July 13, 2010

Dear Members of the Brazil Family Federation for World Peace and Unification (AFUPM),

Over the past two years, we members of the UCI Brazil team have witnessed the beauty of your
country, and seen and come to value those places where True Parents invested important years of
their lives. We have also learnt of the many trials that members of AFUPM have had to face
from the early days of its founding to the present. In recent times we have witnessed those trials
first hand and shared the struggles with you.

We now stand at a crossroads. UCI is being unceremoniously ejected from the critical role it has
been playing in Brazil. As a result, the work done to resolve outstanding legal and tax issues that
threatened the lands True Father invested in, and to restore the land that had been mismanaged,
has now been placed in jeopardy.

We sincerely pray that the current, precipitate actions directed from International Unification
Church headquarters and carried out by the current leaders of AFUPM are truly in line with
God’s expectation and will protect True Parents’ legacy in Brazil that has been preserved to date
only with great efforts. Changes now taking place will have a significant impact on Brazil’s
providence in the future.

The worldwide membership of the Unification Church knew very little about the reality of the
AFUPM in Brazil. They were totally unaware that UCI and its chairman, Dr. Hyun Jin Moon,
had spent the last two years battling in the legal trenches of Brazil in an effort to salvage the
foundations that had been close to being entirely lost due to decades of mismanagement.

Regrettably they are still unaware of that work. Instead they know Brazil from the much edited,
widely circulated videos of the circus into which Rev. Shin Dong Mo turned a respectful
invitation for Dr. Hyun Jin Moon to speak to members who eagerly wanted to hear him. They
are now being told by International headquarters and AFUPM leaders that the national
embarrassment provoked by Rev. Shin was supposedly a ‘hostile takeover’ by Dr. Hyun Jin
Moon and by UCI.

Some are even spreading the particularly vicious rumor that UCI wants to steal all the Brazilian
assets including land, buildings, and the Sorocaba football team. This is despite the fact that UCI
has been managing those assets, worth hundreds of millions of dollars, on behalf of AFUPM for
two years and in that time has recovered an equivalent amount of value that otherwise would
have been lost owing to earlier incompetence, corruption, and irresponsibility. It is also despite
the fact that UCI was working in Brazil at the urgent request of the Korean leaders there, and
with the full endorsement of True Father.
On the basis of such unfounded claims and rumors, UCI and the Superior Council, whose
support as the legal voice of AFUPM has been critical to the legal salvage work undertaken, are
now being shown the door by the Unification Church leadership. Before addressing the steps
they have taken, however, it is worth explaining a little about the AFUPM properties and work
UCI has been doing in relation to them.

Beginning in 1995, AFUPM purchased several large rural properties in the state of Matto Grosso
du Sul. The combined area of the properties was close to 90,000 hectares (222,300 acres). Over
the next twelve years problems with the properties accumulated as a result of lack of financial
and human resources, poor planning and management, failure to seek sound legal and tax advice,
and exploitation by unethical lawyers. By 2007 the Association was under siege from multiple
and severe legal problems that threatened its very existence.

At the time of the Paraguay GPF in July 2008, AFUPM’s problems had reached uncontrollable
proportions. Faced with this crisis, five Korean and one Japanese leaders, (former Continental
Director Cho Jung Soon, Rev. Kim Heung Tae, Rev. Kim Yoon Sang, Rev. Yang Joon Soo, Rev.
Shin Myung Ki, and Rev. Hideo Oyamada) overseeing various aspects of AFUPM’s work in
Brazil, asked for a meeting with Dr. Hyun Jin Moon and, in unison, requested his assistance in
trying to resolve all AFUPM’s issues. Dr. Moon stated that True Father has been directly
overseeing the Brazil providence, and insisted that he would only get involved with True Parents’
blessing. As a result of this meeting, these Korean leaders made formal written requests
(attached) to True Parents for Dr. Hyun Jin Moon’s assistance. True Parents then urged Dr.
Hyun Jin Moon to step in and save the foundation. UCI then set to work, designating a team to
evaluate and address the situation.

As part of the team's research and evaluation process, UCI hired two of the finest law firms in
Brazil to help solve these multiple and difficult problems. UCI and the law firms have been
working together diligently since that time to clean up past problems, protect existing properties,
and recover those which had been lost or stolen. As a result of the intense effort invested,
significant strides have been made in all areas.

The problems fell into three major legal categories (most of which are related, directly or
indirectly, to the ownership of the rural real properties in Mato Grosso do Sul):

First, environmental. Work the AFUPM did at New Hope Farm Jardim, Salobra, Jangada and
Nabileque (Hotel Americano) has been prosecuted for violations of environmental laws.

Second, tax-related. Brazil’s Tax Agency has twice issued orders revoking AFUPM’s tax
immune status, claiming that AFUPM’s ownership and operation of the rural real properties in
Mato Grosso do Sul violates the requirements for tax immunity under the Brazil constitution.
Yet at the same time, AFUPM has also been assessed excessive rural land property tax on the
grounds of insufficient usage of rural land.
Third, attorney related. AFUPM has been victimized by several extremely unethical and/or
incompetent attorneys. One even transferred a large part of AFUPM properties into his own
name.

Working with our attorneys, UCI got to work to tackle and resolve this daunting array of legal
and tax problems for AFUPM. It was an extremely difficult task. In the first place, it was not
easy to even identify what all the legal problems were and, second, in several cases judgment had
already been rendered and/or fines, penalties and damages had accumulated which may be
irreversible.

However, a major success of our hard labor, in the largest case involving almost half of
AFUPM’s rural properties, was achieved when we were notified on July 7, 2010 that the
arbitration was decided in our favor (attached). As a result of this decision, we not only
prevented further loss of land to an unethical former attorney of AFUPM, but were also
successful in reclaiming those properties that had already been transferred to him.

These are the facts. Yet in the face of these facts, and despite the success so far achieved, UCI
and its chairman have once again been falsely accused of seeking to take over church assets.
UCI is happy to provide its services to support the Unification movement and proud of what it
has accomplished for the Brazil AFUPM.

However, it will defend itself against the increasingly frequent misrepresentations and baseless
accusations from the Unification Church leadership and set the record straight. To that end, we
have asked our Brazilian law firm TozziniFreire to prepare a brief summary report (attached) of
the issues addressed and work accomplished until now.

Now that work will have to come to an end. On June 26, on the heels of the very first visit of
Rev. Hyung Jin Moon, International President of the Unification Church, to Brazil, an AFUPM
general assembly was held to remove the Superior Council. The Council’s support has been
critical to winning the legal victories, since they legally represent the Association. The Church
leadership has also taken steps to make it impossible for UCI to continue its work.

The future security of the AFUPM properties was perhaps more compromised on June 15, 2010,
when Mr. Simão Ferabolli, the national leader and the President of AFUPM, acting at the
direction of Continental Director Rev. Shin Dong Mo and the International Unification Church
Headquarters, terminated Mr. Clovis da Silva, a church member and general manager of the
large-scale properties in Mato Grosso du Sul.

Mr. da Silva was the key person on the ground with whom UCI worked to resolve the serious
legal and managerial problems that had arisen in Mato Grosso du Sul outlined above. No one
knows the history and understands the complexities of those issues better than he. His summary
dismissal occurred unilaterally and without consultation with UCI.
These actions were taken in haste and with no discernible rationale. Their singular purpose has
been to oust UCI from Brazil and eliminate its ability to offer advice and managerial oversight of
AFUPM’s challenges. This is harsh treatment to receive after faithfully working to restore
AFUPM’s fortunes. But what most concerns UCI is the potential for the loss of the hard-earned
trust, reputation and credibility with the various Brazilian authorities and agencies that UCI has
been dealing with. The good working relations we have established with them have been critical
to our success and have allowed us to gain one victory after another.

Now this achievement is once again under threat. While knowing nothing of the complex
background of the legal issues related to the Mato Grosso du Sul lands, the Unification Church
leadership is taking over management of those lands, eliminating UCI’s on-the-ground expertise
and relationships built, dismissing people with knowledge in the many ongoing cases, reinstating
individuals who managed the properties when the many problems began, and thus risking again
the loss of the assets that had been so recently saved.

It is no longer clear who will take responsibility to manage these delicate issues now. The US
Family Federation website posted notes from Rev. Shin Dong Mo, purportedly of a meeting of
Brazil’s general assembly on June 12, 2010. In those notes he stated that the continuing legal
issues in Brazil would be resolved by remaining in close contact with the lawyers of the church
and the Mission Foundation. But who will drive the process? Will it be Mr Simao Ferabolli?
Or Rev. Shin? Perhaps even Rev. In Jin Moon in New York? Or Rev. Hyung Jin Moon in Seoul?
Without a consistent continuation and follow-up much will be lost.

As UCI is now shut out of any further involvement with the issues of AFUPM, we wish Rev.
Shin Dong Mo, Mr. Simão Ferabolli, and the International Unification Church headquarters
success as they take over the management of these difficult issues in Brazil. We pray that they
can pick up the responsibility of resolving them and add to the existing success.

However, we want to make very clear our deep concern that these matters will not receive the
attention they require. A great deal of money and effort has been invested to clean up the terrible
mess into which the Brazilian church had fallen. To cease that effort, or return to the haphazard,
incompetent methods of the past can only plunge AFUPM back into the state of near-collapse
from which it has just been rescued.

UCI
 Attachment: Korean and Japanese Leaders’ Request to True Parents

Reverend Kim Heung Tae’s Request

 
 Attachment: Korean and Japanese Leaders’ Request to True Parents

We tried our best to accomplish True Parents’ big goal and the Jardim project in this providential
land, but we made many mistakes due to our lack of understanding the Brazilian culture and
language.

As I felt the limitation of my ability, I’m asking Hyun Jim Nim’s attention and guidance by
taking this opportunity during the GPF events in Paraguay.

I admit that I made terrible mistakes and I want to do my best at the risk of my life to make up
for the past mistakes.

July 2nd, 2008

During Paraguay GPF events

Kim Heung Tae

 Attachment: Korean and Japanese Leaders’ Request to True Parents

Reverend Kim Yoon Sang’s Request

 
 Attachment: Korean and Japanese Leaders’ Request to True Parents

Dear True Parents,

I exerted myself as hard as possible to accomplish the mission as the chief of the Jardim project,
but I’m feeling repentance and penitence for causing anxiety to True Parents due to my
inadequacy in reality.

I beg you that Hyun Jin Nim who has achieved great revolution in Paraguay can oversee (or
manage) Brazil.

I will follow your direction with absolute faith, absolute love, and absolute obedience.

Chon Il Kuk 8th year (2008), July 2nd

From Paraguay Asuncion

Kim Yoon Sang

 Attachment: Korean and Japanese Leaders’ Request to True Parents

Reverend Yang Joon Soo and Shin Myung Ki’s Request

 
 Attachment: Korean and Japanese Leaders’ Request to True Parents

As a person who had managed the assets and had responsibilities for a long time, I have been
feeling deep repentance and regret for the many problems due to my poor management.

We became keenly aware of the limitation of our abilities and I would like to say that we can
solve the current problems through Hyun Jin Nim. Please give us your approval (or accept our
proposal).

July 2nd, 2008

Best regards,

Yang Joon Soo

Please support us with a competent working management team in order to manage and operate
the Jardim project more effectively because the current system has not been working.

Shin Myung Ki
 Attachment: Korean and Japanese Leaders’ Request to True Parents

Reverend Hideo Oyamada’s Request

 
 Attachment: Korean and Japanese Leaders’ Request to True Parents

We did our best to solve the Jardin problem, but it still remains unsolved as of now due to our
fault and incompetence. I am really sorry that we have no choice but to ask HJN to pave the way
for resolution.

Sincerely yours,

7/2/2008

Hideo Oyamada
 Attachment: Summary of the Arbitration Decision

The following is a summary of the 108 page arbitration decision:

The ruling was a 2:1 decision by the Arbitral Tribunal

Reporting part:

(i) full 60 pages report of the parties’ arguments and petitions presented in the proceeding;

Decision part:

(i) an analysis of the agreement’s legal nature: it reaches the conclusion that the agreement is not
a power-of-attorney in rem suam, but refers to it as a partnership;

(ii) the assignment of debt and release of obligation supposedly signed by César Zaduski, was
considered unenforceable, since there is no evidence that the creditors agreed with the
assignment;

(iii) although the decision considered that the Agreement is valid, it has verified reciprocal
breaches: Dr. Antonio did not fulfill the payment of the sale proceeds, and has not acted with the
expected diligence while selling the properties, violating, thus, the good faith; the Association, in
accordance with the decision, breached the Agreement due to the offering of the lands in
guarantee to another party.

(iv) the effect of the reciprocal breach is the restitution of the parties to the previous status (status
quo ante), which means that the selling of the properties grounded on the breached agreement is
null and do not have any effect, even to third parties, in accordance to the ruling;

(v) the validity of the sale and purchase agreement of the Rio Branco farm, as expected, was not
analyzed by the Arbitral Tribunal, since it involves different parties and also has a jurisdiction
clause (Campo Grande);

(vi) due to the ruling that the parties shall be restituted to the previous status, the Tribunal
determined the Association to reimburse Dr. Antonio in the amount of R$ 2.909.058,75, to be
adjusted and accrued with interest since the start of the proceeding. Such amount represents the
sum claimed by Dr. Antonio as expenses (R$ 3,266,499.53) with the deduction of R$ 357,440.78,
not related to the Farms of the Agreement in accordance with the decision; such amount shall be
paid by the Association within 30 days after the restitution of all the properties to the Association;

(vii) the lease agreements were not analyzed by the Tribunal, since they have different parties
and also have a jurisdiction clause (Jardim and Porto Murtinho);

(viii) finally, Dr. Antonio shall present a reconciliation of account of all acts taken on behalf of
the Association and provide report of all the cases that are currently being handled by him.
Attachment: Summary of the Arbitration Decision
Attachment: Summary of the Arbitration Decision
 São Paulo

Rio de Janeiro

Brasília
REPORT
Porto Alegre

Campinas
DATE: July 8th, 2010
New York
TO: AFUPM – “Association”
Associates of AFUPM and Worldwide
ATTN:
Unification movement
FROM: Giovanni Ettore Nanni
SUBJECT: Association’s current legal situation in Brazil

1. INTRODUCTION

By July, 2008, the situation of Associação das Famílias para Unificação e Paz Mundial
(AFUPM or Association) in Brazil was extremely dire, where financial and legal wellbeing
of AFUPM was in serious question. UCI decided to intervene in order to reverse further
trending catastrophe, initiating to adopt some measures in order to guide the
Association onto the right path.

As example of the bad situation experienced by the Association at that moment it’s
possible to mention that it was involved in numerous lawsuits mainly running before the
Court of Mato Grosso do Sul. Some of the attorneys handling those lawsuits have never
provided the Association with reports or copies of the claims, so the Association’s
representatives could not have control of it. Most of all Association’s properties in Mato
Grosso do Sul, as well as few in other states, had been attached by opposing parties in
the lawsuits to guarantee the debts. The Association’s financial situation was terrible. It
had no resources to address the existing debts which included taxes, environmental
fines, attorney’s fees and others.

At that moment, the most relevant properties in Mato Grosso do Sul were involved in a
Contract signed by and between the Association and its attorney Antonio Augusto de
Souza Coelho ("Antonio Augusto"). According to such Contract, said attorney had power
to sell the lands to himself or to third parties. The lands started to be sold, but the
Association never received anything for that. There is no doubt that the Contract was
unfair and absolutely unfavorable to the Association.

Briefly, the Association was involved in the following relevant cases:

(i) five tax foreclosures in the total amount of approximately R$31,500,000.00 (updated
until December, 2009);

(ii) five tax administrative proceedings in the total amount of approximately

R$32,900,000.00 (updated until April, 2010);

(iii) one arbitration proceeding, in which the amount of approximately

R$150,000,000.00 involved refers to the properties discussed on the dispute;

Tozzini, Freire, Teixeira e Silva

R. Borges Lagoa 1328
04038-904 São Paulo SP Brasil
T 55 11 5086-5000 F 55 11 5086-5555
www.tozzinifreire.com.br
(iv) two lawsuits involving the transfer of the properties of the Figueira Farm and the
Morraria Farm, which involves the total amount of approximately R$74,000,000.00;

(v) nine lawsuits filed by David Moura de Olindo (“David”), involving the total amount of
approximately R$10,000,000.00;

(vi) five lawsuits filed by Wilson Francisco Fernandes, involving the total amount of
R$2,700,000.00;

(vii) one lawsuit filed by Laura Cristina Ricci Cristóvão, involving the total amount of
approximately R$600,000.00;

(viii) one enforcement of final decision involving the total amount of approximately
R$70,000,000.00;

(ix) five public civil actions, involving environmental issues: three of them concerns the
New Hope Farm, one concerns the Hotel Americano and one concerns the Salobra Farm.
The amounts involved in such claims are considerable, but very hard to estimate;

(x) other less relevant cases.

2. SERVICES RENDERED BY TOZZINIFREIRE ADVOGADOS

At the time UCI started to assist the Association, the first step taken was hiring
TozziniFreire Advogados. Along with it, several measures have been adopted, initiating
by a research to identify all the problems involving the Association which took over 4
months to fully catalogue and analyze due to the extensive and complicated nature of
the problems. Some of the problems and solutions found by UCI and TozziniFreire will
be briefly described below.

2.1. Real estate properties’ disputes

Part of the chaotic and uncontrolled situation was reflected directly in the past decision
by the Association to settle an Agreement with ex-lawyer Antonio Augusto. The
Agreement, signed by the Association in error, induced by its ex lawyer and without any
kind of legal assistance, basically granted Antonio Augusto powers to sell most of the
Association’s farms in Mato Grosso do Sul.

In other words, the Association assigned control and/or ownership over 46,000 hectares
of property worth approximately R$150,000,000.00 in exchange of assuming debt and
liabilities of no more than R$25,000,000.00 (though Antonio Augusto convinced the
Association to believe that these debts actually amounted to over ten times their real
amount). In fact, Antonio Augusto sold some of the Association’s farms and was taking
all actions in order to sell the rest of them.

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Thus, UCI immediately authorized TozziniFreire, on behalf of Association, to request an
Injunction, which was granted and kept in force, preventing Antonio Augusto from
selling all Association’s farms in Mato Grosso do Sul. In parallel, an arbitration
proceeding was initiated in which the Association claimed for the nullification and/or
Antonio Augusto’s breach of the Agreement signed by the Association and all the acts
taken by Antonio Augusto on behalf of it, which caused inestimable losses for the
Association’s assets.

Recently, an extremely favorable decision was rendered. The Agreement was

terminated and the Association regained all the properties back, except Fazenda Rio
Branco that was not included in the Agreement. It was a two-year proceeding, that
demanded hard work by TozziniFreire and UCI, and the final decision was a great
victory.

Moreover, several farms owned by the Association have been invaded and occupied by
third parties for the past years. The situation was not under control and the possibility
of losing the areas to occupants was worrying. UCI and TozziniFreire have taken the
necessary actions to identify the occupants and to repossess those areas, avoiding the
properties’ loss.

2.2. Former lawyers’ disputes

UCI and TozziniFreire, duly representing the Association, were also able to intercept
another abusive action taken by one of the Association’s ex lawyer, David. There is a
foreclosure proceeding filed by Apolinário Adames de Souza ("Apolinário”) against the
Association in the unreasonable amount of approximately R$70,000,000.00. David,
then, on behalf of the Association, filed a supposed defense, arguing that the amount
due would be approximately R$40,000,000.00. Both the amount plead by Apolinário
and the acknowledgment of debt in the sum of R$40,000,000.00 by David have no
reasonable grounds.

TozziniFreire plead the nullity of the unduly defense presented by David on behalf of the
Association and presented a real refutation for the entire debt that is being collected.
There is still missing a decision about it, but in any case the nullity of David’s act in the
case was already declared by the Lower Court judge and the collection proceeding is
suspended at this time.

Not only are civil measures being taken against all the people involved in such cases,
but also criminal actions are being looked into in this regard.

Also, when UCI undertook the control of the Association’s situation, there were 9 (nine)
lawsuits filed by David, involving the total amount of approximately R$10,000,000.00, 5
(five) lawsuits filed Wilson Francisco Fernandes (“Wilson”), a former attorney too,
involving the total amount of R$2,700,000.00, and 1 (one) lawsuit filed by Laura
Cristina Ricci Cristóvão (“Laura”), also a former attorney, involving the total amount of
approximately R$600,000.00. All these cases refer to attorney fees supposedly owed by
the Association and were not, at that time, being handled by any attorney, reason why

3
the Association’s assets and real estate properties had being attached and lost. With
UCI’s intervention, all these cases started to be handled by TozziniFreire and a lot of
victories have been done in its favor from then on. It is important to point out that at
UCI’s direction, the Association, assisted by TozziniFreire, filed a lawsuit against David,
his companies and Laura in order to annul some of these lawsuits because the
Association was induced in error by them.

2.3. Environmental issues

In relation to environmental issues, it was possible to verify that in the past some fines
were imposed to the Association by environmental authorities and UCI is handling these
cases at the moment.

Also, TozziniFreire found at that time 5 (five) public civil actions filed against Association
related to environmental issues which were completely ignored by the Association and
with high risks of condemnations and huge fines.

Then, one of them, in which was running against the Association, TozziniFreire
presented an appeal to the Superior Court of Justice in order to revoke the unfavorable
decision rendered against the Association. The case has been suspended and UCI has
negotiated a very reasonable agreement that is about to be settled with the Public
Prosecutor.

In another case, an engineer was hired by UCI in order to draft a project to recover the
environmentally damaged area, which will be presented to the Public Prosecutor to
settle the case. It is TozziniFreire’s understanding that a settlement can quickly be
reached if the Association removes all structures that currently reside in the permanent
preservation area along the river. However, UCI has argued that this is a religious holy
ground for the Association and has been working to find a suitable agreement to keep
these structures in their places.

In a third case, UCI negotiated the terms, assisted by TozziniFreire, where the
Association settled an agreement with the Public Prosecutor, ending the lawsuit.

It is important to emphasize that the involved amount in such actions is considerable,

but very hard to estimate. UCI and TozziniFreire succeeded in obtaining great victories
for the Association.

2.4. Tax issues

2.4.1. Judicial tax proceedings

As for the tax liabilities involving the Association, TozziniFreire is currently handling the
defenses filed in the five tax foreclosures already filed by National Treasury aiming at
collecting alleged ITR unpaid taxes, involving approximately R$50,000,000.00.

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A favorable Lower Court decision was rendered in the single case already judged, which
involves the amount of approximately R$2,500,000.00. The Federal Lower Court
recognized the Association’s tax immunity due to an understanding that the
documentation and allegations presented by TozziniFreire, on behalf of the Association,
were enough to prove that it fulfills the requirements established by law for granting
such immunity.

This favorable decision may influence the other pending tax foreclosures related to the
ITR tax debts collection (a potential liability involving R$47,500,000.00), since the basis
of the defenses are the same, as well as any other tax foreclosure involving the same
object (TozziniFreire has been constantly searching for any new tax foreclosure filed by
National Treasury).

Besides the handling of the ITR taxes already assessed by Brazilian IRS, UCI and
TozziniFreire have been coordinating a large and complex work involving the
georreference and registration of Association’s rural real estate properties in order to
properly designate permanent preservation and required legal reserve areas. The
presentation of the proper register and georreference is mandatory to reduce several of
ITR tax debts already assessed and yet avoid potential liabilities involving the rural
property taxes.

2.4.2. Administrative tax proceedings

TozziniFreire is currently handling five tax administrative proceedings issued by the Internal
Revenue Office in order to collect different federal taxes – IRPJ, CSLL, COFINS and PIS.

The values of IRPJ, CSLL, COFINS and PIS are being charged in virtue of an act issued by
the federal tax authorities suspending the tax immunity applicable to the Association.
TozziniFreire presented a defense alleging the expiration of the statute of limitations for
collection of the debts object of such tax collection as well as the application of tax
immunity to the Association, as it fulfills the legal requirements. Such proceedings are
extremely important for the Association as it discusses the tax immunity applicable in the
case.

Recently, TozziniFreire has had a partially favorable decision in the proceeding regarding
ITR issued by the lower court which canceled part of the tax collected that will benefit the
Association. Unfortunately, it is not possible yet to estimate the amount of benefit that the
Association will have in virtue of such decision as it stills need to be confirmed by the higher
court but a decision of the lower court is good news indeed. An appeal was filed before the
higher court in order to change the part of the decision that was unfavorable to the
Association and TozziniFreire is closely following up on it.

2.5. Real Estate Properties

As for the real estate properties owned by Association, UCI and TozziniFreire have prepared
an inventory including all properties owned by the Association with a description of their
legal and documental current status and if they have been sold or encumbered. With this

5
inventory that had previously not been prepared, the Association knows exactly the
situation of each of its real estate properties.

Due to the Arbitration Proceeding and to avoid the real estate properties to be transferred
to third parties, especially to Antonio Augusto, TozziniFreire has blocked all real estate
registries of these properties grounded on an injunction. This action enabled the Association
to keep ownership of all the real estate properties.

Later on, the final decision of the arbitration proceeding determined the termination of the
Agreement and gave back to Association all the properties object of the Agreement.

Due to UCI and TozziniFreire’s actions, the georreference procedure of the farms has been
mostly completed by the engineer hired by UCI. The georreference of the farms shall allow
the regularization of the farms with INCRA, the remission of rural estate taxes (ITR) of the
farms, and the free disposal of the farms by the Association if it intends to.

3. CONCLUSION

To sum up, actions taken by TozziniFreire jointly with UCI have already avoided the
payment of outrageous amounts and have avoided the lost of thousands of hectares of
land areas as well.

UCI and TozziniFreire participate in weekly conference calls (usually lasting at least one
(1) hour) to discuss updates, legal strategies, direction etc.

For instance, TozziniFreire and UCI prevented the loss of 46,000 hectares of property
worth approximately R$150,000,000.00, by means of the above mentioned Injunction.

Afterwards, a very successful work by TozziniFreire and UCI granted the most important
victory to the Association: the arbitration proceeding was judged and the Association
got back all the properties object of the Agreement.

In addition, TozziniFreire, assisted by UCI, plead the nullity of the defense presented by
a former lawyer, which have erroneously acknowledged a R$ 40,000,000.00 debt of the
Association. As informed, there is still one missing decision, but in any case the nullity
of ex lawyer’s act in the case was already declared by the Lower Court judge and the
collection proceeding is suspended at this time.

Moreover, the Association was about to accomplish an award. An appeal to the Superior
Court of Justice was presented in order to revoke the unfavorable decision rendered
against the Association and is about to settle an agreement with the Public Prosecutor.

In other environmental lawsuits, (i) an agreement was settled with the Public
Prosecutor, assisted by TozziniFreire and UCI, ending the lawsuit and (ii) UCI hired an
engineer in order to draft a project to recover the damaged area while maintaining
existing structures, which will be presented to the Public Prosecutor to settle another
environmental case.

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It is important to inform that, in Brazil, the georreference procedure is required to
regularize rural areas’ situation, allowing the remission of rural real estate taxes (ITR)
of the farms and the properties’ free disposal.

The Association should have hired an engineer to do the farms’ georreference procedure
years ago but it had no resources to pay for that complex work.

For that reason, UCI hired an engineer to proceed with the georreference of all farms
owned by Association, needed especially to transfer to the Association the ones that
have been previously acquired and paid, but were still in the name of previous owners,
due to the lack of georreference.

Actions taken by TozziniFreire and UCI made it possible for the mostly completed
georreference procedure of most of the farms.

As for the tax liabilities involving Association, TozziniFreire and UCI are currently
handling the defenses filed in the five tax foreclosures already filed by National Treasury
aiming at collecting alleged ITR unpaid taxes, involving approximately
R$50,000,000.00.

A favorable Lower Court decision was rendered in the single case already judged which
involves the amount of approximately R$2,500,000.00. The Federal Lower Court
recognized the Association’s tax immunity and if this favorable decision influences the
other pending tax foreclosures related to the ITR tax debts collection, the Association
might be released of the payment of R$47,500,000.00.

It is clear that UCI and TozziniFreire are taking all the necessary actions to preserve the
Association’s patrimony and are being successful at their job, as for instance the regain
of all the properties that worth R$ 150,000,000.00 by means of the arbitration
proceeding. Unless forced by AFUPM to withdraw from all work, they intend to continue
with it, in order to safeguard the Association’s situation in Brazil.