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52234599.9 1

INSTALLMENT SALE AGREEMENT

This INSTALLMENT SALE AGREEMENT, dated as of February 1, 2013 (this “Agreement”), is made by and between the GROVELAND COMMUNITY SERVICES DISTRICT, a California community services district (the “District”) duly organized and validly existing under the laws of the State of California, and the GROVELAND/TUOLUMNE FINANCING AUTHORITY, a joint exercise of powers authority duly organized and validly existing under the laws of the State of California (the “Authority”).

W I T N E S S E T H:

WHEREAS, the District owns and operates a system for the supply, treatment and distribution of water within the service area of the District (the “Water System”), and the District wishes to raise funds to finance additional improvements to the Water System, consisting generally of treatment plant upgrades and emergency water supply improvements; and

WHEREAS, the District is authorized by the laws of the State of California (the “State”) to acquire certain property and to finance and refinance projects of the District through the execution and delivery of installment purchase agreements; and

WHEREAS, the District is authorized by the laws of the State to acquire certain real property and equipment, including the property and equipment described in Exhibit B attached hereto (collectively, the “Property”); and

WHEREAS, the District entered into an Installment Sale Agreement, dated as of April 1, 1996, as amended by a First Amendment to Installment Sale Agreement, dated as of June 1, 1998, with the Groveland/Tuolumne Financing Authority (collectively, “1998 Installment Sale Agreement”) to finance and refinance the acquisition, construction and improvement of water storage and treatment facilities for the benefit of the District (the “Project”); and

WHEREAS, the District desires to refinance the 1998 Installment Sale Agreement by the execution and delivery of this Agreement and thereby cause the prepayment by the Groveland/Tuolumne Financing Authority (the “Authority”) of all of the outstanding Groveland/Toulumne Financing Authority Groveland Capital Facilities Refunding Revenue Bonds Issue of 1998 (the “1998 Bonds”); and

WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Agreement;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS:

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ARTICLE I

DEFINITIONS; RULES OF INTERPRETATION

Section 1.1 Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Agreement have the respective meanings given them in the recitals of this Agreement and in this Section 1.1.

“Assignment Agreement” means the Assignment Agreement, dated as of February 1, 2013, by and among the Authority, the District and the Bank.

“Authority Representative” means the Authority’s Chairman, Vice Chairman, Chief Financial Officer, Secretary or their respective designees.

“Bank” means Rabobank, N.A. and its successors and assigns.

“Business Day” means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the State of California are closed.

“Closing Date” means February 21, 2013, being the date of execution and delivery of this Agreement.

“District” means the Groveland Community Services District, a community services district duly organized and existing under the laws of the State of California, its successors and assigns.

“District Representative” means the District’s President, Vice President, General Manager, Finance Manager, Secretary or their respective designees.

“Escrow Agent” means The Bank of New York Mellon Trust Company, N.A., or any successor thereto, acting as Escrow Agent under the Escrow Agreement.

“Escrow Agreement” means the agreement by that name, dated as of February 1, 2013, among the District, the Authority and the Escrow Agent, together with any amendments or supplements thereto permitted to be made by the terms thereof.

“Event of Default” means any of the events specified in Section 6.1.

“Federal Securities” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), for which the full faith and credit of the United States of America are pledged; and (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are directly or indirectly secured or guaranteed by the full faith and credit of the United States of America.

“Financial Consultant” means any consultant or firm of such consultants appointed by the District and who, or each of whom: (a) is judged by the District to have experience in matters relating to the financing of public water systems; (b) is in fact independent and not under domination of the District; (c) does not have any substantial interest, direct or indirect, with the District; and (d) is not connected with the District as an officer or employee of the District, but who may be regularly retained to make reports to the District.

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“Fiscal Year” means the twelve-month period beginning on July 1 of any year and ending on June 30 of the next succeeding year, or any other twelve-month period selected by the District as its fiscal year.

“Gross Revenues” means, with respect to the Water System, all gross charges received for, and all other gross income and receipts derived by the District from, the ownership and operation of the Water System or otherwise arising from the Water System, including but not limited to the following:

(a) all ad valorem taxes allocable to the Water System which are levied upon taxable property in the District by the Board of Supervisors of Tuolumne County, and which are allocated to the District under the provisions of Chapter 6 of Part 0.5 of Division 1 of the Revenue and Taxation Code of the State of California, including all payments, subventions and reimbursements, if any, to the District specifically attributable to taxes lost by reason of tax exemptions and tax rate limitations; but excluding any taxes levied for the sole purpose of providing for payment of principal and interest on any voter-approved indebtedness incurred by the District, which taxes would not otherwise be subject to levy but for the issuance of such indebtedness, and

(b) all amounts levied by the District as a fee for connecting to the Water System, as such fee is established from time to time under the applicable laws of the State of California;

(c) all income, rents, rates, fees, charges and other moneys received for, and all other gross income and receipts derived by the District from, the ownership and operation of the Water System or otherwise arising from the Water System;

(d) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys to the extent that the use of such earnings and income is limited by or under applicable law to the Water System;

(e) the proceeds derived by the District directly or indirectly from the sale, lease or other disposition of a part of the Water System as permitted in this Agreement; and

(f) amounts transferred from a Rate Stabilization Fund to the Water Fund in any Fiscal Year under Section 4.6.

The term “Gross Revenues” does not include (i) customers’ deposits or any other deposits subject to refund until such deposits have become the property of the District, and (ii) the proceeds of any special assessments or special taxes levied upon real property within any improvement district for the purpose of paying special assessment bonds or special tax obligations of the District relating to the Water System.

“Improvement District Bonds” means, collectively, (a) the Groveland Community Services District Revenue Improvement District No. 1 Water Revenue Bonds of 1973, Series A issued in the aggregate original principal amount of $1,370,000 under Resolution No. 11-71 adopted by the Board of Directors of the District on April 15, 1971, as amended; (b) the Groveland Community Services District Revenue Improvement District No. 1 Water Revenue Bonds of 1973, Series B issued in the aggregate original principal amount of $1,735,000 under Resolution No. 11-71 adopted by the Board of Directors of the District on April 15, 1971, as amended, and under Resolution No. 18-78 adopted by the Board of Directors of the District on April 13, 1978; and (c) any other bonds issued on a parity therewith in accordance with said Resolutions and in accordance with the ballot proposition authorizing the issuance thereof.

52234599.9 4

“Independent Accountant” means any certified public accountant or firm of certified public accountants appointed and paid by the District, and who, or each of whom (a) is in fact independent and not under domination of the District; (b) does not have any substantial interest, direct or indirect, in the District; and (c) is not connected with the District as an officer or employee of the District but who may be regularly retained to make annual or other audits of the books of or reports to the District.

“Installment Payments” means all payments required to be paid by the District on any date under Section 4.4, including any amounts payable upon delinquent installments and including any prepayment thereof under Sections 7.2 or 7.3.

“Installment Payment Date” means January 10 and July 10 in each year, commencing July 10, 2013; provided that the final Installment Payment Date shall be January 10, 2026.

“Maximum Annual Debt Service” means, as of the date of any calculation and with respect to the Installment Payments, the 2007 Installment Payments or any Parity Obligations, as the case may be, the maximum sum obtained for the current or any future Fiscal Year during the Term of this Installment Sale Agreement by totaling the following amounts for such Fiscal Year:

(a) the aggregate amount of the Installment Payments coming due and payable in such Fiscal Year pursuant hereto, except to the extent payable from any security deposit pursuant to Section 7.1;

(b) the principal amount of the 2007 Installment Payments and all outstanding Parity Obligations, if any, coming due and payable by their terms in such Fiscal Year; and

(c) the amount of interest which would be due during such Fiscal Year on the aggregate principal amount of all outstanding Parity Obligations, if any, which would be outstanding in such Fiscal Year if such Parity Obligations are retired as scheduled; provided, however, that with respect to any Parity Obligations which bear interest at a variable rate, such interest shall be calculated at an assumed rate equal to the average rate of interest per annum for each of the five previous whole calendar years as shown by the J. J. Kinney Index (or, in the event and to the extent such index is not maintained for all or any portion of such period, any similar index of variable rate interest for tax-exempt obligations as may be selected by the District in its sole discretion).

“Net Revenues” means, with respect to the Water System for any period, an amount equal to all of the Gross Revenues received during such period minus the amount required to pay (a) all Operation and Maintenance Costs coming payable during such period, and (b) all principal of and interest on the Improvement District Bonds coming due and payable during such period.

“Operation and Maintenance Costs” means the reasonable and necessary costs and expenses paid by the District for maintaining and operating the Water System, including but not limited to (a) the costs of acquisition of water to be supplied by the Water System, to the extent treated by the District as an item of expense and not as a capital expenditure, (b) costs of electricity and other forms of energy supplied to the Water System, (c) the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the Water System in good repair and working order, and (d) the reasonable administrative costs of the District attributable to the operation and maintenance of the Water System; but in all cases excluding (i) debt service payable on obligations incurred by the District with respect to the Water System, including but not limited to the Installment Payments and debt service payments on any Parity Obligations, (ii) depreciation, replacement and obsolescence charges or reserves therefor, (iii) amortization of intangibles or other bookkeeping entries of a similar nature, and (iv) costs and expenses which are treated by the District as capital expenditures.

52234599.9 5

“Parity Documents” means, collectively, the indenture of trust, agreement, contract or other document which authorizes the issuance of any Parity Obligations or otherwise establishes or evidences Parity Obligations.

“Parity Obligations” means any bonds, notes, leases, installment sale agreements, contracts or other obligations of the District which are secured by a pledge of and lien upon the Net Revenues on a parity with the Installment Payments, entered into or issued under and in accordance with Section 5.7.

“Rate Stabilization Fund” means any fund established and held by the District as a fund for the stabilization of rates and charges imposed by the District with respect to the Water System, which fund is established, held and maintained in accordance with Section 4.6.

“Reserve Fund” means the fund by that name established and held by the Bank under Section 3.2.

“Reserve Requirement” means $311,577.

“Tax Code” means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official guidance published, under the Tax Code.

“Water Fund” means the fund or funds established and held by the District for the deposit of Gross Revenues from the Water System.

“Water Projects” means the facilities, improvements and other property described more fully in Exhibit B hereto, as that Exhibit may be amended from time to time in accordance with this Agreement.

“Water System” means the entire water treatment, production, storage and distribution system owned or operated by the District, including but not limited to all facilities, properties and improvements at any time owned or operated by the District for the supply, treatment and distribution of water within the service area of the District, together with any necessary lands, rights, entitlements and other property useful in connection therewith, together with all extensions thereof and improvements thereto hereafter acquired, constructed or installed by the District.

“2007 Installment Payments” means the installment payments which are payable by the District under the 2007 Installment Sale Agreement.

“2007 Installment Sale Agreement” means the Installment Sale Agreement, dated May 18, 2007, between LaSalle Bank National Association and the District, as amended and supplemented from time to time in accordance with the terms thereof.

Section 1.2 Interpretation.

(a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to include the neuter, masculine or feminine gender, as appropriate.

(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.

52234599.9 6

(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof.

ARTICLE II

REPRESENTATIONS, COVENANTS AND WARRANTIES

Section 2.1 Representations, Covenants and Warranties of the District. The District represents, covenants and warrants to the Authority as follows:

(a) Due Organization and Existence. The District is a community services district duly organized and validly existing under the laws of the State of California, has full legal right, power and authority under said laws to enter into this Agreement and the Escrow Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the Board of Directors of the District has duly authorized the execution and delivery of this Agreement and the Escrow Agreement.

(b) Due Execution. The representatives of the District executing this Agreement and the Escrow Agreement are fully authorized to execute the same.

(c) Valid, Binding and Enforceable Obligations. This Agreement and the Escrow Agreement have been duly authorized, executed and delivered by the District and constitute the legal, valid and binding agreements of the District enforceable against the District in accordance with their respective terms; except as the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and except as such enforceability may be subject to the exercise of judicial discretion in accordance with principles of equity.

(d) No Conflicts. The execution and delivery of this Agreement and the Escrow Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the District is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the District, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially adversely affect the consummation of the transactions contemplated by this Agreement and the Escrow Agreement or the financial condition, assets, properties or operations of the District, including but not limited to the performance of the District’s obligations under this Agreement.

(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the District or of the voters of the District, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Agreement and the Escrow Agreement, or the consummation of any transaction herein and therein contemplated, except as have been obtained or made and as are in full force and effect.

52234599.9 7

(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the best knowledge of the District after reasonable investigation, threatened against or affecting the District or the assets, properties or operations of the District which, if determined adversely to the District or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Agreement or the Escrow Agreement, or upon the financial condition, assets, properties or operations of the District, and the District is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by this Agreement or the Escrow Agreement, or the financial conditions, assets, properties or operations of the District, including but not limited to the payment and performance of the District’s obligations under this Agreement or the Escrow Agreement.

(g) Prior Indebtedness. The District has not issued or incurred any obligations which are currently outstanding having any lien on the Gross Revenues or priority in payment out of the Net Revenues over the payment of the Installment Payments as provided herein, other than the 2007 Installment Payments.

(h) Adoption of Rates. To the best knowledge of the District, there is no ballot initiative currently being sought or threatened pursuant to Section 3 of Article XIIIC of the California Constitution relating to rates for services provided by the Authority or the District, and the District has not received nor is it aware of any outstanding majority protest action being undertaken by property owners served by the District pursuant to Section XIII D of the California Constitution. The District has not scheduled, and does not anticipate the necessity of scheduling, any increases in rates to provide Net Revenues sufficient to pay Installment Payments due under this Agreement.

(i) Payment of Taxes and Compliance with Governmental Regulations. The District will pay and discharge all taxes, assessments and other governmental charges, if any, which may hereafter be lawfully imposed upon the Water System when the same shall become due. The District will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Water System, or any part thereof.

(j) Compliance with Contracts; Observance of Laws and Regulations. The District will comply with, keep, observe and perform all agreements, conditions, covenants and terms, expressed or implied, required to be performed by it contained in all contracts for the use of the Water System and all other contracts affecting or involving the Water System to the extent that the District is a party thereto. The District will faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States of America or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by it, including their right to exist and carry on their respective businesses, to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired.

(k) Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the Net Revenues or any part thereof or on any funds in the control of the District prior or superior to the lien of the Installment Payments or which might impair the security of the Installment Purchase Agreement; provided, that the District shall not be obligated to make such payment so long as the District contests such payment in good faith.

52234599.9 8

(l) Maintenance and Preservation of the Water System. The District will maintain and preserve the Water System in good repair and working order at all times and will operate the Water System in an efficient and economical manner. The District will pay all maintenance and operation costs of the Water System as they become due and payable. The District will not sell, lease, encumber or otherwise dispose of the Water System or any part thereof in excess of one-half of one percent of the book value of the Water System in any Fiscal Year, unless a District Representative certifies that such sale, lease, encumbrance or disposition will not materially adversely affect the operation of the Water System or the Net Water Revenues; provided, that any real or personal property which has become non-operative or which is not needed for the efficient and proper operation of the Water System, or any material or equipment which has become worn out, may be sold or exchanged at not less than the fair market value thereof and the proceeds (if any) of such sale or exchange shall be deposited in the Water Fund.

(m) Prosecution and Defense of Suits. The District will promptly, upon request of the Authority, take such action from time to time as may be necessary or proper to remedy or cure any cloud upon or defect in the title to the Water System or any part thereof, whether now existing or hereafter developing, will prosecute all actions, suits or other proceedings as may be appropriate for such purpose and will indemnify and save the Authority harmless from all cost, damage, expense or loss, including reasonable attorneys’ fees, which it may incur by reason of any such cloud, defect, action, suit or other proceeding.

(n) Records and Accounts. The District shall keep proper books of record and accounts of the Water System in which complete and correct entries are made of all transactions relating to the Water System. Said books shall, upon prior request, be subject to the reasonable inspection of the Authority upon prior notice to the District.

The District shall cause the books and accounts of the Water System to be audited annually by an Independent Accountant not more than nine months after the close of each Fiscal Year. Such report may be part of a combined financial audit or report covering all or part of the District’s finances. The District shall file its audited financial statements with the Authority annually as they become available.

Section 2.2 Representations, Covenants and Warranties of Authority. The Authority represents, covenants and warrants to the District as follows:

(a) Due Organization and Authority. The Authority is a joint powers authority duly organized, existing and in good standing under and by virtue of the laws of the State; has all requisite corporate powers and authority to enter into this Agreement; is possessed of full corporate power and authority to own and hold real and personal property, and to sell the same; and has duly authorized the execution and delivery of this Agreement.

(b) No Conflicts. Neither the execution and delivery of this Agreement, nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby, conflicts with or results in a material breach of the terms, conditions or provisions of any restriction or any agreement, instrument, regulation or law to which the Authority is now a party or by which the Authority is bound, or constitutes a default under any of the foregoing.

(c) Consents and Approvals. No consent permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the Authority’s execution and delivery of this Agreement, or the consummation of any transaction herein contemplated, except as have been obtained or made and as are in full force and effect.

52234599.9 9

(d) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the best knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Agreement, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by this Agreement.

(e) Representations Regarding Proposition 218. The Authority acknowledges and understands that any undertaking to increase rates, fees and charges with respect to the District as herein provided may be subject to the requirements of Section 6 of Article XIII D of the California Constitution (sometimes referred to as Proposition 218), as interpreted by the California Supreme Court in the case of Bighorn-Desert View Water Agency v. Kelley, 39 Cal. 4th 205 (decided July 24, 2006), under which rate increases for water and wastewater services are subject to the requirements of Section 6, which require that written notice be given to all property owners of the amount of the proposed rate increase, the reasons for the increase, the basis upon which it was calculated and the date of public hearing to be held not less than 45 days from the date of the notice. If at the public hearing written protests of the proposed fee or charge are presented by a majority of the owners of the affected parcel(s), the District may not impose the increased fee or charge.

(f) Further Assurances. Whenever and so often as requested to do so by the District, the Authority will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the District all advantages, benefits, interests, powers, privileges and rights conferred or intended to be conferred upon them by this Agreement.

ARTICLE III

DEPOSIT AND APPLICATION OF FUNDS; RESERVE FUND

Section 3.1 Deposit and Application of Funds. The Authority shall cause the amount of $3,117,830.56 received from the Bank (less the amount of $311,577 to be retained by the Bank in the Reserve Fund) to be applied on the Closing Date as follows:

(a) the Authority (or the Bank on behalf of the Authority) shall transfer the amount of $2,794,247.50 to the Escrow Agent for deposit in the Escrow Fund, established under the Escrow Agreement, to be applied, together with amounts relating to the 1998 Bonds, for the purpose of refinancing the 1998 Installment Sale Agreement in connection with the redemption and defeasance of the 1998 Bonds; and

(b) the Authority (or the District and/or Bank on behalf of the Authority) shall apply $12,006.06 for the purpose of paying the costs of the financing on behalf of the District.

Section 3.2 Reserve Fund. The District will establish the Reserve Fund with the Bank pursuant to the Assignment Agreement. The Reserve Fund will initially be funded, as set forth in the Assignment Agreement, and shall continuously be funded, from available amounts in the Water Fund in

52234599.9 10

an amount equal to the Reserve Requirement. The District covenants that the Reserve Fund shall be maintained at the Bank, in a segregated identified account. Semiannually on or prior to each Installment Payment Date, the Bank shall apply any moneys in the Reserve Fund in excess of the Reserve Requirement to the payment of the Installment Payment coming due and payable on such Installment Payment Date. If on any Installment Payment Date the amounts on deposit in the Water Fund are not at least equal to the amount of the Installment Payment then coming due and payable, the Bank will apply the moneys available in the Reserve Fund to make such payments in full. Any deficiency in the Reserve Fund shall be immediately replenished by the District from the first available amounts held by it in the Water Fund, in accordance with Section 4.5(b).

ARTICLE IV

SALE OF WATER PROJECTS; INSTALLMENT PAYMENTS

Section 4.1 Sale and Purchase of Water Projects. The Authority hereby purchases the Water Projects from the District and the District hereby sells the Water Projects to the Authority and thereafter the District hereby purchases the Water Projects from the Authority and the Authority hereby sells the Water Projects back to the District upon the terms and conditions set forth in this Agreement, all for the purpose of prepaying the 1998 Installment Payments in full.

Section 4.2 Term. The Term of this Agreement begins on the Closing Date and ends on April 1, 2026, or such later or earlier date on which the Installment Payments have been paid in full or provision for such payment has been made as provided in this Agreement.

Section 4.3 Transfer of Title. Title to the Water Projects, and each component thereof, shall be deemed conveyed by the Authority to and vested in the District. The Authority and the District agree that no further action or documentation is intended to be required to cause the transfer of title to the Water Projects; however, if any further actions or documentation is so required, the Authority and the District shall take such actions and execute, deliver and cause to be recorded all such documents.

Section 4.4 Installment Payments.

(a) Obligation to Pay. The District hereby agrees to pay to the Authority, as the purchase price of the Water Projects hereunder, the aggregate principal amount of $3,117,830.56 together with interest (calculated on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof, payable in semiannual Installment Payments in the respective amounts and on the respective Interest Payment Dates specified in Exhibit A. The Installment Payments are secured by and payable solely from the sources specified in Section 4.5.

(b) Effect of Prepayment. If the District prepays all remaining Installment Payments in full under Section 7.2 or Section 7.3, the District’s obligations under this Agreement will thereupon cease and terminate, including but not limited to the District’s obligation to pay Installment Payments therefor under this Section 4.4. If the District prepays the Installment Payments in part but not in whole under Section 7.2 or Section 7.3, the Authority shall provide the District with a revised schedule of Installment Payments reflecting such prepayment.

Section 4.5 Pledge of Net Revenues; Application of Gross Revenues.

(a) Pledge. All of the Net Revenues are hereby irrevocably pledged, charged and assigned to the punctual payment of the Installment Payments. Such pledge, charge and assignment constitute a lien on and security interest in the Net Revenues and such other moneys for the payment of

52234599.9 11

the Installment Payments in accordance with the terms hereof, on a parity with the pledge and lien which secures the 2007 Installment Payments and any Parity Obligations.

(b) Deposit of Gross Revenues into Water Fund; Transfers to Make Payments. The District has previously established the Water Fund, which the District shall continue to hold and maintain for the purposes and uses set forth herein. The District shall deposit all Gross Revenues from the Water System into the Water Fund immediately on receipt. The District shall apply amounts in the Water Fund as set forth in this Agreement, in the 2007 Installment Sale Agreement and in any Parity Documents. The District shall apply amounts on deposit in the Water Fund to pay when due the following amounts in the following order of priority:

(i) all Operation and Maintenance Costs;

(ii) the Installment Payments, the 2007 Installment Payments and all payments of principal of and interest on any Parity Obligations;

(iii) to the Reserve Fund in the amount of any deficiency therein, and to in the respective reserve funds established for any Parity Obligations, the notice of which deficiency has been to the District in accordance with the documents relating to such Parity Obligations;

(iv) any other payments required to comply with the provisions of this Agreement, the 2007 Installment Sale Agreement and any Parity Documents; and

(v) any other purposes authorized under subsection (d) of this Section 4.5.

(c) No Preference or Priority. Payment of the Installment Payments, the 2007 Installment Payments and the principal of and interest on any Parity Obligations shall be made without preference or priority. If the amount of Net Revenues on deposit in the Water Fund is any time insufficient to enable the District to pay when due the Installment Payments, the 2007 installment Payments and the principal of and interest on any Parity Obligations, such payments will be made on a pro rata basis.

(d) Other Uses Permitted. The District shall manage, conserve and apply the amounts on deposit in the Water Fund in such a manner that all deposits required to be made under the preceding subsection (b) will be made at the times and in the amounts so required. Subject to the foregoing sentence, so long as no Event of Default has occurred and is continuing, the District may use and apply moneys in the Water Fund for (i) the payment of any subordinate obligations or any unsecured obligations, (ii) the acquisition and construction of improvements to the Water System, (iii) the prepayment of any other obligations of the District relating to the Water System, or (iv) any other lawful purposes of the District.

Section 4.6 Establishment of Rate Stabilization Fund. The District has the right at any time to establish a fund to be held by it and administered in accordance with this Section 4.6, for the purpose of stabilizing the rates and charges imposed by the District with respect to the Water System. From time to time the District may deposit amounts in the Rate Stabilization Fund, from any source of legally available funds, including but not limited to Net Revenues which are released from the pledge and lien which secures the Installment Payments, the 2007 Installment Payments and any Parity Obligations, as the District may determine.

The District may, but is not required to, withdraw amounts on deposit in the Rate Stabilization Fund and deposit such amounts in the Water Fund in any Fiscal Year for the purpose of paying the

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Installment Payments, the 2007 Installment Payments or the principal of and interest on any Parity Obligations coming due and payable in such Fiscal Year. Amounts so transferred from the Rate Stabilization Fund to the Water Fund in any Fiscal Year constitute Gross Revenues for that Fiscal Year and will be applied for the purposes of the Water Fund. Amounts on deposit in the Rate Stabilization Fund are not pledged to and do not secure the Installment Payments, the 2007 Installment Payments or any Parity Obligations. All interest or other earnings on deposits in the Rate Stabilization Fund will be retained therein or, at the option of the District, be applied for any other lawful purposes. The District has the right at any time to withdraw any or all amounts on deposit in the Rate Stabilization Fund and deposit such amounts to the Water Fund as Gross Revenues and apply such amounts for any other lawful purposes of the District.

Section 4.7 Special Obligation of the District; Obligations Absolute. The District’s obligation to pay the Installment Payments and any other amounts coming due and payable hereunder is a special obligation of the District limited solely to the Net Revenues. Under no circumstances is the District required to advance moneys derived from any source of income other than the Net Revenues and other sources specifically identified herein for the payment of the Installment Payments and such other amounts, and no other funds or property of the District are liable for the payment of the Installment Payments.

The obligation of the District to make the Installment Payments from the Net Revenues and to perform and observe the other agreements contained herein is absolute and unconditional and is not subject to any defense or any right of set-off, counterclaim or recoupment arising out of any breach by the Authority of any obligation to the District or otherwise with respect to the Water System, whether hereunder or otherwise, or out of indebtedness or liability at any time owing to the District by the Authority. Until all of the Installment Payments and other amounts coming due and payable hereunder have been fully paid or prepaid, the District will:

(a) not suspend or discontinue payment of any Installment Payments or such other amounts,

(b) perform and observe all other agreements contained in this Agreement, and

(c) not terminate this Agreement for any cause, including, without limiting the generality of the foregoing, the occurrence of any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Water System, failure to complete the acquisition and construction of the Water Projects by the estimated completion date thereof, sale of the Water System, the taking by eminent domain of title to or temporary use of any component of the Water System, commercial frustration of purpose, any change in the tax or law other laws of the United States of America or the State of California or any political subdivision of either thereof or any failure of the Authority to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement.

Nothing contained in this Section 4.7 releases the Authority from the performance of any of the agreements on its part contained herein, and if the Authority fails to perform any such agreements, the District may institute such action against the Authority as the District may deem necessary to compel performance so long as such action does not abrogate the obligations of the District contained in the preceding paragraph. The District may, however, at its cost and expense and in its name or in the name of the Authority, prosecute or defend any action or proceeding or take any other action involving third persons which the District deems reasonably necessary in order to secure or protect the District’s rights hereunder, and in that event the Authority will cooperate fully with the District and to take such action

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necessary to effect the substitution of the District for the Authority in such action or proceeding at the request of the District.

ARTICLE V

FINANCIAL COVENANTS

Section 5.1 Insurance. The District shall at all times maintain with responsible insurers all such insurance on the Water System as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to the Water System, including worker’s compensation insurance and insurance against public liability and property damage. Such insurance shall include coverage for casualty losses to the facilities constituting part of the Water System. All amounts collected from insurance against accident to or destruction of any portion of the Water System will be applied, at the option of the District, either (a) to repair or rebuild such damaged or destroyed portion of the Water System, or (b) on a pro rata basis to prepay the Installment Payments, the 2007 Installment Payments and any Parity Obligations on the next available prepayment date.

The District shall also maintain, with responsible insurers, worker’s compensation insurance and insurance against public liability and property damage to the extent reasonably necessary to protect the interests of the District and the Authority. The Authority shall be named as an additional insured on such liability insurance policy which is maintained by the District with respect to the Water System, and shall provide evidence of such insurance on the Closing Date and from time to time thereafter at the written request of the Authority.

Any policy of insurance required under this Section 5.3 may be maintained as part of or in conjunction with any other insurance coverage carried by the District, and may be maintained in whole or in part in the form of self-insurance by the District or in the form of the participation by the District in a joint powers agency or other program providing pooled insurance. The District shall file evidence of all insurance policies maintained under this Section 5.3 at least annually with the Authority. All such policies shall provide that the Authority is given 30 days’ prior notice of expiration, any intended cancellation thereof or reduction of the coverage provided thereby.

Section 5.2 Reserved.

Section 5.3 Rates and Charges.

(a) Gross Revenue Covenant. The District shall fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Water System during each Fiscal Year, which are at least sufficient, after making allowances for contingencies and error in the estimates, to yield Gross Revenues from the Water System sufficient to pay the following amounts in the following order of priority:

(i) All Operation and Maintenance Costs of the Water System estimated by the District to come due and payable in the Fiscal Year.

(ii) All Installment Payments, all 2007 Installment Payments and all payments of principal of arid interest on any Parity Obligations of the Water System as they come due and payable during the Fiscal Year, without preference or priority, except to the extent payable from the proceeds of Parity Obligations set aside as capitalized interest.

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(iii) All amounts, if any, required to restore the balance in the Reserve Account to the full amount of the Reserve Requirement, and all amounts required to restore the balance in the reserve accounts established for the 2007 Installment Payments and any Parity Obligations to their required balances.

(iv) All payments required to meet any other obligations of the District which are charges, liens, encumbrances upon, or which are otherwise payable from, the Gross Revenues or the Net Revenues during such Fiscal Year.

(b) Net Revenue Covenant. The District shall fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Water System during each Fiscal Year which are sufficient to yield Net Revenues of the Water System which are at least equal to 125% of the amount of set forth in paragraph (a)(ii) of this Section. For purposes of this subsection (b), the amount of Net Revenues for a Fiscal Year will be computed by including in Gross Revenues all amounts transferred into the Water Fund from the Rate Stabilization Fund during the Fiscal Year.

Section 5.4 Superior and Subordinate Obligations. The District may not issue or incur any additional bonds or other obligations during the Term of this Agreement having any lien on the Net Revenues which is senior to the lien which secures the Installment Payments, or having any priority in payment of principal or interest out of the Net Revenues over the Installment Payments. Nothing herein limits or affects the ability of the District to issue or incur (a) Parity Obligations under Section 5.7, or (b) obligations which are either unsecured or which are secured by an interest in the Net Revenues which is junior and subordinate to the pledge of and lien upon the Net Revenues established hereunder.

Section 5.5 Issuance of Parity Obligations. The District may issue or incur any Parity Obligations during the Term hereof upon satisfaction of all of the following conditions:

(a) No Event of Default has occurred and is continuing.

(b) The Net Revenues (excluding any amounts derived from the Rate Stabilization Fund), calculated in accordance with sound accounting principles, as shown by the books of the District for the most recent completed Fiscal Year for which audited financial statements are available, or for any more recent consecutive 12-month period selected by the District at its option, in either case verified by a certificate or opinion of an Independent Accountant or Financial Consultant, plus the Additional Water Revenues, at least equal 125% of the amount of Maximum Annual Debt Service with respect to the Installment Payments and all Parity Obligations then outstanding (including the Parity Obligations then proposed to be issued and replenishing all required reserve funds).

(c) Upon the issuance of such Parity Obligations a reserve fund shall be established for such Parity Obligations in an amount at least equal to the lesser of (i) Maximum Annual Debt Service on such Parity Obligations, or (ii) the maximum amount then permitted under the Tax Code.

(d) The District shall deliver to the Authority a written certificate of a District Representative certifying that the conditions precedent to the issuance of such Parity Obligations set forth in subsections of this Section 5.7 have been satisfied.

Section 5.6 Reserved.

Section 5.7 Compliance with Prior Financing Documents. The District shall observe and perform all of the obligations imposed on it under the 2007 Installment Sale Agreement and the respective

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resolutions authorizing the issuance of the Improvement District Bonds. The District shall not take any action which constitutes an event of default under and as defined in the 2007 Installment Sale Agreement or any of such resolutions, or any action which, if not cured, with the passage of time would constitute an event of default under and as defined in the 2007 Installment Sale Agreement and the respective resolutions authorizing the issuance of the Improvement District Bonds. In the event of any conflict or inconsistency between the provisions hereof and the provisions of the 2007 Installment Sale Agreement and the resolutions authorizing the issuance of the Improvement District Bonds, the provisions of the 2007 Installment Sale Agreement and such resolutions shall control.

Section 5.8 Tax Covenants. The District shall not take any action or permit to be taken any action within its control which would cause or which, with the passage of time if not cured would cause, the interest with respect to the Installment Payments to become includable in gross income for federal income tax purposes. To that end, the District hereby make the following specific covenants:

(a) The District hereby covenants that it shall not make or permit any use of the proceeds of the Installment Payments that may cause the Installment Sale Agreement to be “arbitrage bonds” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended.

(b) The District covenants that the proceeds of the Installment Sale Agreement will not be used as to cause the proceeds of Installment Sale Agreement to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code.

(c) The District covenants not to take any action or permit or suffer any action to be taken if the result of the same would be to cause the Installment Sale Agreement to be “federally guaranteed” within the meaning of Section 149(b) of the Code.

ARTICLE VI

EVENTS OF DEFAULT

Section 6.1 Events of Default Defined. The following events constitute Events of Default hereunder:

(a) Failure by the District to pay any Installment Payment when due and payable hereunder.

(b) Failure by the District to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in the preceding clause (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the District by the Authority; provided, however, that if the District notifies the Authority that in its reasonable opinion the failure stated in the notice can be corrected, but not within the 30-day period, such failure will not constitute an event of default hereunder if the District commences to cure such failure within the 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time.

(c) The filing by the District of a voluntary petition in bankruptcy, or failure by the District promptly to lift any execution, garnishment or attachment, or adjudication of the District as a bankrupt, or assignment by the District for the benefit of creditors, or the entry by the District into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the District in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted.

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(d) The occurrence of any event of default under and as defined in the 2007 Installment Sale Agreement or any Parity Documents.

Section 6.2 Remedies on Default. If an Event of Default occurs and is continuing, the Authority has the right, at its option and without any further demand or notice, to take any one or more of the following actions:

(a) Declare all principal components of the unpaid Installment Payments, together with accrued interest thereon from the immediately preceding Interest Payment Date on which payment was made, to be immediately due and payable, whereupon the same shall immediately become due and payable. Notwithstanding the foregoing provisions of this subsection (a), however, if, at any time after the principal components of the unpaid Installment Payments have been so declared due and payable under this subsection (a), and before any judgment or decree for the payment of the moneys due have been obtained or entered, the District deposits with the Authority a sum sufficient to pay all principal components of the Installment Payments coming due prior to such declaration and all matured interest components (if any) of the Installment Payments, and the reasonable expenses of the Authority (including any fees and expenses of its attorneys), and any and all other defaults known to the Authority (other than in the payment of the principal and interest components of the Installment Payments due and payable solely by reason of such declaration) have been made good, then, and in every such case, the Authority shall rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

(b) Take whatever action at law or in equity may appear necessary or desirable to collect the Installment Payments then due or thereafter to become due during the Term of this Agreement, or enforce performance and observance of any obligation, agreement or covenant of the District under this Agreement.

(c) As a matter of right, in connection with the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Authority hereunder, cause the appointment of a receiver or receivers of the Gross Revenues and other amounts pledged hereunder, with such powers as the court making such appointment may confer.

Section 6.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy is cumulative and in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VI, it is not necessary to give any notice, other than such notice as may be required in this Article VI or by law.

Section 6.4 Agreement to Pay Attorneys’ Fees and Expenses. If either party to this Agreement defaults under any of the provisions hereof and the nondefaulting party employs attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred. The provisions of this Section 6.4 will survive the expiration of the Term of this Agreement.

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Section 6.5 No Additional Waiver Implied by One Waiver. If any agreement contained in this Agreement is breached by either party and thereafter waived by the other party, the waiver will be limited to the particular breach so waived and will not be deemed to waive any other breach hereunder.

ARTICLE VII

PREPAYMENT OF INSTALLMENT PAYMENTS

Section 7.1 Security Deposit. Notwithstanding any other provision hereof, the District may on any date secure the payment of Installment Payments, in whole or in part, by irrevocably depositing with the Authority or with a third-party depository an amount of cash which, together with other available amounts, is either:

(a) sufficient to pay all such Installment Payments, including the principal and interest components thereof, when due under Section 4.4(a), or

(b) invested in whole or in part in non-callable Federal Securities the payments of principal of and interest on which, together with other available cash, are sufficient to pay the Installment Payments when due under Section 4.4(a) or when due on any optional prepayment date under Section 7.2, as the District instructs at the time of said deposit.

The sufficiency of amounts deposited under the foregoing subsection (b) must be verified by the report of an Independent Accountant which is addressed and delivered to the Authority.

If the District makes a security deposit under this Section for the payment of all remaining Installment Payments, all obligations of the District hereunder, and the pledge of Net Revenues and all other security provided by this Agreement for said obligations, will cease and terminate, excepting only the obligation of the District to make, or cause to be made, all Installment Payments from such security deposit. Any such security deposit shall constitute a special fund for the payment of such Installment Payments in accordance with the provisions hereof.

The District shall provide to the Authority 30 days prior written notice of its intent to discharge its obligations with respect to this Agreement by satisfying the conditions of this Section 7.1, and shall provide the Authority with an opinion of Bond Counsel stating that (i) the deposit and application of funds under this Section 7.1 does not, of itself, cause the interest components of the Installment Payments to be includable in gross income for federal tax purposes, and (ii) as a result of the deposit and application of funds under this Section 7.1, all obligations of the District with respect to this Agreement have ceased and terminated and this Agreement has been discharged.

Section 7.2 Optional Prepayment. The District has the right, at its option, to prepay the principal components of the Installment Payments in whole or in part on any date. Such option shall be exercised by payment of a prepayment price equal to the sum of (a) the aggregate principal components of the Installment Payments to be prepaid, plus (b) the interest component of the Installment Payment required to be paid on or accrued to such date.

If the District prepays the Installment Payments in part but not in whole, the principal components shall be prepaid among maturities on a pro rata basis such that approximately equal Installment Payments remain due hereunder. The District shall give the Authority written notice of its intention to exercise its option not less than 30 days in advance of the date of exercise.

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Section 7.3 Mandatory Prepayment From Proceeds of Insurance, Sale or Condemnation. The District shall prepay the Installment Payments in whole, or in part among maturities on a pro rata basis, from and to the extent of any proceeds of insurance, sale or condemnation awards with respect to the Water System theretofore paid to the Authority for such purpose under Sections 5.3 or 5.4. In the case of full or partial prepayment of the Installment Payments under this Section 7.3, the Installment Payments shall be prepaid on the first day of the first calendar month that is at least 45 days after the occurrence of such event at a prepayment price equal to 102% of the principal balance the Installment Payments to be prepaid, plus any accrued but unpaid interest.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Further Assurances. The District agrees that it will execute and deliver any and all such further agreements, instruments, financing statements or other assurances as may be reasonably necessary or requested by the Authority to carry out the intention or to facilitate the performance of this Agreement, including, without limitation, to perfect and continue the security interests herein intended to be created.

Section 8.2 Notices. Any notice, request, complaint, demand or other communication under this Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by telecopier or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by fax or other form of telecommunication, (b) upon actual receipt after deposit in the United States of America mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the District or the Escrow Agent may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.

If to the District: Groveland Community Services District 18966 Ferretti Road Groveland, California 95321 Attention: General Manager Fax: (209) 962-4943

If to the Authority: Groveland/Tuolumne Financing Authority c/of Groveland Community Services District 18966 Ferretti Road Groveland, California 95321 Attention: Chief Financial Officer Fax: (209) 962-4943

If to the Escrow Agent: The Bank of New York Mellon Trust Company, N.A. 400 Street Hope Street, Suite 400 Los Angeles, California 90071 Attention: Corporate Trust Fax: (213) 630-6480

Section 8.3 Governing Law. This Agreement and any disputes or controversies arising out of or relating to this Agreement shall be governed by and construed in accordance with the laws of the State, without regard to choice of law rules. Any and all disputes or legal actions or proceedings arising out of, under and/or pertaining to this Agreement or any document related hereto or thereto shall be brought in

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the courts of the State or of the Courts of the United States of America for the Eastern District of California and, by execution and delivery of this Agreement, the parties hereto consent to and hereby accept jurisdiction of such courts.

To the full extent permitted by law, the District and the Authority hereby waive trial by jury in any action or proceeding arising out of or relating to the Related Documents to which the District or the Authority is a party.

The waivers made pursuant to this Section shall be irrevocable and unmodifiable, whether in writing or orally, and shall be applicable to any subsequent amendment, renewal, supplement or modification of this Agreement. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

Section 8.4 Binding Effect. This Agreement inures to the benefit of and is binding upon the Authority, the District and their respective successors and assigns, subject, however, to the limitations contained herein.

Section 8.5 Severability of Invalid Provisions. If any one or more of the provisions contained in this Agreement are for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions will be deemed severable from the remaining provisions contained in this Agreement and such invalidity, illegality or unenforceability will not affect any other provision of this Agreement, and this Agreement will be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority and the District each hereby declares that it would have entered into this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable.

Section 8.6 Article and Section Headings and References. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and do not affect the meaning, construction or effect of this Agreement. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof; and words of the masculine gender shall mean and include words of the feminine and neuter genders.

Section 8.7 Payment on Non-Business Days. Whenever any payment is required to be made hereunder on a day which is not a Business Day, such payment shall be made on the immediate preceding Business Day.

Section 8.8 Execution of Counterparts. This Agreement may be executed in any number of counterparts, each of which for all purposes is deemed to be an original and all of which shall together constitute but one and the same instrument.

Section 8.9 Waiver of Personal Liability. No member of the Board of Directors, officer, agent or employee of the District has any individual or personal liability for the payment of Installment Payments or be subject to any personal liability or accountability by reason of this Agreement; but nothing herein contained shall relieve any such member of the Board of Directors, officer, agent or employee from the performance of any official duty provided by law or by this Agreement.

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Section 8.10 Third-Party Beneficiary. The Bank shall be a third-party beneficiary of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed and attested the Installment Sale Agreement by their officers thereunto duly authorized as of the day and year first written above.

GROVELAND COMMUNITY SERVICES DISTRICT By:

General Manager

GROVELAND/TUOLUMNE FINANCING AUTHORITY By: Authorized Officer

52234599.9 A-1

EXHIBIT A

INSTALLMENT PAYMENT SCHEDULE

Payment Date Principal Interest

Total Payment(1)

7/10/2013 $44,405.59 $44,406 1/10/2014 $179,449.56 57,679.87 237,129 7/10/2014 54,360.05 54,360 1/10/2015 189,449.00 54,360.05 243,809 7/10/2015 50,855.25 50,855 1/10/2016 204,449.00 50,855.25 255,304 7/10/2016 47,072.95 47,073 1/10/2017 209,449.00 47,072.95 256,521 7/10/2017 43,198.16 43,198 1/10/2018 219,449.00 43,198.16 262,647 7/10/2018 39,138.36 39,138 1/10/2019 229,449.00 39,138.36 268,587 7/10/2019 34,893.56 34,894 1/10/2020 239,449.00 34,893.56 274,342 7/10/2020 30,463.76 30,464 1/10/2021 249,449.00 30,463.76 279,912 7/10/2021 25,848.97 25,849 1/10/2022 259,449.00 25,848.97 285,297 7/10/2022 21,049.17 21,049 1/10/2023 269,449.00 21,049.17 290,498 7/10/2023 16,064.37 16,064 1/10/2024 279,449.00 16,064.37 295,513 7/10/2024 10,894.58 10,895 1/10/2025 289,449.00 10,894.58 300,343 7/10/2025 5,539.78 5,540 1/10/2026 299,449.00 5,539.78 304,988

Total $3,117,830.56 ________________ (1) Rounded.

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EXHIBIT B

DESCRIPTION OF PROPERTY

Property, facilities, improvements and equipment used for water treatment purposes at the Second Garrote and Big Creek sites, including the following: A two million gallon baffled steel clearwell storage tank and appurtenances. A treatment building including:

1. Chlorine solution injection equipment; 2. Ammonia injection equipment space; 3. Lime slurry injection equipment; 4. Water pumps to boost treated water to storage (above Groveland and in Pine Mountain

Lake).

Main pump modifications (at Big Creek). Emergency generator (at Second Garrote). Electrical service and instrumentation upgrade.