Early Retirement And General Release Agreement

Exhibit 10.1

PENNICHUCK

25 Manchester Street

P.O. Box 1947

Merrimack, NH 03054-1947

(603) 882-5191

FAX (603) 913-2305

February 3, 2005

www.pennichuck.com

Personal & Confidential

Mr. Charles Staab

45 Cathedral Circle

Nashua, NH 03063

RE: Early Retirement and General Release Agreement

Dear Chuck:

This letter agreement states and confirms the conditions concerning your early retirement from employment with Pennichuck Corporation ("Pennichuck"). Specifically, we agree as follows:

1. You retired from employment with Pennichuck effective as of January 31, 2005 (hereinafter the "Separation Date"). On such date, you also resigned as Treasurer and Chief Financial Officer of Pennichuck and all of its subsidiaries. On or before February 3, 2005, you will be paid your regular salary earned up through the Separation Date, and you will be paid accrued and unused vacation time, minus all appropriate withholdings and authorized deductions, in the gross amount of $9,216.00, which is equal to four (4) weeks of vacation pay.

2. If you sign this Agreement, Pennichuck will provide you severance pay in the total amount of One Hundred Ten Thousand Five Hundred Ninety-Two Dollars ($110,592.00), which is equivalent to forty-eight (48) weeks of your current salary, minus all appropriate state and federal withholdings and any qualified contributions that you designate to your account in the Savings Plan for Employees of Pennichuck Corporation, which contributions will be made in accordance with the terms of the Savings Plan. The severance will be paid in a lump sum on or before the 3rd day following the 7-day revocation period described in Paragraph 8(b) below.

3. You are eligible for coverage under Pennichuck's Early Retirement Medical Benefit Policy, subject to the following conditions:

(a) Pennichuck will pay, on your behalf, the cost of the monthly premium for individual plan coverage under Pennichuck's group health plan that Pennichuck


provides for eligible early retirees, and once you reach age 65 and become eligible for Medicare, the cost of the monthly premium for individual Medicomp coverage up to the "Maximum Allowable Benefit" as that term is defined in Pennichuck's Early Retirement Medical Benefit Policy, as amended from time to time (the "Early Retirement Benefit"). The Early Retirement Benefit will be equivalent to the monthly premium Pennichuck's early retirees pay for individual group health coverage under Pennichuck's group health plan for early retirees, as such premium is adjusted from time to time. Pennichuck will pay the Early Retirement Benefit to the insurance carrier on a monthly basis until the earliest of the following: (i) you become ineligible under Pennichuck's Early Retirement Medical Benefit Policy for whatever reason; or (ii) Pennichuck ceases to offer group health coverage to early retirees. However, if Pennichuck ceases to offer group health coverage to early retirees within twelve months from the Separati on Date, then you may elect to continue such coverage under the federal law commonly referred to as "COBRA," and Pennichuck will pay the cost of premiums for COBRA continuation coverage for the remaining portion of the twelve months subsequent to the Separation Date.

(b) The Early Retirement Benefit and your participation in Pennichuck's Early Retirement Medical Benefit Plan are intended to be in lieu of your rights under COBRA.

4. Your family's coverage under Pennichuck group medical and dental insurance plans and your coverage under the group dental plan cease on the Separation Date unless you and your family elect to continue such coverages under COBRA, at their own expense. COBRA continuation notices explaining your rights and an election forms will be provided to you and your family. If you and your family elect COBRA and if you sign this Agreement, Pennichuck will pay the cost of premiums for COBRA continuation coverage for you (as to the dental plan) and your eligible family members (as to both the medical and dental plans) for the 12-month period immediately following the Separation Date. Any premiums for COBRA continuation coverage thereafter will be at your own or their expense. Pennichuck's obligation to pay for COBRA continuation coverage under this paragraph will cease earlier if you or your family members become ineligible for COBRA continuation coverage for any reason.

5. Other than as provided herein, your coverage or participation under all other Pennichuck employee benefit plans ceases as of the Separation Date. Any ...