788885--3/4/2010--PENNICHUCK

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Our vigorous opposition to the City s efforts to acquire our assets by eminent domain has had, and may continue to have, a material adverse effect on our operating results and has been, and may continue to be, a significant distraction to our management. We may not be able to maintain our existing indebtedness or to incur additional indebtedness under our existing long-term and revolving debt facilities, if our future credit ratios do not satisfy the requirements under those facilities. If we are unable to pay the principal and interest on our indebtedness as it comes due or we default under certain other provisions of our loan documents, our indebtedness could be accelerated and our operating results, financial condition and cash flows could be adversely affected. We expect that all or substantially all of our then outstanding indebtedness would be accelerated if the City of Nashua were to acquire a significant portion of our assets by eminent domain; such acceleration could adversely affect our financial condition, operating results and cash flows. We may be restricted by one or more debt agreements from paying dividends in amounts similar to dividends that our Company has paid in recent periods, or, in more unlikely circumstances, from continuing to pay any dividend. The loss of a significant commercial or industrial customer could adversely affect our operating results and cash flows. We are subject to federal, state and local regulations that may impose significant limitations and restrictions on the way we do business. An important element of our growth strategy is the acquisition of water systems. Any pending or future acquisition we decide to undertake will involve risks. The current concentration of our business in southern and central New Hampshire makes us susceptible to any adverse development in local regulatory, economic, demographic, competitive and weather conditions. Weather conditions and overuse may interfere with our sources of water, demand for water services and our ability to supply water to our customers. Contamination of our water supply may cause disruption in our services and adversely affect our operating results, financial condition and cash flows. The necessity for increased security has and may continue to result in increased operating costs. Damage to any of our dams may adversely affect our financial condition, revenues, operating results and cash flows. The success of our business strategies depends significantly on the services of the members of our senior management team and the departure of any of those persons could cause our operating results to suffer. Risks Related to Our Water Management Business Our water management subsidiary s revenue growth depends on its ability to enter into new operating contracts and maintain its existing contracts with municipalities, communities and non-transient, non-community water systems. Our water management subsidiary s business depends on trained, qualified employees. Our water management subsidiary s business is subject to environmental and water quality risks. There is a limited trading market for our common stock; you may not be able to resell your shares at or above the price you pay for them. We are subject to anti-takeover measures that may be used by existing management to discourage, delay or prevent changes of control that might benefit non-management shareholders. Supermajority Shareholder Approval May be Required for Fundamental Transactions with an Interested Shareholder

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788885--3/4/2010--PENNICHUCK_CORP