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of New Hampshire (for which his certification is currently in an inactive status).
Mr. Goodhue’s base annual salary beginning as of April 1, 2021 was $226,353.

Donald L. Ware, Chief Operating Officer

Mr. Ware has been the Chief Operating Officer of Pennichuck Crrporation 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 af 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, 2021 was $217,548.

Summary of Proposal to be Voted Upon at the Annual Meeting

PROPOSAL 1 - ELECTION OF DIRECTORS

On February 25, 2022, the Company's Board of Directors took action to recommend that the
Sole Shareholder increase the number of directors from eleven to a full slate af thirteen, and to
(a} elect C. George Bower, Amymarie R. Corriveau, Jay N. Lustig, John D. McGrath and Preston
J. Stanley, Jr to the Pennichuck Corporation Board of Directors, as Class A directors, each for a
three-year term, and until their successors are elected and qualified; and (b) elect Sarah Pillsbury
to the Pennichuck Corporation Board of Directcrs, as a Class C director, for a two-year term, and
until her successor is elected and qualified.

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

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

C. George Bower
{Director Since. November 2014)

Dr. Bower has been the Principal of ESRA Consulting, LLC, a professional consulting
practice concentrated on the development of safety, health and environmental programs,
from 1994 to present. From 1992 to 1994, Dr. Bower was President of National Soils, Inc.,
an applied technclogy company specializing in the development and management of
industrial facilities and waste treatment operations. He was Senior Associate and Chief
Scientist of Environmental Science and Engineering, Inc. from 1988 to 1992. Dr. Bower
holds a Bachelor of Science degree in Social Sciences from Lock Haven University; a
Master’s degree in Transportation Safety from the University of Central Missouri; and a
Ph.D. from Michigan State University. In 2018, he was elected as Moderator of the
Souhegan Cooperative School District.

Amymarie R, Corriveau
(Director Since: N/A)

Ms. Corriveau has been the President of Trinnex, Inc., a subsidiary of CDM Smith, Inc.,
since the company’s inception in January 2022. From 2000 to 2021, Ms. Corriveau held a
number of positions with CDM Smith (an engineering and construction firm), including
Vice President, Director of Digital Solutions (2020 to 2021), Director of Emerging
Business Development (2018 to 2020), Director of Project Planning and Analysis for
Business Technology (2015 to 2020), and Management Consultant (2000 to 2017). Prior to
joining CDM Smith in the fall of 2000, Ms. Corriveau worked as an environmental
engineer for Black & Veatch. Ms. Corriveau holds a Bachelor of Science degree in
Hydrology from the University of New Hampshire, and a Masters of Engineering degree in
Civil and Environmental Engineering from the Massachusetts Institute of Technology. In
addition to her technical role at CDM Smith, Ms. Corriveau serves in numerous leadership
positions within industry organizations, such as the Water Environment Federation, Water
Research Foundation, and American Water Works Association.

day N. Lustig
(Director Since: January 2012)

Mr. Lustig is currently the Maritime Domain Business Operations Principal at the

MITRE Corporation in Bedford, Massachusetts, a not-for-profit corporation that operates
6 Federally Funded Research and Development Centers for the U.S. Government.

Mr. Lustig has C-Level management experience working with a variety of engineering
disciplines with a primary focus on research and development. He has extensive
experience working government programs and contracts. A former financial advisor,

Mr. Lustig also possesses a deep understanding of the financial and business aspects that
are unique to Pennichuck Corporation. A graduate of the Isenberg School of Management
at the University of Massachusetts, Amherst, Jay and his wife have been residents of
Nashua since 1984.

John D. McGrath
(Director Since: January 2012)

Mr. McGrath has been the Vice President of Construction Operations for Methuen
Construction Co., Inc., in Plaistow, NH, since April 2019. He was a Project Executive for
Methuen Construction from 2016 to April 2019, and a Project Manager from 2007 to 2016.
From 1999 to 2007, Mr. McGrath was a Project Engineer for Barletta Engineering
Corporation in Canton, MA. Mr. McGrath has spent more than 20 years managing projects
specifically related to the rehabilitation, upgrade and construction of water and wastewater
facilities. Mr. MeGrath holds a Bachelor of Science degree in Civil and Environmental
Engineering from Northeastern University.

Sarah Pillsbury
(Director Since: N/A)

Ms, Pillsbury retired in 2020 from the New Hampshire Department of Environmental
Services (NHDES), where she held a number of positions, focused primarily on the
protection and enhancement of New Hampshire’s drinking water and groundwater. Prior to
her retirement, from 2006 to 2020, Ms. Pillsbury was the Administrator of the Drinking
Water and Groundwater Bureau at the NHDES. Ms. Pillsbury holds a Bachelor of Science
degree in Resource Economics from the University of New Hampshire.

Preston J. Stanley, Jr.
(Director Since: January 2012)

Mr. Stanley has been the Owner and Manager of Stanley Iron Works in Nashua, NH, since
1982. From 1961 to 1982, Mr. Stanley served in various positions with Ingersoll Rand in
Nashua, NH, including Service Center Manager, Manager of Materials, and Project
Engineer and Superviser. Mr. Stanley holds a Bachelor of Science degree in Mechanical
Engineering and a Master’s degree in Business and Economics from the University of

Maine.

COPY — FOR INFORMATION ONLY
VO PENNICHUCK:

PROXY CARD
PENNICHUCK CORPORATION

PROXY for Annual Meeting of Sole Shareholder - May 7, 2022
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 7, 2022, at
9:00 a.m., at the Company’s Distribution Facility, 16 Daniel Webster Highway, Merrimack, New Hampshire
The shares represented by this proxy will be voted as directed by the Sole Shareholder

The Board of Directors recommends a vote FOR all nominees named in Proposal 1.
Pronosai 1:
To increase the number of directors from eleven to a full slate of thirteen and to:
(a) elect C. George Bower, Amymarie R. Corriveau, Jay N. Lustig, John D. McGrath and
Preston J. Stanley, Jr. to the Pennichuck Corporation Board of Directors, as Class A
directors, each for a three-year term, and until their successors are elected and qualified;

and

~ rom ts
(b) elect Sarah Pillsbury to the Pennichuck Corporation Board of Directors, as a Class C
director, for a two-year term, and until her successor is elected and qualified.

For Wi Against

C. George Bower oO. 0
Amymarie R. Corriveau oO Oo
Jay N. Lustig o oO
John D. MeGrath oO Oo
Sarah Pillsbury Oo oO
Preston J. Stanley, Jr. Oo OG

Authorized Signature:

CITY OF NASHUA, NEW HAMPSHIRE (Sole Shareholder)

By Date
Name:

Turtle

This Proxy Card is Valid Only When Signed and Dated

Gi Avie Cia we

Gewtlee€eTiKRicCc

31 Will Street — PO BOX 3564 —- NASHUA, N.H. 03060
PH (603)886-0200 / FAX 886-0026 / EMAIL — www.gatecityelectric.com

DATE:

PROPOSAL

3/31/2022

PROJECT: Nashua Police Dept.

Reports Room renovation

SUBMIT TO: City of Nashua police dept — Joseph Fay

603-494-3610
FayJ@nashuapd.com

Provide the following electrical services listed below to create the new “Reports Room’

e®# @eeeee88##e #4

Relocate one existing %4" EMT conduit with power wiring passing through the
floor to a new partition. Install new wires after conduit is in place

Relocate two existing 1” EMT conduits with fire alarm wires passing through to a
new partition. Install new wires after conduit is in place

provide hammer drilled holes through floor in new partition for relocated conduits
Install six new quad outlets on two 120volt circuits within the Report Room
Relocate one existing quad outlet for new doorway

Replace existing single outlet in Report Room with quad outlet

Install one quad outlet outside Report Room and wire to a new circuit

Install 9 wall tile rings and pull string for data cabling by others

Install four new 2x4 LED flat panel lights with dimming wires

Install one wall mounted LED dimmer switch at new doorway

all work performed during normal business hours

Total Project Cost $7,800.00

Guy Lavoie — Vice President

YO PENNICHUCK®

March 30, 2022

ANNUAL REPORT TO THE SOLE SHAREHOLDER

Dear Shareholder:

The Annual Meeting of Pennichuck Corporation (“Pennichuck” or the “Company”) will be held
at 9:00 a.m. on Saturday, May 7, 2022, at the Compuny’s Distribution Facility, 16 Daniel
Webster Highway. Mcrrimack, New Hampshire.

Background on the City's Acquisition and Our Corporate Structure. ‘\he 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 herselfa
shareholder, rather, the entity of the City itself is the sole shareholder of Pennichuck Corporation
represented by the Bourd of Aldermen and the Mayor.

Pennichuck continues to owt five corporate subsidiaries, including three regulated utilities
(Pennichuck Water Works, Inc., Pennichuck East Utility, Inc., and Pittsficld 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 continuc to be able to rely on existing contracts and other rules
with respect lo 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
govemance 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. (hereinafter referred to in this report as Pennichuck Water Works)
provides water service to approximately 29,000 customers in 1] communities which include
Amherst, Bedford, Derry, Epping, Hollis, Merrimack, Milford, Nashua, Newmarket, Plaistow
and Salem.

Pennichuck East Utility, Inc. (hereinafter referred to in this report as Pennichuck East Utility)
provides water service to approximately 8,600 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. (hereinafter referred to in this report as Pittsfield Aqueduct)
provides water service to approximately 650 customers in Pittsfield.

Pennichuck Water Service Corporation (hereinafter referred to in this report as the Service
Company) provides service in connection with the management of water operations services for
| 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 Hanyshire 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-

Ihe Company currently has 126 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,
nationat 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

*

($ Millions)
4" Quarter Year-to-Date
2021 2020 2021 2020
Revenues $13.8 $12.1 $51.7 $49.7
Operating Expenses (10.7) {10.4} (42.0) (39.4)
Opcrating Income 3.1 1.7 9.7 10.3
Interest Expense (3.3) (3.6) (13.9) (11.9)
Other Income _ 0.0 0.1 0.3 0.1
Pre-Tax Income (Loss) (0.2} (1.8) (3.9) (1.5)
Income Tax Provision (Bencfit) 0.2 0.8 _(0.2) 0.5
Net Income (Loss) (0.4) (2.6) 3.7) (2.0)
Dividends Paid to the Shareholder 0.1 0.1 0.3 0.3
Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) — 5.4 40 18.9 19.1

Consolidated revenues for the fourth quarter increased by $1.7 million from $12.1 million
in 2020 to $13.8 million in 2021. The increase is attributable to (1) $2.3 million in
additional recoupment revenues earned and recorded for Pennichuck Water Works in the
fourth quarter, which resulted from the December 9, 2021 NHPUC issued Order No.
26,555. This order approved a QCPAC surcharge of 3.9%, which was effective for capital
projects placed in service in 2019; and (2) on November 9, 2021, the NHPUC issued
Order No. 26,544 approving a permancnt rate increase of 5.45% for Pittsfield Aqueduct,
becoming effective with services rendered back to December 17, 2020.

Consolidated year-to-date revenues increased from $49.7 million in 2020 to $51.7 million
in 2021, an increase of 4.0%. Revenues from the regulated utilities increased due to:

(1) the additional $2.3 million in recoupment revenues recorded for Pennichuck Water
Works, resulting from the December 9, 2021 NHPUC order, as previously discussed;

(2) the 5.45% permanent rate increase for Pittsfield Aqueduct, which was approved by the
NHPUC on November 9, 2021, as previously discussed; and (3) the Service Company
revenues which increased from the prior year due to increases in their Unplanned Revenues
and Backflow Salcs, as these activitics returned to their historical pre-COVID-19 pandemic
levels.

Consolidated operating expenses increased by £0.3 million for the fourth quarter of 2021,
over the same quarter in 2020, The increase is related to a rise in direct operating costs
associated with the rate increases in fuel, power and purification costs, The Company has
also recognized increases in its employee benefit costs, including but not limited to,
employee pension costs and healthcare premiums.

Consolidated operating expenses increased by $2.6 million, or 6.6%, for the full year,
from 2020 to 2021, mainly due to the higher direct production costs, as well as labor and
benefit costs, as previously discussed.

Interest expense increased tn 2021 when compared to 2020 due to interest costs
associated with: (1) the additional financed amounts for capital projects which have been
incurred for ongoing infrastructure replacement, in conformity with the Company’s key
mission objectives; (2) interest costs associated with a $2.5 million Paycheck Protection
Program Loan which was received on May 7, 2020 as part of the Coronavirus Aid, Relief
and Economic Security Act; and (3) increased debt amortization costs associated with the
write-off to maturity in 2014 and 2015 of escrow deposits required to facilitate the
advanced refunding of existing debt, which resulted from the issuance of $73.6 million of
taxable bonds by Pennichuck Water Works on September 2, 202%.

Pre-tax loss for the fourth quarter decreased to $0.2 million in 2021 versus $1.8 million in
2020, due to the increase in overall revenues as previously discussed.

The pre-tax loss for the year increased from $1.5 millton in 2020 to $3.9 million in 2021,
or 160%. This was due to the $2.0 million increase in interest expense coupled with
operating expense increases, as discussed previously, which resulted in a higher pre-tax
loss in 2021.

Dividends paid to the sole shareholder in both 2021 and 2020 were consistent with, and
were paid pursuant to, the CBFRR structure provided for in the New Hampshire Public
Utilities Commission’s Order approving the City’s ownership of the Company.

The Income Tax Provision in the current year reflects the tax accounting for the amortization
of the Municipal Acquisition Regulatory Asset, which is not deductible for tax purposes, and
as such, constitutes a permanent difference in the deductibility of those amortization
expenses for tax purposes, as opposed to their inclusion in the GAAP based financial
statements. The Income Tax Provision (Benefit) also reflects the taxation of CIAC as
income for Regulated Water Utilities, due to the elimination of an exemption allowed prior to
the passage of the 20/7 Tax Cuts and Jobs Act (“TCJA”) which made broad and complex
changes to the U.S. tax code. However, on November 27, 2019, the regulated utilities
received NHPUC approval on the requested amendments to their tariffs which now allow for
recovery of tax costs from developers and other CIAC contributors. This will now allow the
regulated utilities to fully fund the associated tax liability, which resulted from the change in
the 2017 federal tax law, for all CIAC contributions from independent third parties. On
November 6, 2021, the CIAC tax exemption, for federal income taxes, was subsequently
reinstated with passage of the federal infrastructure bill, but only for contributions made after
December 31, 2020. A bill is in the process of receiving final approval in the State of NH,

-5-

that will reinstate the exemption from taxation of CIAC, for NHBPT taxes, if and when
passed. Due to these two significant items, the year-to-date results reflect a tax provision of
approximately 4.9% of pre-tax income for 2021, compared to the statutory lax rate expense
of 27.08%.

Earnings Before Interest, Taxes, Depreciation and Amortization increased in the fourth
quarter from $4.0 million in 2020 to $5.4 million in 2021, or 35.0%, due to an increase in
revenues as discussed previously, over-and-above any operating expense increases.

Earnings Before Interest, Taxes, Depreciation and Amortization for 2021 decreased
from 2020 by approximately $0.2 million, or 1.0%, again due to increased operating
expenses year-over-year, over-and-above any earned revenue increases.