J. Stanley, Jr.

The Board of Directors is nominating John M. Murphy for election as a Class B director to fill
the vacancy resulting from the resignation of James McMahon.

Nominating and Governance Committee

The Nominating and Governance Committee of the Pennichuck Corporation Board of Directors
is responsible for identifying individuals qualified to become Board members, and recommending
to the Board the persons to be nominated by the Board for election as directors at the Annual
Meeting or at a Special Meeting of Sole Shareholder.

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.

Summary of Proposal to be Voted Upon at the Special Meeting
PROPOSAL 1 -— ELECTION OF DIRECTOR

On December 16, 2016, the Company’s Board of Directors took action to recommend that the
Sole Shareholder elect John M. Murphy to the Pennichuck Corporation Board of Directors as a
Class B director to fill the vacancy resulting from the resignation of James McMahon.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” JOHN M. MURPRY.

Information regarding Mr. Murphy’s professional background follows:

Mr. Murphy has been a Senior Research Analyst with Fidelity Investments in
Merrimack, New Hampshire, since 2005. He is responsible for the credit analysis of
municipal and government owned water and sewer utilities in the United States and
for the credit analysis of public power and investor owned utilities as well as
environmental service companies. Mr. Murphy was a Senior Bond Trader for
Fidelity Investments from 1999 to 2005. From 1993 to 1999, Mr. Murphy was Vice
President-Trading and Structured Products for JP Morgan Securities in New York.
Mr. Murphy holds a Bachelor of Business Administration in Finance and
Management from Baruch College; and a Master of Science in Banking and Money
Management from Adelphi University.

Board of Aldermen Page 3
June 14, 2016

does is expand their code enforcement department and do more aggressive code inspection, that is one
way we could go or we could have proposed that approach. That would have taken in our case;
$400,000 out of the landlords of the city in order to expand our code capabilities and it would have hit
good landlords and bad. Another alternative is the one we adopted which is the approach used in Keene
which is, and they have had the citation system since 2002, and what we suggested is something much
less onerous than was passed in Manchester which is simply to say that to avoid this system where a
shrewd owner of a large very poorly kept facility can simply wait for us to cite them and then make the
corrections with no penalty whatsoever, we decided to propose something that would hit bad landlords,
not every landlord like the Manchester system, which would give the code enforcement people a little
more leverage which would enable them to issue a fine upon the discovery of a violation. In their
discretion, they can give a warning but they also can give a fine. Everybody who has testified agrees
that our code enforcement people are very reasonable except everybody is afraid | think without reason,
that they will suddenly become unreasonable or that we will hire new people who will suddenly take a
very aggressive approach and | just don’t think that’s realistic. We only have three code enforcement
people so really we don’t have enough. If we adopted the Manchester system we could certainly hire a
lot more or a third alternative is if we didn’t want to go with the way that has been proposed in the
ordinance or the way in Manchester, we could appropriate $300,000 or $400,000 extra dollars and hire
three or four more code enforcement inspectors and do even more frequent inspections at the bad
buildings. We could have someone go over there every few days just to make sure that nothing goes
wrong because they are not checking. In addition to just the conditions for the people in the building,
these facilities, particularly the one at 23 Temple Street, is a huge problem for Nashua, for the downtown,
for our image and for the success of downtown. If you talk with R.J. Finley who owns the building at 30
Temple Street, and they have done a very good job of bringing businesses and employees to the
downtown; they have taken that building from 10% occupancy up to 90% or 95%. The have Triangle
Credit Union, the have tech companies like Persistent Systems from India; they have Acumana and other
businesses that we want downtown. If you talk to them they say that they wanted to do a housing
development with a mixed use right over their garage but why didn’t they, at least according to them,
because of 23 Temple Street, because it is such a dump that they just didn’t want to take the risk of
investing $10 million next door. What they did is upgraded their parking garage and they did no
development. | think that is the kind of impact that we are seeing. At that same building we have 500
police calls per year so although | don’t fault or in any way criticize the good faith of the people that are
opposing this; | think they are not looking at the big picture. Are we really going to be able to do nothing
about any this, are we just going to continue to manage these properties and let out of town people just
take tens and hundreds of thousands of dollars out of them every year without doing nothing to try to
alter the way of doing business? | think we should pass this and if the code inspectors turn out to be so
onerous in their approach to it, we change it but | just don’t think that is going to happen and as the
Administrative Officer of the City, | will tell them do not; use good discretion and use good judgement.
One fear is that if you find that a tenant has kicked in someone’s wall in the hallway and it looks like the
tenant did it then obviously you should not issue a fine because the landlord is not responsible for that. |
think we can make this work and | think we can use it to at least some degree to strengthen our hand
against the very bad people we have who own some of the residences that we have really been focusing
on with this Substandard Living Conditions Committee. That's my pitch on the landlord/tenant Bill and |
know there are many people here who disagree with me but that is my feeling about it.

On another subject, there is one ordinance that you might not have heard too much about, it proposes
transferring management of the parking function from the traffic manager over to the Economic
Development Department. This was proposed by the Community Development Director Sarah Marchant
because the transportation manager is really a bus person and we need to align economic development
with the parking and the parking is really a downtown economic development function and it has to do
with the parking downtown and so we think it makes much more sense that person report to the
economic development director. Keep in mind that the transportation manager reports to the director
who reports to me anyway, they all report to me as the Mayor so they will be working together one way
or the other but it just stream line things a little more easily.

PENNICHUCK

PROXY CARD
PENNICHUCK CORPORATION

PROXY for Special Meeting of Sole Shareholder - Friday, March 24, 2017

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
Special Meeting of Sole Shareholder of the Company to be held at Pennichuck Corporation, 25 Manchester Street,
Merrimack, New Hampshire, on Friday, March 24, 2017 at 8:00 a.m. The shares represented by this proxy will be
voted as directed by the Sole Shareholder.

The Board of Directors recommends a vote “FOR” the nominee named in Proposal 1.

Proposal 1:

To elect John M. Murphy to the Pennichuck Corporation Board of
Directors as a Class B director to fill the vacancy resulting from the
resignation of James McMahon.

For Against

John M. Murphy CJ CJ

Authorized Signature:

CITY OF NASHUA, NEW HAMPSHIRE (Sole Shareholder)

By: Date:

Name:

Title:

This Proxy Card is Valid Only When Signed and Dated

Chairman, Nominating and Governance Committee

Attention: Suzanne L. Ansara, Corporate Secretary

Pennichuck Corporation

P.O. Box 1947 Merrimack, NH 03054-1947 September 30, 2016

Qualifications for Pennichuck Board Position

Thank you for the opportunity to allow me to present my qualifications for the open board position at Pennichuck Water
Corporation. I’m currently employed at Fidelity Investments as a Senior Research Analyst in the Fixed Income
Department. I’m responsible for the credit analysis of municipal and government owned water and sewer utilities in the
U.S. I'm also responsible for the credit analysis of public power and investor owned utilities as well as environmental
service companies. My analysis consists of a thorough review and modeling of all pertinent financial statements which
includes analysis of cash flow, operating margins, debt service coverage, leverage, pension obligations and liquidity
position. My experience in credit research gives me a deep understanding of how utilities operate, and how they are
managed and governed. It also gives me an in-depth understanding of how financial metrics affect an organizations
operations and their ability to fully recover costs in rates. During my time as a Research Analyst at Fidelity Investments, |
have established many relationships with senior management of utilities of all sizes and governance structures. These
relationships have helped me determine ranagement’s competency and their commitment to raising rates to support
their financial metrics. in my opinion, management's ability and willingness to propose rate increases to maintain
financial stability is a key factor in our internal rating and investment decision. I’m also keenly aware of the tight rope
that management and boards walk at keeping their services affordable. Geographically, my coverage of water and sewer
utilities spans the U.S. | have analyzed entities with $50 million in annual revenue to ones with $5 billion, including
various types of management and regulatory regimes .

| have been in my current positon for the last 12 years and in this time | have developed strong relationships with
investment bankers, underwriters and financial advisors. These relationships and interactions provide me with a deep
understanding of complex financial transactions and insight into trends in the financial markets.

Prior to my current position, | was a corporate and municipal bond trader at Fidelity Investments for 6 years. This
entailed providing relative value analysis and trading of corporate, Canadian and municipal debt for our fixed income
mutual funds.

Previous to my employment at Fidelity, | worked in various trading and underwriting positions in the public finance dept
capital markets at JP Morgan and BT Securities.

In closing, | would like to reiterate my interest in the open board position. | look forward to discussing my qualifications
and how | can become a valuable addition to the Pennichuck Board. | would also like to express my gratitude to the
nomination committee and the Board for consideration for this position.

Sincerely,

John M. Murphy
99 Hawthorne Village Road
Nashua, NH 03062