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MATERIAL FACT
São Martinho Announces Corporate Reorganization

São Paulo, November 10, 2010 - São Martinho S.A. (BM&FBovespa: SMTO3; Reuters: SMTO3 SA and Bloomberg: SMTO3 BZ), one of Brazil‘s largest sugar and ethanol producers, announces that in a meeting held on today‘s date, its board of directors approved, ad referendum the shareholders meeting, a corporate restructuring aimed at reorganizing its operational activities.

The restructuring, which will not result in any changes in the company‘s corporate purpose, will involve the partial spin-off of the operational assets of Usina São Martinho S.A. (wholly nned subsidiary), which will be merged by São Martinho S.A. (parent company), which in turn will focus on the following activities: production and processing of sugarcane; manufacture and marketing of sugar, ethanol and their byproducts; co-generation of electricity; and import and export of goods, products and raw materials. More information will be made available jointly with the Call Notice for the Extraordinary Shareholders’ Meeting, which will be accompanied by the Management Proposal, in accordance with CVM Rule 481.

Usina São Martinho S.A. will continue to hold its land portfolio consisting of approximately 32,350.00 hectares, will change its corporate name to Vale do Mogi Empreendimentos Imobiliários S/A and will change its Corporate Purpose to: a) the purchase and sale of properties; b) the incorporation and commercial operation of real estate projects; c) the commercial operation of activities related to agriculture and livestock production on both own and third-party properties; d) the marketing of agricultural and livestock products and byproducts; e) the extraction and processing of mineral deposits on Brazilian territory, including their marketing; and f) holding interests in other companies.

Following approval by Shareholders at the Extraordinary Shareholders’ Meeting to be held on December 1, 2010, the transaction should increase operational efficiency, especially in the financial and fiscal areas, due to the centralization of activities in accordance with the principles of business, agribusiness and any other commercial activity, and to a reduction in administrative and operational costs.

It is important to note that the capital of São Martinho S.A. will not suffer any changes, since the investment in Usina São Martinho S.A. is already registered in said company at its net book value.

To see the full version in PDF, please click here.