amounts: (i) R$ 6,610,000.00 (six million six hundred and ten thousand reais) annually, adjusted for inflation as of the execution date of this instrument, as measured by the IPCA or any other index that may replace it, always up to the last workday of October of each fiscal year, with (i) the first of such annual payments due up to the last workday of October 2017 and (ii) the last payment due up to the last workday of October 2042; and (ii) R$ 46,270,000.00 (forty six million two hundred and seventy thousand reais), in five annual and successive installments, adjusted for inflation as measured by the IPCA or any other index that may replace it, with the first installment of R$ 9,254,000.00 (nine million two hundred and fifty four thousand reais) due on April 30, 2017 and the subsequent ones in 4 (four) installments of same amount, due on every April 30 of the subsequent years, or on the first following workday.

The non-payment of part of the amount or of the entire amount will immediately lead to the early maturity of the remaining amounts due.

The Transaction is subject to the precedent condition of approval by the responsible corporate bodies of the Company and of EMAE, as well as by ANEEL – National Agency of Electric Energy (or Agência Nacional de Energia Elétrica) (“Precedent Conditions”)

The implementation of the Precedent Conditions will lead to the extinction of all currently existing legal procedures concerning disputes between SABESP and EMAE.

The possible participation of the counterparty, its partners or managers in the decision-making process of the Company concerning the Transaction or the negotiation of the Transaction as representatives of the Company

The existence of litigations concerning the use of the Guarapiranga and the Billings Reservoirs is not new, having already been the subject of recurring disclosures in the Reference Form and in the Financial Statements of the Company.

As well as the information that both companies were “in negotiations for a future agreement”, as reported through the Notice to the Market issued on April 10, 2014.

EMAE did not participate in any aspect of SABESP's decision-making process concerning the Transaction, nor did the Government of the State of São Paulo.

The Company and EMAE do not have managers in common.

Detailed justification of the reasons why the issuer's management believes that the transaction observes commutative conditions or provides for a proper compensatory payment

SABESP's choice in favor of the Transaction stems from the fact that the arguments developed by the Company at the court are not being taken into account in the arbitration procedure under way in the American Chamber of Commerce of São Paulo – Amcham. In addition, this proceeding is in the hands of a single arbitrator and an expert appointed by him, and the arbitrator has made it very clear that the arbitration proceeding is limited to calculating the indemnity owed.

In this sense, although the Company believes that it should be exempted from any burden on the bestowals granted by the responsible bodies, which have authorized the water capture carried out at the Guarapiranga and Billings Reservoirs and, therefore, no compensation is due, but given: (i) recent developments in the arbitration proceedings have gone against Sabesp; (ii) these reservoirs are essential for the

supply of water to the Metropolitan Region of São Paulo; and (iii) water would have to be taken from more distant locations at a high cost if these reservoirs were not available for the Company, Sabesp considers that it is reasonable to use the sharing of costs for the maintenance and operation of these reservoirs as a parameter to eliminate the risk of possible condemnation in the arbitration proceeding and in the other cases being heard by the courts.

In summary, SABESP understood that it would be more fruitful and cheaper to sign an extrajudicial agreement with EMAE, in order to end these disputes involving the two companies.

In this sense, the conclusion of the Transaction has the following assumptions: i) payments by Sabesp must not exceed the amount necessary to reimburse EMAE for the costs of maintaining and operating the Guarapiranga and Billings reservoirs, in proportion to its offtake from the natural flow of each of them; ii) payment should continue to be made as long as the Sabesp and EMAE concessions remain in force, and for as long as Sabesp continues to take water from these reservoirs, subject to the period of prescription of the purpose of the actions; iii) Sabesp shall apply to ARSESP for these expenses to be included in the tariff review now in progress.

As a parameter to establish the amount of the Transaction, as explained in the terms of the Technical Note, accessible through a link in the Material Fact disclosed by the Company on October 28, 2016, was considered the estimated costs for the maintenance and preservation of the hydraulic and heritage structures of the