Terra Santa Agro S A : Material Fact - Business Combination of SLC Agrícola and Terra Santa

	MATERIAL FACT
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BUSINESS COMBINATION OF SLC AGRÍCOLA AND TERRA SANTA AGRO

SLC Agrícola S.A. (B3: SLCE3; ADR's: SLCJY; Bloomberg: SLCE3:BZ; Refinitiv: SLCE3.SA) ("SLC") and

Terra Santa Agro S.A. (B3: TESA3; Bloomberg: TESA3:BZ; Refinitiv: TESA3.SA) ("Terra Santa", and, jointly with SLC, "Companies"), in compliance with the provisions of Law No. 6.404/76 and CVM Instruction No. 358/02, in continuity with the Material Facts disclosed on November 26, 2020, and March 25, 2021, and the Notice to the Market disclosed on January 7, 2021, which disclosed the terms and conditions for implementing the business combination between SLC's business and Terra Santa's agricultural operations (excluding land and improvements) by the merge of Terra Santa shares into SLC, in accordance with articles 252, 224 and 225 of Law No. 6.404/76 ("Merger of Shares" or "Transaction"), inform their respective shareholders, the market in general and other interested parties that, on this date SLC, with a favorable opinion from its Fiscal Council, and Terra Santa, at their respective Board of Directors meetings, approved the following: (i) the execution of the Protocol and Justification of the Merger of Shares ("Protocol"); and (ii) Management's Proposal to the Special Shareholders' Meeting, through which the terms and conditions for implementing the Transaction were established, by means of the Merger of Shares.

The terms and conditions of the Merger of Shares, described below, are set forth in the Protocol, submitted together with the appraisal report and other pertinent documents to the Board of Directors of the Companies and signed by the management of the Companies and will be submitted to the respective special shareholders' meetings of SLC and Terra Santa for approval:

1. Main Terms of the Merger of Shares a. Identification of the companies involved

As indicated above, the Merger of Shares will involve SLC and Terra Santa. Both Companies are listed on B3's Novo Mercado segment and are active in the production and sale of soy, cotton, corn, and other vegetable products.

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1. Description and purpose of the Merger of Shares

The purpose of the intended Merger of Shares is to combine the business of SLC to the agricultural operation of Terra Santa (excluding lands and improvements), through the merger of Terra Santa's shares into SLC, pursuant to articles 252, 224 and 225 of Law No. 6.404/76.

After consummation of the Merger of Shares, new common shares issued by SLC, and traded in the Novo Mercado segment of B3 shall be issued in favor of the Terra Santa shareholders, in replacement of the shares issued by Terra Santa previously held by them, in accordance with the Exchange Ratio, as defined and described in the Protocol.

In preparation for the intended Transaction, Terra Santa carried out a corporate reorganization ("Corporate Reorganization") in order to:

1. transfer from Terra Santa to TS Agro, corporation, with head offices in the City of São Paulo, State of São Paulo, at Praça Gentil Falcão, No. 108, 8th floor, cj. 81, room 04, Cidade Monções, CEP 04.571-150, enrolled with the CNPJ/ME under No. 40.337.136/0001-06, the shares of TS LandCo, all properties, assets, obligations, liabilities and rights to be segregated (especially rural properties and corresponding improvements), not comprising part of the Transaction; and
2. implement a capital reduction of Terra Santa, through handing over TS Agro shares to its shareholders, to be consummated simultaneously with the implementation of the Transaction. This capital reduction was approved at a shareholders' meeting of Terra Santa shareholders on April 29, 2021.

The Corporate Reorganization involves TS Agro being registered with the CVM as a publicly-held company in issuer category A, and being listed in the B3's Novo Mercado segment, which process is already underway. TS Agro will be managed by a Board of Directors composed by Messrs. Silvio Tini de Araújo, Renato Carvalho do Nascimento, Julio Cesar de Toledo Piza Neto, Arlindo de Azevedo Moura e Carlos Augusto Reis de Athayde Fernandes and by an Executive Board of Officers composed by Mr. José Humberto Teodoro Prata Junior, appointed as chief executive officer, chief financial officer and officer of investor relation of TS Agro, and Mr. Marcelo Lambrecht, appointed as executive officer.

The Corporate Reorganization will be implemented prior to the closing of the Transaction and shall be fully consummated simultaneously with the implementation of the Transaction.

Additionally, Terra Santa will enter into lease agreements with TS LandCo on the Closing Date, with an initial term of 20 years and prices on market terms.

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1. Main benefits, costs and risk of the Merger of Shares

The purpose of the Merger of Shares is to promote the combination of the Companies' businesses with benefits to their respective businesses, shareholders, customers, and other stakeholders. The proposed Merger of Shares is strategic due to the complementarity of the Companies' businesses.

At the Companies' view, the Transaction will enable greater value to be generated for the shareholders of both companies, optimizing results, given the synergies and improvement in the capital structure, enabling increased production, reduced costs, and the resulting increase in the supply of food and fiber, produced in a sustainable manner in mature farms located in Mato Grosso state. From an economic-financial point of view, integrating the businesses will promote synergies and increased efficiency in the combined company resulting from the Merger of Shares ("Combined Company").

SLC Agrícola's management estimates that the costs of the Merger of Shares for SLC Agrícola will be approximately sixteen million reais (BRL16,000,000.00), which include costs of appraisals, legal and other advisory services, publications and other related expenses.

Additionally, Terra Santa's management estimates that the costs of the Merger of Shares for Terra Santa will be approximately twenty-five million reais (BRL25,000,000.00), which include costs of appraisals, legal and other advisory services for implementing the Merger of Shares and the Corporate Reorganization, publications and other related expenses.

The Companies do not foresee significant risks arising from the consummation of the Merger of Shares, and its success will depend mainly on the Combined Company's ability to realize growth opportunities and cost savings resulting from the combination of the businesses of SLC Agrícola and Terra Santa.

If such goals are not successfully achieved, the benefits expected from the Merger may not be fully realized, or may take longer than expected to be realized. There are natural risks of price variations in SLC Agrícola shares after the consummation of the Merger of Shares, which is inherent to the capital market and incurred by all shareholders of the Combined Company.

1. Exchange ratio and criteria for its determination

Subject to the terms and conditions provided for in the Agreement, on the consummation date of the Merger of Shares ("Closing Date"), a total of two million, five hundred and sixteen thousand, four hundred and fifty-four (2,516,454) common shares will be issued by SLC Agrícola and attributed to the shareholders and holders of Subscription Warrants of Terra Santa, which

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will represent, as of the Closing Date, on a fully diluted basis, one point three percent (1.3%) of the total and voting capital stock of SLC ("Final Interest").

In order to determine the Exchange Ratio, SLC's shares were valued at twenty-five reais and eighty-three centavos (BRL25.83) per share. This amount was determined based on the volume weighted average price ("VWAP") in the last sixty (60) trading sessions of B3 prior to November 26, 2020.

In the event of a redemption, split, reverse split, stock bonus or any other event that impacts the assumptions considered by the parties for determining the Final Interest, the exchange ratio will be adjusted so that the Merger of Shares results in the Final Interest.

1. Shareholder Approval, other Conditions Precedent and Antitrust Authority Approval

The Transaction is conditioned on obtaining the approval of the Companies' shareholders at their respective shareholders' meetings, as well as verification of certain other conditions precedent usual for transactions of this nature ("Conditions Precedent").

According to the Notice to the Market released on January 7, 2021, the Transaction has been approved, without restrictions, by CADE - Conselho Administrativo de Defesa Econômica (Administrative Council for Economic Defense).

1. Calculation of the replacement ratio pursuant to article 264 of Law No. 6,404/76

Considering that the Companies do not have a control relationship and that they do not have common control, and that the replacement ratio was negotiated between absolutely independent parties, there is no need to talk about the applicability of article 264 of the Corporations Act regarding the Merger of Shares.

1. Right of Dissent and Appraisal

As provided for in articles 252, paragraph 2 and 137, paragraph 1 of Law No. 6.404/76, the right of dissent and appraisal will be guaranteed to shareholders of SLC and Terra Santa who do not vote in favor of the Merger of Shares, who abstain from voting, or who do not attend the relevant Special Shareholders' Meeting, and who expressly state their intention to exercise the right of dissent and appraisal, within thirty (30) days from the date of publication of the minutes of the Special Shareholders' Meeting that approves the Merger of Shares. The right of dissent and appraisal, with the resulting payment of reimbursement, will only be assured in relation to shares issued by SLC and Terra Santa that the shareholder is proven to have owned since close of trading of March 25, 2021, and held without interruption until the date of effective exercise of the right of dissent and appraisal.

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Dissenting shareholders of SLC will be entitled to a refund of their shares in the amount of BRL16,532744, calculated based on the net equity value of SLC shares as of December 31, 2020, according to the financial statements of SLC approved at the Annual Shareholders' Meeting held on April 29, 2021, without prejudice to the drawing up of a special balance sheet under applicable law.

Dissenting shareholders of Terra Santa will be entitled to a refund of their shares in the amount of BRL36,030569, calculated based on the net equity value of Terra Santa shares as of December 31, 2020, according to the financial statements of Terra Santa approved at the Annual Shareholders' Meeting held on April 22, 2021, without prejudice to the drawing up of a special balance sheet under applicable law.

2. Other relevant information a. Subscription Warrants

As per the Notice to Shareholders disclosed on April 29, 2021, by Terra Santa, at the Special Shareholders' Meeting held on the same date, the amendment was approved to the rules for exercising subscription warrants of the Company approved and issued at the Special Shareholders' Meeting held on April 29, 2019 ("Subscription Warrants'), as disclosed in the Management's Proposal and the Material Fact disclosed on March 25, 2021, on the following terms:

• New Exercise Windows for Subscription Warrants
• 
  Subscription Warrants can be exercised: (a) May 3, 2021, to May 13, 2021, with settlement on May 14, 2021; (b) May 17, 2021, to May 27, 2021, with settlement on May 28, 2021; and (c) May 31, 2021, to June 11, 2021, with settlement on June 14, 2021
  ("Exercise Windows").
• Alternatives for Exercising Subscription Warrants
• 1. 
     In order to facilitate exercise in anticipation of the Merger of Shares, as well as to approve, for unexercised Subscription Warrants, cancellation and replacement with SLC shares, three alternatives were approved for the holders of Subscription Warrants, as detailed below:
  2. Subscription Warrants may be exercised in the Exercise Windows at an adjusted exercise price calculated as follows:

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