Document:

Exhibit 10.1

 

THINKORSWIM GROUP INC.

SECOND AMENDED AND RESTATED 2001 STOCK OPTION
PLAN

 

1.             Purpose.  The purpose of this Stock Option Plan (“the
Plan”) is to further the interests of the Company, its subsidiaries and its
stockholders by providing incentives in the form of stock options to key
employees, directors, or consultants who contribute materially to the success
and profitability of the Company and its subsidiaries.  The grants will recognize and reward outstanding
individual performances and contributions and will give such persons a
proprietary interest in the Company, thus enhancing the personal interest in
the Company’s continued success and progress. 
This Plan will also assist the Company and its subsidiaries in
attracting and retaining key employees, directors, and consultants.  The options granted under this Plan may be
either Incentive Stock Options, as that term is defined in Section 422 of
the Internal Revenue Code of 1986, as amended, or nonstatutory options.

 

2.             Definitions.  The following definitions shall apply to this
Plan:

 

(a)           “Board” means the board
of directors of the Company.

 

(b)           “Cause” means “cause”
as defined in any employment or consulting agreement then in effect between the
Optionee and the Company or any Subsidiary or if not defined therein, or if
there shall be no such agreement, (i) the Optionee’s embezzlement,
misappropriation of corporate funds, or other material acts of dishonesty, (ii) the
Optionee’s commission or conviction of any felony, or of any misdemeanor
involving moral turpitude, or entry of a plea of guilty or nolo contendere to
any felony or misdemeanor, (iii) engagement in any activity that the
Optionee knows or should know could harm the business or reputation of the
Company or a Subsidiary, (iv) the Optionee’s material failure to adhere to
the Company’s or a Subsidiary’s corporate codes, policies or procedures as in
effect from time to time, (v) the Optionee’s continued failure to meet
performance standards as determined by the Company or a Subsidiary, (vi) the
Optionee’s violation of any statutory, contractual, or common law duty or
obligation to the Company or a Subsidiary, including, without limitation, the
duty of loyalty, or (vii) the Optionee’s material breach of any
confidentiality or non-competition covenant entered into between the Optionee
and the Company or a Subsidiary.  The
determination of the existence of Cause shall be made by the Committee in good
faith, which determination shall be conclusive for purposes of this Plan.

 

(c)           “Change of Control”
means any of the following events:

 

(i)            The acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (a “Person”), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of either (A) the then outstanding shares of Common Stock of the
Company or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; provided, however, that the following acquisitions shall not
constitute a Change of Control:  (I) any
acquisition by the Company or (II) any acquisition by any 

 

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employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or

 

(ii)           Individuals who, as of
the effective date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the effective
date of the Plan whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or

 

(iii)          Approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company or the sale or other disposition of all or substantially all of the
assets of the Company.

 

(d)           “Code” means the
Internal Revenue Code of 1986, as amended.

 

(e)           “Committee” means the
Compensation Committee of the Board which shall consist of two or more
directors of the Company appointed by the Board.

 

(f)            “Common Stock” means
the Common Stock, par value $0.01 per share, of the Company or such other class
of shares or securities as to which the Plan may be applicable, pursuant to Section 13
herein.

 

(g)           “Company” means
thinkorswim Group Inc., a Delaware Corporation, formerly known as Investools
Inc.

 

(h)           “Continuous Service”
means the absence of any interruption or termination of employment with or
service to the Company or any parent or subsidiary of the Company that now
exists or hereafter is organized or acquired by or acquires the Company.  Continuous Service shall not be considered
interrupted in the case of sick leave, military leave, or any other leave of
absence approved by the Company or in the case of transfers between locations
of the Company or between the Company, its parent, its subsidiaries or its
successors.

 

(i)            “Date of Grant” means
the date on which the Committee grants an Option.

 

(j)            “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.

 

(k)           “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

 

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(l)            “Employee” means any
person employed on an hourly or salaried basis by the Company or any parent or
subsidiary of the Company that now exists or hereafter is organized or acquired
by or acquires the Company.

 

(m)          “Fair Market Value”
means (i) if the Common Stock is not listed or admitted to trade on a
national securities exchange and if bid and ask prices for the Common Stock are
not furnished through NASDAQ or a similar organization, the value established
by the Committee, in its sole discretion, for purposes of the Plan; (ii) if
the Common Stock is listed or admitted to trade on a national securities
exchange or a national market system, the closing price of the Common Stock, as
published in the Wall Street Journal, so listed or
admitted to trade on such day or, if there is no trading of the Common Stock on
such date, then the closing price of the Common Stock on the next preceding
date on which there was trading in such shares; or (iii) if the Common
Stock is not listed or admitted to trade on a national securities exchange or a
national market system, the mean between the bid and ask price for the Common
Stock on such date, as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no
longer reporting such information.

 

(n)           “Incentive Stock Option”
means a stock option, granted pursuant to either this Plan or any other plan of
the Company, that satisfies the requirements of Section 422 of the Code
and that entitles the Optionee to purchase stock of the Company or in a
corporation that at the time of grant of the option was a parent or subsidiary
of the Company or a predecessor corporation of any such corporation.

 

(o)           “Non-Employee Director”
means any member of the Board who is not an Employee.

 

(p)           “Nonstatutory Option”
shall have the meaning as used in Section 9 herein.

 

(q)           “Option” means a stock
option granted pursuant to the Plan.

 

(r)            “Option Period” means
the period beginning on the Date of Grant and ending on the day prior to the
tenth anniversary of the Date of Grant or such shorter termination date as set
by the Committee.

 

(s)           “Optionee” means an
Employee, Non-Employee Director, or consultant who receives an option.

 

(t)            “Outside Director”
means a member of the Board serving on the Committee who satisfies the
requirements of Section 162(m) of the Code.

 

(u)           “Parent” means any
corporation which owns 50% or more of the voting securities of the Company.

 

(v)           “Plan” means this
Amended and Restated 2001 Stock Option Plan.

 

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(w)          “Share” means the Common
Stock, as adjusted in accordance with Section 13 of the Plan.

 

(x)            “Subsidiary” means any
corporation 50% or more of the voting securities of which are owned directly or
indirectly by the Company at any time during the existence of this Plan.

 

3.             Administration.  This Plan will be administered by the
Committee.  Each member of the Committee
must be an Outside Director.  A majority
of the full Committee constitutes a quorum for purposes of administering the
Plan, and all determinations of the Committee shall be made by a majority of
the members present at a meeting at which a quorum is present or by the
unanimous, written consent of the Committee.

 

The Committee has the exclusive
power to select the Employees, Non-Employee Directors, or consultants who shall
receive an award under this Plan, to establish the terms of the Options granted
to each Employee, Non-Employee Director, or consultant, and to make all other
determinations necessary or advisable under the Plan.  The Committee has the sole and absolute
discretion to determine whether the performance of an eligible Employee,
Non-Employee Director, or consultant warrants an award under this Plan, and to
determine the amount of the award.  The
Committee has full and exclusive power to construe and interpret this Plan, to
prescribe and rescind rules and regulations relating to this Plan, and
take all actions necessary or advisable for the Plan’s administration.  Any such determination made by the Committee
will be final and binding on all persons. 
A member of the Committee will not be liable for performing any act or
making any determination in good faith.

 

4.             Shares Subject to
Option.  Subject to the provisions of
Section 13 of the Plan, the maximum aggregate number of Shares that may be
optioned and sold under the Plan shall be 12,000,000.  Such Shares may be authorized but unissued,
or may be treasury Shares.  If an Option
shall expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares that were subject to the Option
shall, unless the Plan has then terminated, be available for other Options
under the Plan.  The maximum number of
Shares with respect to which Options may be granted each calendar year to an
Employee shall be 2,000,000, subject to adjustment in accordance with Section 13
hereof.

 

5.             Employee
Participation.

 

(a)           Eligible Employees.  Every Employee, as the Committee in its sole
discretion designates, is eligible to participate in this Plan.  The Committee’s award of an Option to an
Employee in any year does not require the Committee to award an Option to that
Employee in any other year.  Furthermore,
the Committee may award different Options to different Employees.  The Committee may consider such factors as it
deems pertinent in selecting Employees and in determining the number of Shares
underlying their Option, including, without limitation: (i) the financial
condition of the Company or its Subsidiaries; (ii) expected profits for
the current or future years; (iii) the contributions of prospective
Employees to the profitability and success of the Company or its Subsidiaries;
and (iv) the adequacy of the Employee’s other compensation.  Employees may include persons to whom stock,
stock options, or other benefits 

 

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previously were granted under this or another
plan of the Company or any Subsidiary, whether or not the previously granted
benefits have been fully exercised.

 

(b)           No Right of
Employment.  An Optionee’s right, if
any, to continue to serve the Company and its Subsidiaries as an Employee will
not be enlarged or otherwise affected by his designation as an Optionee under
this Plan, and such designation will not in any way restrict the right of the
Company or any Subsidiary, as the case may be, to terminate at any time the
employment of any Optionee.

 

(c)           Non-Transferability.  No Option granted to Employees by its terms
shall be transferred, assigned, pledged or hypothecated by the Optionee during
his lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process, otherwise than by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined by the Code or Title I of ERISA, or the rules thereunder, and
shall be exercised during the lifetime of the Optionee only by him.  The Committee may grant Options that are
transferable, without payment of consideration, to immediate family members of
the Employee or to trusts or partnerships for such family members; the
Committee may also amend outstanding Options to provide for such
transferability.

 

6.             Non-Employee
Director and Consultant Participation.

 

(a)           Grants of Awards.  The Committee shall have full discretion to
grant Options to Non-Employee Directors and consultants at such times as it
deems appropriate, to determine the number of Shares underlying such Options,
and to determine the other terms and provisions thereof subject to the other
terms of the Plan.

 

(b)           Non-Transferability.  No Option granted to Non-Employee Directors
or consultants by its terms shall be transferred, assigned, pledged or
hypothecated by the Optionee during his lifetime, whether by operation of law
or otherwise, or be made subject to execution, attachment or similar process
otherwise than by will or by the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title I of
ERISA, or the rules thereunder, and shall be exercised during the lifetime
of the Optionee only by him.  The
Committee may grant Options that are transferable, without payment of
consideration, to immediate family members of the Non-Employee Director or
consultant, or to trusts or partnerships for such family members; the Committee
may also amend outstanding Options to provide for such transferability.

 

7.             Option
Requirements.  Each Option granted
under this Plan shall satisfy the following requirements.

 

(a)           Written Option.  An Option shall be evidenced by a written
instrument specifying (i) the number of Shares that may be purchased by
its exercise, (ii) the intent of the Committee as to whether the Option is
to be an Incentive Stock Option or a Nonstatutory Option, and (iii) such
terms and conditions consistent with the Plan as the Committee shall determine.

 

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(b)           Duration of Option.  Each option may be exercised only during the
Option Period.  At the end of the Option
Period the Option shall expire.

 

(c)           Option
Exercisability.  Unless otherwise
provided by the Committee, each Option shall be exercisable only as to no more
than one-fourth (1/4) of the total number of Shares covered by the Option
during each twelve-month period commencing twelve months after the Date of
Grant of the Option.  Notwithstanding the
foregoing, an Option is exercisable only if the issuance of Shares pursuant to
the exercise would be in compliance with applicable securities laws, as
contemplated by Section 11 of this Plan. 
To the extent an Option is either unexercisable or unexercised, the
unexercised portion shall accumulate until the Option both becomes exercisable
and is exercised but in no case beyond the Option Period; provided, however,
that the unexercisable portion of an Option shall immediately expire upon an
Optionee’s termination of Continuous Service for any reason.

 

(d)           Acceleration of
Vesting.  Subject to the provisions
of Section 8(b), the Board may, in its discretion, provide for the
exercise of Options either as to an increased percentage of Shares per year or
as to all remaining Shares.  Such
acceleration of vesting may be declared by the Board at any time before the end
of the Option Period, including, if applicable, upon a Change of Control or
after termination of the Optionee’s Continuous Service by reason of death,
disability, retirement or termination of employment.

 

(e)           Option Price.  Except as provided in Section 8(a) and
9, the Option price of each Share subject to the Option shall be no less than
the Fair Market Value of the Share on the Option’s Date of Grant.

 

(f)            Termination of
Services without Cause.  If the
Optionee ceases Continuous Service for any reason other than a termination by
the Company for Cause or due to the death, disability, or retirement on or
after the age of 65 of the Optionee, the Option shall lapse at the earlier of (i) the
end of the Option Period or (ii) ten days following the last day that the
Optionee is employed by the Company, or the effective date of the termination
of his services to the Company; provided, however, that the Option may be
exercised only for the number of Shares for which it could have been exercised
on such termination date, subject to any adjustment under Sections 7(d) and
13.  The Committee may, in its
discretion, extend the time during which the Option may be exercised after
termination of service.  Any such Option
shall lapse at the end of the period established by the Committee for exercise
after termination of services.

 

(g)           Termination of
Services for Cause.  Unless otherwise
provided by the Committee, if the Company terminates the Optionee’s Continuous
Service for Cause, all Options held by the Optionee shall lapse immediately
following the last day that the Optionee is employed by the Company, or the
effective date of the termination of his services to the Company.  The Option may be exercised on such
termination date, subject to any adjustment under Sections 7(d) and 13.

 

(h)           Death.  Unless otherwise provided by the Committee,
in the case of the death of the Optionee, the beneficiaries designated by the
Optionee shall have from the earlier of 

 

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(i) one year from the Optionee’s demise
or (ii) the end of the Option Period, to exercise the Option; provided,
however, that the Option may be exercised only for the number of Shares for
which it could have been exercised at the time the Optionee died, subject to
any adjustment under Sections 7(d) and 13.

 

(i)            Retirement.  Unless otherwise provided by the Committee,
if the Optionee retires on or after attaining age 65, the Option shall lapse at
the earlier of (i) the end of the Option Period or (ii) three months
after the date of retirement; provided, however, that the Option may be
exercised only for the number of Shares for which it could have been exercised
on the retirement date, subject to any adjustment under Sections 7(d) and
13.

 

(j)            Disability.  In the event of the Optionee’s termination of
Continuous Service due to total and permanent disability (within the meaning of
Section 422 of the Code), the Option shall lapse at the earlier of (i) the
end of the Option Period or (ii) twelve months after the date of such
termination; provided, however, that the Option may be exercised only for the
number of Shares for which it could have been exercised at the time the
Optionee became disabled, subject to any adjustment under Sections 7(d) and
13.

 

8.             Incentive Stock
Options.  Any Options intended to
qualify as an Incentive Stock Option shall satisfy the following requirements
in addition to the other requirements of the Plan:

 

(a)           Ten Percent
Stockholders.  An Option intended to
qualify as an Incentive Stock Option granted to an Employee who, on the Date of
Grant, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of either the Company or any Parent or Subsidiary,
shall be granted at a price of 110% of Fair Market Value on the Date of Grant
and shall be exercised only during the five-year period immediately following
the Date of Grant.  In calculating stock
ownership of any person, the attribution rules of Section 424(d) of
the Code will apply.  Furthermore, in
calculating stock ownership, any stock that the Employee may purchase under
outstanding options will not be considered.

 

(b)           Maximum Option
Grants.  For Incentive Stock Options,
the aggregate Fair Market Value, determined on the Date of Grant, of stock in
the Company exercisable for the first time by an Optionee during any calendar
year, under the Plan and all other plans of the Company or its parent or
Subsidiaries (within the meaning of Subsection (d) of Section 422 of
the Code) in any calendar year shall not exceed $100,000; provided, however,
that if the vesting of Options is accelerated pursuant to Section 7(d),
there shall be no upper limit as to the Fair Market Value of stock in the
Company exercisable for the first time by an Optionee during any calendar year.

 

(c)           Exercise of
Incentive Stock Options.  Any
Optionee who disposes of Shares acquired upon the exercise of an Incentive
Stock Option either (i) within two years after the Date of Grant of such
Incentive Stock Option or (ii) within one year after the transfer of such
Shares to the Optionee, shall notify the Company of such disposition and of the
amount realized upon such disposition.

 

7

 

9.             Nonstatutory
Options.  Any Option not intended to
qualify as an Incentive Stock Option shall be a Nonstatutory Option.  Nonstatutory Options shall satisfy each of
the requirements of Section 7 of the Plan.

 

10.           Method of Exercise.  An Option granted under this Plan shall be
deemed exercised when the person entitled to exercise the Option (i) delivers
written notice to the Company of the decision to exercise, (ii) concurrently
tenders to the Company full payment for the Shares to be purchased pursuant to
the exercise, and (iii) complies with such other reasonable requirements
as the Committee establishes pursuant to paragraph 11 of the Plan.  During the lifetime of the Optionee, such
Option may be exercised only by him.  Payment
for Shares with respect to which an Option is exercised may be (a) in cash
or by certified check, (b) wholly or partially in the form of Common Stock
held by the Optionee for at least six months having a Fair Market Value equal
to the aggregate Option price or (c), if there is a public market for Shares at
such time, through the delivery of irrevocable instructions to a broker to sell
Shares obtained upon the exercise of the Option and to deliver promptly to the
Company an amount out of the proceeds of such sale equal to the aggregate
Option price for Shares being purchased. 
No Person will have the rights of a stockholder with respect to Shares
subject to an Option granted under this Plan until a certificate or
certificates for the Shares have been delivered to him.

 

An Option granted under this
Plan may be exercised in increments of not less than 10% of the full number of
Shares as to which it can be exercised. 
A partial exercise of an Option will not affect the holder’s right to
exercise the Option from time to time in accordance with this Plan as to the
remaining Shares subject to the Option.

 

11.           Taxes, Compliance
with Law; Approval of Regulatory Bodies. 
The Company, if necessary or desirable, may pay or withhold the amount
of any tax attributable to any Shares deliverable or amounts payable under this
Plan, and the Company may defer making delivery or payment until it is
indemnified to its satisfaction for the tax. 
Options are exercisable, and Shares can be delivered and payments made
under this Plan, only in compliance with all applicable federal and state laws
and regulations, including, without limitation, state and federal securities
laws, and the rules of all stock exchanges on which the Company’s stock is
listed at any time.  An Option is exercisable
only if either (i) a registration statement pertaining to the Shares to be
issued upon exercise of the Option has been filed with and declared effective
by the Securities and Exchange Commission and remains effective on the date of
exercise, or (ii) an exemption from the registration requirements of
applicable securities laws is available. 
This Plan does not require the Company, however, to file such
registration statement or to assure the availability of such exemptions.  Any certificate issued to evidence Shares
issued under the Plan may bear such legends and statements, and shall be
subject to such transfer restrictions, as the Committee deems advisable to
assure compliance with federal and state laws and regulations and with the
requirements of this Section 11. 
Each Option may not be exercised, and Shares may not be issued under
this Plan, until the Company has obtained the consent or approval or every
regulatory body, federal or state, having jurisdiction over such matters as the
Committee deems advisable.

 

Each person who acquires the
right to exercise an Option by bequest or inheritance may be required by the
Committee to furnish reasonable evidence of ownership of 

 

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the Option as a condition to his exercise of
the Option.  In addition, the Committee
may require such consents and release of taxing authorities as the Committee
deems advisable.

 

12.           Amendment.  (a) The Committee may without further
action by the stockholders of the Company and without receiving further
consideration from the Optionees, amend this Plan or condition or modify
Options awarded under this plan in response to changes in securities or other
laws or rules, regulations or regulatory interpretations thereof applicable to
this Plan or to comply with stock exchange rules or requirements.

 

(b)           The Committee may at
any time and from time to time terminate or modify or amend the Plan in any
respect.  The termination or any
modification or amendment of the Plan, except as provided in subsection (a),
shall not, without the consent of an Optionee, impair his rights under an
Option previously granted to him pursuant to this Plan.

 

13.           Adjustment Upon
Change of Shares.  If a
reorganization, merger, consolidation, reclassification, recapitalization,
combination or exchange of share, stock split, stock dividend, rights offering,
or other similar transaction or event occurs, the number, class and/or kind of
Shares for which Options are authorized to be granted under this Plan, the number,
class or kind of Shares then subject to Options previously granted under this
Plan, the price per Share payable upon exercise of each Option outstanding
under this Plan and/or any other affected term of an Option shall be equitably
adjusted by the Committee to reflect such changes.  To the extent deemed equitable and
appropriate by the Board, subject to any required action by stockholders, in
any merger, consolidation, reorganization, liquidation or dissolution, any
Option granted under the Plan shall pertain to the securities and other
property to which a holder of the number of Shares of stock covered by the
Option would have been entitled to receive in connection with such event.

 

14.           Liability of the
Company.  The Company, its parent and
any Subsidiary that is in existence or hereafter comes into existence shall not
be liable to any person for any tax consequences expected but not realized by
an Optionee or other person due to the exercise of an Option.

 

15.           Expenses of Plan.  The Company shall bear the expenses of
administering the Plan.

 

16.           Duration of Plan.  Options may be granted under this Plan only
within 10 years from the effective date of this Plan.

 

17.           Applicable Law.  The validity, interpretation, and enforcement
of this Plan are governed in all respects by the laws of Delaware, without
regard to the conflict of laws provisions hereof.

 

18.           Effective Date.  The effective date of this Plan shall be the
date this Plan is adopted by the Board, or such later date as designated by the
Board.

 

9

 

19.           Securities Laws.  The Plan and the administration of the Plan
are intended to comply with all applicable conditions of Rule 16b-3 or any
successor regulation or statute adopted under the federal securities laws.  To the extent any provision of the Plan or
action by the Board or the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee.

 

10PROSPECTUS

Exhibit 4.1

PROSPECTUS

DIVIDEND REINVESTMENT AND COMMON STOCK PURCHASE PLAN

We are offering 300,000 shares of our common stock through our Dividend Reinvestment and Common Stock Purchase Plan.  The Plan provides you with an economical and convenient way to purchase shares of our common stock without paying any brokerage commission or service charge.  Our stock is traded on The Nasdaq National Market under the ticker symbol "PNNW."  Participants who are already enrolled in the Plan will continue to participate in the Plan without any further action on their part.

The Plan is open to:

·

shareholders of record of our common stock.

·

customers of our water utility and water management services subsidiaries.

·

our full-time employees.

Some of the significant features of the Plan are:

·

You may purchase shares of common stock by automatically reinvesting all or a portion of your cash dividends received on our common stock.

·

You may also purchase additional shares of common stock at current market prices by making optional cash payments of $40 to $1,000 each month.  Optional cash payments may be made by check or money order.  Full-time employees may also make optional cash payments through payroll deductions.

·

You can decide whether or not to participate in the Plan, and you may terminate your participation at any time.

·

The Plan Administrator is American Stock Transfer & Trust Company.  Plan participants may access the Plan's features through the Administrator's Internet website at www.amstock.com.

·

The purchase price for shares of common stock that you purchase through the Plan directly from us will be the average of the closing bid prices of our common stock as quoted by The Nasdaq National Market for the five trading days immediately preceding the applicable monthly investment date.

·

The purchase price for shares of common stock that you purchase through the Plan that are acquired in the open market or in privately negotiated transactions with third parties will be the weighted average price per share that the Plan Administrator paid for all common stock purchased for the applicable monthly investment date.

Investing in our common stock involves risks, including risks related to an ongoing eminent domain proceeding against us by the City of Nashua, New Hampshire.  You should read the section titled "Risk Factors" beginning on page 3 before enrolling in the Plan or purchasing any shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus.  Any representation to the contrary is a criminal offense.

The date of this Prospectus is September 22, 2005.

SUMMARY

About Pennichuck Corporation

We are engaged primarily in the collection, storage, treatment and distribution of potable water in southern and central New Hampshire.  We are headquartered in Merrimack, New Hampshire, which is located approximately 45 miles north of Boston, Massachusetts.  We currently provide water service to approximately 30,000 customers.  In 2004, 60% of our water utility operating revenues was derived from residential customers, 23% from commercial and industrial customers, and 17% from other sources, primarily fire protection and billing services to municipalities.  We also engage in non-regulated water management services and real estate development and investment.

Additional information regarding Pennichuck Corporation, including our audited financial statements and a more detailed description of Pennichuck, is contained in the documents incorporated by reference in this prospectus.

About the Plan

The following summary of our Dividend Reinvestment and Common Stock Purchase Plan does not include all of the information that may be important to you.  You should carefully read the entire text of the Plan contained in this prospectus before you decide to participate in the Plan.

ELIGIBILITY AND

ENROLLMENT:

You may be eligible to participate in the Plan in one of four ways:

·

We will automatically enroll you in this Plan if you have been participating in our previous dividend reinvestment and common stock purchase plan.  If you do not wish to participate in this Plan, you can withdraw at any time.

·

You can participate in the Plan if you currently own shares of Pennichuck common stock by submitting a completed Enrollment Application.  You may obtain an Enrollment Application from the Plan Administrator.  You may participate directly in the Plan only if you hold your common stock in your own name.

·

If you are a customer of Pennichuck's water utility or water management services subsidiaries, then you do not need to be a registered holder of Pennichuck common stock to join the Plan.  Each Enrollment Application for a customer who is not a registered stockholder must be accompanied by a check for at least $100, but not more than $1,000.

·

If you are a full-time employee of Pennichuck or one of its subsidiaries, you do not need to be a registered holder of Pennichuck common stock to join the Plan.  You may join either by contributing to the Plan via payroll deductions or by submitting an Enrollment Application accompanied by a check for at least $100, but not more than $1,000.

REINVESTMENT OF

DIVIDENDS:

You can reinvest all cash dividends you receive on all of your shares of our common stock.  Alternatively, you may elect to reinvest all of the dividends you receive on a specified number of your shares Under the Plan, you must reinvest cash dividends received on a specified number of shares held in your name and 100% of the cash dividends received on all of the shares held in your Plan account.  You will be able to purchase additional shares of common stock by reinvesting your dividends, without paying fees.

OPTIONAL CASH

INVESTMENTS:

After you enroll in the Plan, you can buy additional shares of common stock without paying fees.  You can invest a minimum of $40 and up to a maximum of $1,000 each calendar month.  You must reinvest a portion of your cash dividends through the Plan in order to exercise the optional cash investment feature.

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SOURCE OF SHARES:

The administrator of the Plan will purchase shares of common stock in one of four ways:

·

directly from us;

·

in the open market;

·

in privately negotiated transactions with third parties; or

·

a combination of any of the above.

PURCHASE PRICE:

The purchase price of shares of common stock under the Plan depends on whether the Plan Administrator purchases shares directly from us, in the open market or in privately negotiated transactions with third parties.

·

For shares purchased directly from us, the price you pay will be the average of the closing bid prices for our common stock as quoted through The Nasdaq National Market for the five trading days immediately preceding the monthly investment date.

·

For shares purchased in the open market or in privately negotiated transactions with third parties, the price you pay will be the weighted average of the actual prices the Plan Administrator pays for all of the common stock purchased for the applicable monthly investment date.

·

For shares purchased through a combination of the above methods, the price you pay will be the weighted average of the respective prices determined as set forth above for all of the common stock purchased for the applicable monthly investment date.

TRACKING YOUR

INVESTMENT:

You will receive periodic statements of the transactions made in your Plan account.  These statements will provide you with details of the transactions and will indicate the common share balance in your Plan account.

ADMINISTRATION:

American Stock Transfer & Trust Company serves as the administrator of the Plan.  You can contact the Plan Administrator as follows:

Telephone:

1-877-739-9934

Internet:

www.amstock.com

Mail:

American Stock Transfer & Trust Company

Attn: Dividend Reinvestment Department

P.O. Box 922

Wall Street Station

New York, NY  10269-0560

CONTACTING US:

You can write to us at the following address:

Pennichuck Corporation

Investor Relations

25 Manchester Street

P.O. Box 1947

Merrimack, New Hampshire  03054-1947

You can also telephone our Investor Relations Department at 603-882-5191 or

1-800-553-5191.

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RISK FACTORS

Certain risks involved in investing in the common stock offered under this prospectus are described below.  You should carefully consider each of the following factors and all of the information both in this prospectus and in the other documents we have filed with the SEC, including those that are incorporated in this prospectus by reference.  See "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference."

Risks Related to Our Water Utilities

The City of Nashua's use of the power of eminent domain to acquire a significant portion of our water utility assets creates uncertainty and may result in material, adverse consequences for us and our shareholders.

We are involved in ongoing proceedings with the City of Nashua regarding the City's desire to acquire all or a significant portion of the water utility assets of Pennichuck Water, our principal subsidiary.  The City is pursuing such acquisition pursuant to its power of eminent domain under New Hampshire law.  Whether the City will ultimately be permitted to acquire our assets and, if so, the compensation that the City would have to pay us for those assets are highly uncertain and will likely involve protracted proceedings before the New Hampshire PUC.  Our Board of Directors and shareholders would not have the right to approve a forced sale of Pennichuck Water's assets to the City in an eminent domain proceeding or the amount of damages that the City would have to pay to us as a consequence of such a taking.  If the New Hampshire PUC authorizes the City to use eminent domain to acquire any or all of Pennichuck Water's assets, the City would not be bound to proceed with the acquisition, and could decide not to proceed.

Given the highly integrated nature of our businesses, a forced sale of a significant portion of our water related assets may result in increased costs and operating inefficiencies borne by our remaining assets.  Additionally, our water management subsidiary's ability to service its existing contracts, as well as pursue additional operating contracts, could be impaired.  The existence of a pending eminent domain proceeding also could adversely affect Pennichuck Water's future prospects and result in the loss of one or more key employees.

Our vigorous opposition to the City of Nashua's efforts to acquire our assets by eminent domain has had, and will likely continue to have, a material adverse effect on our operating results and has been, and will likely continue to be, a significant distraction to our management.

We have vigorously opposed the City of Nashua’s efforts to acquire our assets by eminent domain and intend to continue to do so.  Our eminent domain related expenses have been, and are expected to continue to be, significant.  These expenses in 2003 and 2004 were $235,000 and $1.2 million, respectively.  A substantial portion of our President and Chief Executive Officer's attention has been and will likely continue to be devoted to coordinating various aspects of our response to the City's eminent domain initiative.  In addition, we expect that from time to time in the future one or more other senior officers may need to participate significantly in various aspects of our response to the City's eminent domain efforts.  We cannot assure you that management's attention to the City's eminent domain initiative will not adversely affect their oversight of other aspects of our business.

The use by one or more cities and towns, in addition to the City of Nashua, of the power of eminent domain to acquire a portion of our water utility assets creates uncertainty and may result in material, adverse consequences for us and our shareholders.

After the City of Nashua began the process to acquire some of our assets by eminent domain, two towns in our service area took preliminary steps to initiate eminent domain proceedings against us.  The Town of Pittsfield voted in March 2005 to acquire the assets of our Pittsfield subsidiary and to appropriate $60,000 for the eminent domain process.  The Town of Bedford voted in March 2005 to acquire our assets within its boundaries.  The City of Nashua has entered into an agreement with certain other municipalities in southern and central New Hampshire, including the Town of Bedford, to form the Merrimack Valley Regional Water District.  If the City should acquire any of Pennichuck Water's assets, then the City may elect to transfer such assets to the District.  We have no basis to evaluate whether Pittsfield or Bedford will actively pursue the acquisition of our assets by eminent domain whether in conjunction with or independent of the City of Nashua.

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Our water utility business requires significant capital expenditures, and the rates we charge our customers are subject to regulation.  If we are unable to obtain government approval of our requests for rate relief, or if approved rate relief is untimely or inadequate to cover our investments, our operating results would suffer.

Our ability to meet our financial objectives is dependent upon the rates we charge our customers.  Our regulated water utility subsidiaries operate under the jurisdiction of the New Hampshire PUC.  The New Hampshire PUC regulates the rates the subsidiaries may charge for providing water to their customers.  From time to time, the subsidiaries petition the New Hampshire PUC for rate increases in which they seek a reasonable opportunity to recover prudently incurred operating costs and investments in property, plant and equipment, which we refer to as the rate base.  Once we file a rate relief petition with the New Hampshire PUC, the ensuing administrative and hearing process may be lengthy and costly.  The timing of our rate relief requests is therefore partially dependent upon the estimated cost of the administrative process in relation to the investments and expenses that we hope to recover through the rate relief to the extent approved.  We can provide no assurances that any future rate relief request will be approved by the New Hampshire PUC; and, if approved, we cannot guarantee that this rate relief will be granted in a timely or sufficient manner to cover the investments and expenses for which we initially sought the rate relief.

Because our projected 2005 to 2008 capital expenditures would approximately double our rate base, we expect to request future rate relief that is relatively large in comparison to our recent rate relief requests.  Given the magnitude of our anticipated future requests, there may be an increased risk that the rate relief granted by the New Hampshire PUC would be untimely or inadequate, which would adversely affect our ability to service the debt that we expect to incur to finance our construction program.

During the 2005 to 2008 period, our capital expenditures will be particularly large as we upgrade our water treatment plant to meet more stringent federally mandated water quality standards, undertake various water distribution, storage, supply, maintenance, rehabilitation and replacement projects and conduct a pilot project for a proposed radio-based meter reading system.  Our estimated capital expenditures for our water utilities during the 2005 to 2008 period are expected to total $59.0 million in current dollars.  By comparison, for the four year period from 2001 to 2004, our capital expenditures were $33.1 million.  Our subsidiaries intend to fund such capital expenditures using a blend of equity, long-term debt, and cash flow from operations.

Our projected 2005 to 2008 capital expenditures would approximately double our rate base.  Given the relatively large magnitude of our construction program, we expect that our future rate relief requests will be relatively large in comparison to our recent rate relief requests.  We intend to submit one or more requests for rate relief as significant components of our capital projects are placed into service.  There can be no assurance that the New Hampshire PUC will approve future rate relief in a timely manner sufficient to cover our investments and expenses during the 2005 to 2008 period or our debt service on long-term debt incurred to support our 2005 to 2008 construction program.  Assuming we are able to issue long-term, tax-exempt financing under the New Hampshire Business Finance Authority, and assuming no change in applicable long-term interest rates, we expect that our annual interest expense will increase approximately $1.0 million for each $20 million of such long-term debt.  Our ability to service that debt would be adversely affected if we were unable to obtain timely and adequate rate relief relating to the capital expenditures incurred during that program.

Our ability to undertake our 2005 to 2008 capital expenditure program depends greatly on our ongoing ability to obtain external financing.  If we are unable to obtain such financing on reasonable terms, so that we are unable to complete all of our capital improvements on a timely basis, our operating results could be adversely affected.

We estimate that approximately 25% to 30% of our projected capital expenditures during the 2005 to 2008 period will be financed using cash flow from our operations (after payment of dividends on common stock).  We intend to fund the balance using external sources, including substantially all of the net proceeds from a recently completed equity offering and $50.0 million from the proposed sale of tax-exempt bonds.  In addition, some of our external financing may be obtained through subsequent equity offerings.  Our ability to secure external debt financing at reasonable costs and terms depends primarily on our ability to maintain continuing access to credit under our revolving credit facility and our access to long-term debt markets.  Our revolving credit facility, which we recently increased to $16.0 million, will expire on December 31, 2007.  Borrowings under the facility are subject to various terms and conditions, including covenants restricting borrowing if certain specified credit ratios are not attained.

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Access to long-term debt at reasonable costs and terms requires that we maintain our credit ratios at levels consistent with comparable investment grade borrowers, as well as at levels consistent with the covenants contained in our existing loan agreements.  Should we be unable to access long-term debt at reasonable costs and terms, our ability to finance our 2005 to 2008 capital expenditures on a timely basis could be materially impaired.  In such an event, we may need to seek other forms of capital at less favorable costs and terms or defer or reduce some of our capital expenditures.  Any delay in implementing capital improvements could adversely affect our ability to request and receive rate relief from the New Hampshire PUC relating to capital expenditures incurred by us.

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; such acceleration could adversely affect our financial condition, operating results and cash flows.

Our $16.0 million revolving credit facility that we recently entered into with Bank of America provides that any indebtedness outstanding under the facility would be due upon the City of Nashua acquiring all or a material portion of Pennichuck Water's assets in an eminent domain proceeding.  We expect that all future debt arrangements, including those that will be incurred to fund our 2005 to 2008 capital expenditure program, will provide expressly or in effect that there would be an acceleration of our indebtedness if the City acquires a significant portion of our assets, whether in an eminent domain proceeding or otherwise.  Such an acceleration could adversely affect our financial condition, operating results and cash flows if we are unable to repay such indebtedness at that time or to refinance the indebtedness on equally favorable terms and conditions.

If we are unable to manage the construction phases of our 2005 to 2008 capital expenditure program successfully, so that we are unable to complete the upgrade of our water treatment plant on a timely basis, then our operating results could be adversely affected and the total amount of capital expenditures may exceed our projected capital resources.

Our significant projected capital expenditures for the 2005 to 2008 period result primarily from our need to upgrade our water treatment plant to meet federally mandated standards.  The water treatment plant project will be constructed in stages.  The initial stage began in 2004, and we expect that the project will be completed in 2008.  The cost of the entire water treatment plant project is currently estimated at approximately $35.0 million.  The following are principal risks that we believe are associated with our water treatment plant construction project:

·

The price of steel, which is a significant portion of the overall cost of the water treatment plant project, may increase substantially from our current estimates, which risk we expect to bear under the terms of the construction contracts.

·

There may be cost overruns resulting from change orders or other factors not linked to the price of steel that we may have to bear under the terms of the construction contracts.

·

One or more significant contractors or subcontractors may encounter financial difficulties and be unable to complete their obligations under the construction contracts on a timely basis or at all.

·

Capital investment cannot be included in rate relief until the project is in service.  Therefore, the timing of rate relief will be adversely affected if construction problems or other factors delay the operation of new plant components.

If we are unable to successfully manage the construction phases of our 2005 to 2008 capital expenditure program, so that we are unable to complete the upgrade of our water treatment plant on time to comply with federal standards, then our operating results could be adversely affected, and the total amount of capital expenditures during the period may exceed our projected capital resources.  If mismanagement is determined to have resulted in cost overruns, then the New Hampshire PUC may not allow recovery for all of the costs associated with the project.

5

Decreased consumption by a significant commercial or industrial customer can and has adversely affected our operating results and cash flows.

Our revenues will decrease, and such decrease may be material, if a significant commercial or industrial customer terminates or materially reduces its use of our water.  Approximately $4.5 million, or 23.5%, of our 2004 water utility revenues was derived from commercial and industrial customers.  We recently lost an industrial customer that accounted for $156,000 of revenues in 2004 when its plant in our service area ceased operations.  Our largest customer is an Anheuser Busch bottling plant located in Merrimack, New Hampshire.  We recently renewed a contract with Anheuser Busch, providing for a supply of up to 3.0 million gallons per day for a term of ten years.  We estimate that our 2005 revenues from Anheuser Busch will be approximately $825,000, reflecting a decrease resulting from a recent change in production processes.  In addition, Anheuser Busch has informed us that it plans to phase out the use of one of its facilities, which used 85,000 gallons per day at full operations, by 2006.

If Anheuser Busch or any other large commercial or industrial customer reduces or ceases its consumption of our water, we may seek New Hampshire PUC approval to increase the rates of our remaining customers to offset decreased revenues.  There can be no assurance, however, that the New Hampshire PUC would approve such a rate relief request, and even if it did approve such a request, it would not apply retroactively to the date of the reduction in consumption.  The delay between such date and the effective date of the rate relief may be significant and could adversely affect our operating results and cash flows.

An important element of our growth strategy is the acquisition of water systems.  Any pending or future acquisitions we decide to undertake will involve risks.

The acquisition and integration of water systems is an important element in our growth strategy.  This strategy depends on identifying suitable acquisition opportunities and reaching mutually agreeable terms with acquisition candidates.  The negotiation of potential acquisitions as well as the integration of acquired businesses could require us to incur significant costs and resources.  Further, acquisitions may result in dilution for the owners of our common stock, our incurrence of debt and contingent liabilities and fluctuations in quarterly results.  In addition, the businesses and other assets we acquire may not achieve the financial results that we expected.

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.

Our core service area, which accounted for 62% of our 2004 consolidated revenues, comprises Pennichuck Water's franchise in the City of Nashua, New Hampshire and portions of the surrounding towns of Amherst, Hollis and Merrimack.  Our revenues and operating results are therefore subject to local regulatory, economic, demographic, competitive and weather conditions in that area.  A change in any of these conditions could make it more costly or difficult for us to conduct our business.  In addition, any such change would have a disproportionate effect on us, compared to water utility companies that do not have such a geographic concentration.

The necessity for increased security has and may continue to result in increased operating costs.

In the wake of the September 11, 2001 terrorist attacks and the ensuing attention to threats to the nation's health and security, we have expended resources to increase security measures at our facilities and heighten employee awareness of threats to our water supply.  We have also incurred expenses to tighten our security measures regarding the delivery and handling of certain chemicals used in our business.  We will continue to bear increased costs for security precautions to protect our facilities, operations and supplies.  We are not aware of any specific threats to our facilities, operations or supplies.  However, it is possible that we would not be in a position to control the outcome of such events should they occur.

6

Damage to, or an upgrade of, any of our dams may adversely affect our financial condition, revenues, operating results and cash flows.

Pennichuck Water owns eight dams, including four impounding dams situated on the Nashua and Merrimack border.  A failure of any of those dams could result in injuries and property damage downstream for which we may be liable and which may adversely affect our financial condition, revenues and operating results.  The failure of a dam would also adversely affect our ability to supply water in sufficient quantities to our customers and could adversely affect our financial condition, revenues, operating results and cash flows.

We also are required from time to time to repair or upgrade the dams that we own.  The cost of such repairs can be and has been material.  In 2004, we incurred costs of approximately $1 million to upgrade the spillways and earthen embankments of our Supply and Harris Pond dams.

In January 2004, the New Hampshire Department of Environmental Services issued a letter to Pennichuck Water setting forth certain deficiencies with regard to the Merrimack Village dam.  We have obtained a 24-month extension of the time in which to complete the necessary repairs, and we are considering whether to sell, demolish or repair the dam.  If the dam is not sold, we expect to bring the dam into compliance during 2006.

The success of our acquisition strategy and our ability to complete successfully our capital additions program 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.

The success of our acquisition strategy and our ability to complete successfully our capital additions program depends significantly on the continued individual and collective contributions of our senior management team.  If we lose the services of any member of our senior management or are unable to hire and retain experienced management personnel, it could harm our operating results.

Risks Related to Our Water Management Business

Our water management subsidiary's revenue growth depends on our ability to enter into new operating contracts and maintain our existing contracts with municipalities, communities and non-transient, noncommunity water systems.

In our target market of southern and central New Hampshire and nearby portions of Maine, Massachusetts and Vermont, municipalities and communities own and operate the majority of water systems.  A significant portion of the marketing and sales efforts of Pennichuck Water Service Corporation, our water management subsidiary, is spent demonstrating the benefits of contract operations to elected officials and municipal authorities Employee unions and certain "public interest" groups generally oppose the principle of outsourcing these services to companies like us and are active opponents in this process.  The political environment means that decisions are made based on many considerations, not just economic factors.  There can be no assurance that we can maintain or expand our water management business.

Our water management subsidiary's business depends on trained, qualified employees.

State regulations set the staff training, experience and staff qualification standards required for the Service Corporation's employees to operate specific water facilities.  We must recruit, retain and develop qualified employees, maintain training programs and support employee advancement.  We must provide the proper management and operational staff of state-certified and qualified employees to support the operation of water facilities.  Failure to do so could put us at risk for, among other things, operational errors at the facilities, which would have an adverse effect on our water management business.

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Our water management subsidiary's business is subject to environmental and water quality risks, which could have a material adverse effect on our financial condition, operating results and cash flows.

Clients of the Service Corporation are owners of the facilities that we operate under contract.  The facilities must be operated in accordance with various federal and state water quality standards.  We also handle certain hazardous materials at these facilities, for example, sodium hydroxide.  Any failure of our operation of the facilities, including noncompliance with water quality standards, hazardous material leaks and spills, and similar events, could expose us to environmental liabilities, claims and litigation costs.  We cannot assure you that we will successfully manage these issues, and failure to do so could have a material adverse effect on our financial condition, operating results and cash flows.

Risks Related to Our Real Estate Activities

The cost of obtaining development permits and other land use approvals, as well as fluctuations in interest rates, construction costs and economic conditions prevailing in the Nashua/Merrimack area and the supply of investment capital for commercial real estate and related assets, could adversely affect the value of our undeveloped land.

Primarily through our Southwood subsidiary, we own several parcels of developable land in Nashua and Merrimack, New Hampshire, comprising approximately 580 acres.  During the next several years, we expect to pursue the permitting and other land use approvals necessary to realize some or all of the value of those parcels.  We will undertake those efforts either alone or in concert with others.  The value we realize for our undeveloped land will depend primarily on whether development permits and other land use approvals can be obtained in a timely, cost-effective manner.  The process of obtaining such permits and approvals is inherently uncertain, lengthy and expensive.  The value of our undeveloped land will also be affected by fluctuations in interest rates, construction costs and economic conditions prevailing in the Nashua/Merrimack area and the supply of investment capital for commercial real estate and related assets.

Write-offs related to real estate development decisions could adversely affect our operating results, and the disposition of a single significant real estate investment could increase fluctuations in our operating results and cash flows.

A change in economic or other conditions may make certain development projects less viable, and we may decide to abandon or delay such projects.  Our future operating results may be adversely affected by write-offs of costs that have been capitalized in connection with potential development projects that we subsequently determine not to pursue.  The disposition of a single significant Southwood investment can affect our financial performance in any period, and therefore our real estate investment activities could increase (and have historically increased) fluctuations in our operating results and cash flows.

The cost of capital improvements to office space and low occupancy levels or rental rates for commercial office space could adversely affect our real estate development subsidiary's operating results.

Southwood has a 50% ownership interest in three separate joint ventures owning commercial office buildings located in Merrimack, New Hampshire and a 50% interest in another nearby parcel of land that is approved for the construction of commercial office space.  From time to time, a Southwood joint venture may need to make significant capital improvements to its property in order to remain competitive.  Such additional investment could adversely affect our return on a project.  Any expiration, default or termination of a lease may adversely affect Southwood's revenues.  A reduction in demand for the joint venture properties may cause us to continue to incur operating costs without offsetting income.  The combined vacancy rate for the Southwood joint venture projects was approximately 11% as of July 31, 2005 Commercial building occupancies and rental rates typically decline in an economic downturn.  Southwood's share of the net operating income (or loss, if any) from leases associated with those buildings could be adversely impacted by a downturn in the local economy and commercial real estate market.

8

Southwood's investment in one or more joint ventures may be jeopardized if the debt financing secured by the properties of those joint ventures cannot be refinanced on acceptable terms.

Southwood holds a 50% interest in four joint ventures, each of which owns land and three of which own a commercial office building, subject to a mortgage note with a local bank.  The mortgage notes, totaling approximately $8.8 million, are not included in our consolidated balance sheets, incorporated here by reference to our Annual Report on Form 10-K for the fiscal year ended December 31, 2004.  Each of the notes is secured by the underlying real property.  In addition, Southwood is contingently liable on one-half of the outstanding balance, and as such, it has issued a guarantee to the mortgagee for its share of the guaranteed indebtedness.  Southwood's investment in one or more joint ventures may be jeopardized if the debt financing secured by the properties of those joint ventures cannot be refinanced on acceptable terms.

Other Risks Related to Ownership of Our Common Stock and Participation in This Plan

Our ability to pay dividends on our common stock is subject to the profitability of our businesses and to certain restrictions imposed by lenders of capital to us.

Our ability to pay dividends is materially dependent on the earnings of our operating subsidiaries, principally our water operations.  We have paid dividends each year since at least 1856.  The amount of future dividends is at the discretion of our Board of Directors and principally depends upon our earnings, financial condition, the capital requirements of our operating subsidiaries and other factors, including the adequacy of rate relief granted by the New Hampshire PUC to our water utility subsidiaries.  Certain bond and note agreements involving Pennichuck Water, our principal subsidiary, among other things, impose restrictions on the payment or declarations of dividends by Pennichuck Water to Pennichuck.  Our revolving credit facility effectively restricts our ability to pay dividends by requiring that our tangible net worth on a quarterly basis must equal or exceed $25.0 million plus new equity proceeds.  Our tangible net worth at June 30, 2005 was $29.0 million.  There is no assurance that we will continue to pay dividends on shares of common stock, and if paid, there is no assurance as to the timing and amount of such dividends.

There is a limited trading market for our common stock; you may not be able to sell your shares at or above the price you pay for them.

Although our common stock is listed for trading on The Nasdaq National Market, the trading in our common stock has substantially less liquidity than many other companies quoted on The Nasdaq National Market.  A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market of willing buyers and sellers of our common stock at any given time.  This presence in turn depends on the individual decisions of investors and general economic and market conditions over which we have no control.  As a consequence of the limited volume of trading in our common stock, a sale of a significant number of shares of our common stock in the open market could cause our stock price to decline.

Participants in the Plan are subject to tax on dividends received even if reinvested under the Plan.

Reinvestment of dividends under the Plan does not relieve a Plan participant of the liability for any income or other tax which may be payable on such dividends.  Each prospective purchaser should consult his or her own advisor to determine the particular federal, state and local tax consequences resulting from participation in the Plan and any subsequent transfer of shares purchased pursuant to the Plan

When we become subject to SEC requirements under Section 404 of the Sarbanes-Oxley Act of 2002, if our internal control reports disclose significant deficiencies or material weaknesses, our shareholders and lenders could lose confidence in our financial reporting, which would likely harm the trading price of our stock, our access to additional capital, and our liquidity.

We were not an "accelerated filer" under the federal securities laws in 2004, and therefore SEC requirements under Section 404 of the Sarbanes-Oxley Act of 2002 did not require us to and we did not prepare a management report on our internal control over financial reporting or obtain an attestation on that report from our auditors in connection with our annual report for the year ended December 31, 2004.  We anticipate that we will be required to provide the internal control reports described above in connection with our annual report for the year ending December 31, 2006.  During the past year, 

9

various accelerated filers, when first providing internal control reports, disclosed significant deficiencies or material weaknesses in their internal control over financial reporting.  When we become subject to SEC requirements under Section 404, if our internal control reports disclose significant deficiencies or material weaknesses, our shareholders and lenders could lose confidence in our financial reporting, which would likely harm the trading price of our stock, our access to additional capital, and our liquidity.

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.

Classified Board of Directors.  We have a classified Board of Directors, which means only one-third of the directors are elected each year.  A classified board can make it harder for an acquirer to gain control by voting its candidates onto the Board of Directors and may also deter merger proposals and tender offers.  At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of the board.

Authorized Shares.  Our Articles of Incorporation authorize the issuance of 11,500,000 shares of common stock and 115,000 shares of preferred stock.  The shares of common stock and preferred stock were authorized in an amount greater than intended to be issued to provide our Board of Directors with as much flexibility as possible to effect, among other transactions, financings, acquisitions, stock dividends, stock splits and employee stock option grants.  However, these additional authorized shares may also be used by the Board of Directors to deter future attempts to gain control of us.  The Board of Directors has sole authority to determine the terms of any one or more series of preferred stock, including voting rights, conversion rates and liquidation preferences.  As a result of the ability to fix voting rights for a series of preferred stock, the board has the power to issue a series of preferred stock that would have the effect of discouraging or blocking a post-tender offer merger or other transaction by a third party.

Shareholder Rights Plan.  Our Board of Directors has adopted a shareholder rights plan.  The rights plan is intended to improve the bargaining position of our Board of Directors in the event of an unsolicited offer to acquire our outstanding common stock.  Under the terms of the rights plan, a preferred stock purchase right is attached to each share of our outstanding common stock that is currently outstanding or becomes outstanding before the rights become exercisable, are redeemed or expire, including each share of common stock being offered by this prospectus.  The rights will become exercisable only if an individual or group has acquired or obtained the right to acquire or announced a tender or exchange offer that if consummated would result in such individual or group acquiring beneficial ownership of 10% or more of our outstanding common stock.  Upon the occurrence of a triggering event, the rights will entitle every holder of our common stock, other than the acquiror, to purchase our stock or stock of our successor on terms that would likely be economically dilutive to the acquiror.  Our Board of Directors, however, has the power to amend the rights plan so that it does not apply to a particular acquisition proposal or to redeem the rights for a nominal value before they become exercisable.  These features will likely encourage an acquiror to negotiate with our Board of Directors before commencing a tender offer or to condition a tender offer on the board taking action to prevent the rights from becoming exercisable.

Supermajority Shareholder Approval May be Required for Fundamental Transactions with an "Interested Shareholder."  Our Articles of Incorporation require that certain fundamental transactions must be approved by the holders of two-thirds of each class of stock entitled to vote and two-thirds of the total number of shares entitled to vote, unless a majority of "disinterested directors" has approved the transaction and other specified conditions are satisfied, in which case the required shareholder approval will be the minimum approval required by applicable law.  The transactions that are subject to this provision are various fundamental transactions between us and an "interested shareholder" or an affiliate of that shareholder.  These transactions include certain sales or other dispositions of our assets, certain issuances of our capital stock, certain transactions involving our merger, consolidation, division, reorganization, dissolution, liquidation or winding up or certain amendments of our Articles of Incorporation or bylaws.  The interested shareholder provision will likely encourage an acquiror to negotiate with the Board of Directors before commencing a tender offer.

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Approval of the New Hampshire PUC would be required for any acquisition of us, and the New Hampshire PUC would consider factors other than what is in the best interest of our shareholders.

Our water utility subsidiaries are regulated by the New Hampshire PUC.  The New Hampshire PUC takes the position that under New Hampshire law, water utility holding companies may not be acquired unless and until there is an order of the New Hampshire PUC approving the acquisition.  In practice, companies acquiring water utility holding companies in New Hampshire have typically sought PUC approval as a condition of any transaction.  The New Hampshire PUC may approve an acquisition only if it determines that the acquisition will not have an adverse effect on rates, terms, service or operation of the utilities and is lawful, proper and in the public interest.

FORWARD-LOOKING STATEMENTS

Certain statements in this prospectus, or incorporated by reference into this prospectus, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are made based upon, among other things, our current assumptions, expectations and beliefs concerning future developments and their potential effect on us.  These forward-looking statements involve risks, uncertainties and other factors, many of which are outside our control, that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.  In some cases, you can identify forward-looking statements where statements are preceded by, followed by, or include the words "in the future," "believes," "expects," "anticipates," "plans" or similar expressions, or the negative thereof.  Forward-looking statements in this prospectus, or incorporated by reference into this prospectus, include, but are not limited to, statements regarding:

·

projected capital expenditures, related funding requirements and anticipated sources of financing;

·

future financing plans;

·

recovery of capital expenditures and expenses in rates;

·

timing and results of eminent domain proceedings before the New Hampshire PUC, and the impact thereof on our consolidated business operations;

·

changes in regulation;

·

developments and trends in the water utility industry;

·

dividend payment restrictions and dividend expectations;

·

the capacity of our water supplies and facilities;

·

the development of new services and technologies by us or our competitors;

·

opportunities for growth in our water management business;

·

opportunities for future acquisitions;

·

the availability of qualified personnel; and

·

general economic conditions.

Forward-looking statements involve risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by these forward- looking statements, including but not limited to the factors that we describe elsewhere in this prospectus, including particularly under the caption "Risk Factors."

11

Given these uncertainties, you should not place undue reliance on these forward-looking statements.  You should read this prospectus and the documents that we incorporate by reference into this prospectus completely and with the understanding that our actual future results may be materially different from what we expect.  These forward-looking statements represent our estimates and assumptions only as of the date of this prospectus.  Except as may be required by our ongoing obligations to disclose material information under the federal securities laws, we are not obligated to update these forward-looking statements, even though our situation may change in the future.  We qualify all of our forward-looking statements by these cautionary statements.

The statutory protection for forward-looking statements that is afforded by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 will not apply to statements regarding our business or operations that are first made within three years after December 16, 2004 by us or various persons acting on our behalf, including our officers or underwriters.  The administrative decrees that the Securities and Exchange Commission and the New Hampshire Bureau of Securities Regulation issued recently in connection with our settlement of parallel administrative investigations specifically prohibit us from engaging in future violations of the antifraud provisions of the securities laws.  Consequently, Section 27A and Section 21E deny the statutory protection for our forward-looking statements for a three-year period beginning on December 16, 2004, the effective date of the decrees.  Additional information regarding the settlement with the SEC and the Bureau is provided in Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 000-18552), incorporated herein by reference.

THE PLAN

The text of the Dividend Reinvestment and Common Stock Purchase Plan of Pennichuck Corporation is set forth below in its entirety.  The Plan is written in a simple question and answer format.  We expect to continue to pay quarterly dividends on shares of our common stock in the future.  However, we cannot assure you that we will definitely pay dividends in the future.  If you are a stockholder and do not participate in this Plan, you will continue to receive cash dividends, if and as declared, in the usual manner as we declare and pay them.

Purpose

1.

What is the purpose of the Plan?

The purpose of the Plan is to provide owners of our common stock and Pennichuck full-time employees and customers with a convenient and economical method to invest cash dividends paid on shares of Pennichuck common stock, as well as optional cash payments, in additional shares of Pennichuck common stock, without payment of any brokerage commission or service charge.

Advantages and Disadvantages

2.

What are the advantages of the Plan?

·

You can reinvest cash dividends paid on your shares of common stock in additional shares automatically.

·

You may purchase additional shares of common stock by making optional cash payments of at least $40 and not exceeding $1,000 per calendar month.  As more fully explained in Questions 15 through 17 below, optional cash payments may be made by check or money order, or by payroll deductions for full-time employees of Pennichuck and its subsidiaries.

·

Full-time Pennichuck employees and customers of Pennichuck water utility and water management services subsidiaries, including all members of households served by these subsidiaries, who do not presently own shares of common stock may become participants as more fully explained in Questions 7 and 8 below.

·

You will not pay any commission or service charge in connection with purchases under the Plan.

·

Full investment of dividends is possible under the Plan because the Plan permits fractions of shares, as well as full shares, to be credited to your account.  In addition, dividends on fractions of shares, as well as full shares, in your Plan account will be credited to such account.

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·

The Plan provides for simplified record keeping and regular statements of account for shares credited under the Plan.

·

The Plan also provides, for a fee of $7.50, for the safekeeping of stock certificates for shares credited under the Plan.

·

Shares held in your Plan account may be sold directly without the issuance of physical certificates or the involvement of a broker.

·

You may buy shares conveniently and economically by check or money order.  If you are a full-time Pennichuck employee, you may also purchase shares through payroll deductions as more fully explained in Question 16 below.

·

You may deposit some or all of the shares of common stock of Pennichuck Corporation currently held by you in stock certificate form into your Plan account for safekeeping or for sale.

·

You may withdraw some or all of your shares held in your Plan account and request to receive a certificate at any time.

·

You may complete all your share transactions including purchases, sales and requests for certificates on the Internet through www.amstock.com.

3.

What are the disadvantages of the Plan?

·

All dividends paid on shares credited to your account under the Plan must be reinvested under the Plan.

·

We will not pay you any interest on optional cash payments held by the Plan Administrator before the monthly investment date.

·

If you send us money to buy stock through the Plan, we will return that money to you, without interest, if it is below the minimum amount allowed.  We will also return to you, without interest, money you send that is above the maximum amount allowed.

·

If the shares that you purchase under the Plan are purchased directly from us, we will not determine the purchase price until the applicable monthly investment date As a result, you will not know the actual price per share or number of shares you will purchase until that date.

·

If the shares that you purchase under the Plan are purchased in the open market or negotiated transactions with third parties, we will not determine the purchase price until the required number of shares have been acquired and the resultant weighted average purchase price has been calculated.

·

If you decide to make optional cash investments through the Plan, your cash payment may be exposed to changes in market conditions for a longer period of time than if you had arranged to buy shares through a broker.

·

You cannot pledge shares of common stock deposited in your Plan account until you withdraw the shares from the Plan.

·

You generally will pay tax on the amount of any brokerage commissions that we pay in connection with your reinvestment of dividends or optional cash purchases where the shares so purchased were acquired by the Plan Administrator in the open market or from third parties.

4.

Does participation in the Plan involve any risk?

The risk to shareholders, customers and full-time employees who participate in the Plan is the same as with any other investment in shares of Pennichuck common stock.  If you purchase common stock under the Plan, you lose any advantage otherwise available from being able to select the timing of your investment.  You should also recognize that, like any investment, Pennichuck cannot assure you of a profit or dividend, or protect you against a loss on the shares purchased under the Plan.

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Administration

5.

Who administers the Plan?

American Stock Transfer & Trust Company administers the Plan.  The Plan Administrator will purchase and hold shares of common stock acquired through the Plan, maintain records, send statements of account and perform other duties relating to the Plan.  Pennichuck and the Plan Administrator are not affiliated.  The Plan Administrator does not make a market in the common stock.

Shares purchased under the Plan will be held by the Plan Administrator until you terminate your participation in the Plan or until you submit a request for withdrawal of all or part of your shares.  Shares purchased under the Plan and held by the Plan Administrator will be registered in its name or the name of one of its nominees.  Pennichuck may replace the Plan Administrator at any time.  In the event that the Plan Administrator should cease to administer the Plan, Pennichuck will make such other arrangements as it deems appropriate for the administration of the Plan.

Enrollment and transaction requests (other than full-time employee requests dealing with payroll deductions) should be sent to the Plan Administrator as follows:

American Stock Transfer & Trust Company

Attn: Dividend Reinvestment Department

P.O. Box 922

Wall Street Station

New York, NY  10269-0560

Questions or requests regarding payroll deductions should be addressed to Pennichuck's Human Resources Department.  Any other questions or correspondence concerning the Plan should be addressed to the Plan Administrator as follows:

Telephone:

1-877-739-9934

Internet:

www.amstock.com

Mail:

American Stock Transfer & Trust Company

Attn: Shareholder Services

59 Maiden Lane

New York, NY  10038

Participation

6.

Who is eligible to participate?

(a)

Shareholders.  All holders of record of Pennichuck common stock are eligible to participate in the Plan.  Beneficial owners whose shares are registered in names other than their own (i.e. in the name of a broker or bank nominee) must arrange with the shareholder of record for participation.  If for any reason a beneficial owner is unable to arrange participation with his or her broker or bank nominee, he or she must become a record holder by having at least one share transferred to his or her own name in order to participate in the Plan.

(b)

Customers.  All customers of Pennichuck water utility and water management services subsidiaries are eligible to participate in the Plan, as well as all members of households served by them.  Water consumers in the franchise territory served by Pennichuck who are not customers, such as renters and condominium owners, may participate in the Plan.

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(c)

Employees.  All full-time employees of Pennichuck and its subsidiaries are eligible to participate in the Plan.

A Customer or an Employee, other than an Employee who participates via payroll deductions, may participate in his or her own name, in the joint name of the Customer or Employee and another person, or in his or her name as custodian or trustee for another person, by marking the Enrollment Application in the appropriate manner.  However, a Plan account for an Employee who participates via payroll deductions will be held solely in the Employee's name.

7.

How does an eligible Shareholder, Customer, or Employee participate?

You may join the Plan by completing and signing an Enrollment Application and returning it by mail to the Plan Administrator.  An Enrollment Application may be obtained at any time by telephone or written request to the Plan Administrator at the above telephone number or address, or to Pennichuck at 603-882-5191, 1-800-553-5191 or P.O. Box 1947, Merrimack, New Hampshire 03054-1947, Attention: Investor Relations.  The Enrollment Application may also be downloaded from the Internet site, www.amstock.com.

In order for a Shareholder to participate in the Plan, the Enrollment Application and any written notification of other instructions must be signed by or on behalf of all owners of record of the relevant shares.  When such shares are held in more than one name (i.e. joint tenants, co-trustees, etc.), all registered holders must sign.  When an Enrollment Application or written notification is signed by an executor, administrator, trustee or guardian, or as attorney, the capacity in which the Enrollment Application or notification is signed must be specified.  An Enrollment Application or written notification by a Shareholder, which is a corporation or other organization, should be signed by an authorized officer or other official, identified as such.

A Customer does not need to be a registered holder of Pennichuck common stock to join the Plan but, by executing the Enrollment Application, agrees to have at least $100 of common stock purchased on his or her behalf on the next monthly investment date (as defined under Question 9).  Each Enrollment Application for a Customer who is not a registered stockholder must be accompanied by a check for at least $100, but not more than $1,000.

If you are an Employee, you have two options for enrolling in the Plan.  You can enroll in the Plan by submitting an Enrollment Application to the Plan Administrator with an initial investment of at least $100 and no more than $1000, as outlined above.  Alternately, you can choose to enroll via payroll deductions.  If you elect this option for enrollment, you should contact Pennichuck's Human Resources Department to obtain an Enrollment and Payroll Deduction Authorization Form, and you should forward the form to that department once completed.  Employees who enroll via payroll deductions need not make an initial investment of $100; rather they can enroll by making optional cash payments as described in Question 16 below.

You must furnish your Federal tax identification number when opening a Plan account.  You automatically continue in the Plan unless you notify the Plan Administrator in writing that you wish to withdraw (see Question 26).  If you cease to be a Customer or Employee, you may continue to participate in the Plan as long as at least one whole share of common stock is registered in your name or held through the Plan.  Current participants do not need to complete and return a new Enrollment Application unless they wish to change their type of participation or withdraw from the Plan.

8.

What does the Enrollment Application provide?

The Enrollment Application allows you to decide the extent to which you want to participate in the Plan.  By checking the appropriate box on the Enrollment Application and supplying any required information, you elect one of the following investment options:

·

FULL DIVIDEND REINVESTMENT--reinvest all dividends on all of the shares of common stock registered in your name, as well as on all the shares credited to your account under the Plan; you may also invest by making optional cash payments in the amount of $40 to $1,000 per month.

·

PARTIAL DIVIDEND INVESTMENT--reinvest all dividends on a specific number of shares of common stock registered in your name as set forth in the Enrollment Application, as well as 100% of the dividends on all of the shares credited to your account under the Plan; you may also invest by making optional cash payments in the amount of $40 to $1,000 per month.

15

If a signed Enrollment Application is returned without one of the boxes checked, you will be enrolled under the "Full Dividend Reinvestment" option.  If a signed Authorization Form is returned with the "Partial Dividend Reinvestment" box checked but without designating the number of shares of common stock registered in your name for which cash dividends are to be reinvested, the form will be returned to you for completion.

A Customer who desires to participate in the Plan must direct the Plan Administrator to purchase shares with an initial investment of at least $100, but not more than $1,000, enclosed with the signed Enrollment Application.

An Employee who desires to participate in the Plan via payroll deductions must indicate this on the Enrollment and Payroll Deduction Authorization Form and must return the form to Pennichuck's Human Resources Department, rather than to the Plan Administrator.  An Employee who desires to participate, but who does not choose to make contributions via payroll deductions, must forward his or her Enrollment Application to the Plan Administrator.  He or she must direct the Plan Administrator to purchase shares with an initial investment of at least $100, but not more than $1,000, enclosed with the signed Enrollment Application.

A Shareholder, Customer or Employee may not participate in the Plan solely with respect to optional cash payments.  All of the dividends on at least one (1) share registered in your name, and all dividends on shares credited to your account under the Plan, must be reinvested under the Plan.

No matter which of the above options is chosen, all shares purchased under the Plan and held in the Plan account will be subject to automatic dividend reinvestment, and the dividends on all such shares will automatically be reinvested in common stock at a purchase price per share of common stock determined under this Plan, as more fully explained in Question 12 below.

9.

When may a Shareholder, Customer or Employee join the Plan?

If you are a Shareholder, Customer or Employee, you may join the Plan as of any "monthly investment date.”  For each month in which a dividend is paid, the monthly investment date is the same date as the "dividend reinvestment date.”  This is the date for the payment of dividends as fixed by the Board of Directors of Pennichuck from time to time.  We have generally paid dividends on the common stock on or about the first business day of March, June, September and December.  Dividends are paid to owners of shares on a certain record date, generally two weeks preceding the payment date (the "dividend record date").  In all months in which a dividend is not paid, the monthly investment date is the first day of the month.

If your Enrollment Application is accompanied by an initial investment and is received by the Plan Administrator on or prior to the business day preceding a monthly investment date, you will be enrolled in the Plan as of the next monthly investment date.  If the Enrollment Application is received by the Plan Administrator after the business day preceding a dividend record date, the reinvestment of dividends will not begin until the second succeeding dividend reinvestment date.  If you are a Shareholder and are enrolling only through the reinvestment of dividends, you will thus not be enrolled in the Plan until the next applicable dividend reinvestment date.

If you have been participating in our previous dividend reinvestment plan, we will automatically enroll you in this Plan.  If you do not wish to participate in this Plan, you can withdraw at any time as provided in the Plan.

If you are a record owner of our common stock, you may join the Plan by completing and signing an Enrollment Application and returning it to the Plan Administrator.  You may obtain an Enrollment Application by telephoning the Plan Administrator at 1-877-739-9934 or Pennichuck at 603-882-5191 or 1-800-553-5191.

The Enrollment Application may also be downloaded from the Internet site, www.amstock.com.

If you are a beneficial owner and wish to join the Plan, you must contact your bank, broker or other nominee to have shares transferred to you so that they are registered in your own name.  You may then participate by simply completing and signing an Enrollment Application and returning it to the Plan Administrator.

16

The Plan Administrator must receive funds for initial investments and optional cash payments at least one business day before a monthly investment date in order for the funds to be invested on that date

Costs

10.

Are there any expenses in connection with purchases under the Plan?

You do not pay any brokerage commissions, service charges or fees on shares you purchase through reinvestment of dividends or optional cash purchases.  We pay all costs of administration of this Plan.

You may instruct the Plan Administrator to sell shares held in your Plan account at any time.  Shares will be sold at the then current market price.  A transaction fee of $15 plus a brokerage commission of $.10 per share will be automatically deducted from your proceeds when your payment check is mailed.

Purchases

11.

Where will the common stock purchased under the Plan come from?

The Plan Administrator will purchase stock:

·

directly from us;

·

in the open market;

·

in privately negotiated transactions with third parties; or

·

a combination of any of the above.

Each quarter we will decide how the Plan Administrator will purchase stock.  We will not provide you with any written notice about the source of the common stock to be purchased.

12.

What will be the price of the common shares purchased under the Plan?

The price per share of common stock purchased under the Plan will be:

·

for shares purchased directly from us, the average of the closing bid prices for our common stock as quoted by The Nasdaq National Market for the five trading days immediately preceding the applicable monthly investment date.

·

for shares purchased in the open market or in privately negotiated transactions with third parties, the weighted average of the actual prices that the Plan Administrator pays for all of the common stock purchased for the applicable monthly investment date.

·

for shares purchased through a combination of these methods, the weighted average of the respective prices determined as set forth above for all of the common stock purchased for the applicable monthly investment date.

13.

How many common shares will I be purchasing through the Plan?

The number of shares of common stock that you purchase depends on several factors, including:

·

the amount of the dividends you reinvest;

·

the amount of any optional cash payments you make; and

·

the purchase price of the common stock on the applicable monthly investment date.

17

The Plan Administrator will credit your account with a number of shares, including fractions computed to three decimal places, equal to the total amount to be invested divided by the applicable purchase price.  The only limit on the number of shares available for purchase directly from us is the number of shares of common stock registered for issuance under the Plan; there is no limit on the number of shares available for purchase in the open market for issuance under the Plan.

The shares purchased for you under the Plan will be held separately from the shares of common stock which you purchase (or have previously purchased) outside the Plan and hold in your own name.

14.

When will purchases of common shares be made?

Purchases of common shares from Pennichuck, and the transfer of shares to accounts under the Plan, will be made as of the close of business on the relevant monthly investment date (for an explanation of "monthly investment date" see Question 9).  In such case, dividend and voting rights normally will commence on the day after the monthly investment date.  In the event shares are purchased in the open market or through private negotiation with third parties, the transfer of shares to accounts under the Plan will be made as soon as possible after the required number of shares have been acquired by the Plan Administrator, but not earlier than the relevant monthly investment date.

No interest will be paid by Pennichuck or the Plan Administrator on cash dividends held under the Plan.

Optional Cash Payments and Initial Investments

15.

How do optional cash payments and initial investments work?

On each monthly investment date, the Plan Administrator will invest optional cash payments and initial cash investments received from Shareholders, Customers and Employees, by purchasing shares of common stock to be credited to the participant's account.  Optional cash payments from Shareholders already enrolled in the Plan and initial cash investments must be received by the Plan Administrator not later than the business day preceding a monthly investment date to be effective on such monthly investment date.  NO INTEREST WILL BE PAID ON OPTIONAL CASH PAYMENTS OR INITIAL INVESTMENTS.

Each optional cash payment must be at least $40, and each initial cash investment must be at least $100.  No initial cash investment or monthly optional cash payment may exceed $1,000.

16.

How do optional cash payments and initial investments work for Employees who choose to enroll via payroll deductions?

Employees who choose to enroll via payroll deductions are not required to make an initial investment.  Instead, they may enroll by electing to make optional cash payments by deducting an amount of at least $10 per week and no more than $250 per week from their weekly paychecks.  Employees should designate this weekly deduction amount on the Enrollment and Payroll Deduction Authorization Form and forward the form to Pennichuck's Human Resources Department.  Human Resources will forward the necessary information to the Plan Administrator.  Employees who elect to participate via payroll deduction and who would like to change their form of participation must contact Pennichuck's Human Resources Department.

17.

How are optional cash payments and initial investments made?

Optional cash payments may not exceed $1,000 in any calendar month.  Any amount in excess of $1,000 will be returned to you.  For purposes of this limitation, at the Plan Administrator's discretion, all Plan accounts under common control or management may be aggregated and deemed to be one account.  The Plan Administrator will purchase as many whole shares and fractional shares, computed to three decimal places, of common stock as can be purchased with the amount submitted.  There is no obligation to make any optional cash payments; however, each optional cash payment must be at least $40 per month.  Optional cash payments cannot be made if you do not have dividends reinvested under the Plan.

18

If you are not an Employee participating through payroll deductions, optional cash payments must be made by personal check or money order, payable in U.S. dollars to the Plan Administrator.  Checks must be drawn against U.S. banks.  Optional cash payments may be mailed to the Plan Administrator at the following address:

American Stock Transfer & Trust Company

Attn: Dividend Reinvestment Department

P.O. Box 922

Wall Street Station

New York, NY  10269-0560

OPTIONAL CASH PAYMENTS FORWARDED TO ANY OTHER ADDRESS DO NOT CONSTITUTE VALID DELIVERY.  Optional cash payments should be mailed with the tear-off portion of your account statement or your purchase transaction advice mailed to you after a purchase is completed by the Plan Administrator.  Optional cash payments can also be made online at www.amstock.com.

Cash payments constituting an initial investment must be accompanied by an Enrollment Application.  New investors may call the Plan Administrator for an Enrollment Application to accompany their initial investment.  The Enrollment Application may also be downloaded from the Plan Administrator's internet site (www.amstock.com) and then mailed to the Plan Administrator.  Thereafter, optional cash payments may be made as set forth above.

You may stop the investment of your optional cash payment or initial investment (and receive a refund of that amount) if the Plan Administrator receives your written request for a refund no later than 48 hours prior to the monthly investment date.  Optional cash investments that are not invested within 35 days of receipt by the Plan Administrator will be returned to you.

In the event that your check is returned unpaid for any reason, the Plan Administrator will consider the request for investment of such funds void and without effect and will immediately remove from your account any shares purchased upon the prior credit of such funds.  The Plan Administrator may then sell such shares to satisfy any uncollected amounts.  If the net proceeds of the sale of such shares are insufficient to satisfy the balance of the uncollected amounts, the Plan Administrator will be entitled to sell additional shares from your account to satisfy the uncollected balance.

18.

Will shares I acquire through optional cash payments and initial investments be subject to automatic dividend reinvestment?

Yes.  All dividends paid on shares you acquire through optional cash payments and initial investments, so long as the shares are held in your Plan account, will be automatically reinvested in shares of common stock.  If certificates for shares acquired through optional cash payments and initial investments are issued, the dividends paid on such shares will continue to be reinvested unless you elect to have them paid in cash by submitting a new Enrollment Application to the Plan Administrator.  Shares must be in your account as of a record date in order to receive dividends on the next dividend reinvestment date.

Reports

19.

How will I be advised of my purchases of shares?

The Plan Administrator will send you a quarterly account statement showing the activity and balance in your Plan account.  Your account statement will also show the total number of shares you purchased through the Plan to date during the calendar year, as well as the total number of shares held in your account as of the dividend reinvestment date.  Each time a purchase is made for you under the Plan, you will also receive a confirmation advice reflecting your purchase price and the number of shares acquired.  You may also view your transaction history online by logging into your account.  Details available online include share price, transaction type and date.

The final quarterly statement for each year will show all pertinent information for that calendar year.  You should keep this statement for tax purposes.  The Plan Administrator may charge you a fee if you request additional copies of your prior account statements.

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In addition, you will receive copies of the same communications sent to every other shareholder, including Pennichuck's quarterly reports, annual report, notice of shareholders' meeting and proxy statement, and income tax information for reporting dividends paid by Pennichuck.

Dividends on Shares held under the Plan

20.

Will I be credited with dividends on shares held in my account under the Plan?

Yes.  Pennichuck pays dividends, if and as declared, to the record holders of all its shares.  As the record holder for participants, the Plan Administrator will be entitled to receive dividends for all shares credited to Plan accounts on the record date.  The Plan Administrator will credit such dividends to you on the basis of full and fractional shares held in your account.  All cash dividends on shares held under the Plan will automatically be reinvested in additional shares of common stock under the Plan.  In the unlikely event that your dividends are not reinvested within 30 days of the dividend reinvestment date, they will be returned to you.

21.

When will I be paid dividends on common stock purchased through the Plan?

You will receive dividends on those shares purchased through the Plan for which you are the shareholder of record as of the record date for a dividend as set by the Board of Directors (normally two weeks before the respective dividend payment date).  Any shares purchased between a dividend record date and corresponding dividend reinvestment date will not earn dividends until the following dividend reinvestment date.

Certificates for Shares

22.

Will share certificates be issued for common shares purchased?

Normally we will not issue certificates for shares that you purchase under the Plan.  Your account statement will show the number of shares held in your Plan account.  In addition to minimizing the costs of the Plan, this protects against loss, theft or destruction of stock certificates.

However, you may at any time request that the Plan Administrator issue you a certificate for any whole number of shares of common stock, up to the number of full shares credited to your Plan account, even though you wish to remain in the Plan.  The Plan Administrator will generally issue certificates approximately three (3) business days after it receives your request.  Please use the transaction request form attached to the bottom of your account statement and mail it to:

American Stock Transfer & Trust Company

Attn: Dividend Reinvestment Department

P.O. Box 922

Wall Street Station

New York, NY  10269-0560

You may also use the Internet at www.amstock.com or the interactive voice response system (IVY) at the toll free telephone number 1-877-739-9934 to submit your requested transaction.

Future dividends on any shares for which you request a stock certificate will be reinvested under the Plan.  If you request certificates for less than all of the stock in your Plan account, any remaining full shares and fractional shares will remain in your Plan account.  We may withdraw you from the Plan and pay you cash for your fractional shares if your Plan account is less than one whole share as a result of withdrawals or sales of stock and you are not reinvesting dividends from any stock registered in your name.

Shares credited to your account under the Plan may not be pledged or assigned while held in the Plan, and any such pledge or assignment will be void.  If you wish to pledge or assign your Plan shares you must request that certificates for such shares be issued in your name.

We will not issue certificates for fractional shares under any circumstances.

20

23.

In whose name will accounts be maintained and certificates registered when issued?

Accounts for Shareholder participants will be maintained in the name or names in which the certificates for shares of common stock were registered when you entered the Plan.  Accounts for Employee and Customer participants will be maintained in the name designated on the Enrollment and Payroll Deduction Authorization Form or the name or names designated on the Enrollment Application when such Customer or Employee enrolled in the Plan.  When we issue stock certificates, we will register them in your name as it appears on your Plan account.

You may ask the Plan Administrator to issue certificates in names other than the Plan account name, but you must comply with any applicable laws and you must pay any applicable taxes.  You must make this request in writing, and your signature must be guaranteed by a qualified medallion guarantee member.

You may also transfer shares held in your Plan account to another person.  Transfers can be made in book-entry form or a certificate will be issued and sent to the new owner by first class mail.  You can transfer to a person who already has a Plan account, or you can set up a new Plan account if the person does not have one.  Follow the steps below to complete your transaction.

Call the Plan Administrator to request a Plan brochure and Enrollment Application.  Complete the form providing the full registration name, address and social security number of the new participant.

The completed Enrollment Application should be sent along with a written request indicating the number of shares (full and fractional if any) which should be transferred to the new participant.  All individuals in the current Plan account must sign the instructions.  The signatures must be guaranteed by a bank, broker or financial institution that is a member of a Medallion Signature Guarantee Program.

Changing Type of Participation; Withdrawal from Participation

24.

How can I change my type of participation?

You may change the type of your participation in the Plan at any time by completing an Enrollment Application and returning it to the Plan Administrator at the address set forth in Question 5 above.  An Enrollment Application and return envelope may be obtained as stated in the answer to Question 7 above.  For a change regarding the reinvestment of dividends to be effective as of the next succeeding dividend reinvestment date, your Enrollment Application must be received by the Plan Administrator not later than the last business day before the corresponding dividend record date.  In order for a change regarding an optional cash payment to be effective as of the next succeeding monthly investment date, your Enrollment Application must be received by the Plan Administrator not later than the last business day before that date.

If you are an Employee and wish to make changes regarding contributions to the Plan via payroll deductions, you should contact Pennichuck's Human Resources Department.

25.

May I withdraw from the Plan?

Yes.  The Plan is entirely voluntary and you may withdraw at any time.

26.

How do I withdraw from the Plan?

You may withdraw from the Plan at any time using the tear-off stub at the bottom of your account statement and forwarding it to the Plan Administrator at the address set forth in Question 5 above.  When you withdraw from the Plan, or upon termination of the Plan by Pennichuck, you will receive certificates for any whole shares credited to your account under the Plan and a cash payment for any fractional share held in your Plan account.  The value of such share certificates and cash payment received in lieu of fractional share interest may be greater than, equal to, or less than the amount you paid for such shares and fractional share interest.

If the Plan Administrator receives your request to withdraw from the Plan at least three business days before any dividend reinvestment date, you will once again receive cash dividends on whole shares you own beginning with that dividend payment date.  However, the Plan Administrator will invest any optional cash payment it has received from you.

21

If the Plan Administrator receives your request to withdraw from the Plan less than three business days before the dividend reinvestment date, the Plan Administrator will process your request as promptly as possible; however, your cash dividend and any optional cash payment then held by the Plan Administrator will be reinvested on that date.

A Shareholder, Customer or Employee may elect to re-enroll in the Plan at any time pursuant to the procedures outlined in Question 7 and 8.

If you are an Employee who has been making optional cash payments via payroll deductions, you must also notify Pennichuck's Human Resources Department if you intend to withdraw from the Plan.

27.

May I discontinue dividend reinvestment on shares held outside my Plan account without withdrawing from the Plan?

Yes, so long as at least one whole share is held through the Plan, you may discontinue the automatic reinvestment of the dividends on the shares held outside the Plan account, without withdrawing from the Plan, by filing a new Enrollment Application to change the type of your participation.  However, the dividends on the shares held in your Plan account will continue to be fully reinvested.

28.

May Pennichuck terminate my participation in the Plan?

If you do not own at least one whole share held through the Plan, your participation in the Plan may be terminated.  We may also terminate your participation in the Plan after written notice in advance mailed to you at the address appearing on the Plan Administrator's records.

29.

What happens when I sell or transfer some or all of the shares registered in my name?

If you dispose of some or all shares of common stock registered in your name (as opposed to shares held through the Plan), that transfer will not affect your participation in the Plan; however, if less than one whole share is held in the Plan account, you may receive a cash payment for the fractional share, and the Plan account will be closed.  As long as at least one whole share is held in the Plan account, the Plan Administrator will continue to fully reinvest the dividends on the shares credited to your account under the Plan until notified that you wish to withdraw from the Plan.  If you desire to dispose of all shares credited to your account under the Plan, you first must withdraw from the Plan as described in Question 26 above.  An administrative fee and brokerage commission will be charged in the event you ask the Plan Administrator to sell the shares held in your Plan account, see Question 31 below.

30.

What happens to the whole shares and fractions of a share when I withdraw from the Plan?

When you withdraw from the Plan, a certificate for your whole shares and a cash adjustment representing any fraction of a share will be mailed directly to you at the address indicated by your written notice, if one is so indicated; otherwise to the address then appearing in the Plan Administrator's records.  The fractional share cash payment will be based on the closing bid price of the common stock as quoted through The Nasdaq National Market for the business day on which the withdrawal request is received, or if there is no such quotation for such day, then for the next-following day for which there is such a quotation.

22

31.

Whom do I call if I want to sell my stock?

If you desire to sell any or all shares held in your Plan account, you may instruct the Plan Administrator to sell such shares in one of three ways:

a.

Go to www.amstock.com and log into your account.  You may sell shares in two easy steps; or

b.

Call the toll-free telephone number to access the Administrator's automated telephone system with your sales order; or

c.

Complete and sign the tear-off portion of your account statement or purchase confirmation and mail the instructions to the Plan Administrator.  If there is more than one individual owner on the Plan account, all participants must sign the tear-off portion of the account statement or purchase confirmation.

As with purchases made in the open market, the Plan Administrator aggregates all requests to sell shares and then sells the total share amount on the open market through a broker.  Sales will be made no less than once a week and may be made as often as daily at the discretion of the Plan Administrator.  The selling price will not be known until the sale is completed.  The proceeds of the sale, less an administrative fee of $15 and brokerage commission of $.10 per share, will be sent to you by check within four days following the sale.

Participants should be aware that the price of Pennichuck common stock may fluctuate during the period between a request for sale, its receipt by the Plan Administrator and the ultimate sale on the open market.  Instructions sent to the Plan Administrator may not be rescinded.

Alternatively, if you desire to sell shares of stock held in the Plan or received upon withdrawal from the Plan, you may follow the normal procedures utilized to sell securities.  You must first request that your shares held under the Plan be converted to certificates (see Question 22 above); you may then contact your usual stockbroker to arrange for such sale.

Other Information

32.

If Pennichuck issues rights to purchase securities to the holders of common shares, how will the rights on Plan shares be handled?

If we issue rights to purchase additional shares of our common stock or any other securities to holders of our common stock, the Plan Administrator will sell those rights relating to shares of common stock held by the Plan Administrator for participants and invest the proceeds in additional shares of common stock on the next monthly investment date In the event that those rights are not saleable or detachable, the Plan Administrator will hold those rights for your benefit.  If you wish to receive any rights directly, you may do so by sending to the Plan Administrator, at least five (5) business days before the record date for the rights offering, a written request that certificates for shares in your Plan account be sent to you.

33.

What happens if Pennichuck declares a stock split or stock dividend?

The Plan Administrator will add any shares resulting from a stock split or stock dividend, on shares you hold in your Plan account, to your Plan account.  We will issue any shares resulting from a stock split, on stock held by you outside the Plan, in the same manner as we would if you were not participating in this Plan.  Transaction processing under the Plan may be curtailed or suspended until the completion of any stock dividend, stock split or other corporate action.

23

34.

How will my shares held under the Plan be voted at meetings of shareholders?

You will receive a proxy card covering those whole shares of common stock credited to your account under the Plan and those shares registered in your name that are not within the Plan.  If the proxy card is returned properly signed and marked for voting, all of the shares will be voted as marked.  Alternatively, you may vote in person at shareholders' meetings.

If a proxy card is returned properly signed but without indicating instructions as to the manner in which shares are to be voted with respect to any items, all of your shares will be voted (to the extent legally permissible) in accordance with the recommendations of Pennichuck's Board of Directors.  This procedure is consistent with the actions taken with respect to shareholders who are not participating in the Plan and who return properly signed proxy cards and do not provide voting instructions.  If the proxy card is not returned, or if it is returned unsigned or improperly signed, none of your shares covered by such proxy card will be voted unless you or your duly appointed representative votes in person at the meeting.

35.

What are the Material Federal Income Tax Consequences of participation in the Plan?

Reinvestment of cash dividends does not relieve you of liability for any income tax which may be payable on such dividends.  If you reinvest dividends under the Plan, you will be treated for Federal income tax purposes as having received, on the dividend reinvestment date, a dividend equal to the then fair market value of the shares purchased with such reinvested dividends plus any tax withheld prior to investment, even though you do not actually receive such amount in cash.  The fair market value will be the closing bid price for our common stock on the dividend reinvestment date as quoted on The Nasdaq National Market, and not the five day average used to calculate the purchase price under the Plan.

The cost basis for Federal income tax purposes of any shares acquired with reinvested dividends will be equal to the fair market value of such shares as of the applicable dividend reinvestment date.  The basis of shares that are purchased with an initial investment or optional cash payment will be equal to the purchase price of such shares.  The amount of tax payable on dividends reinvested in years 2003 through 2008 will depend upon whether the dividends are considered to be "qualified" and therefore taxable at long-term capital gains rates (5% or 15%) or "non-qualified" and taxable at ordinary income tax rates.  In order for the dividends to be qualified, you must be a non-corporate taxpayer and certain holding period and other requirements must be met.  We recommend that you check with your tax advisor to determine whether the dividends reinvested are qualified or non-qualified, and the tax ramifications of the reinvestment of those dividends.

You will generally not realize taxable income when you receive certificates for whole shares credited to your account under the Plan.  However, if you withdraw from the Plan and receive the proceeds from the sale of a fractional share credited to your account, you may realize a gain or loss with respect to such fraction.  Gain or loss may also be realized when whole shares are sold subsequent to withdrawal from the Plan.  The amount of such gain or loss will be the difference between the amount realized from the sale and your tax basis for the shares sold.  The amount realized will be your gross proceeds less brokerage fees and commissions and any transfer taxes you pay.  Subject to limitations contained in the Internal Revenue Code, the administrative fees and charges you incur upon the sale of shares may be deductible if you itemize deductions on your income tax return.

If a sale is made not more than one year after acquisition, any gain (or loss) may be taxed as short-term capital gain (or loss).  If the sale is made after one year, the gain (or loss) may be taxed as a long-term capital gain (or loss).  The holding period for shares acquired pursuant to the Plan will begin on the day following the purchase of such shares.

Pennichuck will in the first instance pay for any costs incurred by the Plan Administrator in purchasing shares in the open market for investment under the Plan, including any brokerage commissions.  The respective amount of such costs will, however, be taxable to the Plan participant as miscellaneous income.  In such event, the participant's basis in the shares so purchased will be increased by the amount of such income that you are treated as having received for Federal income tax purposes.

24

In case you are a foreign stockholder subject to United States income tax or are subject to backup withholding, the amount required to be withheld will be deducted from the dividends payable to you, and the remaining amount will be applied to the purchase of shares under the Plan.  The filing of any documentation required to obtain an exemption from, or a reduction in, United States withholding tax is your responsibility.

Pennichuck believes the foregoing is an accurate summary of the material Federal income tax consequences of your participation in the Plan as of the date of this Prospectus.  This summary may not reflect every possible situation that could result from participation in the Plan.  THEREFORE, EACH PARTICIPANT IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE THE PARTICULAR FEDERAL, STATE AND LOCAL TAX CONSEQUENCES RESULTING FROM PARTICIPATION IN THE PLAN AND THE SUBSEQUENT DISPOSAL OF SHARES PURCHASED PURSUANT TO THE PLAN.  If you do not reside in the United States, your income tax consequences will vary from jurisdiction to jurisdiction.  In addition, the foregoing rules may not be applicable to certain participants in the Plan, such as tax-exempt entities (e.g., pension funds and IRAs).

Please keep copies of your Plan account statements to assist you in complying with the Federal income tax laws.  The foregoing summary is subject to superseding changes in law and regulation; neither Pennichuck nor the Plan Administrator is obligated to inform you of any such changes.

36

What are the responsibilities of Pennichuck and the Plan Administrator under the Plan?

In acting under the terms and conditions of the Plan as described in this Prospectus, neither Pennichuck nor the Plan Administrator will be liable for any act done in good faith or for any omission to act unless done (or omitted) in bad faith or due to gross negligence including, without limitation, any claim of liability arising with respect to (i) failure to terminate any participant's Plan account upon such participant's death or adjudication of incompetence, prior to receipt of notice in writing of such death or adjudication of incompetence, (ii) the prices at which shares are purchased or sold for your account and the times when such purchases or sales are made, (iii) any fluctuation in the market value before or after purchase or sale of shares, or (iv) the tax treatment of dividends reinvested under the Plan.

You should recognize that neither Pennichuck nor the Plan Administrator can assure you of a profit or protect you against a loss on the shares purchased or sold by you under the Plan.

37.

Can Pennichuck change or discontinue the Plan?

While we currently intend to continue this Plan indefinitely, we may amend, suspend, modify or terminate this Plan at any time and for any reason.  The Board of Directors may increase the number of shares that may be issued under the Plan.  We will send you notice of any amendment, suspension, modification or termination.  No such event will affect any shares then credited to your account, except that upon any whole or partial termination of the Plan, certificates for whole shares credited to your account under the Plan will be issued to you and a cash payment will be made for any fraction of a share.  The Plan Administrator may resign at any time upon reasonable notice to Pennichuck in writing.  We may elect and appoint at any time a new Plan Administrator, including ourselves, to administer this Plan.

38.

Who interprets and regulates the Plan?

Any questions of interpretation arising under this Plan will be determined by Pennichuck in its sole discretion and any determination that we make will be final.  We may adopt rules and regulations to facilitate the administration of this Plan.  The terms and conditions of this Plan and its operation will be governed by the laws of the State of New Hampshire

If it appears to Pennichuck that you are using or contemplating the use of the Plan in a manner or with an effect that, in the sole judgment and discretion of Pennichuck, is not in the best interests of Pennichuck or its other stockholders, then Pennichuck may decline to issue all or any portion of the shares of common stock for which you have tendered payment.  Such payment (or the portion thereof not to be invested in shares of common stock) will be returned by Pennichuck as promptly as practicable, without interest.  Under such circumstances, Pennichuck may also act to terminate your participation under the Plan.

25

39.

How can I obtain answers to other questions regarding the Plan?

Any additional questions should be addressed to:

Telephone:

1-877-739-9934

Internet:

www.amstock.com

Mail:

American Stock Transfer & Trust Company

Attn: Shareholder Services

59 Maiden Lane

New York, NY  10038

or

Pennichuck Corporation

Investor Relations

25 Manchester Street

P.O. Box 1947

Merrimack, New Hampshire  03054-1947

Telephone No. 603-882-5191 or 1-800-553-5191

WHERE YOU CAN FIND MORE INFORMATION

This prospectus is part of a registration statement that we filed with the SEC to register the stock offered under the Plan.  This prospectus does not contain all the information you can find in the registration statement or the exhibits to the registration statement.  You may inspect the registration statement and exhibits without charge at the SEC's public reference room at 100 F Street, N.E., Washington, D.C.  20549, and you may obtain copies upon payment of a duplicating fee.

We file annual, quarterly and special reports, proxy statements and other information with the SEC.  You may read and copy any materials we file with the SEC at the SEC's public reference room.  You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.

We make available free of charge through our Internet website at www.pennichuck.com our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.  The information on our website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.

26

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents.  The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information.  We incorporate by reference the following documents:

·

our Annual Report on Form 10-K (File No. 000-18552) for the year ended December 31, 2004,

·

our Current Report on Form 8-K (File No. 000-18552) filed on January 18, 2005,

·

our Current Report on Form 8-K (File No. 000-18552) filed on February 3, 2005,

·

our Current Report on Form 8-K (File No. 000-18552) filed on March 17, 2005,

·

our Current Report on Form 8-K (File No. 000-18552) filed on March 28, 2005,

·

our Current Report on Form 8-K (File No. 000-18552) filed on March 29, 2005,

·

our Current Report on Form 8-K (File No. 000-18552) filed on April 6, 2005,

·

our Current Report on Form 8-K (File No. 000-18552) filed on April 14, 2005,

·

our Quarterly Report on Form 10-Q (File No. 000-18552) for the quarter ended March 31, 2005,

·

our Current Report on Form 8-K (File No. 000-18552) filed on July 26, 2005, our Quarterly Report on Form 10-Q (File No. 000-18552) for the quarter ended June 30, 2005, our Current Report on Form 8-K (File No. 000-18552) filed on August 17, 2005, and our Current Report on Form 8-K/A (File No. 000-18552) filed on September 7, 2005.

In addition, the description of our common stock contained in our registration statement filed under Section 12 of the Securities Exchange Act of 1934, including any amendment or report updating such description, is incorporated by reference herein.  The description of our Rights Agreement contained in our registration statement on Form 8-Al2G filed on April 21, 2000, as amended, is also incorporated by reference herein.

We also incorporate by reference any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus until we sell all of the securities being registered.

We will provide to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of any or all of the information that has been incorporated by reference in this prospectus but not delivered with this prospectus at no cost to the requestor upon written or oral request to:

Pennichuck Corporation

Investor Relations

25 Manchester Street

P.O. Box 1947

Merrimack, New Hampshire  03054-1947

Telephone No. 603-882-5191 or 1-800-553-5191

You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement.  We have not authorized anyone to provide you with different information.  We are not making an offer of these securities in any state where the offer is not permitted.  You should not assume that the information in this prospectus or the documents incorporated by reference is accurate as of any date other than the date on the front of this prospectus or those documents.

27

PLAN OF DISTRIBUTION

As stated elsewhere in this Plan, you will not pay any brokerage fees or commissions for securities purchased on the open market.  Instead, we will pay these fees to the Plan Administrator.  If you choose to sell shares through the Plan, a transaction fee of $15 plus a brokerage commission of $.10 per share will be automatically deducted from your proceeds.  In addition, if you choose to request that the Plan Administrator hold stock certificates for shares credited under the Plan for safekeeping, you will be charged a fee of $7.50.

Persons who acquire shares of our common stock through the Plan and resell them shortly after acquiring them, including coverage of short positions, under certain circumstances may be participating in a distribution of securities that would require compliance with Regulation M under the Securities Exchange Act of 1934, and may be considered to be underwriters within the meaning of the Securities Act of 1933.  We will not extend to any such person any rights or privileges other than those to which he, she or it would be entitled as a participant, nor will we enter into any agreement with any such person regarding the resale or distribution by any such person of the shares of our common stock so purchased.

USE OF PROCEEDS

We will use the net proceeds from the sale of common stock purchased through this Plan directly from us for general corporate purposes.  We have no basis for estimating either the number of shares of common stock that ultimately will be sold by us under the Plan or the prices at which we will sell shares.  We will not receive any proceeds from the purchase of common stock by the Plan Administrator in the open market or in privately negotiated transactions with third parties.

EXPERTS

The consolidated financial statements and schedules of Pennichuck Corporation and its subsidiaries which are incorporated herein by reference to Pennichuck's Annual Report on Form 10-K for the year ended December 31, 2004, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

LEGAL MATTERS

The validity of the shares of common stock being offered by this prospectus has been passed upon for us by Nutter McClennen & Fish LLP, Boston, Massachusetts.

28

TABLE OF CONTENTS

		
	SUMMARY

	1

	About Pennichuck Corporation

	1

	About the Plan

	1

	 
	 

	RISK FACTORS

	3

	FORWARD-LOOKING STATEMENTS

	11

	THE PLAN

	12

	Purpose

	12

	Advantages and Disadvantages

	12

	Administration

	14

	Participation

	14

	Costs

	17

	Purchases

	17

	Optional Cash Payments and Initial Investments

	18

	Reports

	19

	Dividends on Shares held under the Plan

	20

	Certificates for Shares

	20

	Changing Type of Participation; Withdrawal from Participation

	21

	Other Information

	23

	 
	 

	WHERE YOU CAN FIND MORE INFORMATION

	26

	INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

	27

	PLAN OF DISTRIBUTION

	28

	USE OF PROCEEDS

	28

	EXPERTS

	28

	LEGAL MATTERS

	28

_________________________

PROSPECTUS

_________________________

DIVIDEND REINVESTMENT AND

COMMON STOCK PURCHASE PLAN

The date of this Prospectus is September 22, 2005.

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